M N 26 Mar 2024 CMB International Global Markets | Equity Research | Company Update FIT Hon Teng (6088 HK) NDR takeaways: Opportunities in US$1.7bn server connector/cable market; Lift TP to HK$2.42 Target Price HK$2.42 Maintain BUY and raise TP to HK$2.42 to reflect stronger demand of next-gen high-speed connectivity in AI servers in FY24/25E, backed by MCIO connectors (Previous TP HK$2.21) /cables and high-speed I/O products, recent launch of 224G high-speed Up/Downside 19.3% products at DesignCon (link), ...

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update Henlius Biotech (2696 HK) Anticipating sustained profitability  Profit turnaround driven by core business operations. Henliu’s FY23 revenue Target Price HK$18.67 increased 67.8% YoY to RMB5.40bn, driven by strong sales of HANQUYOU (Previous TP HK$18.67) (trastuzumab biosimilar) and serplulimab (PD-1). HANQUYOU recorded Up/Downside 31.8% RMB2.74bn revenue in FY23, +58% YoY. We think HANQUYOU may be free from Current Price HK ...

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update AAC Tech (2018 HK) Solid outlook for PSS merger & optics margin recovery; Maintain HOLD on fair valuation Target Price HK$22.44 AAC reported FY23 revenue of RMB20.4bn (-1.0% YoY) and net income of RMB740mn (-9.9% YoY), above consensus estimates mainly due to exchange (Previous TP HK$14.04) gains and other income. FY23 GPM came in at 16.9%, largely in line, and 2H23 Up/Downside (10.2%) GPM recovered to 19.2% (+1.4ppts YoY/+5. ...

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update Baozun (BZUN US) GAP revitalization making good progress Target Price US$4.93 Baozun delivered mixed 4Q23 results with in-line revenue (+9% YoY) but soft (Previous TP US$6.90) bottom line. For 1Q24E, we expect a low-single-digit YoY decline in revenue, with Up/Downside 113.0% a net loss position, for slower BEC (Baozun E-commerce) recovery with soft Current Price US$2.30 consumption sentiment. Despite that, BBM (Baozun Brand ...

Investment Rating - The report maintains a "BUY" rating for Intron (01760.HK) with a target price of HKD 2.85 per share, down from HKD 6.13 [2][10]. Core Insights - Intron reported a year-on-year revenue increase of 20.1% to RMB 5,802.3 million for FY 2023, but the gross margin fell by 2.9 percentage points to 18.7%, which was lower than estimates [3][4]. - The company experienced a significant decline in net profit, retreating by 23.0% year-on-year, attributed to increased R&D expenses and a competitive pricing environment [4][10]. - The revenue growth was driven primarily by NEV Solutions, but competition led to manufacturers opting for lower-cost solutions, impacting growth in advanced driver-assistance systems (ADAS) [4][10]. - A shift in pricing strategy was noted, with a gross margin of 17.1% in the second half of 2023, indicating adjustments to cope with market pressures [4][10]. - The report anticipates continued challenges in 2024, with profit margins expected to remain under pressure due to lower gross margins and high R&D expenses [4][10]. Financial Summary - Revenue projections for the next few years are as follows: RMB 6,840.5 million in 2024, RMB 7,524.0 million in 2025, and RMB 8,174.4 million in 2026, reflecting a year-on-year growth rate of 17.9%, 10.0%, and 8.6% respectively [15]. - The gross profit is projected to increase from RMB 1,083.6 million in 2023 to RMB 1,247.8 million in 2024, with gross margins expected to stabilize around 18.8% in 2026 [15][17]. - The net profit is forecasted to decline significantly in 2024, with estimates of RMB 219.4 million, before recovering to RMB 301.3 million in 2025 and RMB 398.7 million in 2026 [15]. Operational Outlook - The report indicates a cautious operational outlook, with estimates cut by 51% to 58% due to ongoing difficulties, including lower gross margins and increased financial expenses [4][10]. - The company is expected to face a tightening working capital situation due to a longer cash conversion cycle and high R&D expenses [13][17].

Investment Rating - The report maintains a "BUY" rating for Greentown Management with a target price of HK$ 9.37, reflecting a 13x 2024E PE [2][4]. Core Insights - Greentown Management achieved a net profit growth of +31% YoY in FY23, with a maintained dividend payout ratio of 100%, resulting in an 8% dividend yield [2][5]. - The company is expected to guide industry-leading growth with a revenue CAGR of +20% and net profit CAGR of +25% over the next three years, potentially outperforming the broader property market [2][8]. - The company's adaptability in business restructuring has been highlighted as a key factor in its strong performance despite a sluggish property market [2][8]. Financial Performance Summary - FY23 results showed revenue of RMB 3,302 million, a 24.3% increase YoY, and attributable net profit of RMB 974 million, up 31% YoY [3][5]. - Gross profit margin remained stable at 52%, with a slight decrease in commercial project management (PJM) margin to 52% and an improvement in government PJM margin to 45% [5][12]. - The company reported a net margin of 29.5% in FY23, reflecting a 1 percentage point increase from the previous year [5][12]. Future Projections - Revenue is projected to reach RMB 4,048 million in FY24, with a YoY growth of 22.6%, and net profit is expected to be RMB 1,250.9 million, reflecting a 28.5% increase [3][7]. - The company has a billable contract value of RMB 25 billion, with an expected annual increase of approximately RMB 10 billion [2][8]. - The forecast for net profit in FY26 is RMB 1,897.3 million, indicating a continued growth trajectory [3][12]. Market Position and Strategy - Greentown Management has expanded its business into non-residential projects, which accounted for 15% of new contracts in FY23, in response to a contracting residential market [2][8]. - The company has successfully maintained its market share in the property management sector, with newly contracted gross floor area (GFA) increasing to 35.3 million square meters in FY23 [10][11]. - The report emphasizes the company's asset-light model and high cash flow as significant advantages in the current market environment [2][8].

