Quantum Hi-Tech China Biological (Quantum) reported 1H20 revenue of RMB270mn, up 9% YoY, while revenue in 2Q20 grew strongly by 23% YoY. Attributable net profit (loss) turned around from RMB14mn loss in 1Q20 to RMB55mn in 2Q20, up 132% YoY in 2Q20. Business recovery was mainly driven by the operation continuation after COVID-19 pandemic in China, growing customer base and capacity expansion. Gross margin recovered significantly from 24.4% in 1Q20 to 40.3% in 2Q20 thanks higher capacity utilization rate. Expanding CRO/CDMO customer base. ChemPartner is one of the few China-based companies offering a broad range of services, including pre-clinical CRO services and CDMO services for both small molecule drugs and biologics. In 1H20, ChemPartner recorded RMB531mn revenue in 1H20, up 3% YoY, while revenue increased 14% YoY in 2Q20. ChemPartner added over 100 new customers in 1H20, indicating promising growth outlook in the future driven by expanding customer base. 74% of CRO/CDMO income were from overseas customers. ChemPartner has maintained stable customer relationship with 18 out of the global top 20 pharma companies. ChemPartner is also acquiring new biotech customers from both China and overseas. Fast growing capacity to drive business growth. ChemPartner has expanded its CRO capacity by over 30% to 24,000 m2 from early 2020 thanks to the launch of a new laboratory facility in Shanghai. ChemPartner is aggressively expanding its CDMO capacity to meet the strong demand. ChemPartner plans to expand its biologicals CDMO capacity from current 450L to 4,950L by the end of 2020E, and further expand to 13,950L~18,450L in the coming three years. In addition, ChemPartner’s new cGMP facility in Fengxian, Shanghai will gradually commence operation from 2021E to fulfill manufacturing demand from clinical stage to commercial stage. Driven by the strong demand and expanding capacity, we forecast ChemPartner’s revenue to grow at a 26% CAGR in 2019-22E, contributing 83% of the Company’s total revenue in 2022E. Strengthening leadership in prebiotics industry. Prebiotics are substances which stimulate the growth of beneficial bacteria in the digestive system. The Company’s prebiotics revenue grew 48% YoY in 1H20 from a low base in 1H19, driven by the industry’s demand recovery from the “Quanjian” scandal in 2019. Maintain BUY. We expect revenue to grow at a 25% CAGR in FY19-22E, and attributable net profit to increase 35%/41%/39% YoY in FY20/21/22E. Maintain DCF-based TP unchanged at RMB25.52. Catalyst: CDMO capacity expansion; Risk: Weak organic growth.

Mild growth in 1H20. Revenue gained by 5.0% to RMB146.4bn in 1H20. Delivery GFA surged 24% to 10.5mn sq m. But a 19% decline of recognized ASP (RMB12,668 per sq m) dragged down growth for revenue of property development. On the other hand, other businesses grew robustly. Revenue of construction, property services, rental and other jumped 65%, 27%, 25% and 53% in 1H20, respectively. Gross margin retreated 4.4 ppts to 31.8% but declining reduction from minority interests pushed net profit to grow 5.6% to RMB12.5bn in 1H20. Contracted sales down 4% in 1H20. Contracted sales amount and area tumbled by 4.0% to RMB320.5bn and 3.4% to 20.77mn sq m in 1H20, respectively. Shanghai Region is the largest contributor and accounted for 41.3% of contracted sales in 1H20. Contracted sales in Hangzhou, Shanghai, Ningbo, Suzhou and Nanjing exceeded RMB10bn in 1H20. Sales pace started to accelerate in Jul. Contracted sales increased by 22.5% YoY to RMB59.02bn in Jul 2020. We maintain our sales forecast of RMB650bn in 2020, up 3% YoY. Attributable land bank of 94mn sq m as at Jun 2020. In 1H20, Vanke acquired 55 projects with attributable GFA of 5.05mn sq m. Average land cost was RMB6,368 per sq m. As at Jun 2020, attributable land bank under construction and for future planning were 65.95mn sq m and 28.03mn sq m, respectively. Vanke plans to have new start of 29.21mn sq m in 2020. Construction work was affected by COVID-19 but now returns to normal. Ample property management space. Vanke services had 680mn sq m contracted GFA and 520mn sq m managed GFA as at Jun 2020. It signed 53mn sq m new contracted GFA in the period. Trim TP to RMB31.36. Presold and unbooked properties amounted to RMB695.3bn as at Jun 2020. Completion GFA was 10.75mn sq m in 1H20 and expected to be 22.44mn sq m in 2H20. So earnings growth will be accelerated in 2H20. We maintain earnings forecast unchanged but cut end- 20 NAV forecast from HK$52.42 to HK$48.46. Based on 8x 20E P/E, we change TP from RMB31.6 to RMB31.36.

