China

• Swire Pacific (19 HK)‘s discount to NAV is around a one-year high; and its implied stub (net of Swire Properties (1972 HK) has just rolled over from a multi-year high. 
• 45%-Held Cathay Pacific Airways (293 HK) recently reported its highest annual profit in more than a decade.
• Reportedly (Bloomberg) Air China Ltd (A) (601111 CH) is mulling a stake increase in the Hong Kong carrier. This is inevitable. It’s just a question of timing. 

• A little over a year ago, shareholders approved Sciclone Pharmaceuticals (6600 HK)‘s buyback, which lifted GL Capital’s holding to 31.63% from 28.09%, enabling creep provisions.
• After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.
• GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?

• Tencent is due to release FY23 results tomorrow morning after the HK close. The earnings call is scheduled for 14:00 SAST.
• The market is expecting 1.8% QoQ revenue growth, 8.6% YoY. Strong QoQ revenue growth of 10% is expected for the advertising segment.
• QoQ revenue growth for the gaming sector is expected to decline by 4.9%. Domestic gaming revenue is expected to fall by 7.6%, international gaming revenue expected to increase by 9.6%.

• After rising 14% on Monday, Sciclone Pharmaceuticals (6600 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.”
• SciClone US was listed on NASDAQ in March 1992 and was privatised in October 2017 by a GL Capital-led consortium. It was relisted on the HKEx on 3 March 2021.
• A GL Capital-led consortium will likely once again lead the privatisation. An offer price at or slightly above the IPO price (HK$18.80) would be sufficient to get the vote up.

• According to public news two days ago, COFCO Group is rumored to be a potential suitor for Alibaba’s 78% stake in Sun Art Retail (6808 HK).
• Alibaba wants to eventually get rid of the Sun Art stake, especially after Alibaba’s management change in late 2023.  
• Given limited downside, I believe it is worth a bet on the uncertain timeline but certain intention of the eventual divestiture of Sun Art by Alibaba.

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.

• Adani Green Energy
• Azure Power Global Ltd
• Greenko Energy Holdings

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.

• Adani Green Energy
• Azure Power Global Ltd
• Greenko Energy Holdings

West China Cement’s (WCC) FY 2023 results were soft, but in line with expectations. The company’s profitability in Mainland China continued to weaken, albeit this was partly offset by rising sales volumes and ASP from its African operations. As a result, operating profit in Africa climbed above that for Mainland China for the first time, with the African segment accounting for 31% of total revenue and 74% of operating profit.

In our view, the key risk for investors is WCC’s seemingly relentless expansion in Africa, which is likely to further weaken its leverage. Moreover, we are concerned that further expansion in this region will fundamentally change WCC’s risk profile from a relatively stable infrastructure-led Chinese business to one that is highly exposed to event risks in frontier markets. The company’s African businesses could be exposed to higher geopolitical, regulatory and ESG risks, which are less well understood by investors.

• WuXi AppTec’s 2023 results were disappointing. The decline in performance in 23H2 was quite severe. 2024 performance guidance could be meaningless because the biggest concern now is the geopolitical conflicts.
• If the bill is passed, valuation logic would completely change – not based on DCF/PE, but on PB, market value falling below RMB100 billion. We cannot rule out another privatisation.
• We hope that WuXi AppTec can prepare contingency plans for the worst-case scenario that may occur, rather than simply denying or mitigating the impact of BIOSECURE Act on the Company

• Taste Gourmet (8371 HK) will report its FY24 results in the third week of June. We estimate revenue/earnings growth of 38%/40% YoY. 
• We expect the company to end FY24 with >180 mn HKD of net cash on the balance sheet, representing 32% of the mkt cap (9MFY23 cash 148 mn HKD)
• Maintaining a 50% dividend payout ratio, we expect the company to declare a final DPS of 7 cents ( H1FY24 5.5 cents HKD), representing an 8.5% yield for FY24

• A liquid proxy for China’s recovering consumption (with no technology regulation risk)
• A quality red chip company at a very reasonable valuation
• Growing sales and margins as its premiumisation strategy is executed

• Baicha Baidao’s business model is similar to MIXUE, but MIXUE has more heavy-asset model with own supply chain, while Baicha Baidao is more of a “transfer station” for raw materials.
• Single store data of Baicha Baidao showed varying degrees of decline. It’s uncertain whether Baicha Baidao would maintain current market share/revenue growth/high gross margin in front of fierce homogeneous competition.
• When Baicha Baidao submitted prospectus last year, its valuation was already about RMB18 billion.We think its valuation would be lower than MIXUE, close to Guming and higher than Auntea Jenny.

