Haitian’s 2023 results missed our estimates, dragged by lower-than-expected revenue growth. The company aims to grow revenue and attributable net profit by 12% and 11% respectively in 2024, which implies a likely net profit margin squeeze yoy. In our view, the company is likely to face near-term headwinds due to channel fragmentation and catering companies’ growing preference for single-seasoning products. Maintain HOLD and cut target price by 3% to Rmb36.00.
KEY HIGHLIGHTS Sector Automobile We raise 2024 forecasts on China’s PV sales growth and PEV sales growth from +8%/+21% to +10%/+24% on bigger-than-expected subsidies for the cash-for-clunker program and zero downpayment auto loans. Meanwhile, we lift the target prices of BYD, Geely, GWM, GAC and Yadea to HK$160.00/HK$13.00/HK$13.50/HK$3.30 /HK$20.00 respectively. Upgrade GWM from HOLD to BUY, and upgrade GAC from SELL to HOLD. Top BUY: CATL, Geely and Yadea. Top SELL: BYD, Li Auto and XPeng. ...
GREATER CHINA Results China Longyuan Power (916 HK/BUY/HK$5.72/Target: HK$6.40): 1Q24: Below expectations; low wind speed weighed on performance. COSCO SHIPPING Ports (1199 HK/BUY/HK$4.62/Target: HK$6.75): 1Q24: Results in line; steady performance in a seasonally slow quarter with headwinds. Dian Diagnostics (300244 CH/BUY/Rmb14.13/Target: Rmb18.50): 1Q24: ICL revenue growth satisfactory; esoteric testing and self-developed product segments remain 2024’s key growth drivers. Foshan Haitian Flavou...
During the Chinese New Year (CNY) holiday, tourism, both domestic and outbound, catering and movie consumption put up strong performances. For the consumer sector, we prefer discretionary to staple, and Macau gaming in the discretionary space, given the strong recovery momentum of Macau tourism and moderate hike in opex. Galaxy is our top pick in Macau gaming sector, given its net cash position amid the higher interests. Maintain OVERWEIGHT.
A director at Foshan Haitian Flavouring & Food Co Ltd sold 2,635,000 shares at 34.396CNY and the significance rating of the trade was 74/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over...
Haitian 3Q23 results were below market’s expectation, dragged by weaker revenue and shrinking gross margin. Soy sauce revenue declined 3% yoy and 8% qoq despite the low base. The company’s operational reform may take a longer-than-expected time to bear fruit, in our view, amid the increased channel fragmentation, changing demand among catering companies, as well as the unresolved channel inventory pressure. We maintain HOLD and cut target price by 7.5% to Rmb37.00.
KEY HIGHLIGHTS Strategy Small-Mid Cap Biweekly Pet food exports on track for recovery; beneficiary: Yantai China Pet Food. Results BYD Company (1211 HK/BUY/HK$246.20/Target: HK$630.00) 3Q23: Earnings up 82% yoy and 53% qoq, in line. Maintain BUY. Target price: HK$630.00. China Construction Bank (939 HK/BUY/HK$4.48/Target: HK$6.00) 3Q23: Results in line; earnings up 2.6% on lower credit costs. China Merchants Bank Co. (3968 HK/BUY/HK$30.30/Target: HK$45.00) 3Q23: Results miss; longer wait ne...
During the Golden Week holiday, domestic tourism and catering recovery were on track while duty-free sales recovery was still weak. We prefer sportswear in the discretionary space, given the decent sales momentum during the holiday (Anta: in line with internal targets; Xtep: 20% yoy growth), and baijiu in the staples space, given baijiu’s strong brand power. We prefer Anta in the sportswear sector, given its multiple catalysts, and Moutai in the baijiu sector, for its highest earnings visibility...
Haitian reported lower revenue (-4.2% yoy) and attributable net profit (-8.8% yoy) in 1H23, which were in line with market expectations. The performance of its core condiment products worsened in 2Q23. However, we see sequential improvements in 2H23 as inventory destocking pressure eases and consumer sentiment improves. Maintain HOLD and cut target price to Rmb40.00.
KEY HIGHLIGHTS Economics PMI Further moderation in manufacturing contraction; policy support necessary Sector Aviation Airlines still loss-making but improving; expecting a turnaround in 2H23. Maintain UNDERWEIGHT. Internet China e-commerce seeking growth through international market expansion. Property Demand-side policy easing more strongly than expected; top pick: COLI. Results Baoshan Iron & Steel (600019 CH/BUY/Rmb6.11/Target: Rmb7.10) 1H23: Below expectations; gearing up for the grow...