2Q20 results beat. 2Q external module shipment surged 106.2% YoY to 4,708MW, while external wafer shipment stay relatively flat at 1,112mn pieces, down 5.0% YoY. The Company recognized RMB406mn impairment losses mainly from RMB427mn for Taizhou and Chuzhou plants, and largely offset by RMB296mn gain from solar farm disposal and RMB153mn financial income from excess cash management. Net interests gain was recorded for the consecutive second quarter, as LONGi maintained in a net cash position. For 1H20, net profit was RMB4,116mn, up 104.8% YoY, significantly higher than ours and market estimates. Strong overseas module shipment sustained excellent profitability. LONGi realized wafer/module external shipment of 2.47bn piece/6.58GW in 1H20, up 14.9%/106.2% YoY. Module sales was a highlight as LONGi had 52% module shipped to overseas market, and US module sales offered explicit high margin with significantly higher ASP (+RMB30-50cents vs. domestic spot price.) Wafer sales recorded high GPM at ~40% in 1Q20, and we estimate wafer sales GPM was above 33% though experienced continuous price cut in Apr-May. In a challenging environment came with impacts from COVID-19, LONGi still maintained smooth sales with limited impacts on profitability, in our view. Price/costs impacts to be offset by shipment growth. Recent price/costs fluctuate along the PV supply chain had brought impacts to wafer margin and module demand uncertainties. Based on current pricing structure, wafer GPM declined to ~24% by end-Aug, according to our estimate. We are not over concern on the short term turbulence, as LONGi has state of the art PERC cell (efficiency at 23%), leading product costs structure, and strong overseas module sales network. In 2H20, we expect LONGi to meet its sales target, implying 74.8%/156.4%, which we see strong enough to offset price/costs impacts.

PAB’s 1H20 net profit declined 11.2% YoY to RMB13.7bn, implying 35.5% YoY shrink in 2Q20 earnings. The bottom line weakness mainly came from surging provisions (+57.6% YoY) in 2Q20, as the Bank followed regulatory initiative to build up loss reserves and hold back earnings expansion. However, its revenue/PPoP growth continued to outrun sector peers at 14.3%/18.4% YoY. With notable pick-up in provision coverage and stringent NPL recognition, PAB should see greater room to lower credit cost and unleash earnings potential when policy guidance effect wanes. Results positives: 1) Credit extension was solid at 2.4% QoQ. Retail loan growth recovered to 3.6% in 2Q20 from 1Q20 stagnation, driven by mortgage (+6.0% QoQ), auto finance (+11.0% QoQ), and personal business loans (+15.1% QoQ). 2) Non-interest income rose 19.1% YoY in 2Q20, as net fee income gained 13.6% YoY, and trading and investment return grew 34.2% YoY. As a result, revenue structure improved with 36.8% (+2.1ppt QoQ) non-interest income contribution; 3) Cost-income ratio fell 2.5ppt YoY to 27.7%, indicating better operating efficiency; 4) Asset quality remained healthy. NPL ratio was flat at 1.65%, and provision coverage climbed 15ppt QoQ to 215%, higher than joint-stock banks’ average of 204%. Credit card NPL ratio edged up 3bp QoQ, while corporate NPL ratio further slid 5bp QoQ. 5) Steady growth in retail client base. Number of retail/wealth/PB client rose 3.1%/7.7%/8.5% QoQ, and retail AUM increased 8.6% QoQ to RMB2.32tn. Results negatives: 1) Deposits shrank 3.1% QoQ, pushing LDR to 100%. Proportion of structured deposits stayed elevated at 22.4%. 2) 2Q20 NIM narrowed 1bp QoQ to 2.59%, as asset yield contraction outweighed funding cost retreat. 3) Capital adequacy ratio dropped, with 27bp/31bp QoQ decline in CET-1/total CAR, due to sluggish earnings and cash dividend payout in 2Q20. Maintain BUY and trim TP to RMB18.9. We cut FY20/21 earnings forecast by 12-14%, as we lifted credit cost assumption by 20-24bp to reflect PAB’s prudent provisioning against potential asset quality deterioration. Our revised TP of RMB18.9 is based on 1.24x (from 1.28x) target P/B and FY20E BVPS of RMB15.3.

