研究报告全文：FixedIncomeCreditCommentary19Sep2023CMBICreditCommentaryChinaTMTMaintainbuyXIAOMI30-31sXIAOMI027CBMEITUA027CBinitiatebuyonWB33830ExecutiveSummaryCyrenaNgCPA吳蒨瑩85239000801CreditstoriesremainsoundChineseTMTissuersaregenerallycash-richcyrenangcmbicomhkwithsolidliquidityprofilesMostofthemareinnetcashpositionsandhavestrongcoverageratiosattheirratinglevelsSeeTable6onp7JerryWang王世超85237618919Shorter-datedXIAOMIsremainourtoppicksWelikeXiaomiforitssolidjerrywangcmbicomhkcreditstoryThesizeablenetcashpositionandoperatingcashinflowoffsettheimpactofhigherRDexpensesespeciallythoseonEVXIAOMI338GlennKoCFA高志和042930Baa2BBB-BBBandXIAOMI278071431Baa2BBB-BBB85236576235offer121bpsyieldpick-upoverJD33830Baa1A--and12bpsoverglennkocmbicomhkMEITUA30530Baa3BBB-BBB-AdditionallyXIAOMI0121727CBBaa2--puttableinDec25withaYTPof71isagoodshort-datedplaywithintheXIAOMIcurveWeprefershorter-datedXIAOMIsaswellasotherChineseTMTpapersbecauseofourviewofhigherforlongerUSTPreferCBswithintheMEITUAcurveAt888MEITUA0042727CBBaa3--puton27Apr25offersaYTPof78andayieldpick-upofc159bpsoverMEITUA2125102825ThecashpriceoftheCBisc3ptslowerandthetenoriseffectively6monthsshorterWealsolikeMEITUA0042728CBBaa3--puton27Apr26whichofferslargelythesameYTPbut6ptslowerincashpriceandayearlongerintenorTheCBredemptionsshouldbecomfortablymanagedwithMeituanssizeablenetcashpositionInitiateBuyrecommendationonWB33830At786WB338070830Baa2BBB-istradingataYTMof7458bpspick-upoverMEITUA30530whichisrated1notchlowerThecurrentvaluationofWB33830hasmorethanpricedintheconcernsonMoodysnegativeoutlookinourviewWeareneutralonWB3070524inviewofbetteralternativesforshort-datedplayswithhigheryieldandlowercashpricesTurnedneutralonPDD025CBPDD0120125puttableat100on1Dec23hasmoved3ptshighersinceourrecommendationinMay23At984theCBistradingataYTPof81with25monthstotheputdateWhilewestilllikethecreditstoryofPDDweturnneutraltotheCBasthenear-termupsidefortheCBappearstobelimitedunlessCBholdersareveryconfidentonitsnear-termequitystoryThestockpriceofPDDwas446highersinceMay23andtheUStariffissuewhichinourviewwillbeanoverhangofitsequitystoryinthenear-termCMBIFixedIncomefiscmbicomhkPLEASEREADTHEAUTHORCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE19Sep2023Table1SummaryofourpicksBondAskPxAskYTMYTPOutstandingUSDmnMaturityputdateModifieddurationMEITUA004272788878148004272515MEITUA004272882979150004272625WB3380708307867475007083058XIAOMI01217278557185512172522XIAOMI3380429308127060004293056XIAOMI2780714317567080007143167SourceBloombergChart1YTMYTPofourpicks9MEITUA00427288MEITUA0042727WB338070830XIAOMI0121727XIAOMI2780714317XIAOMI338042930MEITUA305102830YTMYTPYTMYTP6MEITUA218102825JD3380114305012345678ModifieddurationSourceBloombergBuyXIAOMICBand30-31sforsolidliquidityprofileWelikeXiaomissolidcreditstoryandliquidityprofilewithalargecashpositionAsatJun23XiaomihasRMB893bnunrestrictedcashandshort-terminvestmentcomparedwithtotaldebtsofRMB229bnIthasbeeninnetcashpositionoverthepast5yearsWebelieveitwillbeabletorepaythebondintheabsenceofrefinancingAmongXIAOMIswemaintainbuyXIAOMI338042930Baa2BBB-BBBandXIAOMI278071431Baa2BBB-BBBoffer121bpsyieldpick-upoverJD33830Baa1A--and12bpsoverMEITUA30530Baa3BBB-BBB-XIAOMI33830istradingat812whileXIAOMI27831istradingat756bothwithYTMof70WealsolikeXIAOMI0121727CBBaa2--puttableat10525on17Dec25awithYTPof71isagoodshort-datedplaywithintheXIAOMIcurveWeprefershorter-datedXIAOMIsaswellasotherChineseTMTpapersbecauseofourviewofhigherforlongerUST219Sep2023Profitmarginsimprovementin1H23Theglobalsmartphonedemandremainssoftin1H23Xiaomiglobalsmartphoneshipmentsamountedto633mnunits184dropfrom776mnunitsin1H22StillitmaintainstheNo3globalsmartphoneshipmentrankingwithamarketsharebyshipmentunitsof129in2Q23In1H23Xiaomirecorded116decreaseinrevenuetoRMB1268bnmainlyduetodecreaseinsmartphoneshipmentspartlyoffsetbyincreaseinaveragesellingpriceASPofsmartphoneTheASPofsmartphoneisestimatedatRMB1152-1189perunitfor1H23increasedfromRMB1135perunitin1H22Itsgrossprofitmarginincreasedto203in1H23from171in1H22Weexpectthemarginimprovementtrendtocontinuein2H23withitssmartphonepremiumizationstrategyAtthesametimeitfurtheroptimizedinventorymanagementandtotalinventorydown335yoytoRMB385bnthelowestlevelinthepast10quartersBothofthesestrategiesshouldincreasetheoperatingcashinflowforFY23EBITDAwasuptoRMB82bnaccordingtoourestimaterepresenting383yoyincreasefrom1H22ThiswasdrivenbydecreaseinsellingandmarketingexpensesparticularlyintheoverseasmarketAsatJun23ithadanetcashpositiondebtminusunrestrictedcashSTdepositsandinvestmentsofRMB664bnincreasedfromRMB441bnasatDec22TotaldebtamountedtoRMB229bnXiaomialsomaintainedanetcashpositionaveragedRMB511bnoverthepastfiveyearsAftergettingapprovalfromtheNDRCtomanufacturesmartelectricvehicleEVinAug23itwillstillneedapprovalfromMinistryofIndustryandInformationbeforeproceedingtomassproductionwhichXiaomitargetstoconductin1H24ItbudgetedEVrelatedRDinvestmentatUSD10bnRMB728bnover10years2021-31In2022itspentRMB3bninEVRDwhileitplannedtospendRMB75-8bnin2023XiaomistotalRDbudgetfor2022-26wasbudgetedatRMB100bninwhichRMB17bnandRMB20bnwerespentin2022and2023respectivelyThatmeanstheincrementalRDexpensesonEVwillbecRMB5bnfromthelevelofFY22WeexpectXiaomitofunditscapexonEVwithitscashSTdepositsSTinvestmentsandoperatingcashinflowwhilemaintainingnetcashpositionTable2XiaomisfinancialsRMBmn1H221H23ChangeRevenue143522126832-116Grossprofit244782575352EBITDA59258193383Profitbeforetax1321104266893Grossprofitmargin171203EBITDAmargin4165Dec22Jun23UnrestrictedCashandshort-terminvestment6777789270317STdebts21511122-478LTdebts214932176413Netcash4413366384504Gearingratio164148CashSTdebts128x280xNoteNetcashiscalculatedastotaldebtsminusunrestrictedcashandshort-terminvestmentSourceCompanyfillings319Sep2023PreferMEITUA027andMEITUA028CBwithinMEITUAcurveWelikeMEITUA0042727CBBaa3--withintheMEITUAcurveTheCBputtableat10037on27Apr25istradingat888withaYTPof78ComparedwithMEITUA2125102825theCBofferayieldpickupof159bpsandthetenoriseffectively6monthsshorterTheCBistradingat888c3ptslowerthanthecashpriceofMEITUA212525of921WealsolikeMEITUA0042708CBBaa3--puttableon27Apr26whichofferslargelythesameYTPbut6ptslowerincashpriceandayearlongerintenorWithunrestrictedcashandshort-termtreasuryinvestmentsofRMB1202bnasatJun23Meituanhassufficientliquiditytoredeemorrepayitsoffshorematuritiesoverthecoming2-3yearsStrong1H23resultsbenefitedfromconsumptionrecoveryWiththerecoveryinconsumptionposttheremovalofCOVIDrestrictionsMeituansrevenueincreased302yoytoRMB1266bnin1H23Itsgrossprofitmarginimprovedto357in1H23from271in1H22mainlyduetothelowerdeliverycostperorderwithabundantcouriersupplyProfitbeforetaxincreasedtoRMB81bnin1H23fromlossbeforetaxofRMB69bnin1H22ItsoperatingcashflowalsoturnedpositivetoRMB189bnin1H23fromanoutflowofRMB2bnin1H22MeituanisexpandingthemerchantbasepromotionaleventssuchasShenQuanJieandShenQiangShouallowedmerchantstoofferdishesthroughflashsaleslivestreamingandshort-formvideosTheseallhelptoboostthenumberoftransactionsItsInstashoppingalsogrewrobustlyin1H23especiallyinelectronicsandhomeappliancesdailynecessitiesbeautyandpersonalcareandmother-and-childproductsThecompanyguidedafastergrowthinInstashoppingin3Q-4Q23Weexpectthehotelandtravelbusinesstocontinuetogrowin2H23alongsidewiththereboundindomestictravelBesidesMeituanmaintainedanampleliquidityIthadunrestrictedcashandshort-terminvestmentsofRMB1202bnandanetcashpositiondebtsminusunrestrictedcashandshort-terminvestmentsofRMB612bnasatJun23Theseshouldbesufficienttocoveritsshort-termdebtsofRMB207bnandcapexOverthepast5yearsitsnetcashpositionaveragedRMB559bnTable3MeituansfinancialsRMBmn1H221H23ChangeRevenue97207126582302Grossprofit2631545215718EBITDA-205096735719Profitbeforetax-687980662173Grossprofitmargin271357EBITDAmargin-2176Dec22Jun23UnrestrictedCashandshort-terminvestment11203212019273STdebts197282069449LTdebts3836038291-02Netcash5394461207135Gearingratio410380CashSTdebts57x58xNoteNetcashiscalculatedastotaldebtsminusunrestrictedcashandshort-terminvestmentSourceCompanyfillings419Sep2023InitiatebuyonWB33830forbetterrisk-adjustedreturnWB338070830Baa2BBB-istradingat786withYTMof7458bpspick-upoverMEITUA30530whichisrated1notchlowerThecurrentvaluationofWB33830hasmorethanpricedintheconcernsonMoodysnegativeoutlookinourviewWeareneutralonWB3070524inviewofbetteralternativesforshort-datedplayswithhigheryieldandlowercashpricesActiveusersareincreasingbutrevenueistrendingdownWeibopostedamodestincreaseinmonthlyactiveusersMAUsandaveragedailyactiveusersDAUsin1H23MAUswere599mnasatJun23increasedby13mncomparedtoDec22DAUswere258mnasatJun23increasedby6mncomparedtoDec22Howevertheincreaseinactiveusersdidnottranslateintohigherrevenuein1H23Indeedbothadvertisingandvalue-addedserviceVASrevenuedroppedin1H23andtotalrevenuedeclined86yoycomparedtothatof1H22Thecost-cuttingeffortallowedWeibotoachieveEBITDAgrowthof58toUSD250mnMoreovertheprofitbeforetaxturnedpositivetoUSD236mnin1H23fromlossbeforetaxofUSD14mnin1H22mainlyduetotheone-offinvestment-relatedimpairmentandprovisionofUSD204mnin1H22GoingforwardWeibotargetstoenhanceitscontentecosystemincludingcontentqualityandtraffictomonetizetheincreasingactiveusersofitsplatformAsatJun23thenetcashpositionofWeibodroppedtoUSD405mnfromUSD740mnasatDec22whilethegearingratioweakenedto78from73during1H23Nonethelessitsnear-termrefinancingpressureislowanditsliquidityprofileissoundTable4WeibosfinancialsUSDmn1H221H23ChangeRevenue935854-86Grossprofit735674-83EBITDA23625058Profitbeforetax-1423617682Grossprofitmargin786789EBITDAmargin221293Dec22Jun23UnrestrictedCashandshort-terminvestment31712830-108STdebts97--100LTdebts2422242501Netcash740405-453Gearingratio7378CashSTdebts26xNANoteNetcashiscalculatedastotaldebtsminusunrestrictedcashandshort-terminvestmentSourceCompanyfillings519Sep2023PDD025CBPDD0120125CBputtableat100on1Dec23up3ptssinceourrecommendationinMay23At984theCBistradingataYTPof81with25monthstotheputdateWhilewestilllikethecreditstoryofPDDweturnneutraltotheCBasthenear-termupsidefortheCBappearstobelimitedunlessCBholdersareveryconfidentonitsnear-termequitystoryThestockpriceofPDDwas446highersinceMay23