China

• Anta Sports Products (2020 HK), Li Ning (2331 HK), and Xtep International (1368 HK) have announced 1Q24 operational updates, with additional color given in post conference calls. 
• Anta: Retail sales started to accelerate in mid-March, and March were better than January and February. 
• Li Ning:  offline retail sales down low-single-digit in 1Q24, driven by wholesale down mid-single-digit, while retail grew mid-single-digit.  E-commerce grew 20-30% yoy.  

• Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities.
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• In this note, we talk about the positive aspects of the deal.

• Guangming District State-owned Assets Supervision and Administration Bureau reached a cooperation agreement with China National Biotec to establish a joint venture, which will become the new controlling shareholder of Weiguang.
• Since Tiantan is already Sinopharm’s subsidiary, there will be horizontal competition issue in the field of blood product business between Tiantan and Weiguang, mainly due to significant business overlap.
• Some spin-offs and integrations are expected between Tiantan and Weiguang. As the reform of SOE enters a new stage, the two companies could end up very different.

• Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities.
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• In this note, we talk about the not-so-positive aspects of the deal.

• Fosun Tourism (1992 HK) saw a healthy 15.8% overall business volume growth in 1Q24, with net profit sustaining improvement. This should justify a catch-up in share price.
• The cumulative bookings for Club Med for 1H24 have increased 13% YoY, while those for 2H24 have increased 10%. Positive forward bookings indicate an encouraging outlook.
• Four new Club Med resorts to be opened in 2024 and the increase in attractiveness of Hainan after it turns into a duty-free island by 2025 are both drivers.   

• Meituan has navigated through its most challenging period since IPO as competition moderates and reorg comes close to completion. 
• 1Q results should kick off an upward earnings cycle through to the end of 2024 when the company’s efforts to revamp loss-making new initiative businesses gather pace. 
• That said, lack of clear topline driver remains the key reason for our cautious view about the sustainability of re-rating. Maintain neutral.

• A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
• They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
• RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.

• A shares were up on the week, while Hs were down. BIG divergence among liquid names. 
• Net SOUTHBOUND buying was +HK32.1bn. SOUTHBOUND ended its consecutive post-CNY daily net buy streak on 25 March, then started a new one. No net sell days since.
• Little market news. More geopolitical news. SOE bank H-shares are seeing relentless net and gross buying, very very little selling.

• We believe the revenue growth will be slow in 1Q24, but it will still be rapid for the full year 2024.
• We also believe the operating margin will hit the historical high in 1Q24, but it will be just stable for the year 2024.
• We conclude the stock has an upside of 60% for the year end 2024. Buy.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND’s consecutive buying streak ended on Monday 25-March, then started again. NORTHBOUND has been selling recently (this week and last buying semi tech, selling renewables)
• Hs fell sharply vs As. AH Premia very wide. Alpha on portfolio vs straight H vs A but a bad week as liquid Hs underperformed liquid As by 2.5+%.

• In 1Q24, Xiaomi and Transsion shipments grew rapidly, while Samsung Electronics (005930 KS) and Apple (AAPL US) shrank.
• Tims China’s revenue expanded with new openings, which is encouraging in the competitive market.
• In China, Tesla fired salespeople who had served the company for less than six months.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 6.7bn of A-shares on decent volume. A-shares out-performed H-shares quite dramatically, taking back H-share gains from the week before, which reversed prior weeks.
• This week saw net buying of semiconductor/chip names, and net selling of the EV/Solar/Battery space and buying of the Ping Ans, but most notable was liquid A vs H performance.

• Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO.
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
• We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.

• Remegen’s product revenue fails to cover R&D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
• If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
• Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.

• JD.com (9618 HK) announced this week that it has repurchased 2.8% of the outstanding shares of the company in the first quarter of 2024. 
• Improved shareholder returns is a key thesis for the stock, given that there is little market expectation on such given limited track record.
• A positive catalyst on full year performance could be the government’s announced stimulus policy for home appliance in April this year (trading old for new).