We expect to see periodical opportunities in the following months due to the slow pace of consumption recovery and lack of incremental funds. We suggest paying more attention when the share prices dip to a low level that is close to the bottoms in Apr/Oct-Nov 22. We are confident on domestic sportswear leaders’ future growth from the increasing demand for professional sports products against the partially recovered purchasing power. Maintain OVERWEIGHT on the consumer sector.
In spite of the limited funds in the market, we believe that consumer names’ investment opportunities still exist after share prices factored in rational expectations. We expect players with high earnings visibility and/or faster-than-expected growth pace (ie Moutai, Anta and CR Beer) to remain attractive for investment against a relatively weak consumption recovery background. Maintain OVERWEIGHT on the consumer sector.
While we think the road ahead to an overall consumption recovery is still bumpy despite the RSV pickup in 2M23, we are upbeat on the wealthy group’s sustainable consumption ability and the future growth of China’s luxury and duty-free markets. We believe the duty-free market will grow at a faster pace than the overall luxury market in China. CTGDF will be the largest beneficiary of the government’s intention to nurture it into a super strong duty-free leader globally. Maintain OVERWEIGHT on the ...
Concerns on the household segment’s excess deposits continued into 2023 after the peak of its incremental deposits of Rmb17,840b in 2022. However, we expect gradual consumer spending recovery ahead as evidenced in 2021 given the easing of the pandemic and the recovery of consumer confidence. We attribute the share price corrections to the weak sentiment on overall consumption situations, but stay positive on the improving fundamentals. Maintain OVERWEIGHT on the consumer sector.
We see the recent consumer names’ share price correction as a pause in the upward trend due to: a) a lack of data exceeding market expectations, which would support the high share price levels in a short period, and b) fundamentals that are still improving. We reiterate that verification of improving consumption and further positive market consensus will drive the upward trend ahead. We suggest paying attention to potential further re-rating of Wuliangye ahead. Maintain OVERWEIGHT on the consume...
We attribute the stronger share price performance of baijiu names than peers to the market’s optimistic expectation on an economic and consumption recovery. We think the view of fundamentals likely remains positive although the share price performance could be diverse at the current stage. We attribute the relatively weak price performance of CTGDF to its limited tourism reception capacity, which will be effectively alleviated after its pipeline projects start operating. Maintain OVERWEIGHT on t...
In the second week after the holidays, the recovery continued and we saw more footfall in shopping malls, and busier roads and highways in Shanghai. We still prefer high-end products and services amid the improving fundamentals. We are also upbeat on the demand for sub-premium baijiu in Feb and Mar 23 given the recovery in drinking occasions. Fenjiu should be the key beneficiary thanks to its competitive product mix and continuous brand revival. Maintain OVERWEIGHT on the consumer sector.
After the holidays, traffic flow is normalising rapidly and we are also seeing more footfall in shopping malls, in both core and non-core areas in Shanghai. We are still upbeat on the fundamentals of CTGDF as the pipeline project, recovery of international airlines, further development of downtown duty-free, and recovery of margins would support its growth ahead. We are also upbeat on the leading diary players’ further rerating in 2023. Maintain OVERWEIGHT on the consumer sector.
Last week, the daily average subway traffic flow in Beijing, Shanghai, Guangzhou and Shenzhen recovered respectively to 19.0%, 24.5%, 6.0% and 5.5% of 2019 levels. We expect the overall footfall in Shanghai to drop this week as more people return to their hometowns. We are upbeat on the footfall in Hainan during the holidays as: a) traffic has been recovering recently, and b) the first wave of pandemic cases in Tier 1 cities is coming to an end. Maintain OVERWEIGHT on the consumer sector.
In the last week, the daily average subway traffic flow in Beijing, Shanghai, Guangzhou and Shenzhen recovered to respective 55.9%, 57.4%, 62.7% and 96.7% of 2019 levels. We also saw an almost complete footfall recovery in East Nanjing Road in Shanghai. We suggest paying attention to potential profit-taking in the near term after the sector-wide rally as the market focus may shift to improvement in fundamentals, while the impact of the first wave of COVID-19 infections m
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