SANY’s net profit in 1H20came in at RMB8.5bn, up 25.5% YoY. Net profit in2Q20surged 78% YoY to RMB6.3bn. In particular, operating cash inflowsignificantly rebounded to RMB9.4bn in 2Q, versus an outflow of RMB895mn in1Q. While we fine-tuned our 2020E earnings forecast by -5% due mainly to lowerassumption on the concrete machinery sales and the blended gross margin, weslightly raised our 2021E-22E earnings forecast by 1%, as we expect furtheroperating cost reduction. We raised our TP from RMB24.7to RMB26.4, basedon 16x 2020E P/E (up from 14.3x), on the back of 16% estimated earnings growthin 2021E. SANY remains the key beneficiary of strong infrastructure spendinggrowth and strict emission control policies. Reiterate BUY. Key highlights on 1H20results. Revenue grew 13% YoY to RMB49bn,driven mainly by a 17% YoY increase in excavator revenue. Revenue fromconcrete machinery sales only increased by 5% YoY, slightly below ourexpectation. Gross margin narrowed by 2ppt YoY to 30.3%, which was largelydue to the impact of COVID-19in 1Q. SANY maintained a stringent expensecontrol in 1H20, with S&D expense ratio reduced by 1.8ppt YoY. SANYmaintained its R&D spending growth which we believe is essential forenhancing its long-term competitiveness. Net profit grew 25.5% YoY toRMB8.5bn. Sharp recovery in 2Q20. Revenue grew 45% YoY to RMB32bn in 2Q, asignificant improvement from a decline of 19% in 1Q. While the gross marginwas down 2.4ppt YoY to 31.5%, it improved 3.3ppt QoQ. All these, togetherwith the increase in other gains and finance income, boosted net profit growthof 78% YoY (to RMB6.3bn) in 2Q compared with a decline of 32% YoY in 1Q.In particular, the operating cash inflow reached RMB9.4bn, suggestingexcellent cash flow management. High visibility on the 2H20E outlook. According to CCMA, excavator salesvolume (for the industry as a whole) grew 55% YoY in Jul. In addition, basedon Jiangsu Hengli’s (601100CH, BUY) latest order intakes of hydrauliccylinders, we expect the momentum of excavator demand to continue overthe coming months. Besides, we expect the concrete machinery sales growthto accelerate in 2H20E on the back of the recovery of property construction. Key risks: (1) Risk of overseas business due to pandemic; (2) Slowdown ofconstruction activities; (3) Risk of expanding to financing business.

2Q20 results strongly beat on better margins. 1H20 NP fell 1% to RMB3,781mn (equivalent to 60% of our FY20E NP est. vs 54-56% in 1H17- 1H19). 2Q20 NP jumped 72%. Revenue rose 22% led by liquid milk (+17%) and milk powder (+86%). By key products, Satine rose 25% (vs Milk Deluxe 30%+) and Pro-Kido rose 40%. Ambrosial rose 10% in 2Q20 but still fell 5% in 1H20 as consumption pattern shifted from yogurt to milk. 2Q20 GPM widened 1.6ppt to 38.7% on reduced promotions and better product mix. NP jumped 72% on operating leverage and GPM expansion. Grabbed more market share. According to Nielsen data, retail sales of ambient liquid milk and chilled liquid milk decreased by 5.1% and 7.8%, respectively, while retail sales of IMF increased by 4.9% in 1H20. Organic liquid milk, chilled fresh milk and UHT milk outperformed the market by growing 12.6%, 12.3% and 7.5%, respectively, in terms of retail sales. During the period, Yili’s market share of ambient products/chilled products increased by 3.2/0.3ppt to 38.8%/15.3%, but market share of IMF fell 0.2ppt to 5.8%. 2H20E outlook. Yili maintained its 2020 target of RMB97bn total revenue (+8% YoY). 1H20 adj. NP growth was 14.6% (on share award scheme benchmark), on track to meet 10% growth target in FY20E. Though raw milk cost is expected to increase in 2H20E, Yili expects this trend would limit industry’s promotion activities in 2H. For selling expenses ratio, Yili expects a slight YoY decline trend on precise spending. New businesses development. (1) Chilled fresh milk: Current market size is >RMB10bn. Yili recorded around RMB300mn sales in 1H20. Sector growth depends on ongoing consumer education and cold chain development. Management expects ambient milk remains the key growth driver. (2) Cheese: Market size of B2C is around RMB3bn and B2B’s size could be 2-3x of B2C. Yili recorded >RMB200m sales in 1H20 (vs MN’s RMB457mn). Maintain Buy. We lifted FY20/21/22E NP by 13%/7%/9% to mainly factor in lower selling expenses ratio. Catalysts: better-than-expected revenue and margins. Risks: Raw milk cost pressure, food safety issues.

