Blue Lotus Capital Group focuses on Chinese New Economy and Non-US Internet companies through its secondary and primary business lines. Since the founding of the company in April 2015, Blue Lotus has formed Blue Lotus Research Institute (BLRI), Creekwood Investment and QC Capital to tackle equity research, financial advisory and direct investment fields, respectively and maintained offices in Hong Kong, Shenzhen, Shanghai and New York. Blue Lotus Research Institute (BLRI) covers more than 60 high tech companies in Hong Kong, US ADR and Chinese domestic bourses. It has received Type 4 research license from Hong Kong Security and Futures Commission (SFC) since founding. Since inception, Creekwood Investment has helped more than 35 companies in raising more than US$650mn of capital.
We expect Miniso to report C4Q22 top line, non-GAAP operating profit and GAAP net income 1.7%, (1.5%) and in-line vs. consensus. Our C1Q23 top line is 3.7% vs. the consensus; We view MNSO’s sustained growth driver to be bringing Made-In-China merchandises to the mall economies around the world; We re-evaluate the stock and maintain the Buy rating, with TP at US$22. The downward revisions of EPADS in 2023-25E are mainly attributable to 1) slower offline resumption pace from Covid impact in 2022, 2) rescheduled oversea expansion paces, compared to our previous update on Nov. 23rd, 2021.
Even though we are long-term optimistic on the rise of Chinese consumer brands, we believe short-term optimism is misplaced. Chinese underconsumption is only half true. It only occurs in categories associated with development stages; We suggest investors to focus on two themes: (1) structural changes led by China’s transition to an older and more affluent society, (2) substitution and globalization that can break the ceiling for valuation;Our TOP PICKS are Li Auto, Atour, Luckin, FUTU, BEKE and Miniso.
Surgical robot today is a precursor product of the eventual AI-enabled, decision capable one of the future. Current surgical robot’s medical benefit is confined to a narrow set of procedures and a narrow set of matrices; Domestic surgical robots have no competitive advantage against global products except price and implicit government support. To fight for install base ahead of state procurement, we believe a price war will erupt soon; We initiate with SELL with TP of HK$18.3. We prefer to come in after the price war.
We initiate Atour with a BUY because we believe it has stricken a best-in-class balance among (1) price-benefit for travellers, (2) investment-return for franchisees and (3) input-advancement for employees; We expect Atour to embark on a single-brand network expansion to >2,500 hotels while maintaining its service and brand premiums. It will have to pursue a multi-brand strategy afterwards but choices are aplenty;
Innovent’s single product is facing declining sales and increase competition. Its next product, a PCSK9 Inhibitor, works in a niche market, in our view; Yet Innovent’s R&D and sales seem to be benchmarking against BeiGene. Innovent might suffer from low profit margin in the long run; We initiate Innovent with a SELL rating and TP of HK$17.
Mr. Eric (Tianli) Wen is responsible for IOT and Intelligent Hardware research at Blue Lotus. Eric is one of the most renowned TMT analysts in China. Since he started covering China Internet under Mary Meeker in Morgan Stanley in 2002, Mr. Wen has studied the industry for more than 18 years.
Mr. Wayne T. Chang is a specialist of the Chinese concept share (CCS having worked at BOCI (Bank of China Oppenheimer and Mirae Asset Securities in sales positions covering North Asia across 13 sectors with a focus on US listed ADRs, H-shares, and A-share names.
Mr. Shawn (Zixiao) Yang is responsible for Internet & Media and Advertising coverages at Blue Lotus. Mr. Yang has extensive experience in the financial and internet industry.
Blue Lotus Research Institute’s Managing Director Shawn Yang discussed the recent performance disclosure of relevant companies, including the operational performance of JD.com and Tencent August 17th. He talked about JD.com's merchant subsidies, Tencent's future game reserves, and the challenges these companies will face in the second half of the year.
Blue Lotus Research Institute's Managing Director, Mr. Shawn Yang, recently had an interview with Bloomberg regarding Alibaba on June 21st. He discussed Alibaba's new organizational changes, future IPO plans for its subsidiary business groups, and the market competition landscape and unique features of LLM products.
Shawn Yang, managing director at Blue Lotus Capital Advisors, discusses Alibaba business split up and Tencent’s recent quarterly earnings with BBG on Mar 23th and Mar29th, respectively. Shawn also discussed his 2023 outlook for eCommerce, gaming, and ads sectors. We maintain a BUY rating for Alibaba and Tencent.
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