• Innovent is most well-known as the developer of mazdutide in China, however this is overshadowing a strong portfolio of oncology drugs in a very high growth market.
• China’s approach to healthcare is being defined by having the biggest diabetic population, over 4 million new cancer cases per year, and over 100 million living with obesity.
• We expect the valuation gap between the two first-to-market GLP-1 drugs, and competition to close. Oncology drug sales and valuations will continue its growth trajectory.

• We have seen four transactions of MNC acquiring Chinese Biotech companies. However, this does not mean that domestic big pharmaceutical companies will also participate in the acquisition of small Biotech.
• The underlying investment logic of innovative drug is undergoing changes. Non-oncology fields, such as autoimmunity, CNS, endocrine metabolism, and ophthalmology will be the main hot directions of investment and R&D.
• Shanghai Tofflon Science A (300171 CH) is still in downward trend. We’re not optimistic about its 2023 results. We don’t recommend bottom-fish this stock unless there is a major catalyst.

• ASPs remain under pressure as STO, J&T gain volume share in ground segment
• March showed a surprising slowdown in pace of international volume growth
• We believe Q423 and Q124 company-level profitability will mostly disappoint

• Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO.
• Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
• In this note, we look at the firm’s past performance.

• We would see CanSino’s performance pick up obviously in 2024 – Revenue of meningococcal vaccines would up about 50% YoY. Both R&D and SG&A expenses would show a declining trend.
• Starting from 2025, CanSino’s product matrix will become more diverse.Its financial performance will enter a virtuous cycle. Revenue in 2025 may exceed expectations, depending on the approval time of PCV13i.
• CanSino is one of the few domestic vaccine companies that has ability to explore the international market. Mispricing/expectation differences in the market will give investors the opportunity for excess returns.

• Since my previous insight on China Tourism Group Duty Free (1880 HK) in October 2023, the stock has declined 33%, and year-to-date, the stock has declined 13%.
• The company faces headwinds from continued overall weakness in Hainan duty free sales and potentially increased competition in Hainan.
• The company already announced preliminary 1Q24 results, with sales down 9% yoy and net profit flat.  The company is trading at 18x 2024 earnings.

• A pullback in global equities is underway following steep uptrend violations on MSCI ACWI (ACWI-US) and EURO STOXX 50. Both are 4-5% off their highs; further downside may be limited.
• Several 5%-10% pullbacks are to be expected in any given year, particularly after the historic 5-month rallies, so we view this as healthy and normal within the ongoing bull market.
• ACWI-US is currently testing important support at $105; if this area were to break, next major supports are $102 and $99; this is where we would be buying.

• Low-Cost producer of copper and zinc with two of the biggest  ten mines in the world.
• Recent mine acquisition and increased production at existing mines will grow earnings.
• The supply and demand imbalance in copper will lead to higher prices.

• Perfect Medical Health (1830 HK), post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&investments representing 24% of the market cap.
• HK is experiencing a dip in consumer sentiment, and the company isn’t immune to it, but flat sales/profitability, a 24% net margin, and >40% ROE provide great margin of safety.
• The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.

• Mobvoi, an emerging AIGC market player in China, set terms for an IPO and plans to raise ~HK$330M (~$42M) in Hong Kong. CICC and CMB International are leading the offering.
• The initial public offering is expected to be between HK$3.70 and HK$4.10. At the midpoint of the range, Mobvoi has a market value of ~HK$5.8B based on 1491.5M outstanding shares.
• In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenarios for each business segment under my base case.

• KWEB giving an attractive entry point here, as it begins to outperform the domestic FDN.
• Toyota>Honda and look for that relationship to continue going forward.
• JD>BABA, a new dynamic divergence between the two, and my opinion is JD will be the leader in 2024 and beyond.

• The discounts of both Naspers and Prosus have widened during the last 5 trading sessions.
• We see current levels as attractive entry points for trading the rump.
• In our view, there are a number of fundamental factors that could act as positive catalysts to a further structural narrowing of the discount.