CITICB reported decent revenue/PPoP growth of 10.3%/15.2% YoY in 2Q20.However, solid topline was slashed by heavy provision charges, leading to YoYearnings contraction of 26.5%/9.8% in 2Q/1H20. We see little surprise from thenegative profit growth, given CBIRC’s earlier announcement of 9.4%/24%banking sector earnings decline for the same period. Policy guidance on profitconcession and overhang from the pandemic should continue to weigh on Chinabanks’ bottom line growth in 2H20. Having said that, we see limited share pricedownside at current depressed valuation. Thorough NPL exposure and front-loading of provisions bode well for long-term rerating.n Results positives: 1) Heathy deposit growth of 3.9% QoQ outpaced loangrowth of 1.4% QoQ. LDR fell 2.3ppt to 94%. 2) 2Q20NIM widened 4bp QoQto 2.01%, mainly on rising yield of retail loans. Yet, 1H20NIM still narrowed12bp YoY amid decline in overall asset yields and rigid deposit cost.Management expected further margin contraction in 2H20, but likely in smallermagnitude. 3) Trading income rose 20% YoY, mainly on higher return ofbond investments amid falling market rates. 4) 2Q20cost-income ratiodropped 3.2ppt YoY to 23.1%, suggesting better operating efficiency.Results negatives: 1) NPL ratio picked up 3bp QoQ/18bp HoH to 1.83%,higher than joint-stock banks’ average of 1.63%. This was mainly due toworsening asset quality of retail loans, esp. credit cards, of which NPL ratiosurged 76bp HoH to 2.50%. However, management saw credit card NPLsabating from the peak in Mar 2020. 2) Provision charges soared 66.5% YoYin 2Q20, yet provision coverage slid 1.6ppt QoQ to 176%, below peer averageof 204%. 3) Capital position weakened on softer earnings and cash dividendpayout in 2Q20. CET1/total CAR fell 12bp/10bp QoQ to 8.80%/12.57%.Maintain BUY with lower TP of RMB6.80. We cut FY20/21earningsforecasts by 14.1%/15.5%, to reflect lower NIM/fee income and higher creditcost assumptions. Our revised TP of RMB6.80is based on 0.71x (from 0.75x)target P/B and FY20BVPS of RMB9.62.

Hengli’snetprofitin1H20grew47%YoYtoRMB986mn,implyinganimpressivenetprofitgrowthof85%YoYin2Q.Grossmarginof44.5%in2Qisarecordhigh,suggestinghighutilizationrateandstrongpricingpower.Werevisedupourearningsforecastin2020E-22Eby5-8%(12-15%aboveconsensus),afterincorporatinghighergrossmarginassumptionandlowerexpenseratios.Afterrollingoverthevaluationbaseto2021E,weraisedourTPtoRMB82basedonunchangedmultipleof45xP/E.Webelievethefast-growingpumpandvalvesaleswillcontinuetolendsupporttothevaluation.MaintainBUY.nKeyhighlightson1H20results.Revenuegrew24%YoYtoRMB3.46bnandgrossmarginsignificantlyexpanded4.9pptYoYto41.9%.This,coupledwithlowerSG&Aratios,boostedthenetprofitgrowthof47%YoY.Operatingcashinflowin1H20increasedby19%YoYtoRMB944mn.In2Q20,netprofitsurged85%YoYtoRMB639mn,mainlydrivenby71%YoYincreaseinrevenueand4.6pptYoYgrossmarginexpansion(to44.5%).nSolidsalesgrowthin1H20.Salesvolumeofhydrauliccylinderforexcavatorgrew27%YoY330kunits.Thesegmentrevenuegrew16%YoYtoRMB1.4bn,aresultoflowerASPduetohigherdemandforsmall-sizeexcavators.HydraulicTechnology,themajorsubsidiarywithafocusonhydraulicpumpandvalve,reportedrevenuegrowthof86%YoY.Revenueofnon-standardizedhydrauliccylindersdropped9%YoYtoRMB577mn.nProductionvolumestayinghighinJul&Aug.Basedonourunderstanding,Hengli’smonthlyproductionvolumereached53kunitsinJulandisexpectedtoreach54kunitsinAug.Suchmonthlyvolumesuggestsstrongdownstreamdemand.Besides,productionvolumeofpumpsandvalvesareexpectedtostayhighin3Q.nKeyrisks:(1)Slowdownofconstructionactivities;(2)riskofoverseasexpansion;(3)increaseinrawmaterialscost.

