20210809-招银国际-Our_best_high_conviction_ideas_24页_2mb

CMBI Research Focus List Summary

Core Content Overview

The CMBI Research Focus List highlights a range of investment ideas across different sectors, focusing on both long and short-term opportunities. The list includes companies with strong growth potential, attractive valuations, and positive catalysts that could drive future performance. The report also discusses recent additions and deletions from the list, as well as the performance of previously recommended stocks.

Main Long Ideas

BYD – H (1211 HK)

• Sector: Auto
• Rating: BUY
• Target Price (TP): HK$315 (19% upside)
• Analysts: Jack Bai / Robin Xiao
• Key Points:
  • Strong rebound in April auto sales, with NEV sales accounting for 56.7%.
  • DM-i series PHEV is expected to drive demand due to its high cost performance and efficiency.
  • Current valuation is 3x P/S, significantly lower than peers.
  • Future catalysts: NEV sales growth, external power battery shipment, and semiconductor business updates.
• Financial Highlights:
  • Revenue growth: 28.25% in FY21E.
  • Net income: 6,919 RMB mn in FY21E.
  • P/E: 93.4x in FY21E.
  • ROE: 9.8% in FY21E.

Zhejiang Jingsheng (300316 CH)

• Sector: Capital Goods
• Rating: BUY
• Target Price (TP): HK$77.5 (26% upside)
• Analyst: Wayne Fung
• Key Points:
  • Leading manufacturer of crystal growing equipment for solar industry.
  • Benefiting from strong capex growth in solar wafer manufacturers.
  • Introducing SiC equipment, which is expected to be a new growth driver.
• Financial Highlights:
  • Revenue growth: 84% in FY21E.
  • Net income: 1,486 RMB mn in FY21E.
  • P/E: 56.4x in FY21E.
  • ROE: 25.2% in FY21E.

SANY International (631 HK)

• Sector: Capital Goods
• Rating: BUY
• Target Price (TP): HK$11.9 (24% upside)
• Analyst: Wayne Fung
• Key Points:
  • Benefiting from policy to speed up coal supply and high metal prices.
  • Launching new products and expanding into mining trucks and robotics.
  • Strong valuation premium based on 24x P/E.
• Financial Highlights:
  • Revenue growth: 35.1% in FY21E.
  • Net income: 1,298 RMB mn in FY21E.
  • P/E: 18.2x in FY21E.
  • ROE: 15.7% in FY21E.

Li Ning (2331 HK)

• Sector: Consumer Disc.
• Rating: BUY
• Target Price (TP): HK$103.82 (27% upside)
• Analyst: Walter Woo
• Key Points:
  • Leading sportswear brand leveraging domestic fashion mania.
  • Growth drivers include premiumization, e-commerce expansion, and improved store productivity.
  • TP based on 55x FY22E P/E.
• Financial Highlights:
  • Revenue growth: 37.5% in FY21E.
  • Adj. Net profit: 3,255 RMB mn in FY21E.
  • P/E: 53.4x in FY21E.
  • ROE: 28.5% in FY21E.

Prada (1913 HK)

• Sector: Consumer Disc.
• Rating: BUY
• Target Price (TP): HK$68.09 (20% upside)
• Analyst: Walter Woo
• Key Points:
  • Strong 1H21E results confirm turnaround.
  • EBIT margin expected to recover to 15%+ by FY23E.
  • TP based on 55x FY22E P/E.
• Financial Highlights:
  • Revenue growth: 32.8% in FY21E.
  • Adj. Net profit: 347 RMB mn in FY22E.
  • P/E: 47.7x in FY22E.
  • ROE: 11.0% in FY22E.

WH (288 HK)

• Sector: Consumer Staples
• Rating: BUY
• Target Price (TP): HK$8.90 (38% upside)
• Analyst: Albert Yip
• Key Points:
  • Expected to deliver a 95% YoY increase in NP in 2H21E.
  • Share buyback offer is a key catalyst, with potential to boost FY22E EPS by ~9%.
  • Valuation is undemanding at 9.3x FY21E P/E.
• Financial Highlights:
  • Revenue growth: 6% in FY21E.
  • Adj. Net profit: 1,308 RMB mn in FY21E.
  • P/E: 9.3x in FY21E.
  • ROE: 8.6% in FY21E.

Hope Education (1765 HK)

• Sector: Education
• Rating: BUY
• Target Price (TP): HK$3.54 (144% upside)
• Analyst: Albert Yip
• Key Points:
  • Maintained FY21E adj. NP guidance of RMB800-850mn.
  • Anticipated M&A activities and conversion of independent colleges.
  • Strong overseas study demand with target of 30,000 students in 2021-22.
• Financial Highlights:
  • Revenue growth: 43% in FY21E.
  • Adj. Net profit: 811 RMB mn in FY21E.
  • P/E: 10.9x in FY21E.
  • ROE: 11.9% in FY21E.

Innovent Biologics (1801 HK)

• Sector: Healthcare
• Rating: BUY
• Target Price (TP): HK$120.9 (63% upside)
• Analysts: Jill Wu / Sam Hu / Jonathan Zhao
• Key Points:
  • Strong pipeline with product launches in 2022-23E.
  • NDRL inclusion of Tyvyt's large indications in 2021E.
  • TP based on 67x FY21E P/E, equivalent to 1.4x PEG.
• Financial Highlights:
  • Revenue growth: 69.5% in FY21E.
  • Adj. Net profit: 3,935 RMB mn in FY22E.
  • P/E: 44.1x in FY22E.
  • ROE: 27.3% in FY22E.

China Pacific Insurance (2601 HK)

• Sector: Insurance
• Rating: BUY
• Target Price (TP): HK$36.0 (57% upside)
• Analyst: Gigi Chen
• Key Points:
  • Expected to report better-than-peers VNB momentum and improved agent productivity in 1H21E.
  • Strong performance in 1H21E, with TP based on 40x FY21E P/E.
• Financial Highlights:
  • Revenue growth: 42.4% in FY21E.
  • Net profit: 2,300 RMB mn in FY21E.
  • P/E: 0.4x in FY21E.
  • ROE: 12.4% in FY21E.

CG Services (6098 HK)

• Sector: Property
• Rating: BUY
• Target Price (TP): HK$91.2 (54% upside)
• Analyst: Jeffrey Zeng
• Key Points:
  • Potential for better-than-pre-announced 1H21E results.
  • Attractive valuation post-industry correction.
  • TP based on 30x FY21E P/E.
• Financial Highlights:
  • Revenue growth: 114.5% in FY21E.
  • Net income: 1,486 RMB mn in FY21E.
  • P/E: 14.7x in FY22E.
  • ROE: 29.7% in FY22E.

China Hongqiao (1378 HK)

• Sector: Materials
• Rating: BUY
• Target Price (TP): HK$15.0 (53% upside)
• Analyst: Robin Xiao
• Key Points:
  • Benefiting from the rebound in the domestic market.
  • High yield of 9.6% in FY21E.
• Financial Highlights:
  • Revenue growth: 34.1% in FY21E.
  • Net profit: 3,255 RMB mn in FY21E.
  • P/E: 4.9x in FY21E.
  • ROE: 14.9% in FY21E.

BYDE (285 HK)

• Sector: Technology
• Rating: BUY
• Target Price (TP): HK$55.0 (39% upside)
• Analysts: Alex Ng / Lily Yang
• Key Points:
  • Strong growth in technology sector.
  • High yield of 21.3% in FY21E.
• Financial Highlights:
  • Revenue growth: 61.8% in FY21E.
  • Net profit: 3,255 RMB mn in FY21E.
  • P/E: 13.1x in FY21E.
  • ROE: 14.0% in FY21E.

Meituan (3690 HK)

• Sector: Internet
• Rating: BUY
• Target Price (TP): HK$383.0 (74% upside)
• Analysts: Sophie Huang / Miriam Lu
• Key Points:
  • Strong growth in internet and technology sectors.
  • TP based on 20x FY21E P/E.
• Financial Highlights:
  • Revenue growth: 995.9% in FY21E.
  • Net profit: 2,300 RMB mn in FY21E.
  • P/E: NA.
  • ROE: NA.

Bilibili (BILI US)

• Sector: Internet
• Rating: BUY
• Target Price (TP): HK$142.0 (80% upside)
• Analysts: Sophie Huang / Miriam Lu
• Key Points:
  • Strong growth in internet and technology sectors.
  • TP based on 20x FY21E P/E.
• Financial Highlights:
  • Revenue growth: 483.9% in FY21E.
  • Net profit: 2,300 RMB mn in FY21E.
  • P/E: NA.
  • ROE: NA.

Recent Additions and Deletions

Additions

• Li Ning (2331 HK): Strong domestic fashion momentum and margin improvement.
• Prada (1913 HK): Strong 1H21E results and positive outlook for 2H21E and FY22E.
• WH (288 HK): Share buyback offer and improved 3Q21E performance.
• Innovent Biologics (1801 HK): Strong product pipeline and NDRL inclusion.
• China Pacific Insurance (2601 HK): Better-than-peers VNB momentum.
• CG Services (6098 HK): Attractive valuation post-correction.
• Hikvision (002415 CH): Limited policy risk and diversified customer base.

Deletions

• JNBY Design (3306 HK): Rally after positive profit alert limits short-term upside.
• Anta (2020 HK): Softened retail sales due to pandemic.
• CR Beer (291 HK): Sales volume affected by pandemic.
• PA Good Doctor (1833 HK): Lack of near-term catalysts.
• Powerlong CM (9909 HK): Uncertainty in 1H21E results.
• Kingsoft Cloud (KC US): Policy-related uncertainty and disclosure rules.

Performance of Recommendations

• Last Report (6 Jul): 16 long ideas outperformed MSCI China index by 6.7ppt, delivering -4.0% return vs -10.6% for the index.
• Top Performers: Zhejiang Jingsheng, JNBY Design, ZTE, BYD-H, and SANY International delivered 16% or more returns.
• Performance: 7 of the 16 long ideas outperformed the benchmark.
• Valuation Trends: Most stocks are trading below historical averages, offering potential upside.

Key Takeaways

• The focus list includes companies across various sectors, with a strong emphasis on the auto, consumer discretionary, and technology industries.
• Positive catalysts such as share buybacks, product launches, and policy support are highlighted.
• Valuation is a key consideration, with several stocks offering attractive multiples.
• The report suggests a mix of long and short-term investment opportunities, with a focus on growth and market re-rating.