We view ENN Energy as “Low Risk” on the LARA scale. This reflects the company’s large scale and diversified business profile across Mainland China as well as its robust financial position, with low leverage. These are balanced against ENN Energy’s exposure to commodity price risks and potential changes in government policies. In addition, the company has ongoing related-party transactions.

Our fundamental Credit Bias on ENN Energy is “Stable”, supported by the defensive nature of the industry and the company’s good cash-flow generation. ENN Energy has maintained c. 1.0x net leverage over the past five years.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”. While natural gas is a fossil fuel, it has a lower carbon footprint compared to coal, and has been regarded as a “transition fuel” for countries currently dependent on coal (e.g. China and Indonesia). This will likely support strong gas demand over the next decade, particularly in developing countries.

We have a “Hold” recommendation on the XINAOG notes, with the 2.625 ’30s at 83.9/5.6%/5.7 years.

• Zhubajie Co Ltd (ZHUHKZ HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
• Zhubajie (ZBJ) is a customized enterprise services e-commerce platform in China. The firm focuses on matching and facilitating the transactions between enterprise clients and service providers through its ZBJ platform.
• In this note, we talk about the firm’s historical performance.

• Pacific Basin Shipping (2343 HK) just announced a US$40m buyback which equals 2.5% of market capitalisation, showcasing management’s confidence in the outlook.
• At end-1Q24, it covered 68% of FY24 Handysize days at US$10,960/day and 78% of Supermax days at US$13,370/day, leaving significant room to capture the upside in 2H24.
• Market consensus looks overly conservative with FY24 earnings of US$154m, given BDI of 1,808 YTD. The average half-year BDI and net profit since 1H20 is 1,822 and US$189m.  

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.

• China Jinmao Holdings
• JSW Steel Ltd
• Sands China
• Yuexiu Property

• And eagle-eyed reader spotted Hang Lung Properties (101 HK)‘s scrip dividend option for the FY23 final dividend. That’s the first time I’ve seen HLP provide this alternative. 
• Over the years, the Chan family and Hang Lung (10 HK) have chipped away at HLG’s and HLP’s minorities. HLP and HLG are currently trading at all-time low P/Bs. 
• This scrip dividend, which takes a page out of Jardine Matheson (JM SP)‘s playbook, would boost HLG’s stake in HLP to ~63% from 61.24% currently; if opting only for scrip.

• In its final results on 30 January, the Hang Lung Properties (101 HK) board declared a final dividend of HK$0.60 per share, which can be paid in cash or by scrip.
• The Chan family’s share of outstanding shares has steadily increased from 53.15% in 2013 to 61.89%. The scrip dividend could increase the family to 63.57% of post-dividend outstanding shares. 
• The Chan family have plenty of headroom to chip away at minorities before breaching the 25% public float requirements. HPL’s valuation is undemanding, but a privatisation offer is unlikely.

• Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
• There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
• The potential adds have outperformed the potential deletes between 9-10% for both indices over the last month with the deletes dropping a lot more than the adds.

• We expect Miniso’s revenue for C1Q/2Q24 to be 1.0%/2.7% higher than consensus due to adequate inventory and strong sales of the Chiikawa series. 
• We believe Miniso has found a new competency in quickly turning around IP sales through economies of scale in supply chain and store network.
• We maintain the stock as BUY and raise our TP by US$3 to US$34/ADS.

• Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO. 
• Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
• In this note, we will talk about the not-so-positive aspects of the deal.

• The core of Belle’s transformation is to inject “digitalization” into existing massive store assets, with strategy of “omnichannel+multi brands”. Belle also devotes significant resources to online channels and online-to-offline integration.
• Benefiting from the DTC retail model, Belle increases the probability of success when launching products. Licensing/acquisition are important ways to empower new brands and promote growth. Belle’s performance has rebounded.
• However, the path of transformation hasn’t yet been completed. Belle still mainly relies on heavy asset mode and is exposed to inventory risks. There ‘s still room for further improvement.

