HKD | 10% P.A. GUARANTEED COUPON | MONTHLY KO OBSERVATIONS | EKI 60%

INVESTMENT OPPORTUNITY
China Tech – Growth at Reasonable Price
Alibaba (9988 HK) is China’s leading e-commerce group, anchored by its Taobao and Tmall platforms. While growth is expected to slow due to a maturing e-commerce market and increased competition, the share price decline has made the risk-reward attractive. Alibaba trades at record low valuations of 13.9x 2022F PE on an 2022-2025 EPS CAGR of 16%. UOBKH Research has a target price of HK$167 based on a SOTP valuation, which includes conservative estimates for its core commerce business at multiples of 2x P/S and 10x P/E.
Xiaomi (1810 HK) is China’s leading handset maker. In 3Q21, its global smartphone shipments ranked No. 3 with a market share of 13.5%. Xiaomi has a strong presence outside of China, with its market share of smartphone shipments in 3Q ranking No. 1 in 11 countries and regions and among the top five in 59 countries and regions globally. Global monthly active users (MAU) of MIUI crossed 500m in November 2021. Xiaomi continues to execute on its “Smartphone x AIoT” strategy, with the number of connected IoT devices (excluding smartphones, tablets and laptops) crossing 400m devices. Valuations have become attractive: Xiaomi trades at 13.5x 2022F PE on an 2022-2025 EPS CAGR of 16%.
At the strike level of 75% of current prices, the underlying stocks have an implied upside to consensus target price of at least 114%. Stock FY 2022F PE(x) 2022F EP