CMBI Research China and Hong Kong Stock Recommendations (December 2023)

CMB International Capital Corporation It is a wholly owned subsidiary of . China Merchants Bank (Hong Kong: 3968 /shaman: 600036 /OTCMKTS: chicky /OTCMKTS: CIHHF) – one of China’s largest banking groups and the largest privately owned bank. They consistently release free research pieces and post them on their website. china and Hong Kong Stock Recommendations (our first chapter To see the full list tag for us EM Stock Pick Tear Sheet)

Stocks covered this month december (Not too many for a month) This post includes:

Tongda Group Holdings, Luxshare Precision Industry, Xiaomi Corp,

They also put out monthly lists (and post them on their website). 20+ High Conviction Stock Ideas – i.e. Chinese stock recommendations (our In May, June, July, August, September, October and November A post summarizing this) However, this list doesn’t change much from month to month. They haven’t done a December list, but this post has updated charts and statistics for the next stock, the November list.

Li Auto, Geely Automobile, Weichai Power, Zhejiang Dingli, CR Power, CR Gas, JNBY, JS Global, Vesync, Kweichow Moutai, Innovent Biologics, AIA, Tencent, Pinduoduo, Netflix, Kuaishou, CR Land, BYDE, Innolight & Kingdee

With slowing domestic growth, growing demographic challenges and regulatory uncertainty, Chinese companies and brands would be wise to look overseas, with SE Asia a natural destination.

Last night, while I was abroad for the holidays and going to a mamak restaurant that I had never eaten before, something caught my eye. KG’ Snack (“I am from Shenzhen, China”) The store took over a corner of a recently closed Middle Eastern restaurant. (They moved to a hotel across the street.)

The store is full of Chinese snack products and drinks. For example, if you zoom in on the center of the photo, you can see bottled water with a red label. Nongfu Spring (Hong Kong: 9633 /OTCMKTS: NNFSF) that You can find them everywhere in Chinese convenience stores and supermarkets.

The store is in a great location as tour buses carrying tourists on package tours (from China and other parts of Southeast Asia) have to turn the corner and park in the parking lot across the street. This will allow people to walk to Jalan Alor, a crowded outdoor restaurant. distance). This means that tourists on the bus (or tourists walking from a few nearby hotels where they often see tour groups staying) don’t have to pay rebates to travel agents because they can’t miss seeing or passing by the store. Plus, the rent is probably a lot cheaper than Jalan Alor itself (last I heard, just a stand without a water connection would cost Myr2,000, or $420 per month).

What I find interesting (apart from the interesting assortment of snacks and drinks from China that are worth researching to see if the producer has them in stock) Signs hung on the ceilings of 400 stores nationwide. However, when I googled and checked social media, I don’t think anything will come out (I don’t know how to search for the store’s name in Chinese characters, and it’s not even registered in Google Maps yet); However, the store’s design looks very corporate or similar to that of a large brand chain. KG is also an abbreviation for Kangaroo, the mascot seen on some of the store’s signage.

So maybe this is a Chinese snack and convenience store chain with 400 stores somewhere (maybe in China, but definitely not in Malaysia…) or it could be a business started by a local wholesaler importing Chinese products. I’m from Shenzhen.

Malaysia also has another snack and convenience store chain called MiX that sells snacks, food and beverages across the region.

Below is a small MiX store close to the main intersection in the center of Bukit Bintang, which is usually crowded with tourists and locals alike.

Here’s a video from the larger flagship store showing a variety of products:

I’ve seen claims online that MiX is from Taiwan, but I’ve never seen any evidence for this or that it exists outside of Malaysia. It’s probably a retail chain started by a local wholesaler who doesn’t mind thinking his customers are from Taiwan.

Each shelf label has a small flag printed on it to let you know which country each product comes from. It’s a nice touch. No one country’s products seem to dominate the selection in the small Bukit Bintang store. For example, I have bought canned papaya milk from Taiwan in the past, and amazingly delicious but reasonably priced yogurt muesli from China there in the past.

Finally our Monday post You mentioned Mixue’s plans to go public.

🇨🇳 China’s largest bubble tea makers Mixue and Guming file for Hong Kong IPO (Reuters)

• mixwhich has about 36,000 stores, is aiming to raise $500 million to $1 billion in its Hong Kong IPO. GumingIt aims to raise $300 million to $500 million at $9,000, according to a source with direct knowledge of the matter.

• Bubble tea is one of the few bright spots for Chinese consumers.Low-cost operators are performing particularly well.

• Hong Kong listing Nayuki Holdings (Hong Kong: 2150 /OTCMKTS: NYKHF), Korea’s only listed bubble tea chain storeIt’s down about 80% since its debut in 2021, when consumer confidence was higher.

🇨🇳 MIXUE Group IPO: Investment Case (Smart Karma) $

• Mix Group (MIX HK)the world’s leading fresh beverage company, has filed for the HKEx IPO to raise US$500 million to US$1 billion.

• The mix is China’s largest and world’s second largest fresh beverage companyAccording to CIC, this is based on the number of stores and cups sold in 9M23.

• that much investment case Built on strong brands, leading market share, strong revenue growth, strong cost management, stable profitability and cash generation.

I haven’t bought anything yet, but there are at least two Mixues that have recently opened within a short walk of the main intersection in central Bukit Bintang.

Mixue will face significant competition in Malaysia (from street vendors, convenience stores, bubble tea or milk tea shops, mamak stalls, etc.). However, SE Asia’s hot climate means that reasonably priced ice cream and cold drinks can be sold all year round.

My point is that China’s food and beverage products KG’ Snack (“I am from Shenzhen, China”) and mix with mix Focusing attention on launching in Southeast Asia, a region with a large Chinese community, especially with tourists coming from China, shows that Chinese brands have come a long way and have the potential to succeed overseas. And while there may be a certain amount of anti-Chinese sentiment in SE Asia, locals will still be open-minded to trying great-tasting and reasonably priced food and beverage products.

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Tongda Group Holdings Co., Ltd. (Hong Kong: 0698 / at: T.J.C.) professionally Global smart mobile communication It covers home appliances such as mobile phones, smart home appliances, automobiles, household goods, sporting goods, network communication facilities, and 5G-related businesses.

Luxshare Precision Industries (she: 002475) A world-class designer and manufacturer. Cable Assembly and Connector System Solutions For consumer, automotive, cloud, and enterprise applications. Committed to flexible design, agile manufacturing, and collaborative partnerships, they work with technology leaders to create innovative solutions that transform industries.

The product portfolio includes cables, connectors, motors, wireless charging, FPC, antennas, acoustics and electronic modules. They provide one-stop solutions for a wide range of industries, including consumer electronics (computers, devices and peripherals), enterprise and cloud applications, automotive and healthcare.

Luxshare Precision Industry Co., Ltd was founded in 2004 and was publicly listed on the SME Board of Shenzhen Stock Exchange in 2010.

xiaomi (Hong Kong: 1810 / at: 3 CP /OTCMKTS: XIACF) We are a home appliance and smart manufacturing company. Smartphones and smart hardware The core is connected to the IoT platform.

As of the second quarter of 2023, Xiaomi was among the top three in the global smartphone market by smartphone shipments, according to Canalys. Xiaomi has also built the world’s leading consumer AIoT (AI+IoT) platform, with 606 million smart devices excluding smartphones, tablets and laptops connected to the platform as of June 30, 2023. Xiaomi products are sold in more than 100 countries. and regions around the world. In August 2023, we were selected to the Fortune Global 500 for the fifth consecutive year.