Investor Notes - Phillip Securities (HK) Ltd

19 Jul, 2021 (Monday)

HUTCHMED(13)
Analysis：
HUTCHMED (013) is a global commercial-stage biopharmaceutical company focused on the discovery, development and commercialization of targeted therapies and immunotherapies for the treatment of patients with cancer and immunological diseases. In addition to its Oncology/Immunology operations, it has built large-scale and profitable drug marketing and distribution capabilities of prescription drugs in China. The aim of its research is to develop drugs with high selectivity and superior safety profiles, a key benefit of which is that our drug candidates have the potential to be effectively paired with other oncology and immunology therapies at effective dosages with fewer side effects. Over the past fifteen years, its in-house discovery engine has created a broad pipeline of ten clinical stage drug candidates with a further seven oncology and immunology drug candidates in preclinical testing. (I do not hold the above stock)
Strategy：
Buy-in Price: $61.00，, Target Price: $70.00, Cut Loss Price: $57.00

CHINFMINING(1258)
Analysis：
The company is the world`s leading copper producer, operating copper mining and smelting operations in Zambia and the Democratic Republic of Congo. The company is an overseas platform for the development of copper and cobalt resources by China Nonferrous Metals Corporation, a central enterprise directly under the SASAC. As of the end of 2020, the company has 5.84 million tons of copper resources, 2.39 million tons of reserves, and 1.9134 million tons of equity copper reserves; 170,000 tons of cobalt resources, 54,000 tons of reserves, and 45,700 tons of equity cobalt reserves; it is expected to be self-produced by 2022 The copper production capacity will reach about 170,000 tons/year, the smelting copper production capacity will reach about 570,000 tons/year; the cobalt metal production capacity will reach about 3900 tons/year. Recently, the company has placed 250 million shares on a first-to-new basis and raised 985 million Hong Kong dollars. As the Chambishi Southeast Mine gradually reaches production, the combined exploration and construction project of the main ore body of Gambov and the open-pit mine project of Ron Extension With the completion and commissioning one after another, China Nonferrous Mining`s profitability will be further improved.
Strategy：
Buy-in Price: $3.60, Target Price: $6.30, Cut Loss Price: $2.10

BYD (1211.HK) - New Platform Is Introduced Again

Investment Summary

Sales Volume of Electric Vehicles Hit a Record High in June

According to data, BYD sold 51,015 vehicles in June, up 51% yoy and up 10% mom. Specifically, 41,366 new energy vehicles were sold, up 192% yoy and up 26% mom, and 9,649 traditional fuel vehicles were sold, down 50.6% yoy and down 28.5% mom. The sales volume of new energy vehicles hit the Company's record high, exceeding the sales volume of new energy vehicles of rivals Tesla and SGM-Wuling in China. Passenger vehicles and commercial vehicles made a contribution of 49,765 units and 1,250 units, respectively. In H1, the Company sold 246,700 vehicles accumulatively, up 55.5% yoy.

In terms of the sales volume of new energy passenger vehicles in June, the sales volume of EVs reached 20,016 units, up 102% yoy and up 7% mom, and that of HEVs reached 20,100 units, up 537% yoy and up 55% mom. Benefited from the whopping sales figures of DM-i models, HEVs have displayed an outstanding performance.

BYD's three new DM-i models (Qin PLUS DM-i, Song PLUS DM-i, and Tang DM-i) have been launched successively since March this year. They are equipped with the self-developed "DM-i super plug-in hybrid" system, which are highly competitive. In June, the total sales volume of the three new DM-i models was expected to be approximately 17,000 units, with the cumulative order exceeding 120,000 units. Limited by the bottleneck of the blade battery production capacity, the supply exceeded the demand for the products. The average delivery cycle took approximately three months. In H2, Qin Pro DMi, Song Pro DMi, and Han DMi will also be launched. As the blade battery production capacity increases, the sales volume of DM-i series models is expected to continue to grow.

In addition, as BYD's first e platform 3.0-based model, Dolphin will be launched in the third quarter. It targets younger customers, aiming to fully tap the entry-level electric vehicles and travel markets.

Semiconductor's Spin-off Listing Activates a New Round of Positive Feedback Mechanism for Capital and Company Value

Recently, BYD's proposal to spin off its semiconductor business and to list it on the A-share GEM has been accepted, officially opening the way for multiple businesses to obtain value revaluation through the capital market. We believe that with the acceleration of the neutralization strategy, the spin-off listing of other sectors such as blade batteries, commercial vehicles, and photovoltaic energy storage may be successively achieved in the future. The improvement in operational efficiency and value reshaping brought about by the spin-off will push up the Company's potential value. The Company is expected to fully benefit from the dividend of the positive feedback mechanism for capital and company value.

Investment Thesis

Therefore, although there are various challenges in the future, we believe that the Company is entering into a growth period with more stability and sustainability.

In terms of STOP valuation adopt, we give the original business (automobile, mobile phone, rechargeable battery and photovoltaic business) 138/84 HK$/per share, power battery business and semiconductor business from two assumptions of optimistic expectation and cautious expectation. 176/90 and 12/4.4 HK$/per share, the overall valuation is respectively 321/176 HK$/per share, implying 45% and -20% upside respectively. For comprehensive consideration, we given the target price of 248.5 HK$, corresponding to 2021/2022/2023 110/83/60x P/E, 7.6/7.0/6.3x P/B, Accumulate rating.

(Closing price as at 14 July)

Risk

Sales of NEVs is not as good as expected

New business risk

Slow-down of Hand-set components business

Financials

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Recommendation on 19-7-2021
Recommendation	Accumulate
Price on Recommendation Date	$ 221.000
Suggested purchase price	N/A
Target Price	$ 248.500

Writer Info

Zhang Jing
(Research Analyst)

Tel: (+86 21 51699400-103)

Email:
zhangjing@phillip.com.cn

Enquiry : 2277 6666 OR investornotes@phillip.com.hk
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