Comprehensive Analysis of Key Greater China Companies – October 31, 2024

Broker Name: UOB Kay Hian

Date of Report: October 31, 2024

The latest report from UOB Kay Hian provides an in-depth analysis of several significant companies in the Greater China region. Let’s dive into the performance, expectations, and strategic insights for these companies.

ASMPT (522 HK)

Share Price: HK\$87.00 | Target Price: HK\$104.50 | Upside: 20.1%

ASMPT, a prominent provider of semiconductor assembly and packaging services, reported a mixed performance for 3Q24. The company’s Semi solutions business exceeded revenue and margin expectations due to strong advanced packaging demand, leading to a 10% beat in operating profit estimates. However, a forex loss resulted in a net profit below expectations.

The Surface Mount Technology (SMT) solutions segment saw a significant decline, with revenue dropping 18.2% yoy and 7.5% qoq to HK\$1.6 billion. Despite this, gross margins improved by 6.8ppt yoy and 1.0ppt qoq. The net profit for the quarter was HK\$26 million, impacted by an unexpected HK\$107 million forex-related loss. Excluding this, the net profit would have been HK\$137 million, in line with estimates.

Key Financials

• FY24 Net Turnover: HK\$12,989 million
• FY24 EBITDA: HK\$1,633 million
• FY24 Net Profit: HK\$636 million
• FY24 EPS: 127.9 cents

Baoshan Iron & Steel (600019 CH)

Share Price: Rmb6.56 | Target Price: Rmb7.90 | Upside: 20.4%

Baoshan Iron & Steel reported underwhelming 3Q24 results, with revenue and profit both under pressure. The company’s net profit for 3Q24 was Rmb11,944 million, down from Rmb12,187 million in 2023. Production volumes slowed due to weak downstream demand, affecting the overall sales performance.

Despite the challenges, the company saw robust growth in differentiated products, recording a sales volume of 22.55 million tonnes, up 11.0% yoy. However, the expansion into overseas markets faced hurdles, with export orders reaching 4.66 million tonnes.

Key Financials

• FY24 Net Turnover: Rmb329,349 million
• FY24 EBITDA: Rmb30,689 million
• FY24 Net Profit: Rmb9,012 million
• FY24 EPS: 40.5 fen

BYD Company (1211 HK)

Share Price: HK\$295.00 | Target Price: HK\$260.00 | Upside: -11.5%

BYD reported a 12% yoy increase in its 3Q24 earnings, in line with estimates. The company’s net profit for the quarter was Rmb11,607 million, supported by strong sales volume of 1.06 million units. Despite this, the company’s earnings growth is expected to slow in 2025-26 due to competitive pressures.

BYD’s revenue grew by 24% yoy to Rmb201.13 billion in 3Q24, with a gross margin of 21.9%. Operating cash flow surged to Rmb42.1 billion, and free cash flow turned positive at Rmb19.8 billion.

Key Financials

• FY24 Net Turnover: Rmb751,544 million
• FY24 EBITDA: Rmb93,837 million
• FY24 Net Profit: Rmb37,068 million
• FY24 EPS: 1,275.7 fen

China Construction Bank (939 HK)

Share Price: HK\$5.97 | Target Price: HK\$6.70 | Upside: 12.2%

China Construction Bank (CCB) reported a positive turnaround in 3Q24 earnings, driven by lower provisions and a significant increase in other NII. The bank’s net profit for the quarter was Rmb326,221 million, with a net interest margin (NIM) of 1.52%.

Despite a sluggish loan growth and ongoing NIM compression, CCB’s fee income decline narrowed to 7% yoy, supported by gains in mutual fund distribution fees and credit card fees. The bank’s capital position remains strong with a CET1 ratio of 14.1%.

Key Financials

• FY24 Net Turnover: Rmb723,670 million
• FY24 Net Interest Income: Rmb597,825 million
• FY24 Net Profit: Rmb326,221 million
• FY24 EPS: 128.9 fen

China Tourism Group Duty Free (601888 CH)

Share Price: Rmb67.90 | Target Price: Rmb86.90 | Upside: 28.0%

China Tourism Group Duty Free reported 3Q24 results slightly below expectations, with a net profit of Rmb6,714 million. The company’s revenue for the quarter was Rmb67,540 million, with a gross margin of 32.0%.

