研究报告全文：CMBIResearchFocusListOurbesthighconvictionideas14February2023CMBIFocusListLongandshortideasMcap3MADTVPriceTPUpDownPExPBxROEYieldCompanyTickerSectorRatingUSbnUSmnLCLC-sideFY22EFY23EFY22EFY22EFY22EAnalystLongIdeasLiAutoIncLIUSAutoBUY260213825044076NANA32-52NAShiJiDouWenjingGeelyAutomobile175HKAutoBUY149105211616542236198156611ShiJiDouWenjingSCNewEnergyTechnology300724CHCapitalGoodsBUY61117611891870573873235615603WayneFungKatherineNgZoomlionHeavyIndustry1157HKCapitalGoodsBUY765846521311994065037WayneFungKatherineNgYancoalAustralia3668HKCoalBUY517030653073172109612207WayneFungCRGas1193HKGasBUY10014233939116867813119NAMeganXiaJackBaiCDC341HKConsumerDiscretionaryBUY1015132151143687338NA0721WalterWooYumChina9987HKConsumerDiscretionaryBUY2572604822554615595285NA5908WalterWooJNBY3306HKConsumerDiscretionaryBUY0706109127168784NA32589WalterWooCRBeer291HKConsumerStaplesBUY250547604774283813266417210JosephWongBudweiserAPAC1876HKConsumerStaplesBUY39624823527216322278299212JosephWongKweichowMoutai600519CHConsumerStaplesBUY3395732018420244003237031110327927JosephWongCTGDF601888CHConsumerStaplesBUY6183544204525502558640111720005JosephWongProya603605CHConsumerStaplesBUY743421790184034243159021407JosephWongInnoventBiologics1801HKHealthcareBUY8442643052622NANANANANAJillWuAndyWangWuXiBiologics2269HKHealthcareBUY8442661412049653339965129NAJillWuBenchenHuangChinaLife2628HKInsuranceBUY331211213920950NANANA10342GigiChenTencent700HKInternetBUY1186640381638160NANANANANASaiyiHeWentaoLuFrankTaoPinduoduoPDDUSInternetBUY464712629961929-3247194NANANASaiyiHeFrankTaoWentaoLuKuaishou1024HKInternetBUY118664062194051NANANANA00SophieHuangCRLand1109HKPropertyBUY34324693674512384760911253JeffreyZengMiaoZhangBOEVaritronix710HKTechnologyBUY333526191260362521852314720AlexNgLilyYangWingtech600745CHTechnologyBUY193160588646259172NA7904LilyYangAlexNgKingdee268HKSoftwareITservicesBUY111156816623843NANANA-700MarleyNganSourceBloombergCMBIGMPriceasof142202310am2LatestadditionsdeletionsfromCMBIFocusListCompanyTickerSectorRatingAnalystRationaleAdditionsJNBY3306HKConsumerDiscretionaryBUYWalterWooWebelieveJNBYcouldoutperformduringOct-Dec2022thankstolowbasechildrenclothingincidentWearemoreoptimisticaboutitsFY623Eresultsthanksto1robustsalesgrowthduringJanandCNY20232lowbasein2022and3morebrandingandproductupgradesKweichowMoutai600519CHConsumerStaplesBUYJosephWongWethinkitsthebestproxytoChinasconsumption-ledrecoveryChinaLife2628HKInsuranceBUYGigiChenWeaddChinaLife-H2628HKtoourtoppickgiven1itsoutperformanceonnewbusinessgrowthYTD2aturnaroundof750-daymovingavgof10-Yrgovernmentbondyieldsin1H23whichwillbenefittheinsurersreservesbalanceand3currentundemandingvaluationat02xPEVFY23Ebelowthe5-yravgPEVat04xPinduoduoPDDUSInternetBUYSaiyiHeFrankTaoWeaddPDDintothelistduetopotentiallybetterthanstreetconsensusGMVandrevenuegrowthWentaoLudrivenbyitsenhanceduserstickinessandincorporationofmorebrandedproductsCoredomesticbusinessshouldmaintainhighprofitabilityandprovidestrongsupportforoverseasexpansionDeletionsCPIC2601HKInsuranceBUYGigiChenWeremoveCPIC-H2601HKfromourtoppickasthestockhasalreadyrisenby223YTDsubstantiallyoutperformingtheHSIwhichroseby52YTDChinaLife-H2628HKhoweverwithitslaggedYTDperformanceagainstthemarketwebelievetheelevatedjumpstartsaleswillbepricedinbymarketforanotherroundofincreaseAlibabaBABAUSInternetBUYSaiyiHeFrankTaoWentaoWeLuremoveAlibabafromthefocuslistgiventhattheinvestmentthesishasplayedoutiepositivenewsregardingFintechregulationandshort-termstrongconsumptionrecoveryhasbeenwellexpectedbythemarketandwethinkthestockpricemaytakesometimetoregaingrowthmomentumonmid-to-longtermdriversSourceCMBIGM3PerformanceofourrecommendationsInourlastreportdated17Januarywehighlightedalistof22longideasThebasketequalweightedofthese22stocksoutperformedMSCIChinaindexby24pptdelivering07returnvsMSCIChina-172ofthesestocksdeliveredover10ofreturnand13ofour22longideasoutperformedthebenchmark4LongIdeas5LiAutoIncLIUSStillbestpositionedamongNEVtrioRatingBUYTPUS440076upsideAnalystsShiJiDouWenjingInvestmentThesisWeareoftheviewthatChinasautoindustryhasFinancialsandValuationsbeenexperiencingdrasticchangesasconsumerspursuenewvaluesfromYE31DecFY21AFY22EFY23EFY24EvehicleswhichneedspioneersbutnotfollowersWearepessimisticaboutRevenueRMBmn270104517090650129950mostincumbentautomakerstechtransformationAmongNEVstart-upsdespitehighersalesvolumefromsometier-2brandscomparedwiththeYoYgrowth18566721007434NEVtriotheystillneedtimetobuildcustomertrustinourviewAsNetincomeRMBmn32120845172730pioneerstheNEVtriohastheiradvantagesanddisadvantagesWhiletheEPSRMB017108027138NEVtrioallhasmorethanRMB30bnnetcashtosupportthemthroughoutYoYgrowthNANANA42822024weareoftheviewthatLiAutoprobablyhasahigherchancetobeaPSx41281410long-termwinnerintermsofsalesandprofitabilityPBx27323130YieldNANANANAOurViewLiAutofinished2022withthehighestsalesvolumeamongtheNEVtrioonlywithtwomodelsWeexpectLiAutos4Q22EGPMtobeatROE09521365managementsguidanceof20WeprojectthecompanytoturnnetprofitNetgearingNetcashNetcashNetcashNetcashin4Q22EfromnetlossofRMB16bnin3Q22despitehigherRDandSourceCompanydataBloombergCMBIGMestimatesSGAexpensesQoQWeexpectLiAutotocontinueleadingFY23EsalesvolumeamongtheNEVtrioWeprojectLiAutosFY23Esalesvolumetobe025mnunitsabitmoreconservativethanmanagementsguidanceof03mnunitsamidtheoverallindustryheadwindsandpotentialproductcannibalizationWestillexpectLiAutototurnprofitableinFY23EtheearliestamongtheNEVtriothankstotheitssuperiorproductmixcostcontrolandmanagementefficiencyCatalysts1StrongsalesvolumeYoYgrowthin1H232PossiblemildersalescannibalizationbetweentheL7tobedeliveredinMar2023L8andL9thansomeinvestorsexpectation2firstBEVbatteryelectricvehiclemodeltobelaunchedin2023ValuationOurtargetpriceofUS4400isbasedon33xFY23EPSLinktolatestreportsLiAutoIncLIUSStillbestpositionedamongNEVtrioChinaAutoSector2023OutlookAcriticalyearforlong-termsurvival6GeelyAutomobile175HKPHEVcouldbeapositivesurpriseinFY23RatingBUYTPHK165042upsideAnalystsShiJiDouWenjingInvestmentThesisGeelyisourtoppickamongincumbentautomakersFinancialsandValuationsduetoZeekrsprogressiveimprovementandpossiblePHEVsalesboomYE31DecFY21AFY22EFY23EFY24EWeexpectZeekrtoalmostdoubleitssalesvolumeinFY23EaidedbyaRevenueRMBmn101611143630157650167000compactSUVmodelWeareoftheviewthatBYDs23marketshareinthePHEVsegmentisnotsustainableandGeelyislikelytobeoneoftheYoYgrowth1034149859automakerstograbmarketsharefromBYDWeprojectGeelysFY23NetincomeRMBmn4847470855677027salesvolumetorise3YoYto15mnunitswithalmost059mnunitsEPSRMB048046054068beingNEVsWeexpectZeekrsnetlosstonarrowinFY23EYoYgrowth12429182262PEx205236198157OurViewZeekrisontrackforlong-termdevelopmentZeekrendedPBx14151413theyearof2022withsalesvolumeofaround72000unitsbeatingitsYield08111317salestargetof70000unitswhichexceededmanyinvestorsinitialexpectationWeprojectZeekrssalesvolumetodoubleinFY23EaidedROE73667486byanewcompactSUVWevalueZeekr25xthesameasourtargetNetgearingNetcashNetcashNetcashNetcashvaluationforXpengFY23EcorerevenueexcludingViridisbatterypackSourceCompanydataBloombergCMBIGMestimatessalesandRDserviceswhichwouldresultinHK109bnfor100ZeekrsvaluationDespitelaggingautonomousdrivingtechnologiesZeekrsrecentsalesmomentumandpricepositioningarestrongerthanXpengThegrossmarginimprovementatZeekrcouldalsobekeyforvaluationnextyearWeprojectGeelysPHEVsalesvolumeinclLynkCotoreach02mnunitsinFY23EWithlessonslearntfromtheXingyueLandEmgrandLPHEVsweexpectGeelystwonewPHEVsin1H23tobemoresuccessfulValuationDespitetripledsalesvolumeforGeometryinFY22EcomparedwithFY21itsloss-makingandhighratioofride-hailingfleetsmakeusvalueittheleastamongGeelysNEVbusinessesWeestimateprofitabilityforGeelysotherbusinessesincludinginternal-combustionengineICEvehiclesLynkCoIPlicensingandRDservicestobestableinFY23EaidedbyalargerportionofmorepremiummodelsWevalueGeelysallotherbusinessesexcludingZeekrat15xprior10xourrevisedFY23PEamidhigherPHEVsalesvolumeforecastLinktolatestreportGeelyAutomobile175HKPHEVcouldbeapositivesurpriseinFY237SCNewEnergyTechnology300724CHAkeybeneficiaryofthetransformationofsolarcelltechnologyRatingBUYTPRMB18757upsideAnalystsWayneFungKatherineNgInvestmentThesisSCisaleadingsolarpowerequipmentsupplierwithaFinancialsandValuationswell-diversifiedproductportfoliocoveringequipmentwithnewtechnologiesYE31DecFY21AFY22EFY23EFY24EsuchasTOPConHJTandPerovskitesolarcell钙钛矿BackedbytheRevenueRMBmn5047581375529812strongphotovoltaicsPVinstallationdemandworldwideaswellastheYoYgrowth25153030transformationfromPERCtechnologySCwillcontinuetocapturetheNetincomeRMBmn717104212511643capexup-cycleEPSRMB214299359472YoYgrowth31402031OurViewSCwonmeaningfulsizeofPE-polyrouteTOPConturnkeyConsensusEPSRMBNA291383488PEx541387323246contractsinoverseasin2022whichindicatesthatsuchtechnologyhasPBx65564841alreadygainedclientrecognitionKeyadvantagesofPE-PolyrouteincludeYield02030304bettersolarcellefficiencyhigherproductionefficiencyandyieldwhichcanROE155156161181helpachievemassscaleproductionofTOPConsolarcellBesidesweNetgearingNetcashNetcashNetcashNetcashbelieveSCsearly-moveradvantageindevelopingHJTandPerovskiteSourceCompanydataBloombergCMBIGMestimatessolarcellwillenableittoenjoytheuptrendinequipmentdemandregardlessofanypotentialchangeintechnologyFigPlannedTOPConcapacityinChinacumulativeWhydowediffervsconsensusWhileour2022E23E24EEPSestimatesare3-6-3versusconsensusweseepotentialearningsGW300upsidegiventhefaster-than-expectedtechnological-drivenequipment267replacement250Catalysts1IndustryAnnouncementofmoresolarcellcapacity200177expansionplans2CompanyBreakthroughinHJTPerovskitesolarcell150technology10065ValuationOurTPofRMB187isbasedon52xPE1SDabovethe50historicalaverageof36xtoreflectthebreakthroughsinthenew100equipment20212022E2023E2024ETOPConcumulativecapacityLinktolatestreportSourceCMBIGMestimatesSCNewEnergyTechnology300724CH3Q22netprofit12xYoYAcleanbeat8ZoomlionHeavyIndustry1157HKSpin-offofAWPunittounlockvalueRatingBUYTPHK52413upsideAnalystsWayneFungKatherineNgInvestmentThesisZoomlionisleadingconstructionmachineryFinancialsandValuationsmanufacturerinChinaTheCompanyhasidentifiedconstructionYE31DecFY21AFY22EFY23EFY24EmachineryagriculturalmachineryintelligentagricultureandmaterialsasRevenueRMBmn67132404194397047885thekeybusinesslinesThediversificationstrategyonbothproductlevelYoYgrowth313988889AWPexcavatorandindustrylevelmaterialswillhelpsmooththeNetincomeRMBmn6303282435984118revenuestreamEPSRMB076033041047YoYgrowth217571274145OurViewZoomlionissettobenefitfromthecontinuousgrowthofConsensusEPSRMBNA034042051infrastructurespendingandthereductionofpropertysectorriskWeviewEVEBIDTAx42876760PEx471199482Zoomlionasastrongrecoveryplayin2023EfollowingtheearningsdeclinePBx05060606in20212022Besideswebelievetheupcomingspin-offofZoomlionYield91374754AerialMachinerythroughassetinjectionintoShenzhenRoadRoverTechROE122506470002813CHcanhelpZoomlionunlockthevalueoftheAWPbusinessNetgearingNetcash686950MeanwhileZoomlioneffectivelyimplementedthesharebuybackschemeSourceCompanydataBloombergCMBIGMestimatesInAug-Dec2022ZoomlionspentRMB155bntobuyback260mnA-shares3oftotalossharesaveragepriceRMB599shareWenotethatZoomlionhasagoodtrackrecordonsharebuybackinthepastFigZoomlionsrevenuebreakdownRMBmnEnvironmentalindustryWhydowediffervsconsensusOur2022E23E24Eearningsforecast80000discontinuedFinancialservicesis417belowconsensusThatsaidwebelievemarketwillputthe70000andothersfocusonthetrendofearningsrecoveryin2023E60000Agriculturalmachinery50000Catalysts1StabilizationofpropertysectorvetotowercraneOthers40000concretemachinerydemand2Spin-offofAWPunit30000Excavator20000ValuationOurTPofHK524isbasedon115x2023EPE05SDCranemachineryabovetheaverageof10xsincetheupcyclestarting2019Ourabove-10000Concretemachineryaveragetargetvaluationistoreflecttheearningsrecoveryforthefirsttime0intwoyearsStockistradingat10x2023EPEthelowestamongpeersLinktolatestreportSourceCompanydataCMBIGMestimatesZoomlionHeavyIndustry1157HKSpin-offofAWPbusinesstounlock9valueYancoalAustralia3668HKSharepricepullbackoffersbuyingopportunityRatingBUYTPHK5373upsideAnalystWayneFungInvestmentThesisWeexpectaresilientdemandforseabornecoalasFinancialsandValuationsmanycountrieshaveputenergysecuritytopoftheprioritywhilethecoalYE31DecFY21AFY22EFY23EFY24EsupplyhasremainedtightduetominerscapexdisciplineThestrongcoalRevenueAmn540311293103119501pricehelpedYancoalAustraliaYALthelargestpurecoalproducerinYoYgrowth55610908779Australiaturnthenetgearingdramaticallyfrom69in2020toanetcashNetincomeAmn791453838003245positioninJul2022whichpavedthewayforgenerousdividendEPSA060344288246YoYgrowthNA4757163146distributiongoingforwardConsensusEPSANANANANAEVEBITDAx35101213OurViewSharepriceofAustraliancoalminerscameunderpressurelastPEx86172124weekastheNewcastlecoalprice6000kCalhasdeclined30sincePBx11090807lateJanduetothewarmer-than-expectedwinterinEuropeandAdanisYield95207168143coalsellingatdiscountpriceThatsaidwebelievethisoffersgoodbuyingROE139612385289opportunityonYancoalWeunderstandthattherecentAPI5coalpriceNetgearing316NetcashNetcashNetcashYancoalsmajorbenchmarkremainedresilientatUS125-130tversusSourceCompanydataBloombergCMBIGMestimatestheaverageofUS141tin4Q22Goingforwardweexpectthere-openingNote1ThermalcoalpriceassumptionsA300250pertonneinofChinawillcontinuetolendsupporttotheregionalcoalpriceinFY23E24ENote2Dividendyieldisnetofdividendtaxof30particularafterCNYBesidesweexpecttheimprovedrelationsbetweenChinaandAustraliaresumptionoftheimportofAustraliancoalrecentlyFigNPVsensitivitytoLTcoalpriceandWACCwillhelpAustraliancoalminerstogainsharefromtheRussianminersWACCLTcoalthermalcoalpriceAt5380100120140160392238536883WhydowediffervsconsensusThereisonlylimitednumberofanalysts492640536680coveringthestockWebelievethemarkethasyettorealizethepotentialof592941536577theCompany693142526374793342526171NoteAssumingLTthermalcoalpriceA120tCatalysts1Recoveryofcoalproductionasaresultofimprovedweather2ReopeningofChinatotriggeranincreaseinregionalpriceWACCLTmetallurgicalcoalpriceAt53120140160180200394750535658ValuationThestockisattractivelytradingat21yield2022Eand2x4948505355582023EPEReiterateBUYwithNPV-basedTPofHK53594851535557694850525456LinktolatestreportYancoalAustralia3668HKThermalASPin4Q794850525455NoteAssumingLTmetallurgicalcoalpriceA160tcontinuedtobeatbenchmarkSourceCMBIGMestimates10CRGas1193HKOct-Nov2022dollarmargininlineoptimisticgassalesoutlookfor2023RatingBUYTPHK391316upsideAnalystsMeganXiaJackBaiInvestmentThesisCRGisnowtradingat12xFY23PEitsstockpriceFinancialsandValuationshasbeenuparound40sinceweissuedlastreporttotheresumeYE31DecFY21AFY22EFY23EFY24EcoverageWearestilloptimisticaboutCRGconsidering1theRevenueHKmn78175102507110986121343optimizationofpandemiccontrolmeasuresin2023isexpectedtoboostNetprofitHKmn63951682817524785621domesticgasdemandReflectingthissituationCRGsgassalevolEPSReportedHK282301332377growthanddollarmarginmanagementmayimproveafterwards2DilutedEPSHK282301332377sustainedMAprovidesgreatsupportforthestabledevelopmentofConsensusEPSHKNA277303339CRGsgasconnectionbusiness3stickto12NstrategytherobustPEx87886078277growthmomentumofCRGsvalue-addedservicescontinuesand4PBx1481341211superiorfinancialresilienceMaintainBUYROE127119117119OurViewTwopositivefactorsbolsterthegasdistributorssectorintheSourceCompanydataBloombergCMBIGMestimatespastfewmonthsFirstChinaimprovesitspandemiccontrolmeasuresbringinggoodsignalstodomesticeconomicgrowthandgasdemandFigCRGsgassalesvolumemix2020-24ESecondrecentpositivestimuluspolicyonpropertyindustrymaybenefitthegasconnectionbusinessForCRGgiventheattractivevaluationandimproveddollarmarginpreviouslyitsstockpricehasreboundedsignificantlyNextweareoptimisticaboutCRGconsidering1itsbetter-than-peersstablegasconnection2Q3dollarmarginimprovedtooverRMB055cbmanddollarmargininOct2022andNov2022wereinlineRMB047cbmandRMB048cbmand3robustcomprehensiveservicegrowthWebelieveCRGsstockpricestillhasgrowthspacebutneedtobecautiousasthevaluationstartstolookabitrichValuationConsideringoptimisticgassalesoutlookfor2023inlineOct-Nov2022dollarmarginandsteadygasconnectionbusinessandcomprehensiveservicesgrowthWemaintainourTPunchangedatHK3913andgiveBUYratingwhichisbasedon12xFY23forwardPESourceCompanydataCMBIGMequivalenttoaround-1SDfromitstwo-yearhistoricalaveragePERisk22Q4gassalesgrowthmaymissduetodomesticweakeconomicdataduringthespreadoftheepidemicValuationlooksabitrichasadefinitivere-openingispartlypricedinLinktolatestreportCRGas1193HKEyeson4Qgasdollarmargin11andsolidcomprehensiveservicegrowthCDC341HKLightattheendofthetunnelRatingBUYTPHK151214upsideAnalystWalterWooInvestmentThesisCDCisthelargestquickservicerestaurantgroupinFinancialsandValuationsHKItowns364136restaurantsinHKChinaandgeneratedHKD75bnYE31MarFY22AFY23EFY24EFY25EsalesandHKD21mnnetprofitinFY322InourviewHKretailislikelytoSalesRMBmn75088812599019897972bottomoutthankstothere-openingofHK-ChinaborderandtheYoYchange1188211086resumptionofsocialactivitiesandCDCisamajorbeneficiaryWealsoAdjNetprofitRMBmn212231639874851believeCDCssalesandnetprofitcouldrecoverfasterthantheindustryEPS-FullydilutedRMB004040069084becauseof1industryconsolidation2upgradesinproductsandYoYchange9419917722217branding3morecontractswonwithschoolshospitalandotherpublicprivateinstitutionsand4quickrecoveryinthesouthernChinaregionConsensusEPSRMBNA038066084PEx3687338196161OurViewWebelievetheworstshouldbegoneforCDCanditsSSSGPSx27272423shouldturnpositiveto14in2H323Ethanksto1lowbaseinJan-Yield21213543Mar20222re-openingofHK-Chinaborder3removalofallsocialROE0780130146distancingmeasuresbenefititsinstitutionalcateringandfast-casualNetdebtequityNetcashNetcashNetcashNetcashdiningevenmoreand4morenewproductlaunchesmoreplant-basedSourceCompanydataBloombergCMBIGMestimatesSKUsandsuccessfulsocialmediamarketingcampaignWealsobelievethemargintocontinuetoclimbdrivenby1ASPhike