Investment Rating - The report maintains a "BUY" rating for Zhejiang Dingli with a target price of RMB70, representing an upside of 24.8% from the current price of RMB56.10 [2]. Core Insights - Zhejiang Dingli plans to invest RMB1.7 billion to build a new production base for 20,000 units of new energy aerial work platforms (AWP), which is expected to enhance its global competitiveness [2]. - The new capacity is projected to contribute approximately RMB2.5 billion in annual sales once operational, with completion expected in 36 months [2]. - The company has sufficient internal resources to finance the capital expenditure without needing equity financing [2]. Financial Performance Summary - Revenue is expected to grow from RMB5,445 million in FY22 to RMB6,267 million in FY23, and further to RMB7,508 million in FY24, reflecting a year-on-year growth of 15.1% and 19.8% respectively [9]. - Net profit is projected to increase from RMB1,257 million in FY22 to RMB1,693 million in FY23, and RMB1,963 million in FY24, indicating a growth rate of 34.7% [9]. - The earnings per share (EPS) is forecasted to rise from RMB2.48 in FY22 to RMB3.34 in FY23, and RMB3.88 in FY24, showing a year-on-year growth of 34.7% [9]. Capacity Expansion and Market Position - The new production base will add 30% capacity by 2026-27, focusing on scissors lifts to meet rising demand for electric and advanced models in overseas markets [2]. - Dingli currently operates five production bases, and the new facility will require acquiring additional land in Deqing, Zhejiang [2]. - The company is positioned to benefit from the increasing demand for aerial work platforms, particularly in international markets [2]. Revenue Breakdown and Growth Projections - The revenue from core business segments is expected to grow significantly, with boom lifts projected to generate RMB2,250 million in FY24 and scissor lifts expected to reach RMB4,419 million [4]. - The average gross margin for the core business is anticipated to improve from 29.4% in FY22 to 36.5% in FY24 [4]. - The overall revenue growth rate is projected to stabilize around 15.2% in FY25, indicating sustained demand and operational efficiency [12].

M N 22 Mar 2024 CMB International Global Markets | Equity Research | Company Update Innovent Biologics (1801 HK) More than obesity  Strong product sales in FY23. In FY23, Innovent recorded total revenue of Target Price HK$55.00 RMB6.21bn, including RMB5.73bn product sales revenue (+38.4% YoY), in line with (Previous TP HK$57.35) our expectation. Innovent had a strong 2H23, with product sales +33.1% HoH vs the Up/Downside 44.4% first half. As per Eli Lilly, total sales of sintilimab in FY23 reached US$393.3 ...

Investment Rating - The report maintains a "BUY" rating for Li Ning with a target price of HK$29.40, indicating an upside potential of +38.4% from the current price of HK$21.25 [1]. Core Insights - Li Ning's FY23 results met expectations, with revenue of RMB27.6 billion, reflecting a 7% year-over-year increase, while net profit decreased by 21.6% to RMB3,187 million. The company declared a final dividend of RMB0.19, resulting in a payout ratio of 45% [1]. - Management provided conservative guidance for FY24, targeting a sales growth of approximately 5% and a net profit margin (NPM) of 12-13% [1]. - The company is focusing on operational improvements and quality enhancement, with a goal to drive NPM towards 15% in the mid-to-long term [1]. Financial Performance Summary - FY23 revenue was RMB27.6 billion, up 7% YoY, while net profit was RMB3,187 million, down 21.6% YoY. The gross profit margin (GPM) remained stable at 48.4% [2]. - The operating profit margin (OPM) contracted by 6.0 percentage points to 12.9%, primarily due to an increase in selling and distribution expenses [2]. - The cash conversion cycle extended by 5 days to 35 days, with operating cash flow reaching RMB4.7 billion, a 20% increase YoY [1][2]. Operational Highlights - Direct-to-consumer (DTC) sales mix improved to 25.0% from 20.7% in FY22, contributing positively to the GPM [1]. - The company reported a sell-through rate of 78%, significantly higher than 52% in FY22, indicating improved inventory management [1]. - Channel inventory decreased to 3.6 months, down from 4.2 months in December 2022, reflecting better inventory control [1]. Future Outlook - For FY24, Li Ning aims for a revenue target of RMB29.3 billion, with projected earnings of RMB3.52 billion [1]. - The company plans to optimize its store network, expecting to close over 20 directly operated stores while opening around 100 franchised stores [1]. - Management is implementing measures to control unauthorized sales activities, targeting a reduction of such activities by 50-60% by the end of FY24 [1].

Xtep International | 1368.HK Rating BUY Maintain Saucony stands out among the new brands Target price HK$6.6 4 C Cuu rr rr ee nn t price HK$5.04 Upside: +31.7% Curren FY23 results inline (b reakdown in Exhibit 1): Company update Xtep reported FY23 result with revenue and net profit at RMB14.3bn and RMB1,030mn. up 10.9%/11.8% YoY. While excluding inventory and receivables provisions and 21 Mar 2024 write-backs, the group’s core operating profit/earnings at RMB1,546/RMB996mn, up 4.4%/6.1% YoY. The key highlig ...