• Mao Geping Cosmetics (1478187D CH) is looking to raise around US$300m in its upcoming Hong Kong IPO. The bookrunner on the deal is CICC.
• Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
• As per F&S, MGC was the only domestic market player among the top ten premium beauty groups in China, ranking eighth by 2022 retail sales.

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.

• Meituan

• Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO. 
• Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
• The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage. 

• CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations 
• The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates  
• Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations 

• A few weeks ago, Alibaba announced it would not seek IPO for CaiNiao
• The change of plans could force BABA/CaiNiao to re-focus on profitability
• BABA will reportedly buy rest of CaiNiao at US$10.2 bn valuation — cheap!

• J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
• As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Lonking Holdings (3339 HK)‘s demand should pick up in 2H24 supported by the government’s “Action plan to promote large-scale equipment renewals and consumer goods trade-ins”. 
• Industry volume sales have already witnessed a narrower YoY decline in Mar, with solid exports of wheel loaders and domestic sales of excavators.
• After going ex- in late-May, its PER will drop to 7.0x and yield will rise to 6.6%. Net cash of HK$1.56/share is more than fully cover its share price.

• C1Q24 was marked by liquidity crises in innovative drug and medical device, and depressed margin in digital health. We believe this is a buying opportunity;
• PD-1 has recovered nicely in C2H23 and exceeded our expectation made for 2023.We forecast 20% YoY growth in 2024.Further,pipeline maturity has led to new drugs in autoimmune and metabolic drugs;
• Biosimilar has proven to be part of the solution to deal with low paying ability of Chinese healthcare and denial of access to the high paying US healthcare market. 

• The HSI INDEX is currently down for the 2nd week in a row and it is quite oversold on a WEEKLY basis.
• A temporary reversal could come as soon as this week or next week, but we don’t think this will mark a restart of the previous rally.
• Look at the 16250-16050 area to go LONG, this is the area where the index most likely will print a temporary bottom.

• The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
• BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
• BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO. 

• Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO. 
• Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions.
• In this note, we will talk about the positive aspects of the deal.

• Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
• We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case. 
• There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.

• We believe the criticism against Nongfu Spring will eventually help the company.
• Catching the trend of sugar free, tea revenue surged by 83% in 2023.
• The company achieved higher growth and higher margin, but its stock price is still flat.

• Horizon Robotics, a consumer-centric and fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, filed for an IPO and plans to raise up to $500M in Hong Kong.
• Horizon Robotics was founded in 2015 by Dr. Yu Kai, Dr. Chang Huang, Ms. Feiwen Tao, and a group of scientists and tech entrepreneurs. 
• I have a positive view of an upcoming IPO and believe Horizon Robotics is in a great position to capitalize on rapidly growing smart vehicles market in China and worldwide.

• NetEase will be Activision Blizzard’s agency in China again after a divorce more than a year ago.
• Alibaba’s cloud service plans to reduce its overseas price offers by 23% on average.
• Infant formula companies, such as Feihe and Ausnutria, suffered from revenue shrinkage in 2023.

• Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
• We have looked at the company’s performance in our past note. In this note, we talk about valuations

• On April 9, J&T disclosed operating stats from Q124 — a positive surprise
• We welcome the disclosure, but J&T should also explain X-border’s demise
• We believe J&T’s China operation remains far less profitable than its peers’

• Travelsky Technology Ltd H (696 HK) Jan-Feb operational data strong, volume processed by domestic +45% YoY and international by +52% YoY; much higher than the consensus 2024 forecast of 15%  
• Traffic among the Big 3 Chinese airlines was up 46% YoY (-9% MoM) in March to +8% vs 2019. Domestic traffic rose 19% YoY (-11% MoM) to +24% vs 2019
• TP of HKD9.92 (+8% UPSIDE) is based on 2024 PE 14.8x (1SD below mean). The upside is uncompelling, but we advocate a HOLD as traffic growth is stronger than consensus   

• 23H2 net loss significantly widened as cost control was not as tight as in 23H1. Expenses would remain high in 2024, since Innovent would continue expanding team in CVM field.
• Innovent may think that not many players will join the competition of weight loss drug in short-term, but the actual commercialization of mazdutide after launch could be full of uncertainties.
• It’s already good for Innovent to be breakeven in 2025. If Innovent breaks even in 2024, it will exceed expectations.Considering major policy shift, Innovent could experience a leap in valuation.

