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GRAND PHARMA(512)
Analysis：
Grand Pharmaceutical Group (512) is principally engaged in the manufacture and sales of pharmaceutical preparations and medical devices, bio-technology products and health products, specialized pharmaceutical raw materials and other products. The core products of the Group cover several major business areas, featured products of which include the anti-tumor, cerebro-cardiovascular emergency pharmaceutical products and advanced cerebro-cardiovascular intervention advanced medical devices, severe disease and anti-infection, respiratory and ENT, bio-health products and specialized pharmaceutical ingredients. According to its profit alert, net profit attributable to shareholders of the Company for the six months ended 30 June 2022 recorded a decrease of approximately 35%-45% as compared to that of the six months ended 30 June 2021. If excluding the changes in fair value of investment in Telix Pharmaceuticals Limited, the consolidated net profit attributable to shareholders of the Company actually increased by not less than 20% as compared with the same period of last year, due to further expansion in markets of the Group`s core products. (I do not hold the above stock)
Strategy：
Buy-in Price: $4.38, Target Price: $4.78, Cut Loss Price: $4.18
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VINDA INT`L(3331)
Analysis：
In H1 2022, total revenue of Vinda International（03331） increased by 6.6% (growth at constant exchange rates:6.9%) to HK$9,680 million. In terms of business segment, tissue and personal care segments contributed 82% and 18% of the Vanda`s total revenue, respectively. In terms of sales channel, traditional channel, key accounts managed supermarkets and hypermarkets, B2B corporate clients and e-commerce platforms accounted for 26%, 23%, 10% and 41%, respectively, of the total revenue. As the dominant consumption channel, e-commerce revenue recorded an organic sales increase of 14.3%. Gross profit was down by 8.7% to HK$3,100 million. Gross profit was negatively impacted by input costs pressures such as raw material, energy and distribution costs. Vinda took actions including multiple pricing initiatives in mitigating input cost pressures. Continuous product mix improvement was also deployed to allow the Vinda to maintain a stable gross margin at 32.0%. As the improved standards of living, demographic changes, and increased hygiene awareness have led to a persistent and rising demand for high quality, differentiated products related to hygiene and health, market share remained strong and the Vinda brand would continue to strengthen its market leading position.
Strategy：
Buy-in Price: $21.25, Target Price: $22.65, Cut Loss Price: $20.46
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Xtep International (1368.HK) - 1H2022 Positive profit alert in line with consensus
1H2022 Positive profit alert in line with consensus Xtep announced the operation data of 2Q2022. Xtep core brand products retail sell-through (including offline and online channels) grew by mid-teens (30 % – 35 % growth in 1Q2022), retail discount level at 25% – 30% (25% discount at 1Q2022). For the six months ended 30 June 2022, core brand products retail sell-through (including offline and online channels) grew by 20 % – 25 %, and inventory turnover was around 4.5 months (about 4 months in 1H2021, 1Q2022), estimated to be related to the impact of the COVID. Xtep also expected to record a significant increase of not less than 35% in its unaudited consolidated profit attributable to shareholders for 1H2022 as compared to that for the corresponding period in 2021, which is also in line with market consensus. Such increase was primarily due to a not less than 35% growth in consolidated revenue mainly attributable to: (1) remarkable sales fair orders resulting from encouraging retail performance of the core Xtep brand and Xtep Kids` business driven by their breakthrough in product innovation, retail channel upgrade and increased brand awareness; and (2) an impressive YoY revenue growth of over 100% for Saucony under the professional sports segment owing to its strong retail sales particularly in its e-commerce business. Adverse impact of COVID on the economy is fading in June, 618 sales growth 64% The adverse impact of the latest round of COVID outbreaks on the economy is fading, and the resumption of work and production in key cities, core brand products sales are expected to gradually improve. In fact, according to the 618 Shopping Festival sales data in 2022, Xtep recorded a 64% YoY online sales growth to RMB650mn, while the online sales of the core Xtep brand surged 61% to RMB590mn and those of Xtep Kids swelled 103% to RMB75mn. Saucony's even rocketed 135%, the most among all international sports shoe brands during the Festival. Company valuationIn 2Q2022, Xtep's core brand products retail sales growth slowed down due to the impact of the resurgence in pandemic. However, Xtep continues to cooperate with international brand distributors and launched a new store in Tangshan Rongda Shopping Mall with Pou Sheng in July. With the expansion of quality channels, which may help the sales growth of core brand and offset the impact of the COVID in the first half of the year. We adjust our FY2022E EPS forecast to RMB0.43 (down slightly compare with March 2022 report), with TP at HKD13.01, represents of 26.2x P/E (equivalent to the average P/E ratio of the past 2 years plus 1 standard deviation). We downgrade our investment rating to “Neutral”. Risk factors1) Resurgence in COVID in mainland; 2) Weak domestic growth and consumer spending in sportsware; 3) Intensified competition in the industry; and 4) Slower-than-expected in new brands development. Financial
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| Recommendation on 9-8-2022 | | Recommendation | Neutral | | Price on Recommendation Date | $ 12.800 | | Suggested purchase price | N/A | | Target Price | $ 13.010 |
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