Strong growth not interrupted by COVID-19pandemic. WuXi AppTecreported 1H20revenue of RMB7.23bn, up 23% YoY, largely inline with ourestimate. Non-IFRS net profit was up 29% YoY to RMB1.52bn. Attributablenet profit surged 62% YoY to RMB1.72bn, mainly due to the RMB408mninvestment income and RMB222mn fair value gains, offset by RMB487mnfair value loss from derivative component of convertible bonds.n Fast expanding customer base during COVID-19pandemic. In 1H20,WuXi AppTec added c. 600new customers which contributed 5.5% of theCompany’s total revenue. WuXi AppTec has provided services to a widerange of over 4,000customers, including all the top 20big pharma companiesworldwide. Top 20pharma companies contributed 31.9% of the Company’stotal revenue in 1H20. CDMO income to further accelerate on expanding capacity. In 1H20,CDMO revenue grew 26% YoY to RMB2.16bn, contributing 30% of the totalrevenue. Thanks to follow-the-molecule strategy, the Company added 269new molecules into its CDMO pipeline. The CDMO business has richpipelines with 26commercialized projects, 42Phase III projects, 184PhaseII projects and 861early-stage projects. In order to meet the strong demand,the Company boosted its annual manufacturing capacity of high potency APIsto 100kg level by Jun 2020and will further expand its CDMO capacity.n DDSU projects allows the Company to share profit from innovativedrugs. In 1H20, WuXi AppTec has submitted 13INDs for DDUS projects,accounting for 19% of innovative small molecule IND filings accepted by theNMPA. Cumulatively, the Company’s DDSU projects have completed 98INDfilings and 66clinical approvals. In addition, 84DDSU projects are indiscovery or preclinical phase.We lifted SOTP-based TP from RMB118.32to RMB131.98to reflectstrong long-term growth outlook for WuXi AppTec. We forecast WuXiAppTec’s adjusted Non-IFRS net profit to grow by 27%/33%/29% YoY inFY20E/21E/22E, respectively; and attributable net profit to increase73%/24%/29% YoY in FY20E/21E/22E. Moreover, WuXi AppTecmaintained a diversified investment portfolio with 90+ companies and fundswhich will bring significant investment gains over the long term.Catalysts: 1) Higher-than-expected earnings growth, 2) Overseasacquisitions. Risk: Operation disrupted by the COVID-19Pandemic.

Dingli’s net profit in 1H20grew 57% YoY RMB409mn, in line with the profit alertreleased in Jul. This implies a 78% YoY increase in 2Q20net profit to RMB284mn.Most notable is that the operating cash inflow in 1H20surged 12x YoY toRMB756mn, suggesting high earnings quality. We expect rising penetration ofaerial working platform (AWP) in China remains a structural growth story. Weslightly revised up our 2020E-22E earnings forecast by 1-3%. We lifted our TPfrom RMB81to RMB117, after rolling over our valuation base to 2021E (42x P/Emultiple unchanged). Reiterate BUY.n 2Q20results highlight: Revenue grew 135% YoY to RMB1.09bn in 2Q20,driven by strong demand for AWP in China. Gross margin contracted 3.3pptYoY to 37.4% which was due to more new competitors in the market. Sellingexpense and administrative expense ratio dropped 1.4ppt and 1.9ppt YoY,respectively, to 4.5% and 4.6%, helped by operating leverage. Operating cashinflow surged 6.4x YoY to RMB677mn, much higher than the net profit.n Strong demand in China to continue. In 1H20, the total revenue growth of77% YoY was driven mainly by China market, where revenue surged 172%YoY to RMB1.09bn, accounting for 76% of Dingli’s total revenue. Such growthwas stronger than the industry average of 54% YoY growth (in terms of volume,according to the figures from CCMA). Going forward, the construction of newproduction line for 3.2k units of boom lift with a focus on China market is aboutto complete. We expect a gradual capacity ramp-up in 4Q20E and the newproduction line will serve as a key growth driver for Dingli in 2021E.n Recovery in the overseas market will offer additional upside. Dingli’soverseas revenue (focus mainly on the US and Europe) dropped 9% YoY toRMB350mn (accounted for 24% of total revenue), largely due to the COVID-related shutdown. That said, such decline was less than the industry averagedecline of 19%. Indeed, improvement in overseas market has been seen asDingli received orders early this month for 300units of boom lifts from Collé,an equipment leasing company in Europe. Going forward, we expect thegradual re-opening of the overseas economies will offer upside to the AWPsales.n Major risk factors: (1) Price competition due to more new entrants in the AWPmarket; (2) prolonged impact of COVID-19in overseas; (3) Unexpected slowdownof construction activities in China.

