20230214-招银国际-CMBI_Research_Focus_List__Our_best_high_conviction_ideas_31页_3mb

CMBI Research Focus List Summary

Core Content Overview

This document outlines the CMBI Research Focus List for 14 February 2023, highlighting long and short ideas with detailed analysis, target prices, and key financial metrics. The focus is on identifying companies with strong growth potential and investment value, particularly in the context of China's economic recovery and industry-specific trends.

Main Points

• CMBI's long ideas are based on high conviction and include companies across multiple sectors such as Auto, Capital Goods, Coal, Gas, Consumer Discretionary, Consumer Staples, Healthcare, Insurance, Internet, and Property.
• Target prices and upside potential are provided for each company, along with rating and key analysts.
• Performance metrics such as P/E, P/B, ROE, and Yield are included to evaluate valuation and financial health.
• The latest additions and deletions from the focus list are detailed, providing insights into the rationale for each change.
• The performance of the previous recommendations is summarized, with the basket of 22 long ideas outperforming the MSCI China index by 2.4 percentage points in the period from 17 January to 13 February 2023.

Key Companies in the Long Ideas

Latest Additions and Deletions

Additions

• JNBY (3306 HK) – Consumer Discretionary, BUY, TP: HK$12.7 (16% upside)

  • Rationale: Expected strong performance in Q4 2022 and FY23E due to low base and improved branding and product upgrades.

• Kweichow Moutai (600519 CH) – Consumer Staples, BUY, TP: HK$1842.0 (32% upside)

  • Rationale: Best proxy for China's consumption-led recovery.

• China Life (2628 HK) – Insurance, BUY, TP: HK$20.9 (50% upside)

  • Rationale: Strong new business growth, bond yield turnaround, and undemanding valuation.

• Pinduoduo (PDD US) – Internet, BUY, TP: $92.9 (-3% upside)

  • Rationale: Better than expected GMV and revenue growth, driven by user stickiness and branded products.

Deletions

• CPIC (2601 HK) – Insurance, BUY

  • Rationale: Already outperformed the HSI significantly, so it's removed to focus on China Life.

• Alibaba (BABA US) – Internet, BUY

  • Rationale: Investment thesis has played out, and the stock may need time to regain growth momentum.

Performance of Previous Recommendations

• In the last report (17 January 2023), 22 long ideas were highlighted.
• The basket of these stocks outperformed the MSCI China index by 2.4ppt, delivering 0.7% return (vs MSCI China -1.7%).
• 2 stocks delivered over 10% return, and 13 long ideas outperformed the benchmark.

Key Insights and Analysis

Li Auto Inc. (LI US)

• Best positioned among NEV start-ups.
• Expected to turn profitable in FY23E, earlier than other NEVs.
• Target Price: $44.00 (76% upside).
• Valuation: Based on 3.3x FY23E P/S.
• Catalysts: Strong sales growth, milder cannibalization, and first BEV model launch in 2023.

Geely Automobile (175 HK)

• Top pick among incumbent automakers.
• Zeekr is expected to double sales in FY23E with a new compact SUV.
• Target Price: HK$16.50 (42% upside).
• Valuation: Based on 2.5x FY23E core revenue.
• Catalysts: PHEV sales boom, spin-off of AWP unit, and improved financials.

S.C New Energy Technology (300724 CH)

• Key beneficiary of solar cell technology transformation.
• Expected to benefit from TOPCon, HJT, and Perovskite.
• Target Price: RMB187 (57% upside).
• Valuation: Based on 52x P/E (1 SD above historical average).
• Catalysts: Solar cell capacity expansion, technological breakthroughs.

Zoomlion Heavy Industry (1157 HK)

• Spin-off of AWP unit to unlock value.
• Target Price: HK$5.24 (13% upside).
• Valuation: Based on 11.5x 2023E P/E.
• Catalysts: Stabilization of property sector, spin-off of AWP unit.

Yancoal Australia (3668 HK)

• Share price pullback presents a buying opportunity.
• Target Price: HK$30.6 (73% upside).
• Valuation: Based on 2x 2023E P/E.
• Catalysts: Recovery of coal production, reopening of China, improved relations with Australia.

CR Gas (1193 HK)

• Optimistic gas sales outlook for 2023.
• Target Price: HK$39.13 (16% upside).
• Valuation: Based on 12x FY23E forward P/E.
• Catalysts: Improved pandemic control, M&A activity, and "1+2+N" strategy.

CDC (341 HK)

• Light at the end of the tunnel.
• Target Price: HK$15.12 (14% upside).
• Valuation: Based on 40.1x FY23E P/E.
• Catalysts: Reopening of HK-China border, social media campaigns, product upgrades.

Financial Highlights

• Li Auto Inc.: Expected to turn net profit in 4Q22E and lead FY23E sales.
• Geely Automobile: Sales volume to rise 3% YoY to 1.5mn units.
• S.C New Energy Technology: Revenue growth expected to be 30% in FY23E.
• Zoomlion Heavy Industry: Net income to grow 27.4% in FY23E.
• Yancoal Australia: Net income to grow 16.8% in FY23E.
• CR Gas: EPS to grow to HK$3.32 in FY23E.
• CDC: Sales to grow 2% YoY in FY23E, net profit to grow 4% YoY.

Summary

The CMBI Focus List for February 2023 includes a mix of buy recommendations across various sectors, emphasizing growth potential, technological advancements, and market recovery. The latest additions include JNBY, Kweichow Moutai, China Life, and Pinduoduo, while CPIC and Alibaba have been deleted. The performance of the previous long ideas showed positive returns against the MSCI China index, with 13 stocks outperforming the benchmark. Key factors influencing the recommendations include sales growth, technological progress, valuation, and market conditions.