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CMOC(3993)
Analysis¡G
China Molybdenum (3993) was subject to limited impact of the COVID-19 outbreak and has maintained stable operations and production across all business segments. For the first quarter ended 31 March 2020, the Group recorded RMB22.38 billion of revenue, up by 400% on a year-on-year basis. Net profit attributable to shareholders amounted to RMB448 million, up by 39% on a year-on-year basis. The Company also reported RMB5.888 billion of operating cash flow, representing a significant improvement as compared with that of the same period of 2019. The Group continued its efforts on cost control across all business segments. Total production cost of mining operations was down by RMB494 million, including over USD50 million savings in production cost of the copper and cobalt business in the DRC and 15% cut in Brazil niobium C1 cost on a year-on-year basis. (I do not hold the above stock)
Strategy¡G
Buy-in Price: $2.60, Target Price: $2.85, Cut Loss Price: $2.45
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Xusheng(603305)
Analysis¡G
Ningbo Xusheng is engaged in aluminum alloy die casting which integrates R&D, production and marketing for precision auto parts and industrial parts. Products are mainly used in the electric vehicles and other machinery manufacturing industry, light-weight field. Xusheng has become a strategic partner to many world-renowned OEMs and Tier 1 suppliers such as Tesla, Great Wall Automobile , ZF, CATL, Polaris, JAC, NextEv and Magna. Xusheng was awarded the top 10 Excellent suppliers from Tesla.
Strategy¡G
Buy-in Price: RMB39.00, Target Price: RMB44.00, Cut Loss Price: RMB36.00
Maxell¡]6810¡^
Established in 1966. After becoming a wholly-owned subsidiary of Hitachi, Ltd. (6501) in 2010, they were relisted in 2014 and went independent from Hitachi Group. Mainly carries out the manufacture and retail of energy, industrial parts and materials as well as electrical and consumer products.For FY2020/3 results announced on 14/5, net sales decreased by 3.7% to 145.041 billion yen compared to the previous year and operating income fell into the red from 5.424 billion yen in the previous year to (137) million yen. In addition to a decrease in revenue in projectors and semiconductor-related embedded systems, a decline in the occupancy rate of their factory in China and a decrease in sales of optical components for the automobile market and in health / electrical personal appliances have affected.For its FY2021/3 plan, net sales is expected to decrease by 3.5% to 140 billion yen compared to the previous year and operating income to return to profit from (137) million yen the previous year to 500 million yen. With increasing awareness in hygiene due to the spread of COVID-19, there has been growth in sales of batteries for thermometers used for measuring temperature as well as the sterilising and deodorising machine for corporate and the general consumer. In addition to the sterilising and deodorising machine being used in the offices of Japanese corporations, orders for them appear to be increasing in Asian regions, such as in China.Target Price : 1,203 yenBuy Price : 1,026 yenCut-Loss : 930 yen
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Report Review of May. 2020
Sectors: Air & Automobiles (Zhang Jing), Automobile & Air (ZhangJing)This month I released 3 updated reports of BYD (1211.HK)¡AWeifu (000581.CH)¡Aand Spring Airlines (601021.CH), which got success by their unique Competitive edge. Among them, we highly recommend Spring Airlines. Spring Airlines, the leader of the low-cost airlines in China, is the first private low-cost airlines in China. No matter in terms of the size of the fleet and the number of routes, or of the passenger traffic, Spring Airlines is far ahead in the domestic low-cost airline market. The unit operating cost of the company is 32%-37% lower than that of the other three major airlines. With a significant cost advantage, the company is able to launch products at lower prices. The company provided tickets with prices 30-45% lower than that of full-service airlines. Such advantage in cost effectiveness attracts numerous self-paying passengers who are more sensitive to prices as well as business travellers pursuing high cost effectiveness, Maximizing the use of existing assets has recorded efficient production operations. The company's yield and P L/ F are much higher than that of other domestic airlines, which reflects its excellent capabilities for operations. China's low-cost airlines started developing late and are still in the early stages of development, with a low penetration rate. The company has vast development space, and has the first-mover advantages and a "barrier", which help it to fully enjoy the industry dividend. We believe that short-term impact caused by the epidemic does not change the long-term investment value of the company. As for valuation, we expected diluted EPS of the Company to RMB 0.42/2.56 of 2020/2021. And we accordingly gave the target price to RMB47, respectively 2.8/2.3x P/B for 2020/2021. "Buy" rating. 
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