Prompted by government policy and technological innovation, China's NEV market is expected to enter into a rapid growth period with CARG of 43% in 2020- 25E. As the pioneer in the NEV field in China, BYD was ranked No.1 in NEPV/No.4 in NECV in 2019. We believe that the Company will maintain its excellent performance thanks to its technological advantages and brand recognition in the future. The Company is experiencing a re-rating process as supply chain open up activities help release value from power battery and IGBT. We believe the re-rating is yet to finish. We initiate BUY with SOTP-derived TP of RMB112.12 per share. China NEV industry to usher rapid growth from 2021E. We forecast that NEV sales volume will achieve 1.7mn units in 2021E, an increase of 66% YoY, supported by favorable policies such as the extension of subsidies/the implementation of the double credit policy. BYD, as the undoubted leader in China's NEV field, launched its blade battery early this year and will subsequently launch its DM4.0 platform in 4Q20E, supporting NEV sales growth. We expect its total vehicle sales (ICE and NEV) to increase by 34% YoY in 2021E. The corresponding revenue from the auto segment will achieve an increase of 47% YoY to RMB83.3bn in 2021E. Blade Battery: a potential game-changer. BYD recently launched blade battery and the first model (Han) equipped with blade batteries. While ensuring safety, the blade battery extends the mile range, broadening the application scenarios of traditional LFP. BYD is now actively developing the 2nd generation of blade batteries with improving costs and energy density. We believe that the external shipment of the power battery will have a brilliant potential since 2021E. We think incremental income from battery external shipment will significantly lift BYD's overall valuation. We expect NP from power battery business will achieve a CAGR of 161% through 2021E to 2025E. Semiconductor: a new shining point from BYD’s supply chain. BYD introduced 30 strategic investors into IGBT semiconductor business in Jun 2020 with a post investment valuation of RMB10.2bn. By far, BYD holds 72.3% equity of IGBT business. We are optimistic about its IGBT business given its import substitution potential in China’s NEV supply chain. We expect NP from IGBT business will achieve a CAGR of 68% through 2021E to 2025E. We are optimistic about the future growth potential of BYD and initiate BUY rating with TP of RMB112.12 (26.0% upside potential).

美的20财年1季度业绩表现稳健,主要归因于:1)出口订单强劲;2)表现较好的小家电以及电商占比相对高;以及3)原材料价格下行和人民币贬值。尽管岀口订单在未来几个季度可能下跌,但相信国内市场可持续复苏。我们维持买入评级,下调目标价至72.80人民币,基于17倍21财年预测市盈率(之前为18倍20财年预测市盈率),对比中国/国际同业平均的16倍/14倍。 19财年净利润符合预期:市场份额及毛利率增长强劲。美的19财年的净利润同比增长20%,高于彭博预测2%/低于招银国际证券预测1%。虽然去年4季度销售增长放缓至7%,但净利润同比提速至24%,主要受惠于毛利率上升受:空调销售增加(线下市场份额+4ppt至29%/线上市场份额+7ppt至30%),高端产品销售上升,人民币贬值及原材料价格下行所带动。 20财年1季度业绩稳健,略胜同业表现。美的1季度的净利润只是同比下滑23%,在疫情影响下算是稳健,略好于同业海尔智家的-41%,苏泊尔的-41%和格力的-69%,主要归因于:1)产品结构改善,小家电受疫情催化反而受惠,大家电则受到严重冲击(例如空调);以及2)出口订单同比大增26%。 公司预期20财年销售/净利润下降3-5%,主要受国内市场逐渐复苏,以及出口不稳所影响。我们认为公司能达成指引目标,因为:1)4月份小家电销售已回复正常水平,年中28种新产品推出相信能带动销售;2)今年空调价格战料将持续,但受影响更多是小品牌如奥克斯及其他。虽然美的空调于19财年的平均销售价录得双位数跌幅,但仍能抢占更多的市场份额;3)出口订单在2-3季度或持续减少(截至今年4月取消/暂停订单占总销售约3%),但我们估计公司在美国/欧洲国家的业务占总销售不到20%,因此影响比较有限;4)毛利率应可维持稳定,受惠于原材料成本下降以及人民币贬值。不过,机械人及自动化产品(主要为库卡)销售或于20财年下跌,因外围环境不稳,客户投放于技术革新的资本开支也有减少。 维持买入评级,下调目标价至72.80元人民币(34%上行空间)。我们重申买入评级,原因包括:1)公司目前股价已反映负面因素,复苏进度理想;2)受惠于公司的产品结构,第1季度业绩改善将持续至第2季度。我们将20/21财年的预测净利润分别下调18%/11%,以反映疫情影响和海外订单减少而导致销售下降。我们的新目标价对应17倍21财年预测市盈率(此前是18倍20财年预测市盈率)。公司现价的20/21财年预测市盈率为16倍/13倍(中国同业平均19倍/16倍),PEG为1.6倍(中国同业平均1.8倍)。

