Investor Notes - Phillip Securities (HK) Ltd

7 Dec, 2022 (Wednesday)

CHAOJU EYE CARE(2219)
Analysis：
Chaoju Eye Care (2219) is primarily engaged in the operation of ophthalmic hospitals and optical centres in China. As of June 30, 2022, the Group operated a network of 18 ophthalmic hospitals and 25 optical centers spanning across five provinces or autonomous region in China. The Group recently completed the acquistion of equity interest in 4 hospitals, namely 75% equity interest in Tangshan Jidong Hospital; 51% equity interest in Yutian Jidong Hospital; 51% equity interest in Luannan Jidong Hospital; 65% equity interest in Luanzhou Jidong Hospital. The Group will be able to create synergies with the clustered operations of its ophthalmic hospitals in Chengde City and the Target Hospitals in Tangshan City, as they will collaborate and expand its coverage in eastern Hebei Province which will be significant to its future development into Beijing, Tianjin and other regions in Hebei Province. (I do not hold the above stock)
Strategy：
Buy-in Price: $3.70, Target Price: $4.10, Cut Loss Price: $3.50

MICROPORT(853)
Analysis：
For the six months ended 30 June 2022, MicroPort Scientific Corporation (00853) recorded revenue of US$405.0 million, increased by 5.3% in US$ or 10.1% excluding the foreign exchange impact compared to the six months ended 30 June 2021. Despite the reduction in elective surgeries at medical institutions due to the COVID-19 pandemic, the heart valve business, the endovascular and peripheral vascular devices business and the neurovascular devices business recorded increases of 44.8%, 26.6% and 22.9% in revenue excluding the foreign exchange impact respectively. During the reporting period, loss attributable to equity shareholders of the Company US$198.1 million. As for the PRC market, thanks to the economic and social development, the health awareness among its people has been raised significantly, and reform of the medical system has also brought policy bonus. The medical device market in China has huge development opportunities. With its strong brand recognition, extensive distribution network, and the economies of scale achieved by the deployment of multiple channels, the company would further increase its market share in the PRC.
Strategy：
Buy-in Price: $20.00, Target Price: $22.05, Cut Loss Price: $18.26

Geely (175.HK) - Intelligent Electrification Drives the Company to Make Continuous Efforts in High-end Branding

Investment Summary

The Momentum for Sales Growth Is Strengthened in October Despite a Sales Decline in New Energy Vehicles

According to the released sales data for October, Geely Auto reported total sales volume of 152,263 units, a significant increase of 36.4% yoy and a substantial growth of 16.65% mom. The year-on-year and month-on-month growths increased by 10.8 ppts and 10.2 ppts, respectively from the previous month. In the first ten months, the Company sold 1,141,901 vehicles accumulatively, up 10% yoy. The Company completed 70% of the annual target of 1,650 thousand units.

The sales volume of new energy vehicles (including battery electric vehicles, plug-in hybrid electric vehicles, and hybrid electric vehicles) reached 32,277 units in October, down 25% from the previous month, accounting for 21% of the total sales volume, down from 33% in the previous month, mainly due to a large sales decline in the Geometry models.

The Proportion of High-end Models Increases, and the Intelligent Electrification Drives the Company to Make Continuous Efforts in High-end Branding

In terms of sub-brands, Geely reported sales volume of 119,874 units, a significant increase of 34% yoy and a growth of 18% mom. Among its higher-end models, the sales volume of "China Star" series (Xingyue, Xingyue L, and Xingrui) reached 30,033 units, up 32% mom. In term of the specific models, the sales volume of both Xingrui and Xingyue L was over 10 thousand units, the sales volume of the Emgrand family outstripped 20 thousand units, and that of the Bin family (Binyue and Binrui) exceeded 30 thousand units.

During October, GeelyEmgrand L Hi.P, which is equipped with the Leishen Power, and Xingyue L Hi.P, as well as the Haoyue L, a new model on the CV platform, and the Boyue L, a brand-new model on the CMA platform, joined the product lineup of Geely in succession, with reservations opened. It is worth noting that the order of Boyue L exceeded 26,000 units on October 26, the first day of the launch, and its sales volume outstripped 8,000 units in the first month of the launch, with eye-catching performance, showing the initial potential as a top-selling model.

In October, the sales volume of Lynk& Co was 16,439 units, a slight growth of 1.6% mom and a decrease of 24.27% yoy. Lynk& Co has newly launched the Lynk& Co 03, the Lynk& Co 03 EM-F, an intelligent electric hybrid model, and the Lynk& Co 09EM-P Voyage Edition. The replacement and upgrading of Lynk& Co is also in progress.

The sales volume of Geometry, a battery electric vehicle brand, reached 12.6 thousand units, up 116% yoy and down 32.6% mom, mainly due to the upcoming launch of the more intelligent new models of G6 and M6. The sales volume of Ruilan, a battery replacement brand, was 5,831 units, up 28.4% mom.

The sales volume of Zeekr, a high-end battery electric vehicle brand, reached 10,119 units relying on the Zeekr 001, exceeding 10 thousand units for the first time, up 22.3% mom. Since its launch, it has delivered 55.6 thousand units accumulatively, verifying the product strength in the fierce competition with new car-making forces. The Zeekr 009, a new battery electric luxury MPV with six seats, was officially released in November, cutting into the segment of domestic high-end intelligent electric MPV. It will further enrich the product matrix of Zeekr and facilitate the promotion of the strategy of high-end branding.

Recently, the Company announced its intention to spin off Zeekr for a separate listing. The valuation of Zeekr was close to RMB60 billion in the previous pre-IPO financing. If it is successfully spun off for listing, it will help Zeekr obtain more resources to seize market opportunities and realize a two-wheel ecosystem driven by industry and capital, which will also be conducive to the value revaluation of the parent company.

Investment Thesis

After the launch of the new generation hybrid technology Leisheng Power, the electrification and intelligent upgrading are accelerating, helping Geely return to the new energy vehicle racing track. In addition, the supply shortage of automobile chips and other factors are are expected to gradually improve or eliminate, and the long-term competitiveness of the company are still worth looking forward to and growth momentum remain unchanged.

We revised our financial forecast and target price to HK$14.2, equivalent to 24/15/10.6x P/E ratio in2022/2023/2024, and we give the rating of Buy. (Closing price as at 1 December)

Financials

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Recommendation on 7-12-2022
Recommendation	BUY
Price on Recommendation Date	$ 11.600
Suggested purchase price	N/A
Target Price	$ 14.200

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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