Despite the challenges, the company saw an improvement in its airport business, although traveler spending remained weak. The company remains optimistic about its long-term growth prospects, driven by product mix improvements and market expansion.

Key Financials

• FY24 Net Turnover: Rmb64,993 million
• FY24 EBITDA: Rmb9,903 million
• FY24 Net Profit: Rmb6,230 million
• FY24 EPS: 301.1 fen

COSCO SHIPPING Ports (1199 HK)

Share Price: HK\$4.49 | Target Price: HK\$6.18 | Upside: 37.5%

COSCO SHIPPING Ports (CSP) reported a 5.0% yoy increase in core net profit for 3Q24, amounting to US\$81.1 million. The company’s revenue for the quarter was US\$399.0 million, with a gross margin of 27.6%.

Despite disruptions in the Red Sea, CSP achieved respectable performance, driven by growth in overseas ports/terminals. The company’s net gearing remained healthy at 29.2%, providing scope for further M&A-driven growth.

Key Financials

• FY24 Net Turnover: US\$1,527 million
• FY24 EBITDA: US\$530 million
• FY24 Net Profit: US\$296 million
• FY24 EPS: 8.3 US cents

Foxconn Industrial Internet (601138 CH)

Share Price: Rmb24.84 | Target Price: Rmb30.00 | Upside: 20.8%

Foxconn Industrial Internet (FII) reported robust growth in its AI business for 3Q24, although net profit of Rmb6,402 million fell short of expectations. The company’s revenue for the quarter was Rmb170,282 million, with a gross margin of 7.0%.

The AI server segment saw a revenue increase of 228% yoy in 9M24, contributing significantly to the overall growth. Despite the margin dilution, the production ramp of Blackwell servers is expected to offset the negative impact from 2025.

Key Financials

• FY24 Net Turnover: Rmb635,668 million
• FY24 EBITDA: Rmb33,556 million
• FY24 Net Profit: Rmb24,847 million
• FY24 EPS: 125.1 fen

LONGi Green Energy Technology (601012 CH)

Share Price: Rmb19.25 | Target Price: Rmb19.30 | Upside: 0.3%

LONGi reported a net loss of Rmb6,505 million for 9M24, in line with expectations. The company’s revenue for the quarter was Rmb20,064 million, with a gross margin of 8.0%.

Module shipments reached 51.2GW, showing a 17.7% yoy increase. The company expects an earnings recovery in the coming quarters, driven by improvements in product mix and market conditions.

Key Financials

• FY24 Net Turnover: Rmb78,784 million
• FY24 EBITDA: -Rmb442 million
• FY24 Net Profit: -Rmb6,354 million
• FY24 EPS: -83.7 fen

Midea Group (000333 CH)

Share Price: Rmb72.75 | Target Price: Rmb106.50 | Upside: 46.4%

Midea Group reported robust revenue and earnings growth for 3Q24, driven by steady progress in overseas expansion. The company’s revenue for the quarter was Rmb72,798 million, with a net profit of Rmb7,115 million.

The company continues to focus on innovation and market expansion to drive future growth, with a strong emphasis on technology and customer satisfaction.

Key Financials

• FY24 Net Turnover: Rmb78,784 million
• FY24 EBITDA: Rmb11,703 million
• FY24 Net Profit: Rmb6,230 million
• FY24 EPS: 301.1 fen

Ningbo Xusheng Group (603305 CH)

Share Price: Rmb13.00 | Target Price: Rmb7.60 | Upside: -41.5%

Ningbo Xusheng Group (NXS) reported disappointing 3Q24 results, with net profit falling 66% yoy to Rmb58 million. The revenue for the quarter was Rmb1,125 million, with a gross margin of 18.2%.

The company faced pressure from customers’ price cuts and rising raw material costs, impacting profitability. Given the unclear outlook, the earnings forecast has been significantly revised downwards.

