Although the number of pandemic cases was well under control last week, market sentiment still remained low. We expect the share price fluctuation to continue in the near term. We cut 2022 earnings forecasts for CTGDF given its suspension of operations. As the market is focusing on its performance in 2023 and thereafter, we do not expect its share price to drop below the low seen in Apr 22. Maintain CTGDF as our top pick in the consumer space. Maintain OVERWEIGHT on China’s consumer sector.
The yoy growth of total RSV was faster in Aug 22 (5.4%) than in Jul 22 (2.7%) on the low base in Aug 21. Despite near-term consumption being largely decided by the pandemic situation, we expect better consumption in 2H22 than in 1H22. We suggest watching four key areas in the consumer space: a) further increase in concentration (eg Jonjee), b) low penetration (eg duty-free), c) easing cost pressure (eg beer), and d) strong pricing power (eg Moutai). Maintain OVERWEIGHT on China’s consumer sector...
The better-than-expected 1H22 results and the sales recovery in Jul-Aug are not enough to catalyse a sustainable upward trend of share prices amid the external uncertainties. We are cautious on the consumption during the Mid-Autumn Festival and National Day holidays. We recommend a combination of certainty (Moutai) and high growth potential (CTGDF). We suggest long-term funds to accumulate shares of CTGDF. Maintain OVERWEIGHT on China’s consumer sector.
Despite the recent surge in COVID-19 cases in Shenzhen and Chengdu, we still remain optimistic on a sales improvement in 2H22 given the: a) sales improvement in Jul-Aug 22, and b) easing COVID-19-related restrictive measures. The market is likely focusing on the sequential improvement in the following months of 2022 and corporate performances in 2023. We remain upbeat on sectors with solid growth potential. Maintain OVERWEIGHT on China’s consumer sector.
Tsingtao Brewery’s revenue/core earnings grew 5.4%/20% yoy in 1H22. Gross profit/EBIT margin expanded 0.2ppt/1.6ppt yoy in 1H22. Overall shipments narrowed by 1% yoy due to a decline in non-Tsingtao brand product sales (-5.4% yoy), bolstered by sales of Tsingtao brand products (+2.8% yoy). Overall ASP hiked 6.5% yoy in 1H22, fully offsetting the unit COGS hike. We remain upbeat on its further upmarket push and the potential contributions from costs savings ahead. Upgrade to BUY. Raise target pri...
GREATER CHINA Economics Economics: Scorched but not lost. Results AIA Group (1299 HK/BUY/HK$77.70/Target: HK$97.95): 1H22: Value of new business below expectations. GEM (002340 CH/SELL/Rmb8.83/Target: Rmb6.50): 2Q22: Earnings remained flat qoq, missing estimates. Maintain SELL. Target price: Rmb6.50. Guangzhou Tinci Materials Technology (002709 CH/SELL/Rmb50.89/Target: Rmb41.00): 2Q22: Earnings up 184% yoy and down 6% qoq, in line with estimates. Maintain SELL. Target price: Rmb41.00. Innovent B...
KEY HIGHLIGHTS Economics Scorched but not lost. Results AIA Group (1299 HK/BUY/HK$77.70/Target: HK$97.95) 1H22: Value of new business below expectations. GEM (002340 CH/SELL/Rmb8.83/Target: Rmb6.50) 2Q22: Earnings remained flat qoq, missing estimates. Maintain SELL. Target price: Rmb6.50. Guangzhou Tinci Materials Technology (002709 CH/SELL/Rmb50.89/Target: Rmb41.00) 2Q22: Earnings up 184% yoy and down 6% qoq, in line with estimates. Maintain SELL. Target price: Rmb41.00. Innovent Biologics...
The number of COVID-19 cases surged to more than 3,000 nationwide (covering 27 provinces and municipalities) in the last week, but we reiterate accumulating CTGDF’s shares on a potential price correction. The H-share listing would likely exert limited dilution impact. For sportswear, we keep Li Ning as our top pick. Maintain OVERWEIGHT on China’s consumer sector.
In Jul 22, the main packaging materials’ costs inflation continued to ease. We expect the potential cost savings to contribute to profit margins recovery in the future. Despite the surge in the number of COVID-19 cases in Sanya recently, we reiterate our optimistic view on the development of China’s duty-free market and maintain CTGDF as our top pick. Maintain OVERWEIGHT on China’s consumer sector.
We think the government is making efforts to encourage normal cross-region travel under the zero-COVID framework as the National Health Commission mandates nationwide recognition of the nucleic acid test results. We think the high-income group’s purchasing power and willingness to spend would be less affected by the pandemic than the low-income group. Maintain OVERWEIGHT on the sector.
We reckon that the overall situation of the pandemic has not worsened materially in the last week. We think the pandemic would likely exert a weakening negative impact on investment sentiment in the future months, and thus we suggest focusing more on the sustainable sector growth trend and companie
Despite a bumpy road in the near term and a potential slowdown in the growth of residents’ income, we are upbeat on sectors with relatively high growth potential. While we still prefer the duty-free sector the most, we also like: a) sportswear for the revival of domestic brands, b) high-end baijiu for the ongoing market size expansion, and c) beer for the ongoing premiumisation. Maintain OVERWEIGHT on China’s consumer sector.
The external environment is improving as the “asterisk” symbol has been abolished in travel history record, and recent large scale screening of COVID-19 cases in Shanghai showed the government’s rational efforts to eliminate virus at the beginning. We prefer CTGDF to other covered names given its largest growth potential with high growth visibility. We maintain OVERWEIGHT on the China consumer sector.
BHP shareholders received US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger. As a part of the distribution, some shares belonging to ineligible and other small shareholders are being sold by the sales agent, JPM, in a US$823m block. In this note, we will look at the possible deal dynamics and run the deal through our ECM framework.
CALB aims to raise around US$1.5bn in its Hong Kong IPO. CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products. CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products in China. According to Frost & Sullivan (F&S), in terms of installed capacity in 2021, it was ranked second in China among third-party EV battery companies and ranked seventh globally among EV battery companies. As of Dec 21...
Fosun aims to raise around US$527m via selling a 3.5% stake in Tsingtao. This is not the first selldown by Fosun: We covered the Dec 2021 selldown in Tsingtao Placement - Has sold before. Will sell again. The Apr 21 selldown in Tsingtao Brewery Placement - Fosun Is Back Again, Settling into a Pattern We covered the Dec 2020 selldown in Tsingtao Brewery Placement - Friday Evening Is Always a Good Time for a Beer, Maybe Not This One. In this note, we will talk about the deal dynamics and run t...
BHP shareholders will receive US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger. As a part of the distribution, some shares belonging to ineligible and other small shareholders will have to be sold by the sales agent, JPM. Such shares could add up to US$1.5bn in stock sales which will be done in early June. In this note, we will look at the possible deal dynamics and the overall background of the deal.
VistaREIT is looking to raise about US$158m in its Philippines IPO. This would be a 100% secondary selldown by the Sponsors; the REIT would not receive any proceeds from the IPO. Vista REIT (VREIT) is a Philippine REIT which owns commercial properties, comprising both retail and office properties. The REIT had weathered the effects of COVID relatively well, given its exposure towards essential providers and BPO tenants. However, its larger assets have seen their occupancies dwindle since FY19....
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