20211109-招银国际-CMBI_Research_Focus_List__Our_best_high_conviction_ideas_25页_2mb

CMBI Research Focus List Summary

Core Content Overview

The CMBI Research Focus List highlights a series of high conviction investment ideas across various sectors in China. The report includes both long and short ideas, with a particular emphasis on long-term growth opportunities and current market dynamics. It provides detailed analysis of each company's financials, valuation, and growth drivers, along with performance data and analyst insights.

Main Ideas and Key Points

Long Ideas

1. Zhejiang Dingli (603338 CH)

   • Sector: Capital Goods
   • Rating: BUY
   • Target Price: RMB87.0 (22% upside)
   • Analyst: Wayne Fung
   • Key Points:
     • AWP (Aerial Working Platform) is entering a structural growth phase due to rising labor costs in China.
     • Anti-dumping duties have been set at 17.78%, but the impact is expected to be manageable.
     • The company benefits from its global presence, cost competitiveness, and brand recognition.
     • Target price is based on 44x 2021E P/E, reflecting strong earnings growth.

2. SANY International (631 HK)

   • Sector: Capital Goods
   • Rating: BUY
   • Target Price: HK$14.3 (77% upside)
   • Analyst: Wayne Fung
   • Key Points:
     • Intelligent products and robotic business are key growth drivers.
     • Revenue growth accelerated to 51% YoY in 3Q21, with net profit growth of 8% YoY.
     • The company is expected to benefit from the development of intelligent coal mines and ports.
     • Target price is based on 23x 2022E P/E, with potential M&A as a catalyst.

3. Bosideng (3998 HK)

   • Sector: Consumer Discretionary
   • Rating: BUY
   • Target Price: HK$6.13 (5% upside)
   • Analyst: Walter Woo
   • Key Points:
     • Focus on premiumization and brand elevation.
     • Strong digital capability and offline store network.
     • Sales growth and margin improvements are achievable.
     • Target price is based on 23x FY23E P/E, with a conservative outlook on volume growth.

4. Haier (6690 HK)

   • Sector: Consumer Discretionary
   • Rating: BUY
   • Target Price: HK$36.91 (35% upside)
   • Analyst: Walter Woo
   • Key Points:
     • Global leader in home appliances with 7 major brands.
     • Maintained strong guidance despite 4Q21E challenges.
     • Expected to benefit from macroeconomic turnaround in property, logistics, and raw material inflation.
     • Target price is based on 17x FY22E P/E, with a low valuation offering good risk-reward.

5. CTGDF (601888 CH)

   • Sector: Consumer Staples
   • Rating: BUY
   • Target Price: RMB350.0 (50% upside)
   • Analyst: Joseph Wong
   • Key Points:
     • Largest domestic duty-free operator with 90%+ market share.
     • Expected to benefit from the normalization of domestic travel and spending in 4Q.
     • Potential for mean reversion and value unlocking via secondary H share listing.
     • Target price based on 43x end-22E P/E, above 3-year average.

6. CR Beer (291 HK)

   • Sector: Consumer Staples
   • Rating: BUY
   • Target Price: HK$88.0 (40% upside)
   • Analyst: Joseph Wong
   • Key Points:
     • Strong premiumization strategy with a 2% sub-premium price hike and 5% premium mix increase.
     • Expected to offset volume decline through mix-driven ASP growth.
     • Target price based on 3-year average EV/EBITDA multiple.

7. Mengniu (2319 HK)

   • Sector: Consumer Staples
   • Rating: BUY
   • Target Price: HK$58.0 (20% upside)
   • Analyst: Joseph Wong
   • Key Points:
     • Effective cost control and mix upgrade are key to margin improvement.
     • Raw milk price hike is expected to be transitory, with margins likely to recover.
     • Ambitious five-year revenue target and expansion into Southeast Asia via the acquisition of Aice.
     • Target price based on 29.8x end-22E P/E, above 3-year average.

8. Innovent Biologics (1801 HK)

   • Sector: Healthcare
   • Rating: BUY
   • Target Price: HK$116.9 (71% upside)
   • Analyst: Joseph Wong
   • Key Points:
     • Strong product portfolio and premium model strategy.
     • Expected to benefit from Huawei/Honor's weakness in the high-end segment.
     • Target price based on 23x 2022E P/E, with growth expected from new products and e-cigarettes.

9. China Pacific Insurance (2601 HK)

   • Sector: Insurance
   • Rating: BUY
   • Target Price: HK$36.0 (50% upside)
   • Analyst: Joseph Wong
   • Key Points:
     • Strong brand recognition and market position.
     • Expected to benefit from a more stable environment.
     • Target price based on 23x 2022E P/E, with a low yield and strong ROE.

10. Meituan (3690 HK)

    • Sector: Internet
    • Rating: BUY
    • Target Price: HK$383.0 (40% upside)
    • Analyst: Joseph Wong
    • Key Points:
      • Strong product and service upgrades.
      • Expected to benefit from the expansion of lighthouse factories.
      • Target price based on 23x 2022E P/E, with potential for M&A.

11. CR Land (1109 HK)

    • Sector: Property
    • Rating: BUY
    • Target Price: HK$44.8 (55% upside)
    • Analyst: Joseph Wong
    • Key Points:
      • Strong brand and market presence.
      • Expected to benefit from a more centralized procurement strategy.
      • Target price based on 23x 2022E P/E, with a strong P/B ratio.

12. CG Services (6098 HK)

    • Sector: Property
    • Rating: BUY
    • Target Price: HK$91.2 (65% upside)
    • Analyst: Joseph Wong
    • Key Points:
      • Strong grid-parity project return and capacity expansion visibility.
      • Expected to benefit from a more favorable market environment.
      • Target price based on 23x 2022E P/E, with a high ROE and P/B ratio.

13. China Longyuan (916 HK)

    • Sector: Renewables
    • Rating: BUY
    • Target Price: HK$21.0 (21% upside)
    • Analyst: Joseph Wong
    • Key Points:
      • Strong focus on renewable energy.
      • Expected to benefit from cost control and mix upgrades.
      • Target price based on 19.4x 2021E P/E, with a low yield and strong ROE.

14. Suntien (956 HK)

    • Sector: Renewables
    • Rating: BUY
    • Target Price: HK$5.17 (N/A)
    • Analyst: Robin Xiao
    • Key Points:
      • Strong wind resources outlook and capacity expansion visibility.
      • Share price decline after disappointing 3Q21 results.
      • Target price based on 8.4x 2021E P/E, with a good risk-reward ratio.

15. Xiaomi (1810 HK)

    • Sector: Technology
    • Rating: BUY
    • Target Price: HK$39.7 (94% upside)
    • Analyst: Alex Ng / Lily Yang
    • Key Points:
      • Strong product portfolio and premium model strategy.
      • Expected to benefit from Honor's recovery and market weakness.
      • Target price based on 15.7x FY22E P/E, with a low yield and strong ROE.

16. Willsemi (603501 CH)

    • Sector: Technology
    • Rating: BUY
    • Target Price: RMB346.6 (23% upside)
    • Analyst: Alex Ng / Lily Yang
    • Key Points:
      • Strong fundamentals and growth potential.
      • Expected to benefit from a more favorable market environment.
      • Target price based on 50.9x 2021E P/E, with a high ROE and P/B ratio.

17. Hikvision (002415 CH)

    • Sector: Software & IT Services
    • Rating: BUY
    • Target Price: RMB76.3 (50% upside)
    • Analyst: Joseph Wong
    • Key Points:
      • Strong focus on intelligent products and robotic business.
      • Expected to benefit from the development of intelligent coal mines and ports.
      • Target price based on 29.2x 2021E P/E, with a high ROE and P/B ratio.

Performance of Recommendations

• In the last report (12 Oct), 18 long ideas were highlighted.
• The basket of these stocks underperformed the MSCI China index by 1.4ppt, delivering -4.1% return (vs MSCI China -2.7%).
• BYD-H and Willsemi delivered 20% return.
• 7 of the 18 long ideas outperformed the benchmark.

Latest Additions and Deletions

Additions:

• Haier (6690 HK): Strong execution in 3Q21 and solid 4Q21E guidance.
• CR Beer (291 HK): Strong premiumization and mix upgrade.
• Mengniu (2319 HK): Strong cost control and mix upgrade.
• Suntien (956 HK): Strong wind resources outlook and capacity expansion visibility.
• Xiaomi (1810 HK): Strong product portfolio and premium model strategy.

Deletions:

• BYD-H (1211 HK): Recent rally may lead to profit-taking.
• ZTO Express (2057 HK): ASP improvement trend is already priced in.
• JS Global (1691 HK): Concerns about logistic issues and China growth slowdown.
• China Hongqiao (1378 HK): Uncertainties around power shortage and potential air pollution control measures.
• BYDE (285 HK): Expected to be negatively impacted by chip shortage and smartphone weakness.

Valuation Highlights

• Zhejiang Dingli: 44x 2021E P/E, with a strong upside.
• SANY International: 23x 2022E P/E, with potential M&A as a catalyst.
• Bosideng: 23x FY23E P/E, with a focus on ASP growth.
• Haier: 17x FY22E P/E, with a good risk-reward.
• CTGDF: 43x end-22E P/E, above 3-year average.
• CR Beer: 29.8x end-22E P/E, with a strong mix-driven strategy.
• Mengniu: 29.8x end-22E P/E, with a focus on cost control and mix upgrade.
• Innovent Biologics: 23x 2022E P/E, with growth expected from new products.
• China Pacific Insurance: 23x 2022E P/E, with a strong brand and market position.
• Meituan: 23x 2022E P/E, with potential for M&A.
• CR Land: 23x 2022E P/E, with a strong brand and market presence.
• CG Services: 23x 2022E P/E, with a strong grid-parity project return.
• China Longyuan: 19.4x 2021E P/E, with a focus on cost control.
• Suntien: 8.4x 2021E P/E, with a good risk-reward ratio.
• Xiaomi: 15.7x FY22E P/E, with a strong product portfolio.
• Willsemi: 50.9x 2021E P/E, with a high ROE and P/B ratio.
• Hikvision: 29.2x 2021E P/E, with a strong ROE and P/B ratio.

Conclusion

The CMBI Research Focus List highlights a diverse range of high conviction investment ideas across multiple sectors, with a focus on long-term growth and current market dynamics. The report provides detailed analysis of each company's financials, valuation, and growth drivers, along with performance data and analyst insights. The recommendations include a mix of long and short ideas, with a particular emphasis on long-term opportunities. The report also highlights the performance of the recommendations and provides insights into the latest additions and deletions from the list. The valuation analysis shows that the target prices are based on a range of multiples, with a focus on P/E and P/B ratios. The report concludes with a summary of the key points and highlights the potential for growth and value creation.