M N 8 Apr 2024 CMB International Global Markets | Equity Research | Company Update Haidilao (6862 HK) Looking for expansion opportunities with downside protection We think Haidilao’s downside is protected by its dividend (5.6% FY24E yield and Target Price HK$21.52 the 90% payout ratio should sustain into the future), while the upside is highly (Previous TP HK$24.76) dependent on its speed of store expansion (which is still very slow but we tend Up/Downside 25.1% to think it will accelerate once the franchis ...

Investment Rating - The report maintains a BUY rating for China Life, with a new target price set at HK$13.7, implying a potential upside of 47.2% from the current price of HK$9.31 [2][4][16]. Core Insights - China Life reported a full-year net profit attributable to shareholders of RMB 46.2 billion, a decrease of 30.7% year-over-year, but the net loss in 4Q23 significantly narrowed to RMB 610 million from a loss of RMB 10.6 billion in 3Q23 [2][6]. - The company achieved a low-teen growth in Value of New Business (VNB), increasing by 11.9% year-over-year to RMB 36.9 billion, despite revised Economic Value (EV) assumptions [2][6]. - The insurer's insurance revenue saw a strong rebound, growing by 32.6% in the second half of 2023, supported by a release of RMB 44.1 billion in contractual service margin [2][6]. Summary by Sections Financial Performance - For FY23, China Life's net profit was RMB 46.2 billion, with a net profit of RMB 10.6 billion in 4Q23, reflecting a significant improvement from the previous quarter [2][6]. - The company reported a total investment yield of 2.43% and a net investment yield of 3.70% by the end of 2023, both showing a decline compared to the previous year [2][6]. VNB and EV Growth - The VNB for FY23 was RMB 36.9 billion, reflecting an 11.9% increase year-over-year, while the EV grew by 5.6% to RMB 1.26 trillion [2][6]. - The report indicates that the revisions in EV assumptions had a limited impact on VNB growth, with the long-term investment return revised down to 4.5% [2][6]. Investment Strategy - The report anticipates a positive turnaround in net investment results in 1H24, driven by improved index performances and a higher allocation to bonds [2][6]. - The target price adjustment reflects a new valuation approach based on P/EV and DDM, with the new target price of HK$13.7 implying a P/EV of 0.3x for FY24E [2][6].

Investment Rating - The report maintains a "BUY" rating for Haier Smart Home with a target price raised to HK$31.24, indicating a potential upside of 21.8% from the current price of HK$25.65 [2][4]. Core Insights - Haier's FY24E guidance is expected to be resilient, supported by steady growth in the Casarte brand, improvements in the Air-conditioning business, and favorable macroeconomic policies [2][6]. - The company has raised its dividend payout ratio to over 45% for FY24E, reflecting a strong commitment to returning value to shareholders amidst a challenging macro environment [2][6]. - Management remains confident in achieving sales growth of mid-single digits to high-single digits (MSD to HSD) and over 10% net profit growth for FY24E [2][6]. Financial Summary - FY23 results showed a 7% YoY increase in sales to RMB261.4 billion and a 14% YoY rise in net profit to RMB16.7 billion, aligning with Bloomberg estimates [6]. - The dividend per share (DPS) increased by 42% YoY to RMB8.04, with a payout ratio significantly up from 36% the previous year [6]. - Revenue projections for FY24E are set at RMB278.9 billion, with expected net profit of RMB19.3 billion, reflecting a 14% growth [3][12]. Growth Drivers - Key growth drivers for FY24E include: 1. Steady sales growth of 10% to 15% for the Casarte brand due to increased presence in high-end markets and repeat orders from members [2]. 2. A ramp-up in the Air-conditioning business, aided by improved operational efficiencies and in-house production [2]. 3. Potential subsidies and favorable policies in the EU market, alongside a rebound in demand in the ANZ market [2]. 4. Continued demand from high-end segments, particularly in the US market [2]. Margin Improvement - Expected improvements in both gross profit (GP) and net profit (NP) margins due to: 1. Centralized sourcing of raw materials and better freight rate negotiations [2]. 2. Increased automation and digitization across global factories [2]. 3. Enhanced product premiumization through high-end brand sales [2]. 4. Targeted marketing strategies and manpower rationalization in the EU market [2]. Earnings Revision - FY24E net profit estimates have been fine-tuned down by 1% to RMB19.1 billion, while FY25E estimates have been adjusted up by 2% to RMB21.8 billion [7]. - Revenue estimates for FY24E have been slightly reduced by 0.8% to RMB278.9 billion, reflecting slower growth in certain segments [7]. Valuation Metrics - The stock is currently trading at 12x FY24E P/E, which is below its 5-year average of 15x, indicating potential undervaluation [2][4]. - The new target price is based on a 14x FY24E P/E, reflecting a positive outlook for the company's performance [2].