• Following the positive response to our article on Perfect Medical , we are keen to introduce our readers to another noteworthy company in the healthcare and beauty industry, Water Oasis.
• Despite initial appearances suggesting sluggish revenue growth over the past decade, a deeper examination reveals significant improvements in business quality and consistent shareholder returns through substantial dividends.
• This under-the-radar company, we believe, presents an attractive risk-reward profile.

• A week ahead of trial, a defendant in massive fraud case copped a plea
• Terms of deal include guilty plea, asset forfeiture, restitution of US$158 mn
• US investigation continues; are other Chinese companies involved in case?

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND’s consecutive buying streak ended on Monday 25-March, then started again. NORTHBOUND has started selling (but buying semi tech).
• Hs rebounded vs As. AH Premia still wide. Fabulous two-week performance by the Quiddity Portfolio (+2.09% over the two weeks) on a delta 3:1 long H/short A

• Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
• The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
• Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 11.5bn of A-shares on low-ish volume. A-shares underperformed H-shares quite dramatically, giving back gains from two weeks ago.
• This week saw considerable net buying of semiconductor technology names. I expect that to continue.

• In 2023, CanSino Biologics (688185 CH) generated revenue of RMB561.7 million from the sales of meningococcal conjugate vaccines, up 266% YoY.
• This year, consensus is expecting CanSino to report revenue of RMB858 million, up whopping 140% YoY, mainly driven by meningococcal vaccines.
• CanSino is expected to add pneumococcal conjugate vaccine (PCV13) vaccine in its revenue stream in 2025. The company’s PCV13i is a potential best-in-class improved PCV13.

• Orient Overseas International (316 HK) saw 27.2% QoQ freight rate uptick in 1Q24. This is a positive start and we should not be too concerned about the 12% YoY decline.
• Its overall load factor also expanded 0.9pp YoY in the quarter, and this is the first YoY improvement since 2Q22. A better utilisation level is good for unit costs.
• At end-FY23, net cash equals 62.4% of the share price, dragging ROE to 7.5% for the next three years. But with such solid financials, its 0.7x P/B is not expensive.

• Masked by a high base, 4Q FY24 sales of Sa Sa International Hldgs (178 HK) edged down by 4.1% YoY. However, sales for mainland China have increased by 18.2%.
• Overall sales for FY24 are in line with market projections and there is potential for further margin expansion. Its 6.7x and 5.9x PERs for FY25F and FY26F are inexpensive.
• The addition of more mainland cities to the Hong Kong individual visit scheme, promotion of Hong Kong tourism, and weaker USD in the medium term are all positive factors.

• China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector. 
• Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.
• There is “horizontal competition” issue between Taiji and Shanghai Shyndec Pharmaceutical (600420 CH), which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.

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.

• Anton Oilfield
• Greentown China

• Golden Throat Holdings is a gem. It has excellent fundamentals including an eye-catching dividend yield (17.9% in 2023) and a blistering DPS growth (10x from 2020 to 2023). 
• It also benefits from a compelling long-term theme (relieving sore throats caused by worsening air quality/smog/fine dust problems along with recurrent regular cold/flu symptoms among millions of people in China). 
• Golden Throat Holdings is one of the leading throat lozenges manufacturers in China. Its net margin averaged 24% from 2019 to 2023.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) lock-ups. HD Hyundai Marine Solution (443060 KS), ZEEKR (ZK US)and Sichuan Baicha Baidao Industrial (SCBCBDID CH) IPOs.
• Event-Driven developments L’Occitane (973 HK), CGN New Energy Holdings (1811 HK), Azure Minerals (AZS AU), Genex Power Ltd (GNX AU), Riso Kyoiku (4714 JP), Chilled & Frozen Logistics Holdings (9099 JP).