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6 Mar, 2019 (Wednesday) |
 
PICO FAR EAST(752)
Analysis：
Pico Far East (752) is principally engaged in exhibition and event marketing services as well as other distinct businesses, including visual branding experiences, museum and themed environment, interior and retail, conference and show management, temporary infrastructure for sporting events, and other related business. The Group has been continuously dedicated to drive transformation, create success and remain focused on the Group`s mission of being a global total brand activation company. The Group plans to acquire 100% stake in a Target Company know as Local Projects. The Target Company is a marketing agency company organized in New York, USA. It is principally engaged in the design and production services that integrate physical design with digital media an dis one of the industry experts that specialized in marketing design and production services that integrate physical design with digital media within the USA market. The Acquisition will not only further expand the business exposures of the Group in the USA market but also enlarge the revenue stream of the Group. (I do not hold the above stock)
Strategy：
Buy-in Price: $3.05, Target Price: $3.45, Cut Loss Price: $2.85
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PC PARTNER(1263)
Analysis：
The group is a manufacturer of computer electronics. The key products are video graphics cards, motherboards, and mini-PCs. In the first half of 2018, the revenue of the group was 5.54 billion HKD, 86.4% growth YoY; the net profit was 340 million HKD, up by 6.8 times. The substantial growth in revenue was partially thanks to the upsurge of cryptocurrency, such as Bitcoin and Ethereum. As a video graphics card is needed for cryptocurrency mining, the hike on the price of Bitcoin increases the demand for video graphics card. Although the price of Bitcoin has already fell from the peak, it is believed cryptocurrency will still be the main trend in the future, so the demand from cryptocurrency should be sustainable. Besides, the commercialization and competitive use of video games will also help to increase the demand for video graphics cards. Own brand “ZOTAC” video graphics card is currently the group`s key products in the e-sports. In addition to video graphics cards, they are also working on the development of VR backpacks to capture the huge market of virtual reality.
Strategy：
Buy-in Price: $3.00, Target Price: $4.50, Cut Loss Price: $2.00
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Anta Sports (2020.HK) - FY18 Results Beyond Market Expectations; Conservatively Optimistic Guidance for FY19
Investment SummaryAnta reported 2018 operating results beating market expectation. Anta brand realized mid-teens growth and non-Anta brand delivered yoy growth between 80% to 85%. Benefiting from rising same store sales and operation efficiency, we expect the turnover to stably grow in future. In 2019, it targets to deliver over 20% topline growth. We estimate 19E/20E EPS to be RMB1.82/2.20 respectively, and raise TP to HKD50.8, Accumulating rating. (Closing price at 27 Feb 2019) Company Business2018 results beating expectations. Anta's revenue rose by 44% to RMB24.1bn. GPM rose by 3.3ppts reaching 52.6%, but OPM declined by 0.2ppts to 23.7%, due to climbing selling expenses. Net profit attributable reaching RMB4.1bn, up by 33%. Net operating cash flow grew by 40% to RMB4.44bn. Dividend pay-out ratio dropped from 70% in 2017 to 45% in 2018. 
Improving store sales and efficiency. As up to the end of 2018, the amount of Anta/ non-Anta stores reached 10,057/1,652 respectively, exceeding previous guidance ( Anta 9700-9800, Fila 14000-15000). Meanwhile, we see that same stores sales growth served as one main driver, given Anta/ Anta Kids delivering monthly sales of RMB220k/ 130k per single store (by 10% yoy), and Fila /Fila Kids recording sales of RMB700k/ 300k (up by 40%/ 50% yoy). Currently inventory level is getting better, with inventory days of key biz Anta maintained at around 4.2 months, and Fila's inventory days dropping from 150 days to 130 days. Improving efficiency is expected to go on to contribute to steady sales growth. 2019 guidance. The company aims to realize sales growth of 20% in 2019E, with Anta and Fila respectively growing by min-teens and 30%. As up tp 2020, the total turnover CAGR is targeted to be 15%~20%. For other bizs, Descent is going to actively explore and strive for turning profit in 2019E. While other new brands like Amer Sports and Kolon still contribute little to sales and profit. 
Acquisition progress smoothly. The company announced that the acquisition of Amer Sports have been approved in related national regulations globally. The trade will be sellted in March. We highlight this transaction is an important step in Anta's exploration in overseas market. Valuation & RisksWe raise target price to HKD50.8: Future momentum comes from rising store efficiency, rapid growth of Kids` product and further exploration of Fila and its subsidy bizs. Projected EPS is RMB1.82/2.20 in 19E/ 20E and target price is raised to HKD50.8. Risks include: Rising selling and R&D expenses; Sluggish retail market; Inefficiency resulting from so many brands under operation. 
Financials
Click Here for PDF format...
| Recommendation on 6-3-2019 | | Recommendation | Accumulate | | Price on Recommendation Date | $ 45.400 | | Suggested purchase price | N/A | | Target Price | $ 50.800 |
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Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited and/or its affiliates ( the “Group”) believe to be accurate. The Group does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof. The Group (or its employees) may have interests in relevant investment products. For details of different products’ risks, please view the Risk Disclosures Statement on http://www.phillip.com.hk.
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