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In today’s briefing:
- Henlius Biotech (2696 HK): Fosun Offer?
- Henlius (2696 HK): Privatisation by Fosun Pharma?
- XM / Xiaomi (1810 HK): 1Q24, Revenue Up by 27%, Smartphone Shipments Ranked Global No. 3
- Sun Art (6808 HK): FY24 Unimpressive, But All Eyes On Potential Alibaba Sale
- [Trip.com (TCOM US, SELL, TP US$45) TP Change]: Liquidity and Platform Positive Vs. Demand Negative
- Full Truck Alliance Q124 Results: Strong Financials Match Recent Strong Share Performance – HOLD
- CICC (3908 HK): Soon to Be Its Time
- SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote
- Morning Views Asia: China Vanke , Lippo Malls Indonesia Retail Trust
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Henlius Biotech (2696 HK): Fosun Offer?
- Biopharmaceutical outfit Shanghai Henlius Biotech (2696 HK) is currently suspended pursuant to the Takeovers Code.
- Shanghai Fosun Pharmaceutical (Group) (2196 HK) holds ~60% in Henlius, mostly via domestic shares. Co-founders and Qatar Authority hold ~28% and 8% the H shares respectively.
- IF an Offer were to unfold, it would be the third in this space in the past two months, after Offers for Sciclone (6600 HK) and Yichang HEC (1558 HK),
Henlius (2696 HK): Privatisation by Fosun Pharma?
- Shanghai Henlius Biotech (2696 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” The likely bidder is Fosun Pharma.
- A merger by absorption would require approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). There could also be a 90% minimum acceptance condition.
- The shares are 62% below the IPO price. However, shareholders with blocking stakes would welcome an offer suggesting a 30-40% takeover premium would be sufficient.
XM / Xiaomi (1810 HK): 1Q24, Revenue Up by 27%, Smartphone Shipments Ranked Global No. 3
- Total revenue growth rate climbed up 27% YoY in 1Q24 with all businesses growing strongly.
- Smartphone shipments grew by 34% YoY and achieved global No. 3.
- In 1Q24, the gross margins of all major businesses obviously improved.
Sun Art (6808 HK): FY24 Unimpressive, But All Eyes On Potential Alibaba Sale
- Sun Art Retail (6808 HK)‘s FY24 (fiscal year ending March) numbers were overall unimpressive, with sales down 13% yoy and net loss increasing to RMB1.6bn.
- The new CEO’s strategy is to refocus on SSSG of offline traffic and restore price competitiveness. April and May SSSG improved.
- The stock is up 20% since my initial insight on the name in March, and I believe more upside remains.
[Trip.com (TCOM US, SELL, TP US$45) TP Change]: Liquidity and Platform Positive Vs. Demand Negative
- In a tough macro environment with travel as perhaps the only bright spot in consumption
- However, equally compelling is the demand negatives of overseas travel as a somewhat luxurious consumption item and tough competition at home;
- Given the stock’s valuation, we maintain the rating as SELL but raise TP to US$45/ADS, implying 2025 PE of 15x.
Full Truck Alliance Q124 Results: Strong Financials Match Recent Strong Share Performance – HOLD
- FTA’s revenue growth accelerated in Q124 and exceeded management guidance
- Gross and OpInc margins (cash basis) both improved sharply in Q124
- Growth, profitability, mix improved, but FTA no longer so cheap; HOLD
CICC (3908 HK): Soon to Be Its Time
- China International Capital Corporation (3908 HK) is a laggard among the Chinese securities companies. With the rebound in HSI and Shanghai Composite, such divergence should narrow.
- The investment banking business should recover following the rebound in the secondary market and equity valuations. HK’s IPO funds raised are forecast to double in 2024.
- At 0.4x 12-month P/B, the market has deeply discounted CICC’s earnings outlook. However, as earnings recovery will be fast, its share price will react rapidly.
SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote
- On the 28th March, Li Zhenfu (SciClone (6600 HK)‘s NED), Assicurazioni Generali (G IM), and concert parties (collectively controlling 36.61%), made an Offer at $18.80/share, a 33.9% premium to undisturbed.
- The Offer price is bang in line with SciClone’s March 2021 IPO price. Terms were declared final. This is a clean deal.
- The Scheme Document is now out. The Court Meeting will be held on the 19th June. Expected payment on or before the 12 July. FWIW: IFA says fair & reasonable.
Morning Views Asia: China Vanke , Lippo Malls Indonesia Retail Trust
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.