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ZAI LAB(9688)
Analysis：
Zai Lab (9688) is a patient-focused, innovative, commercial-stage, global biopharmaceutical company, focusion on oncology, infectious diseases and autoimmune diseases. For the three months ended June 30, 2022, total revenues were US$48.2 million, representing an increase of 30.6% as compared to the same period in 2021. Net loss was US$137.9 million, compared to US$163.3 million for the same period last year. The decrease in net loss was primarily due to no upfront payments for new licensing agreements partially offset by an increase in foreign exchange loss of US$42.2 million, which is a non-cash adjustment. As of June 30, 2022, cash and cash equivalents, short-term investments, and restricted cash totaled US$1,256.9 million, maintaining a strong balance sheet. (I do not hold the above stock)
Strategy：
Buy-in Price: $33.00, Target Price: $37.00, Cut Loss Price: $31.00
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CHINA TELECOM(728)
Analysis：
In the first quarter of 2022, China Telecom（00728）operating revenues were RMB119,629 million, representing an increase of 11.9% over the same period of last year, of which service revenues were RMB110,024 million, representing an increase of 9.9% over the same period of last year. The profit attributable to equity holders was RMB7,223 million, representing an increase of 12.1% over the same period of last year. Basic earnings per share was RMB0.08. EBITDA was RMB32,361 million, representing an increase of 4.2% over the same period of last year. EBITDA margin was 29.4%. Benefit from individual informatisation upgrade led by 5G, revenues from mobile communications services amounted to RMB49,014 million, representing an increase of 5.0% over the same period of last year. The total number of mobile subscribers reached approximately 380 million with a net addition of 7.11 million. The number of 5G package subscribers reached approximately 211 million with a net addition of 22.95 million, while the penetration rate reached 55.5%. The mobile ARPU amounted to RMB45.1. Wireline and Smart Family service revenues reached RMB29,645 million, representing an increase of 4.9% over the same period of last year. The number of wireline broadband subscribers reached 173 million, and the Smart Family revenue increased by 22.5% year-on-year, driving the broadband blended ARPU to reach RMB46.7. Succeed in propelled “the cloud migration, the use of data and intelligence injection” for customers, Industrial Digitalisation service experienced an accelerated growth, with revenue reaching RMB29,414 million, representing a year-on-year increase of 23.2%. In the future, China Telecom further promote the implementation of the “Cloudification and Digital Transformation” strategy, and accelerate the construction of the cloud-network infrastructure in a computing era. As a result, China Telecom operating performance continued to improve with new achievements in high-quality development.
Strategy：
Buy-in Price: $2.80, Target Price: $3.00, Cut Loss Price: $2.69
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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 11-8-2022 | | Recommendation | Neutral | | Price on Recommendation Date | $ 12.800 | | Suggested purchase price | N/A | | Target Price | $ 13.010 |
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