M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update Zhejiang Dingli (603338 CH) New AWP capacity expansion plan to further enhance global competitiveness Target Price RMB70.00 Zhejiang Dingli (Dingli) announced over the weekend that it plans to spend (Previous TP RMB70.00) RMB1.7bn to build a new production base for 20k units of new energy aerial work Up/Downside 24.8% platform (AWP). We understand that the entire capacity will be for scissors lifts, Current Price RMB56.10 gi ...

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].

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 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 ...

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].

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 Prudential Plc with a target price adjusted to HK$137.8, reflecting a potential upside of 81.9% from the current price of HK$75.75 [2][3]. Core Insights - Prudential reported a strong FY23 performance with new business profit (NBP) increasing by 45% year-over-year (YoY) to US$3.13 billion, surpassing consensus estimates by 6.4% [2]. - The NBP margin expanded by 3 percentage points to 53% for the full year, with a notable improvement in the second half of FY23, where the margin reached 57% [2]. - The board approved a full-year dividend of US$0.2 per share, indicating a 9% increase from FY22, and expects continued dividend per share (DPS) growth of 7%-9% in FY24 [2]. Summary by Sections Financial Performance - FY23 net profit was US$1.7 billion, a significant recovery from a loss of US$1.0 billion in FY22 [3]. - The adjusted operating profit for FY23 grew by 8% YoY to US$2.9 billion, driven by lower central costs and restructuring expenses [2][3]. - The Group's total assets increased to US$174.1 billion in FY23, with a projected growth to US$198.6 billion by FY24 [8]. Business Segments - Agency NBP surged by 75% YoY to US$2.1 billion, supported by a 37% growth in Health & Protections (H&P) and a 59% increase in agent productivity [2]. - The bancassurance segment saw a decline of 8% to US$793 million, primarily due to poor performance in China and Vietnam [2]. - The NBP of the China joint venture, CITIC Prudential Life, fell by 43% YoY to US$222 million, impacted by a 40% decline in APE sales [2]. Valuation Metrics - The stock is currently trading at a price-to-embedded value (P/EV) of 0.54x for FY24E, close to historical lows, reflecting concerns over China exposure and trading liquidity [2][3]. - The expected return on equity (ROE) is projected to improve from 9.8% in FY23 to 12.5% by FY26 [9]. - The dividend yield is anticipated to rise from 1.6% in FY23 to 2.7% by FY26 [9].

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].

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 ...

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 ...