美的20财年1季度业绩表现稳健,主要归因于:1)出口订单强劲;2)表现较好的小家电以及电商占比相对高;以及3)原材料价格下行和人民币贬值。尽管岀口订单在未来几个季度可能下跌,但相信国内市场可持续复苏。我们维持买入评级,下调目标价至72.80人民币,基于17倍21财年预测市盈率(之前为18倍20财年预测市盈率),对比中国/国际同业平均的16倍/14倍。 19财年净利润符合预期:市场份额及毛利率增长强劲。美的19财年的净利润同比增长20%,高于彭博预测2%/低于招银国际证券预测1%。虽然去年4季度销售增长放缓至7%,但净利润同比提速至24%,主要受惠于毛利率上升受:空调销售增加(线下市场份额+4ppt至29%/线上市场份额+7ppt至30%),高端产品销售上升,人民币贬值及原材料价格下行所带动。 20财年1季度业绩稳健,略胜同业表现。美的1季度的净利润只是同比下滑23%,在疫情影响下算是稳健,略好于同业海尔智家的-41%,苏泊尔的-41%和格力的-69%,主要归因于:1)产品结构改善,小家电受疫情催化反而受惠,大家电则受到严重冲击(例如空调);以及2)出口订单同比大增26%。 公司预期20财年销售/净利润下降3-5%,主要受国内市场逐渐复苏,以及出口不稳所影响。我们认为公司能达成指引目标,因为:1)4月份小家电销售已回复正常水平,年中28种新产品推出相信能带动销售;2)今年空调价格战料将持续,但受影响更多是小品牌如奥克斯及其他。虽然美的空调于19财年的平均销售价录得双位数跌幅,但仍能抢占更多的市场份额;3)出口订单在2-3季度或持续减少(截至今年4月取消/暂停订单占总销售约3%),但我们估计公司在美国/欧洲国家的业务占总销售不到20%,因此影响比较有限;4)毛利率应可维持稳定,受惠于原材料成本下降以及人民币贬值。不过,机械人及自动化产品(主要为库卡)销售或于20财年下跌,因外围环境不稳,客户投放于技术革新的资本开支也有减少。 维持买入评级,下调目标价至72.80元人民币(34%上行空间)。我们重申买入评级,原因包括:1)公司目前股价已反映负面因素,复苏进度理想;2)受惠于公司的产品结构,第1季度业绩改善将持续至第2季度。我们将20/21财年的预测净利润分别下调18%/11%,以反映疫情影响和海外订单减少而导致销售下降。我们的新目标价对应17倍21财年预测市盈率(此前是18倍20财年预测市盈率)。公司现价的20/21财年预测市盈率为16倍/13倍(中国同业平均19倍/16倍),PEG为1.6倍(中国同业平均1.8倍)。

Resilient 1Q20for Midea, reflected by 1) strong export orders, 2) relatively highsmall appliances and online mix, and 3) favorable input costs and FX rate.Exports may experience more pressure but China recovery should be healthy in2Q-4Q20E. Therefore, we maintain BUY but cut TP to RMB 72.80, based on 17xFY21E P/E (rolled over from 18x FY20E), vs China/ Int’l peers’ avg. of 16x/ 14x.n FY19net profit inline: Strong market share gains and GP marginexpansion. Midea’s FY19NP att. rose by 20% YoY, 2% above/ 1% belowBBG/ CMBIS est. Despite sales growth slowed to 7% YoY in 4Q19, NP att.accelerated to 24% YoY in 4Q19, aided by GP margin expansion on more A.C.sales (market shares +4ppt to 29% for offline/ +7ppt to 30% for online inFY19), more high-end product, favorable FX and lower raw material cost.n 1Q20result was resilient and slightly better than industry. Midea’s 1Q20NP att. fell by 23% YoY, fairly resilient and way better than its peers such asHaier SH’s -41%, Supor’s -41% and Gree’s -69%. The beat, in our view, wasdue to: 1) better product mix, with less impact on small appliances vs largeappliances (e.g. A.C. was hit hard) and 2) strong exports orders of 26% YoY.n Guiding for a 3-5% decline in sales/ NP att. in FY20E, driven by a gradualrecovery in China and potentially bumpy export sales. We find this targetachievable, because: 1) small appliances sales had already normalized in Apr2020and should do better as Midea plans to launch 28new products in Jun2020, 2) A.C. price war may continue in FY20E but only at the expense ofsmaller brands like AUX and others. Midea still managed to gain shares evenwith double digit decline in ASP in FY19, 3) export orders cut/ suspension maygo up in 2Q-3Q20E (~3% of FY20E sales as of Apr 2020) but should only belimited, given less than 