2easeinrentalFigSalesandnetprofitpressureand3operatingleverageMoreoverthereareotherpositiveslike1accelerationinstoreexpansionand2turnaroundinmainland12000HKmnChina979710000902084278494812679637509WhydowediffervsconsensusForFY22E23E24Eoursales80006714forecastsare230higherthanconsensusandournetprofit6000forecastsare640abovestreetaswearemoreconfidentonitsSSSGandOPmarginexpansion40002000570Catalysts1betterthanexpectedproductlaunches2fasterthan4587435921232399485expectedstoreopeningsand3furtherimprovementinstoreeconomics0ValuationWederivedour12mTPofHK1512basedona22xFY324EPEWebelieveitthepositivesfromHK-Chinaborderre-openingwerenotfullypricedinThestockistradingat20xFY324EPESalesNetprofitattLinktolatestreportCDC341HKLightattheendofthetunnelSourceCompanydataCMBIGMestimates12YumChina9987HKRobustrecoveryandstoreexpansionaheadRatingBUYTPHK5546115AnalystWalterWooInvestmentThesisYUMCisthelargestrestaurantgroupinChinabyFinancialsandValuationssalesItowns11788storesinFY218168KFC2590PizzaHut1030YE31DecFY22AFY23EFY24EFY25EotherbrandsandgeneratedUSD98bnsalesandUSD990mnnetprofitSalesRMBmn9569110721241413938inFY21InourviewitisevenbenefitingfrompandemicthrumarketYoYchange29157121123sharesgainsandstructuralmarginimprovementsdrivenby1innovativeAdjnetprofitRMBmn44288110871363andsuccessfulproductlaunches2moreautomationsandefficientuseofEPS-fullydilutedRMB104217268336labour3smaller-sizedstoresand4lessdepreciationduetolowercapexYoYchange5441086234254ConsensusEPSRMBNA191236306OurViewAsoft4Q22waswellexpectedandwearepositiveonFY23EPEx595285231184outlookandturnaroundthanksto1decentstartinCNYMSDSSSGPSx353229256hadbybetterthanTaiErCouCouHDLs30-102refinedstoreYield08111316economicscanachievebreakevenevenwithjust80ofthesamestoreROE59117132148salesin2019level2decentroomforupwardrevisionontheopeningNetdebtequityNetcashNetcashNetcashNetcashplan1100-1300implying8to10YoYgrowthnoaccelerationfromSourceCompanydataBloombergCMBIGMestimatesthe10lastyearbutmanypeershavealreadyannouncedacceleratedexpansionplansMoreovergreaterbuyingpowerfrom1thestockFigSalesandnetprofitgrowthconnectprogrammeasithadcompeteditsprimarylistinginHKEXand2120potentialinclusionintothestockindicesareallmeaningfulsupports7680WhydowediffervsconsensusForFY23E24E25Eoursales4231forecastsare347belowconsensusandournetprofitforecasts2630406191031713are6614abovestreetaswearemoreconfidentonitsoperational4161competitivenessandOPmarginexpansion0-6Catalysts1betterthanexpectedproductlaunches2further-40-17improvementinstoreeconomicsand3morepolicyrelaxations-50-80ValuationOurnewTPisbasedon33xFY23EPEupfrom30xclosetoFY19AFY20AFY21AFY22EFY23EFY24E2sdabovethe5yearsaverageof27xgiventheupcycleand32NPSalesgrowthAdjOPgrowthNPattgrowthCAGRduringFY22-25EThestockistradingat29xFY23EPESourceCompanydataCMBIGMestimatesLinktolatestreportYumChina9987HKRobustrecoveryandstoreexpansionahead13JNBY3306HKDividendplaywithlong-termgrowthpotentialRatingBUYTPHK126716upsideAnalystWalterWooInvestmentThesisJNBYisaleadingdesignerbrandinChinaowningFinancialsandValuationsbrandslikeJNBYCROQUISlessandjnbybyJNBYetcWebelieveitsYE30JunFY22AFY23EFY24EFY25EFY25EtargetofRMB60bnRMB900mnisrobust1417salesNPSalesRMBmn4086456150215368CAGRandachievableenoughweonlypricedin90ofitGrowthYoYchange1011610169driversinclude1industryconsolidation2upgradesinproductsandAdjNetprofitRMBmn559585709810branding3storerevamps4rampupofitsdigitalrelatedande-EPS-FullydilutedRMB1113115514001600commercesales5storeexpansionand6developmentofnewbrandsYoYchange13638212143ConsensusEPSRMBNA121014031641OurViewApparelsectorwasweakduringNov-Dec2022butJNBYPEx87847061shouldoutperformduetoitslowbaseinOct-Dec2021affectbychildrenPSx29272523clothingincidenthencewethinkFY623Etargetlow-teensalesgrowthYield8996116132andMSDnetprofitgrowthisrelativelysafeAndwearemoreoptimisticROE325327364379onFY624Ebecauseof1excellentrecoveryinJan2023andCNYNetdebtequityNetcashNetcashNetcashNetcash15growthboostedbyimproveddemandforclothingafterre-openingSourceCompanydataBloombergCMBIGMestimatesandcoldweather2lowbasesduetopandemic3storeproductivityimprovements60ofstoreswererevampedinthepastfewyears4FigSalesandnetprofitgrowthhalf-yearlystep-uponitsmarketingactivitiesegselectionofactressZhouXunand15088supermodelXiaoWenJuasbrandambassadorsforJNBYandLess23501881058310WhydowediffervsconsensusForFY23E24E25Eoursales-50-4forecastsare038lowerthanconsensusandournetprofit-28forecastsare102belowstreetaswearemoreconservativeonits-37-150SSSGbutmoreoptimisticonitsGPandOPmarginexpansion-180-250Catalysts1betterthanexpectedproductandbrandingupgradesand2fasterthanexpectedstoreexpansion-350-3212H201H212H211H222H221H23E2H23EValuationWederivedour12mTPofHK1267basedona10xFY623ESalesgrowthNPgrowthPEWebelieveJNBYcanre-ratemoreoncethegrowthacceleratefurtherin2023Thestockistradingat8xFY623EPEand9FY623EyieldSourceCompanydataCMBIGMestimatesLinktolatestreportJNBYDesign3306HKDividendplaywithlong-termgrowthpotential14CRBeer291HKAnotherpositiveyearfor2023ourpreferredpickforChinasre-openingRatingBUYTPHK77428upsideAnalystJosephWongInitial2023outlookManagementremainsconfidentin2023andguidesFinancialsandValuationsforaHSDgrowthinrevenuecontributedby1aLSDvolumegrowthYE31DecFY21AFY22EFY23EFY24Edrivenby20sub-premiumpremiumSKUsthatacceleratefrommid-RevenueRMBmn33387356173882542619teengrowthin20222aMSDtoHSDASPgrowththankstoregionalpriceYoYgrowth62679098hikeandproductmixupgradeMeanwhileinputcostpressureiseasingNetincomeRMBmn4587429950245736RMB500mnincreasevsRMB1bnin2022andshouldfuelGPMtoEPSRMB10131518expandfurtherfrom2022OpexratiowillcontinuetodeclineastheYoYgrowth210200169142companywillcontinuetooptimizeproductionstructureandfocusonConsensusEPSRMBNA131619premiumSKUsMoreexercisesoncapacityoptimizationinourviewisPExNA381326286reasonableandlookstobeongoingwithin2023PBxNA645750DivyieldNA101214Alackluster4Q22Subsequenttoastrong3Q4QvolumehasbeenROE141172185187unexcitingpartlyduetoslowseasonandlockdownsComparedtoa07NetgearingNetcashNetcashNetcashNetcashy-ydeclinein1HmanagementexpectsFYvolumetohoveratbreak-evenSourceCompanydataBloombergCMBIGMestimatesPremiumsub-premiumgrowthcontinuedtooutperformgroupaverageat10within2HandhenceFYthankstoHeinekenASP-wisemanagementexpectedaFYMSDincreasey-yandthiscameinconsistentFig1-yearforwardEVEBITDAtoourexpectationThegrowthshouldalsoleadtoastableGPMforthex1-yrfwdEVEBITDALTaverageperiodwhencosthikeshouldhavelargelybeenmitigatedinourview35-2SD-1SDSGAcontinuedtodeclinein2Hbutataslowerpacethanwhatwesaw1SD2SDin1Hduetoexpenseincurredforcapacityoptimization3025EarningschangeandvaluationToreflecttheaboveweraiseour202223Erevenueby3266GPMby0004ppandtheseleadtoa202681increaseinournetprofitsassumptionsrespectivelyOurnewTP15isbasedonanupdated260xfromprevious270xroll-forwardend-23EPEwhichstillrepresents1sdabovelong-termaveragesince201810Jul18JulJul19Jul20Jul21Jul22JulApr18AprOct18Oct19Apr19Oct20Apr20Oct21Apr21Oct22Apr22OctJan21JanJan19Jan20Jan22Jan23JanLinktolatestreportCRBeer291HKAnotherpositiveyearfor2023our18JanpreferredpickforChinasre-openingSourceCompanydataCMBIGMestimates15BudweiserAPAC1876HKArelieving3QChinaspricehikeandAPACEastoutperformanceremainkeygrowthdriversRatingBUYTPHK27216upsideAnalystJosephWong3QnormalizedEBITDAcameinaboveconsensusatUS593mup16FinancialsandValuationsYoYAPACEastperformanceespeciallywhichinSouthKoreacontinuedYE31DecFY21AFY22EFY23EFY24EtosurpriseunderamoreliberalsocialdistancingpolicyRevenueUSmn6788686575958111YoYgrowth2151110668SeptemberChinanightlifeopeningratiowentfurthertothesouthtoNetincomeUSmn9501047125113576095respectivelyfromc7595inJulyTherestrictionswereEPSUS007008009010mostlyconcentratedinBudAPACspremiumfootprintsespeciallyinYoYgrowth84710219585southeastFujianZhejiangandNorthBeijingTianjinandthentheConsensusEPSUSNA008010012northwestareaGoingforwardtheCompanycontinuestoexpectsporadicPExNA322278247butshorterlockdownswiththecurrentdynamiczeropolicyTomitigatethePBxNA292827impactmanagementdevelopeddigitalizedtrackingplatformthatenablesDivyieldNA121416quickcalculationofchannelimpactbycityandallocatesinventoryinaROE8792103104dynamicwayNetgearingNetcashNetcashNetcashNetcashBudAPACannouncedapricehikeeffectivefrom1NovforitspremiumSourceCompanydataBloombergCMBIGMestimatesandsuperpremiumSKUinChinaThemagnitudeaccordingtotheFig1-yearforwardEVEBITDAmanagementwillbenchmarktothecountrysCPIonanaveragelevelWhilethisislikelythefirstpricehikeannouncedfor4QweexpectotherbrandstofollowsuitinthenextfewmonthsgivenslowsalesseasonduringwintertimehasbeenagoodwindowfordistributortoabsorbtheimpactStrongpotentialinIndiawithitsdemographicadvantageTheoptimizationprogresshasbeensatisfactoryandmanagementlooksbeyondDDgrowthbutdoublingofthetotalsizeofthemarketsizeforitsbrandForinstanceCoronaisnowavailableinover15statesinIndiaValuationUponchangesinhousekeepingitemsourrevisedTPofHK272fromHK280isstillbasedon200xend-23EEVEBITDAwhichrepresents3-yearaverageLinktolatestreportBudweiserAPAC1876HKArelieving3QChinasSourceCompanydataCMBIGMestimatespricehikeandAPACEastoutperformanceremainkeygrowthdrivers16KweichowMoutai600519CHProxyofChinasconsumption-ledrecoverybuyingintoanyweaknessforthenextrecoverywaveRatingBUYTPRMB244032upsideAnalystJosephWongAstheproxyofChinaconsumptionwethinkMoutaiisundoubtedlywell-FinancialsandValuationspositionedtobenefitfromthecurrentconsumption-drivenrecoveryThisYE31DecFY21AFY22EFY23EFY24EwillnotonlybeunderpinnedbyreopeningofrestaurantsandresumptionofRevenueRMBmn109464127215149786172710socialeventsbutalsocompanyspecificcatalystsTheseinclude1YoYgrowth117162177153platformextensionthroughi-Moutaiwiththelaunchof100mlFlyingFairyNetincomeRMBmn52460625937457986626akaFeitianSKUregisteringRMB15bn2022revenue16oftotalEPSRMB418498594690with30mnactiveusersand2amorediversifiedsalesmixfromSeriesYoYgrowth123193191162baijiuwithcoreproductssuchasMoutai1935MoutaiPrinceClassics茅ConsensusEPSRMBNA500620700台王子酒酱香经典MoutaiPrinceGold茅台金王子etcMeanwhilewePExNA370311267arewaryofthecapacitybottleneckofbothMoutaiSeriesbaijiuwhichhasPBxNA1039982beenaknowndragtogrowthThatsaidwithoutalegitsubstituteweviewDivYieldNA271619thisanongoingopportunityforMoutaitomonetizethisexcessdemandROE277279319307throughgradualpricehikeuntiltheannouncedcapacityexpansionNetgearingNetcashNetcashNetcashNetcashMoutaiSeriesbaijiuto71k56ktoncompletesCompoundingwithourSourceCompanydataBloombergCMBIGMestimatesreopeningthesisthishappeningexpansionimprovisesamulti-yeargrowthstoryinbothpriceandvolumeinwhichweproject16173-yearFig1-yearforwardPErevenuenetprofitsCARGbetween2022-25ErespectivelywithasteadilyimprovingGPMWearebuy-ratedwitharefreshedTPatRMB2440uponx1-yrfwdPELTaverage-2SDcoveragetransferWethinksharescouldtakeabreatherafterthebull-run80-1SD1SD2SDbutwewouldrecommendbuyingintoanyweaknessforthenextrecovery70waveinwhichgrowthlikelytore-acceleratefrom2Qonwards60ValuationOurTPisbasedon410xend-23EPEwhichrepresentslong-50termaveragesince2019Ourmethodologyreflectsourrelativeoptimism40vis-a-visotherFBdiversifiedofwhichtargetmultiplesarebasedon-1sd30belowlongtermaveragethatMoutaiisoneofthecorebeneficiaries20standingattheforefrontofChinasreopeningwithhighcertaintyin10earningssupportJul18Jul19Jul20Jul21Jul22JulOct19Oct20Apr22AprApr18Apr18Oct19Apr20Oct21Apr21Oct22OctJan22JanJan18Jan19Jan20Jan21Jan23JanLinktolatestreportKweichowMoutai600519CHProxyofChinasconsumption-ledrecoverybuyingintoanyweaknessforthenextrecoverySourceCompanydataCMBIGMestimateswave17CTGDF601888CHAttheforefrontofChinasreopeningRatingBUYTPRMB25525upsideAnalystJosephWongTravelbansandanysocialdistancingmeasuresarelikelytoweighon4QFinancialsandValuationsdomestictravelmomentumThatsaidwhenthefatalityrateassociatedwiththeYE31DecFY21AFY22EFY23EFY24EpandemicgraduallydiesdownandpolicyrhetoricisturningmoreliberalweseeRevenueRMBmn676765708073409101991scopefordomestictraveltostartnormalizinginto1Q23particularlywhentheYoYgrowth287157286389quarterisclusteredwiththeCNYbreakthatcatalyzefamilytouristingCTGDFisNetincomeRMBmn96546830997613224thelargestdomesticduty-freeoperatorwithc80marketsharein2022andisEPSUS49355168thereforepoisedtobethemajorbeneficiaryofthisrecoverytrajectoryThestockisYoYgrowth572293447325tradingat400xend-23EPEstill25belowits3-yearaverageWearguesharesConsensusEPSRMBNA497393mean-reversionislikelytotakeplacewithin2023EnottomentionfurthervaluetoPExNA586401303beunlockedthroughitssecondaryHsharelistingonanexpandedshareholderPBxNA1179880baseWemaintainourBuyratingandCTGDFisourtoppickforChinasreopeningDivyieldNA050811alongwithCRB291HKBuyandProya603605CHBuyROE326200243264Netgearing328495520538TheopeningoftheHaikouDFSmallonOct28Withatotalof280ksqmthemallSourceCompanydataBloombergCMBIGMestimatescovers800globalluxurybrandsand25ofthemincludingYSLPradaBurberryBVMoncleretchadtheirfirstfootstepinHainanOntheotherhandaccordingtoFig1-yearforwardPEoursurveycustomercouldenjoy20forevery2cosmeticitemspurchasedForotherpopularbrandslikeShisedoLaMerDiordiscountrangesfrom28-32offx1-yrfwdPELTaverage-2SDMSRP95-1SD1SD2SDEarningschangeBarringanyfine-tuneinhousekeepingitemsourforecastsarelargelyunchangedfornowOurcurrentforecastimplies4Q22Erevenuenet75profitstobeRMB177bn22bnwitha37GPM55ValuationOurnewTPofRMB255isbasedonanupdated500xfrompreviously35450xend-23EPEwhichstillrepresentsitsaveragesinceJune2020whenmarketstartedtore-ratethestockforaseriesofpolicytailwindWebelieveour15methodologyhasappropriatelypriced-intherecentmarketsentimentaboutChinasgradualreopeningprogressJun20Jun21Jun22Oct20OctOct21Oct22OctApr21AprApr22Feb21Feb22FebDec20Dec21Dec22DecAug22AugAug20Aug21AugLinktolatestreportCTGDF601888CHAttheforefrontofChinasreopeningSourceCompanydataCMBIGMestimates18Proya603605CH3Qasmallbeatbuttheimplied4QnumberslookunexcitinggiventhecurrentguidanceRatingBUYTPRMB1843upsideAnalystJosephWongProyapre-announcedits3QoperatingdatawithrevenueandnetprofitsFinancialsandValuationsgrowingat14-2330-45YoYtoRMB125bntoRMB135bnYE31DecFY21AFY22EFY23EFY24ERMB180mntoRMB200mnrespectivelyThetrajectorywasinlinewithourRevenueRMBmn4633581273379181expectationthat3Qsalesmoderatefrom1HwhenpartofJulysdemandYoYgrowth235254262251hasbeenpulledforwardto618andmomentumforAugandSepshouldNetincomeRMBmn6277249761249havenormalisedtopositivegrowthOntheotherhandnetprofitswasaEPSUS29364962beatWithoutmuchdetailandexcludinganynon-coreitemsweestimateYoYgrowth212256348280thiswouldlikelybecontributedbybettermarginsasaresultofbothmixConsensusEPSRMBNA263544upgradeandmarketingcostsavingsPExNA424315233PBxNA907461If3Q22resultseventuallykick-inatthehighendoftheannouncement4QDivyield05070912revenueandnetprofitwouldgrowat14and7respectivelyROE218214240253assumingmanagementmaintainsitsfullyearguidancedetailsseebelowNetgearingNetcashNetcashNetcashNetcashWeconsiderthisabitlowandweseepossibilitiesthatProyacouldSourceCompanydataBloombergCMBIGMestimatesachievehighergrowthdependingonthesalesmomentumofDouble11Fig1-yearforwardPEProyahasannounced6heroproductsduringatoptierKOLlive-streamingfortheupcomingDouble11Ofnotethevolumeofgiftswascomparablex1-yrfwdPELTaveragetothatoflastyearandwethinkthemagnitudeofdiscountsisunlikelyto-2SD-1SDbeundisciplined701SD2SD60Duringthe2QearningscallProyamanagementmaintaineditsfull-year50guidanceof25revenuenetprofitsgrowthConsideringa30-40online40salesgrowthfor2022Ethetargetimpliesofflinesalesgrowthwouldremainnegativethroughout2HSeparatelyProyamanagementhas30initiatedanewESOPplaninJulythisyearwithvestingconditionstipulated20tobenolessthan252322revenuenetprofitgrowthYoYfor2022-1024ETo-datemanagementremainsconfidenttoachievethetarget132019732020132022432018732018432019732019132020432020132021432021732021432022732022LinktolatestreportProya603605CH3Qasmallbeatbuttheimplied13201810320181032019103202010320214QlooksunexcitinggiventhecurrentmanagementguidanceSourceCompanydataCMBIGMestimates19InnoventBiologics1801HKFastexpandingcommercialproductportfolioRatingBUYTPHK525922upsideAnalystsJillWuAndyWangInvestmentThesisInnoventcurrentlyhaseightcommercialproductsandFinancialsandValuationsiscontinuingtoexpanditsproductportfolioAdditionallargeindicationsofsintilimab1LGCand1LESCCwasaddedtotheNRDLatnopricecutYE31DecFY22EFY23EFY24Ewhichwasamajorcatalystforthedrugsfuturesalesramp-upAdditionallyRevenueRMBmn488460018577weexpectthesNDAofsintilimab2LEGFRmnsq-NSCLCtobeapprovedYoYgrowth142343in1H23ECyramzaVEGFR2wasofficiallylaunchedin4Q22for2LGCNetlossRMBmn20701816663and2LHCCInJun2022NDAsofIBI326BCMACARTandIBI306PCSK9wasacceptedbyCDEwhichareexpectedtobeapprovedinEPSRMB1351190431H23EInJan2023IBI376PI3KwasfiledformarketingaswellIBI-ConsensusEPSRMB171103039362GLP-1GCGRanotherpotentialblockbusterhasstartedPh3studiesRDexpensesRMBmn250023002144forobesityanddiabetesinNov2022WithinthenextfiveyearsInnoventCapexRMBmn300300300targetstolaunchover15productsinChinawhichwillsupportitsRMB20bnannualproductrevenuetargetSourceCompanydataBloombergCMBIGMestimatesOurViewInnoventhascompetitiveearly-stagepipelineswithglobalrightsIBI-110LAG3continuestodemonstratepositivesignalsin1Lsq-NSCLCFigRevenuetrendand1LGCpatientsinPh1bstudiesIBI-939adifferentiatedIgG4mAbtargetingTIGITvsIgG1mAbforotherTIGITcandidateshasshownpromisingbenefitsinORRandPFSincombinationwithsintilimabinarandomizedPh1bstudyinPD-L1TPS50NSCLCAdditionallyIBI-322CD47PD-L1isexpectedtohavePoCdatainlymphomainearly2023WhydowediffervsconsensusEliLillyreportedUS575mn-25QoQsalesfromsintilimabin4Q22whichwaslargelyimpactedbytheCOVIDsituationinChinasimilartotheimpactofCOVIDtootherChinesebiopharmacompaniesWithCOVIDbeingstabilizedduetotheNRDLcoverageextensionandfavorableNRDLpricenegotiationweexpectsalesofsintilimabtoramp-upquicklyin2023ValuationwederiveourtargetpriceofHK5259basedonDCFvaluationWACC99terminalgrowthrate30LinktolatestreportInnoventBiologics1801HKFastexpandingcommercialproductportfolioSourceCompanydataCMBIGMestimates20