andtheUStariffissuewhichinourviewwillbeanoverhangofitsequitystoryinthenear-termRecalledthatinApr23theUS-ChinaEconomicandSecurityReviewCommissionreleasedareportaccusingTemuandSHEINanotherChinesee-commerceplatformofexploitingtradeloopholestoimportgoodsintoUSandevadingfrompayingimporttariffsUnderthecurrentTariffActgoodswithafairretailvaluenotexceedingUSD800enterduty-freeintotheUSaslongastheyarepackagedandaddressedtoindividualbuyersalsoknownasdeminimisruleAsofJun23TemuandSHEINaccountedforaboutone-thirdofdeminimisparcelssenttotheUSTemuwasaccusedtotakeunfairadvantagesoverUScompetitorsfromthetariffexemptionandthelawmakersintheUSaretryingtoexcludeChinesecompaniesfromusingthetariffexemptionPDDhasnotdisclosedthefinancialsoroperatingperformanceofTemuyetsinceitslaunchasthesizeofthebusinessisstillsmallcomparedtoonlinebusinessinChinaaspercompanysmanagementThepossibleincreaseintariffmaydampenthepricecompetitivenessoftheproductssoldonTemuThatcouldslowdownPDDsoverseasexpansionThereislimitedupdatesastotimelineandthenextstepsincetheUSSelectCommitteeontheChineseCommunistpartypublishedinJun23Table5PDDsfinancialsRMBmn1H221H23ChangeRevenue5523389918628Grossprofit4011260103498EBITDA1221921015720Profitbeforetax1361925965907Grossprofitmargin726668EBITDAmargin221234Dec22Jun23UnrestrictedCashandshort-terminvestment149439179509201STdebts144881538762LTdebts24472883178Netcash132504161239217Gearingratio144126CashSTdebts24x20xNoteNetcashiscalculatedastotaldebtsminusunrestrictedcashandshort-terminvestmentSourceCompanyfillings619Sep2023Table6SummaryoflatestfinancialsofmajorChinaTMTplayersBABATencentBaiduJDXiaomiWeiboMeituanPDDRMBmnRMBmnRMBmnRMBmnRMBmnUSDmnRMBmnRMBmnYearend31Mar31Dec31Dec31Dec31Dec31Dec31Dec31DecReportdate1Q241H231H231H231H231H231H231H23IssuerratingsMSFA1AAA1AAA3-ABaa1A--Baa2BBB-BBBBaa2BBB-Baa3BBB-BBB-NotratedRatingoutlookStableStableStableStableStableNegSta-StableNotratedRevenue2341562991946520053088712683285412658289918EBITDA5368110457413829165678193250967321015Interestexpenses17845941162112441044NA70824Unrestrictedcash22640513964742060910203145923612700331379Short-term2839532062251480951441015781146993189148129investmentsdepositsShort-termdebts82366620624859258961122-2069415387Long-termdebts1573073113716640747045217642425382912883Totaldebts16554337757791266729412288624255898518269Netdebtnetcash34481531705988891621806638440561207161239EBITDAmargin229350212316529376234EBITDAint263x176x85x133x78xNA137x8317DebtEBITDA09x18x33x22x14x49x30x05xNoteNetdebtiscalculatedastotaldebtsminusunrestrictedcashandshort-terminvestmentdepositsSourcesCompaniesfillingCMBIResearch719Sep2023Chart2YTMYTPofmajorChinaandUSTMTplayersSourceBloombergCMBIResearchCMBInternationalGlobalMarketsLimitedFixedIncomeDepartmentTel8523761886785236576291fiscmbicomhkCMBInternationalGlobalMarketsLimitedCMBGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankAuthorCertificationTheauthorwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheauthorcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatauthorinthisreportBesidestheauthorconfirmsthatneithertheauthornorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreport819Sep2023ImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMandoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestDisclaimerForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereport9