22 Jul 2024 CMB International Global Markets | Equity Research | Company Update Jiumaojiu (9922 HK) We see risks in 2H24E after the miss in 2Q24 HOLD (Down) Jiumaojiu issued a profit warning for 1H24, which is still awful compared to our already negative outlook. With risks to linger in the near future (SSSG drop may sustain and store expansion may also slow down, etc.), plus the fairly high valuation (23x FY24E P/E), we now cut our FY24E-26E net profit forecasts by 69%-57% and downgrade the stock to HOLD. ...

Investment Rating - The report downgrades the stock rating to "Hold" from "Buy" due to a challenging outlook for the second half of 2024 and high valuation concerns [2]. Core Views - The company has issued a profit warning for the first half of 2024, with expected net profit of approximately 67 million RMB, a 70% decline year-on-year [2]. - The same-store sales growth (SSSG) for the second quarter of 2024 has worsened, with declines of 18% for Tai Er, 37% for Song, and 13% for JMJ, compared to previous quarter declines [2]. - The report anticipates continued risks in the near future, including potential slowdowns in store expansion and ongoing declines in same-store sales [2]. Summary by Sections Financial Performance - Revenue for FY24E is projected at 7,128 million RMB, with a year-on-year growth of 19.1% [3]. - Net profit for FY24E is expected to be 209.9 million RMB, reflecting a significant decline of 56.9% compared to FY23A [3]. - The report revises net profit estimates for FY24E to FY26E down by 69% to 57% [2][4]. Revenue Adjustments - The revenue forecast for FY24E has been adjusted down by 13.5% compared to previous estimates, with a new projection of 7,128 million RMB [4]. - The gross profit margin for FY24E is expected to be 63.3%, slightly lower than previous estimates [4]. Market Valuation - The target price is set at 3.59 HKD, down from a previous target of 8.39 HKD, reflecting a 5.3% potential upside from the current price of 3.41 HKD [2]. - The stock is currently trading at a P/E ratio of 23 times FY24E earnings, which is considered high given the expected sales growth of 6% and a significant decline in net profit [2][6]. Operational Insights - The company plans to implement new business models, including franchising and satellite stores, to improve performance [2]. - Management is focusing on menu improvements, pricing strategies, and employee incentive programs to enhance operational efficiency [2].

Investment Rating - The report maintains a "Buy" rating for the company, despite facing strong headwinds from dealers [2][3]. Core Views - The company is expected to remain profitable in the first half of 2024, with a projected net profit of RMB 43 million, despite a forecasted 8% decline in new car sales year-on-year [2][3]. - The report anticipates a slight recovery in margins in FY25 due to the elimination of convertible bond burdens and the introduction of new electric vehicle models by BMW [2][3]. - The target price has been adjusted from HKD 4.00 to HKD 3.00, based on a revised earnings multiple of 10 times the estimated FY25 earnings per share [2][3]. Financial Summary - For 1H24, new car sales are expected to decline to 29,200 units, with a significant drop in average selling prices by 13% [2][3]. - The company’s revenue is projected to decrease by 15% year-on-year, while gross profit is expected to decline by 11% [2][3]. - The net profit for FY25 is estimated at RMB 360 million, reflecting a 52.9% decrease from previous estimates [7][8]. Sales and Profitability - The report indicates that the gross margin for new cars is expected to drop to -3.7% in 1H24, marking a historical low [2][3]. - Despite a decrease in service volume, after-sales service revenue is projected to grow by 12% year-on-year, with Porsche contributing a larger share [2][3]. Market Position - The market share of the company in Porsche sales in China is expected to increase from 16% in 2H23 to 17% in 1H24, despite a 39% decline in Porsche's overall sales [2][3]. - The company is expected to benefit from a potential reduction in sales targets by foreign automakers, which may lead to improved margins in FY25 [2][3].

