Comprehensive Analysis of Key Chinese Companies and Market Trends

Date: Thursday, 28 November 2024

Broker: UOB Kay Hian

Anta Sports: Strategic Moves Propel Growth Prospects

Anta Sports, a major player in the Chinese sportswear market, continues to expand its influence with a strategic focus on refinancing and share buybacks. The company has announced the issuance of €1.5 billion zero-coupon convertible bonds (CBs) due 2029, aimed at refinancing existing debt and facilitating additional buybacks. These measures reflect Anta’s commitment to optimizing its financial structure and enhancing shareholder value.

Anta’s QTD operations have met expectations, despite facing higher return rates during the Double 11 shopping festival. The management is focused on achieving profit targets through stringent cost control measures. The company’s financial outlook remains robust, with projected net turnover reaching Rmb86,564 million by 2026 and a continuous increase in EBITDA and net profit margins. UOB Kay Hian recommends maintaining a “BUY” stance with a target price of HK\$120.60, reflecting a potential upside of 54.1%.

China State Construction Engineering Corporation: Navigating Economic Challenges

China State Construction Engineering Corporation (CSCEC) is strategically positioned to benefit from supportive fiscal policies anticipated in 2025, driving a 15-20% year-on-year growth in infrastructure orders. Despite pressures in the real estate sector, CSCEC anticipates stabilization in property business and a single-digit growth in housing construction orders. However, property sales are expected to decline slightly.

The company has adjusted its earnings forecasts for 2024-2026 to account for a slower macroeconomic recovery, with a slight reduction in revenue projections. CSCEC’s strategic focus on infrastructure expansion and fiscal support remains a positive outlook for 2025. The recommendation is to “BUY” with a revised target price of Rmb6.61, emphasizing a positive long-term outlook.

Best Pacific International Holdings: Expanding Horizons in Fabric Production

Best Pacific International Holdings, a leader in lingerie materials and elastic fabrics, is poised for growth with its Vietnam factory serving as a pivotal production hub. The company has identified capital and time as significant barriers to entry in fabric production, emphasizing its competitive advantage in solid product R&D and its strong capability in elastic fabric design.

Management is optimistic about the order book for 2025, forecasting margin expansion through operating leverage and favorable raw material prices. The company is considering further capacity expansion in Vietnam to meet rising demand for synthetic sportswear. Although not rated by UOB Kay Hian, Best Pacific’s strategic positioning and resilience in the industry are noteworthy.

JBM Healthcare: Strengthening Brand Presence in Hong Kong

JBM Healthcare Limited, renowned for its branded healthcare products like Ho Chai Kung and Po Chai Pill, is enhancing its market presence through digital expansion and strategic marketing. Post-COVID-19, the company has leveraged increased brand awareness to drive growth, particularly in Mainland China.

Management has set ambitious targets for fiscal year 2025, including a 20% revenue growth and a 40-50% net profit increase, fueled by effective online channel strategies and marketing campaigns. JBM is also broadening its geographic reach and product offerings. While the company is not rated, its strategic initiatives position it well for future growth.

Hansoh Pharmaceutical Group: Advancing in Pharmaceutical Innovation

Hansoh Pharmaceutical Group is making significant strides in the pharmaceutical sector, with a notable 44.2% year-on-year revenue increase in 1H24. The company continues to enhance its product portfolio, with a focus on innovative drugs that are expected to contribute significantly to revenue in the coming years.

Hansoh Pharma is recommended as a “BUY” with a target price of HK\$29.00, driven by its strategic product launches and market positioning. The company’s robust financial performance and strategic focus on innovation make it a compelling investment opportunity.

Conclusion

The companies analyzed showcase a diverse range of strategies and market positions, reflecting the dynamic nature of the Greater China market. From Anta Sports’ strategic financial maneuvers to CSCEC’s infrastructure focus, and from Best Pacific’s expansion plans to JBM Healthcare’s brand-driven growth, each company presents unique opportunities for investors. With the healthcare and pharmaceutical sectors also showing promising developments, the overall market outlook remains positive despite macroeconomic challenges.