The 720: APAC Tech 2H Strategy, SEC, Initiations - SPCX & InnoScience at Buy, Japan Industrial Electronics, China Consumer Staples

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The 720: APAC Tech 2H Strategy, SEC, Initiations - SPCX & InnoScience at Buy, Japan Industrial Electronics, China Consumer Staples

e Wanchen alongside dairy names such as Mengniu. Leaf Liu

China Staples – Value Retailers 1H26 Preview. We raise our 2026-28E net profit

estimates for Busy Ming and Wanchen by 6-13% and 2-11%, respectively, driven by

faster-than-expected store expansion and resilient same-store sales growth. We

increase our 12m TP for Busy Ming to HK$581 and for Wanchen to Rmb324, reiterating

our Buy ratings on both names given their attractive risk/reward profiles and healthy

store unit economics. We expect both industry leaders to continue scaling their

networks rapidly by cultivating stronghold markets and exploring under-penetrated

areas, while maintaining stable franchisee gross margins through procurement scale and

logistics optimization. Leaf Liu

China Snacks – 2Q26 Preview and resilient margins. We expect our snacks universe to

experience a sales pullback in the second quarter following strong shipments in the first

quarter, driven by muted consumer demand and persistent weakness in traditional retail

channels. Despite the top-line slowdown, we see a solid industry margin profile with

expected net profit margin expansion of 1 to 6 percentage points, alongside an

attractive shareholder return focus offering dividend yields between 3% and 8%. We

lower our earnings estimates and 12m TPs across most of our coverage to reflect softer

sentiment, including Buy-rated Yankershop to Rmb60, Buy-rated Weilong to Rmb8.21,

and Sell-rated Want Want to HK$2.9. However, we upgrade Chacha to Buy with a raised

12m TP of Rmb22.5, as we see a compelling turnaround story supported by easier

competition dynamics and lower procurement costs. Also see China Snacks –