Investment Rating - The report upgrades the investment rating of Sunny Optical to "Buy" with a target price of HK$67.88, reflecting a significant potential upside from the current price [2][8]. Core Insights - The report highlights a positive profit warning for 1H24, projecting a year-on-year profit increase of 140-150%, driven by a recovery in gross profit margin (GPM), increased iPhone market share, and the adoption of hybrid/periscope camera technologies [2]. - Adjustments to FY24 and FY25 earnings per share (EPS) estimates have been made, increasing by 46-82% due to stronger GPM and market share growth [2][5]. - The anticipated launch of AI smartphones is expected to accelerate the upgrade cycle in the second half of 2024 [2]. Financial Summary - Revenue projections for FY24E, FY25E, and FY26E are set at RMB 39,816 million, RMB 44,259 million, and RMB 48,555 million, respectively, indicating a year-on-year growth of 25.7%, 11.2%, and 9.7% [5][11]. - Net profit estimates for FY24E, FY25E, and FY26E are RMB 2,458 million, RMB 2,709 million, and RMB 3,315 million, reflecting year-on-year growth rates of 123.6%, 10.2%, and 22.4% [5][11]. - The report indicates a recovery in GPM, with projections of 16.4% for FY24E, 16.8% for FY25E, and 17.6% for FY26E [7][11]. Market Position and Growth Drivers - Sunny Optical is expected to capture increased demand from iPhone and Android customers, with iPhone market share projected to grow to 18% in 2024 and 25% in 2025 [2]. - The report anticipates significant growth in the automotive lens segment, with a compound annual growth rate (CAGR) of 25% from FY22 to FY24E [8]. - The company is positioned to benefit from the recovery in the smartphone market and the introduction of augmented reality (AR) and virtual reality (VR) products [2][8]. Valuation Metrics - The report assigns a price-to-earnings (P/E) ratio of 25.2x for FY25E, reflecting the company's diversified growth across multiple business segments [8][9]. - The valuation is based on a sum-of-the-parts (SOTP) approach, with different P/E ratios assigned to various business units, including 18x for camera modules and 35x for automotive lenses [8][9].

Investment Rating - The report maintains a "Buy" rating for TK Group with a target price (TP) of HKD 2.79, based on a FY24E price-to-earnings (P/E) ratio of 8.2 times, consistent with its 5-year historical forward P/E ratio [2][17][28]. Core Views - TK Group reported a positive profit for the first half of 2024, with a year-on-year profit growth exceeding 40%. The optimistic outlook is supported by strong order momentum, new customer acquisitions, and recovery in revenue/profit margins across most segments [2][17]. - The company is expected to achieve a revenue growth of 20% and a profit growth of 38% in FY24E, driven by increased orders in the consumer electronics sector and improved operational efficiency [17][35]. - The report highlights that TK Group has a solid cash position after repaying a significant portion of its bank loans in FY23, allowing for potential acquisitions and maintaining a high dividend payout level [17][35]. Financial Summary - Revenue projections for TK Group are as follows: - FY22: HKD 2,279 million - FY23: HKD 1,946 million - FY24E: HKD 2,339 million (20.2% YoY growth) - FY25E: HKD 2,705 million (15.6% YoY growth) - FY26E: HKD 3,135 million (15.9% YoY growth) [3][30][32]. - Net profit estimates are: - FY22: HKD 226.9 million - FY23: HKD 204.2 million - FY24E: HKD 281.4 million (37.8% YoY growth) - FY25E: HKD 334.8 million (19.0% YoY growth) - FY26E: HKD 399.1 million (19.2% YoY growth) [3][30][32]. - The report indicates an expected gross profit margin (GPM) increase to 24.3% in 1H24E from 23.3% in 1H23, reflecting improved operational leverage [17][35]. Valuation Metrics - The report provides the following valuation metrics: - P/E ratio for FY24E: 5.6 - P/B ratio for FY24E: 0.9 - Dividend yield for FY24E: 8.1% [3][32]. - The report emphasizes that the stock offers an attractive risk/reward profile, considering the expected EPS growth of 38% in FY24E and a dividend yield of 8% [17][35].

| --- | --- | --- | |-------|---------------------------------------------------------------------------------------------------------------------------------------|----------------------| | | | | | | 宏观：高质量发展是推进中国式现代化的首要任务，政策利好科技行业与高 | | | | 端制造业，但提振消费政策依然较少。构建统一大市场和新型城镇化利好核 心城市、大众消费、科技行业、大数据公司、智能电网产业链和能源资源行 | 叶丙南 , Ph.D 刘泽晖 | | | 业龙头国企。在土地财政萎缩背景下，财税体制改革重点是为地方财政开 | 伍力恒 | | | 源，相关行业税负可能上升。未来金融业发展重点是科技金融、绿色金融、 普惠金融、养老金融、数字金融。 | 李汉卿 | | | 科技：会议强调发展新质生产力，促进实体经济和数字经济深度融合，健全 | 刘梦楠 | | | 现代化基础设施建设，提升产业链供应链韧性和安全水平 ...