Key Financials

• FY24 Net Turnover: Rmb4,447 million
• FY24 EBITDA: Rmb1,012 million
• FY24 Net Profit: Rmb439 million
• FY24 EPS: 47.0 fen

PICC Property and Casualty (2328 HK)

Share Price: HK\$12.08 | Target Price: HK\$13.40 | Upside: 10.9%

PICC Property and Casualty reported strong investment gains for 3Q24, with net profit reaching Rmb24,685 million. The company’s revenue for the quarter was Rmb515,807 million, with a combined ratio of 97.7%.

The company’s investment yield improved due to favorable capital market movements, and management remains confident in achieving profitability in its non-auto business line for 2024.

Key Financials

• FY24 Net Turnover: Rmb539,194 million
• FY24 Investment Income: Rmb26,786 million
• FY24 Net Profit: Rmb30,215 million
• FY24 EPS: 83.7 fen

Shanxi Xinghuacun Fen Wine (600809 CH)

Share Price: Rmb197.10 | Target Price: Rmb249.20 | Upside: 26.4%

Shanxi Xinghuacun Fen Wine reported a revenue growth of 1% yoy for 3Q24, with total revenue of Rmb17,268 million. The company’s gross profit margin improved to 76.2%, and net profit for the quarter was Rmb10,438 million.

Despite lagging behind its annual sales target, the company announced a commitment to maintaining an annual payout ratio of over 70% from 2024-26, with a potential for interim or special dividends.

Key Financials

• FY24 Net Turnover: Rmb38,365 million
• FY24 EBITDA: Rmb16,936 million
• FY24 Net Profit: Rmb12,511 million
• FY24 EPS: 856.8 fen

Shenzhen Mindray Bio-Medical Electronics (300760 CH)

Share Price: Rmb270.50 | Target Price: Rmb330.00 | Upside: 22.0%

Mindray reported slightly lower-than-expected 9M24 results, with revenue growing 8.0% yoy to Rmb29,485 million. The company’s net profit for the period was Rmb10,637 million.

Mindray expects its domestic business to recover in 2025 as hospitals resume medical equipment procurements. The company’s overseas business is expected to continue expanding rapidly.

Key Financials

• FY24 Net Turnover: Rmb37,478 million
• FY24 EBITDA: Rmb13,402 million
• FY24 Net Profit: Rmb12,496 million
• FY24 EPS: 1,014.2 fen

Wuliangye Yibin (000858 CH)

Share Price: Rmb148.80 | Target Price: Rmb181.90 | Upside: 22.2%

Wuliangye Yibin reported a modest revenue growth of 1% yoy for 3Q24, with total revenue of Rmb17,268 million. The company’s net profit for the quarter was Rmb30,211 million.

Despite the slow revenue growth, Wuliangye announced a commitment to maintaining a payout ratio of over 70% from 2024-26, ensuring a minimum annual dividend of Rmb20 billion.

Key Financials

• FY24 Net Turnover: Rmb91,592 million
• FY24 EBITDA: Rmb43,285 million
• FY24 Net Profit: Rmb33,308 million
• FY24 EPS: 856.8 fen

Zhejiang Shuanghuan Driveline (002472 CH)

Share Price: Rmb28.65 | Target Price: Rmb35.00 | Upside: 22.2%

Zhejiang Shuanghuan Driveline reported strong 3Q24 results, with net profit of Rmb265 million. The company’s revenue for the quarter was Rmb8,074 million, with a net margin of 10.1%.

The company’s growth was driven by the EV gear and smart actuator segments, which saw significant positive growth. Margins are expected to remain on an uptrend due to improvements in production efficiency and factory digitalization.

Key Financials

• FY24 Net Turnover: Rmb9,204 million
• FY24 EBITDA: Rmb2,031 million
• FY24 Net Profit: Rmb1,027 million
• FY24 EPS: 120.7 fen

Conclusion

The report from UOB Kay Hian highlights the diverse performances and strategic directions of key companies in the Greater China region. Investors should consider these insights to make informed decisions, keeping an eye on the evolving market dynamics and company-specific factors.