M N 5 Apr 2024 CMB International Global Markets | Equity Research | Company Update GAC Group (2238 HK) PHEV could be a new catalyst We estimate GAC Group (GAC)’s net profit to rise 22% YoY to RMB5.4bn in Target Price HK$5.50 FY24E, as Aion’s upscale attempt, cost reduction and overseas expansion could (Previous TP HK$6.00) help narrow its loss. We are of the view that Aion needs quality growth in FY24E Up/Downside 73.0% to lay out foundation for long-term development. We project Trumpchi’s PHEV Current Pric ...

Investment Rating - The report maintains a BUY rating on Nayuki (2150 HK) but cuts the target price to HK$ 3.43 [2][4] Core View - The report highlights that franchising and cost-cutting are key to Nayuki's strategy, despite a cautious outlook on the catering sector due to weakening macro demand and increased competition [2] - Nayuki's high cash level (over 75% of its market cap) and potential income from franchising are key reasons for the BUY rating [2] - The report expects a mixed FY24E outlook with pressure on topline growth but some room for margin improvement [2] Store Expansion and Performance - Nayuki's SSSG for Jan/Feb/Mar 2024 were -29%/-34%/-30%, worse than the 7% drop in 2H23, driven by a drop in both ASP and volume [2] - The store expansion plan for FY24E is conservative, with ~200 new self-operated stores and ~150 closures, resulting in a net increase of only a handful of stores [2] - For franchising, around 80 stores were opened in FY23, and the target for FY24E is 200-400 franchised stores, with a long-term goal of 2,000-3,000 new stores [2] Financial Projections - Revenue growth for FY24E is forecasted at 14%, driven by a 3% increase in store counts (excluding franchise), a 6% increase in sales per store, and ramp-up of RTD and franchising business [2] - Net profit margin for FY24E is expected to improve to around 1.1%, supported by stable GP margin, cost control, and cautious investment in the RTD business [2] - The report cuts FY24E/25E net profit by 87%/72% due to slower self-operated store expansion and falling sales per store [2] Valuation and Market Performance - Nayuki is currently trading at 0.7x FY24E P/S and 20x FY25E P/E, with a target price of HK$ 3.43, representing a 31.3% upside from the current price of HK$ 2.61 [2][4] - The valuation method has been changed from 20x FY24E P/E to 1.0x FY24E P/S, applying a ~20% discount to peers' average of 1.2x [2] Historical Performance - FY23 revenue increased by 20% YoY to RMB 5.2bn, with net profit turning positive to RMB 13mn, but NP margin remained low at 0.3% [6] - In 2H23, sales growth slowed to 14%, and NP margin turned negative to -2.1%, driven by a sharp drop in ASP and volume [6] Earnings Revision - The report significantly revises down FY24E revenue and net profit estimates, with revenue now forecasted at RMB 5,877mn (-28.2% from previous estimates) and net profit at RMB 63.7mn (-86.9% from previous estimates) [7] Peer Comparison - Nayuki's valuation is compared to peers in the Greater China catering sector, with a 12-month target price of HK$ 3.43, representing a 31% upside [12]

M N 5 Apr 2024 CMB International Global Markets | Equity Research | Company Update Atour Lifestyle (ATAT US) Prudent guidance but QoQ recovery is likely 4Q23 results were a slight beat but the FY24E guidance is slightly disappointed. Target Price US$23.68 However, we are not that pessimistic because: 1) sequential improvement is (Previous TP US$23.93) likely (high base in 1H), 2) OCC rate is still the best among its peers implying Up/Downside 24.7% further market share gains, and 3) PMI has started to impro ...

| RESEARCH 5 Apr, 2024 EEKA Fashion | 03709.HK COMPANY UPDATE Stable development with new catalysts H F NGO, Brian, CFA STOCK RATING TARGET PRICE SENIOR ANALYST BUY HK$ 16.78 brianngo@westbullsec.com.hk EEKA Fashion (03709.HK) reported a YoY 22.1% growth in revenue to RMB 6.9bn, and its gross +852 3896 2965 margin slightly surged to 75.3%, leading to a YoY 121.8% increment in the bottom-line. The Group 2701 – 2703, 27/F, Infinitus Plaza, 199 Des Voeux Rd also announced a dividend of HKD 0.7/share, amounting ...

M N 2 Apr 2024 CMB International Global Markets | Equity Research | Company Update RemeGen (9995 HK) Awaiting the fruition of overseas BD collaborations RemeGen recorded RMB1.08bn of revenue in FY23, including RMB1.05bn from Target Price HK$41.72 product sales (+42% YoY), contributed equally by RC18 and RC48. In FY23, (Previous TP HK$57.65) GP margin (vs product sales) increased to 76.9% (vs 63.4% in FY22). Selling Up/Downside 53.7% expense ratio (vs product sales) increased from 60% in FY22 to 74% in FY23, ...

Investment Rating - The investment rating for Newborn Town (09911.HK) is "BUY" with a target price of HK$ 3.31, reduced from the previous target price of HK$ 3.78 [20][28]. Core Insights - Newborn Town reported a total revenue of RMB 3.3 billion and a profit attributable to shareholders of RMB 512.8 million, slightly exceeding estimates. The strong performance of apps like Sugo and TopTop in the MENA market contributed significantly, with revenue increases of approximately 3x and 2x year-on-year respectively. However, the app Mico experienced a significant decline of over 30% year-on-year, which was unexpected and negatively impacted overall performance [9][26][28]. - The company aims to develop two more flagship social networking apps with expected monthly revenues exceeding USD 10 million within three years, although details on these apps remain limited [9][28]. Financial Performance - Revenue projections for the upcoming years are as follows: RMB 4,190.7 million in 2024, RMB 4,542.0 million in 2025, and RMB 4,880.5 million in 2026, reflecting year-on-year growth rates of 26.7%, 8.4%, and 7.5% respectively [6][16]. - Gross margin has shown resilience, maintaining above 50%, with a reported gross margin of 52.1% for 2023, an increase of 14.3 percentage points from previous estimates [10][22]. - The net profit attributable to shareholders is projected to be RMB 449.5 million in 2024, RMB 472.1 million in 2025, and RMB 499.3 million in 2026, indicating a growth trajectory despite challenges [24][32]. Market Position and Competitors - Newborn Town's market capitalization is approximately HK$ 3.1 billion, with a current stock price of HK$ 1.85 [5][21]. - The company is positioned within a competitive landscape, with peers showing varied performance metrics, highlighting the challenges faced in replicating successful app performance [14][31].

M N 3 Apr 2024 CMB International Global Markets | Equity Research | Company Update Great Wall Motor (2333 HK) PHEVs key to FY24; Earnings likely still resilient Target Price HK$13.00 Maintain BUY. We are of the view that the Tank brand, pick-up trucks and exports (Previous TP HK$13.00) will continue to support Great Wall’s earnings in FY24E. Great Wall’s success in Up/Downside 39.2% the off-road style SUVs has helped its PHEV sales volume and brought higher- Current Price HK$9.34 than-expected margins, alth ...