2024 ¥ 7 月 22 日 招煤国际环球市场 | **** | 行业研究 中 国 医 药 政策利好持续兑现 年初至今,MSCI 中国區方指数下跌 24.3%,跑輪 MSCI 中国指数 27.9%;近期行 业初现反弹趋势。目前行业指数的动态市盈单为 23.8 倍,低于 12 年历史均值。宠 的三中全会及国常会再次弥落推进大规模设备更新。7月5日,国务院常务会议审 议通过《全链条支持创新跨发展实范方案》。医疗反腐已进行一年,我们预期随着 行业监管常态化,医药行业的盈利有望从 2H24 开始逐步修复。此外,海外降息预 期或将推动高辞性的创新药/器械板块体值反弹。我们继续看好龙头医疗设备、龙 头创新药(包含创药/Biotech)、业绩礼实且估值吸引的消费医疗企业。 ■ 三中全会弄火铁词"这条是新",国体会研究落地。7月19日国务院常务会议 研究加大力度支持大规模设备更新和消费品议旧换新政策措施。会议决定,统 筹安排起长期特别国债资金,进一步推动大规模设备更新标消费品以旧换新。 此外,三中全会相关新闻发布会也提到,"实施好大规模谈备更新和消费品以 旧换新政策,投入更多病金白银,办大政策支持力度,让企业和消费者获得实 ...

22 Jul 2024 CMB International Global Markets | Equity Research | Company Update Sunny Optical (2382 HK) Positive profit alert alleviates GPM concerns; Upgrade to BUY We upgrade Sunny Optical to BUY and raise our TP to HK$67.88 following 1H24 positive profit alert of 140-150% YoY growth, as we think Sunny's GPM recovery, iPhone share gain and hybrid/periscope cam adoption are tracking ahead of expectations. We revised up our FY24-25E EPS by 46-82% to reflect stronger GPM, iPhone share gain (18%/25% in 2024/2 ...

Investment Rating - The report maintains a "BUY" rating for TK Group with a target price of HK$2.79, indicating a potential upside of 46.8% from the current price of HK$1.90 [8][21][40]. Core Insights - TK Group announced a positive profit alert for 1H24, projecting over 40% year-on-year earnings growth, primarily driven by strong orders in the smartphone and wearables segments [4][7]. - The company is expected to achieve 20% sales growth and 38% earnings growth year-on-year in FY24, supported by new client orders and improved operational efficiency [4][7]. - The gross profit margin is anticipated to improve to 24.3% in 1H24, up from 23.3% in 1H23, due to a better product mix and utilization improvements [4][37]. Summary by Sections Earnings Summary - TK Group's revenue for 1H24E is projected at HK$1,025 million, reflecting a 19.8% increase year-on-year, with net profit expected to reach HK$77 million, a 41.4% increase [37]. - The gross margin is expected to rise to 24.3%, while the operating margin is projected at 6.2% for 1H24E [37]. Financial Forecasts - Revenue is forecasted to grow from HK$1,946 million in FY23 to HK$2,339 million in FY24, representing a 20.2% year-on-year increase [30][42]. - Net profit is expected to increase from HK$204.2 million in FY23 to HK$281.4 million in FY24, marking a 37.8% growth [30][42]. Valuation - The stock is currently trading at a P/E ratio of 5.6x for FY24E, which is considered attractive given the expected earnings growth and dividend yield of 8% [4][40]. - The target price of HK$2.79 is based on an 8.2x FY24E P/E, aligning with the company's historical valuation metrics [40]. Growth Drivers - Key growth drivers include strong order pipelines from major clients such as Meta, SONOS, and Polycom, alongside anticipated product launches from major tech companies [4][7]. - The company is well-positioned for potential M&A opportunities due to substantial cash reserves following debt repayments [4][7].

Investment Rating - The report maintains a BUY rating for Meidong Auto, with a revised target price of HK$3.00, down from HK$4.00, based on a 10x FY25E EPS valuation [2][5]. Core Views - Despite facing strong industry headwinds, Meidong is expected to remain profitable in 1H24, with a projected net profit of RMB43 million, supported by subsidies from Porsche and Lexus [2]. - The outlook for FY25 is anticipated to improve due to the removal of the convertible bond burden and a new NEV model cycle for BMW, leading to a projected net profit of RMB360 million [2]. - The report highlights a decline in new car sales volume by 8% YoY to 29,200 units in 1H24, with a significant drop in average selling price by 13% YoY [2]. Financial Summary - Revenue for FY24 is projected at RMB24,141 million, a decrease of 15% YoY, with gross profit expected to drop by 11% YoY to RMB1,877 million [11]. - The new car gross margin is expected to fall to -3.7% in 1H24, marking the lowest in history, while after-sales service revenue is projected to rise by 12% YoY [2][11]. - The report indicates a significant decline in net profit from RMB521 million in FY22 to RMB140 million in FY23, with a forecasted recovery to RMB360 million in FY25 [11][12].