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NEUEDU(9616)
Analysis：
Neusoft Education (9616) is a private IT higher education service provider in China, focusing on nurturing talents in IT industry. The Group currently operates three universities, namely Dalian University in Liaoning province, Chengdu University in Sichuan province and Guangdong University in Guangdong province, to provide bachelor degree programmes, junior college diploma programmes and junior college to bachelor degree transfer programmes. As of 31 December 2021, the total number of student enrolment in our three universities reached 45,618, hitting a record high in size. According to its positive profit alert, for the six months ended 30 June 2022 as compared to the corresponding period in 2021, it is expected to record an increase of not less than 70% in the profit for the period attributable to owners of the Company. (I do not hold the above stock)
Strategy：
Buy-in Price: $4.15, Target Price: $4.55, Cut Loss Price: $3.90
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LK TECH(558)
Analysis：
LK Technology is one of the largest integrated die-casting machine manufacturers in the world. Its main products include die-casting machines, injection molding machines and CNC machining centers (CNC). Among them, die-casting machines are the company's main source of income, and its market share in China exceeds 60%, the global market share of die-casting machines over 4,500 tons exceeds 50%, and the exclusive supply of super-large die-casting machines over 6,000 tons for Tesla. It is expected that Tesla will purchase at least 80 large die-casting machines of more than 6,000 tons from the company in the next three years. Under the trend of lightweight, it is expected that other new energy vehicle companies will also adopt integrated die-casting technology, and the company will deliver at least 500 large-scale die-casting machines in the next five years.
Strategy：
Buy-in Price: $13.40, Target Price: $18.50, Cut Loss Price: $10.60
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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 17-8-2022 | | Recommendation | Neutral | | Price on Recommendation Date | $ 12.800 | | Suggested purchase price | N/A | | Target Price | $ 13.010 |
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