20% sales exposure to US/ EU, and 4) GP marginshould be stable, which is well supported by falling costs and weakening CNYenvironment. However, the robotic and automation sales (mainly KUKA) maydecline in FY20E since capex on technology upgrades by customers werereduced due to the adverse macro environment.n Maintain BUY but trimmed TP to RMB 72.80(34% upside). We reiteratedBUY because: 1) negatives are all priced in and recovery onwards shall behealthy, and 2) 1Q outperformance to will sustain into 2Q thanks to productmix. We cut FY20E/ 21E NP by 18%/ 11% to factor in sales drop due to virusoutbreak and cut in overseas orders. Our new TP is based on 17x FY21E P/E(rolled over from 18x FY20E). The counter now trades at 16x/ 13x FY20E/21E P/E (vs China peers’ avg. of 16x) or 1.6x PEG (vs China peers’ 1.8x).

FY19NP +8% to RMB6,934mn, in line with our estimates and consensus. 1Q20NP was down 50% due to COVID-19impact. That said, management said salesrecovered 90% currently and expects a full recovery by Jun 2020. We cut ourFY20/21E net profit estimates by 17%/5% mainly to reflect lower revenue andGPM. Our TP is revised from RMB34.04to RMB33.10, based on 28.0x averageFY20E and FY21E EPS. We expect Yili would benefit from industry consolidation,reflected by market share gain in 1Q20. Maintain Buy.n FY19results in line. Revenue rose 14%, in line, led by liquid milk (+12%)and milk powder (+25%). Key products like Satine and Ambrosial grew by 17-18%, behind MN’s Milk Deluxe and Just Yoghurt’s 20%+ growth. Market shareof UHT milk and IMF rose 1.4ppt and 0.4ppt to 37.7% and 6.0%, respectively,in 2019. GPM fell 0.5ppt to 37.3%, slight below our expectation of 37.8%, ledby 6.7ppt reduction in GPM of milk powder segment mainly due to margindilution from the acquisition of Westland Co-operative Dairy. SG&A expensesratio dropped 0.6ppt to 28.2%, led by 1.6ppt reduction in A&P expenses.n 1Q20hit by COVID-19. Revenue dropped 11% led by 19% decline of liquidmilk sales as sales affected by COVID-19. Market share of UHT milk andchilled milk up 1.1ppt and 0.3ppt YoY. GPM squeezed by 2.4ppt to 37.5% onmore promotion to destock old inventories. SG&A expenses ratio increased1.6ppt due to operating deleverage. Yili reported RMB67mn net finance cost(vs RMB105net income) as total borrowing increased from RMB6.8bn in Dec2019to RMB12bn in Mar 2020. NP fell 50% to RMB1,143mn.n FY20E guidance. Yili sets its total revenue and PBT target at RMB97bn andRMB6.1bn in FY20E, representing 7.5% YoY growth and 26% YoY decrease,respectively. This implies 14% YoY growth/13% YoY decline for totalrevenue/PBT, respectively, during 2-4Q20. That said, excluding governmentgrant and share award expenses, management expects adj. NP to resumegrowth in 2-4Q20. Going forward, while Yili still focuses on domestic dairybusiness, it will develop Southeast Asia market and develop healthy drinksbusiness.n Maintain Buy. Our new TP of RMB33.10is based on 28.0x average FY20Eand FY21E EPS. Our target P/E multiple is unchanged as we expect Yili toresume double-digit revenue growth beginning 2H20E. Catalysts: better-than-expected revenue and margins. Risks: recovery slower-than-expected,raw milk cost pressure, food safety issues.