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 Vanke
• Nickel Industries

• A document titled “Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain” would completely change the outlook/investment logic of China’s innovative drugs.
• We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
• After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.

• TCL Electronics Limited (1070.HK ) (“TCL”), with a market cap of HKD 7.57 billion (USD 968 million), is not your ordinary Chinese TV manufacturer.
• TCL focuses on mid-to-high end audio/video products like miniLED, QLED, Android, and smart TVs, ranking second in the global TV market behind Samsung.
• The Company also produces air conditioners, refrigerators, smartphones, tablets, and smart home devices. A recent catch-up with the IR team at TCL’s Shenzhen Industrial Park Headquarters intrigued us and we decided to dig a bit deeper.

• Great Wall Motor denied that many employees have resigned recently, but there many complaints from employees on social media.
• Many small companies grew strongly, such as Tuniu up by 140% and Kanzhun up by 46%.
• Weibo’s advertising revenue decreased, while most companies’ ad revenues have recovered.

• AviChina Industry & Technology H (2357 HK)‘s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. 
• Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
• The stock’s 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.

• A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
• Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
• The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row. 

• KE Holdings’ (BEKE) reported C4Q23 revenue 6.2%/7.5% above our est./cons.. Its non-GAAP net income miss our est. by 8.3%, due to bad debt write-off and year-end bonus
• Although recovery in new home market remains muddy, we view Beike’s commitment to deliver 5% yield through dividend and stock buyback as investor friendly. 
• We reiterate BUY rating and maintain TP at US$24/ADS . 

• 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 BUY RMB 32.8bn of A-shares on decent volume after one RMB-3bn week following 5 weeks straight of net buying total RMB +63bn. Foreigners are in.
• The volume now is back to chasing momentum, but given so much net buying, much of it appears to be passive plus a CATL kicker.

• 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 a net buyer every day since the end of Chinese New Year. NORTHBOUND a huge net buyer this week, now net buyers in size (RMB +93bn) over 7 weeks.
• For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are Sino Land  (83 HK), Hysan (14 HK), Far East Consortium (35 HK), Dongyue (189 HK) & Great Eagle Holdings (41 HK)/Champion REIT (2778 HK).

• The Hang Seng Index is rallying and could co higher this week but it seems there isn’t much room to go really higher.
• A good target to cover your LONG holdings would be 17500, for this coming week and/or the following week.
• A pullback this coming week is also possible, so it’s not sure the index can rally more from here, or at least not without some correction first.

• BZ reported 4Q23 revenue in-line/2.6% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 3.5%/21.9%, mainly attributable to effective cost control measures. 
• We think the competitive advantages over peers grand BZ privilege to enjoy the early sign of hiring demand recovery, whereas overall China job market remains lackluster in early 2024.
• We upgrade the stock from SELL to BUY and rise TP by US$7.5 to US$22/ADS.

• Migao Group Holdings (9879 HK) is looking to raise up to US$124m in its Hong Kong IPO.
• Migao Group (Migao) is a vertically-integrated national potash fertilizer company in China.
• In this note, we look at the firm’s past performance and share our thoughts on valuation.

• Alibaba Group’s office messaging and meeting app DingTalk is allowing users of Tencent Holdings’ rival social media app WeChat to directly join any meeting initiated on DingTalk without first registering.
• DingTalk users can now share a meeting link with WeChat users, who can enter the meeting within WeChat.
• Previously, DingTalk required participants to download its meeting app and register.

• Miniso report C4Q23 revenue in-line/7.9% vs. our estimate/consensus, non-GAAP NI is 5.1%/10.5% higher than our estimate/consensus on strong overseas sales from North and Latin Americas. 
• Company guided for soft operating margin thanks to robust new store openings, which we believe to be accretive to earnings in the long run
• We maintain the stock as BUY and but cut TP by US$2 to US$31/ADS

• In 4Q23, we believe total revenue will grow by 20% YoY and MT will have the fourth profitable quarter.
• We believe Douyin will not threaten MT in the long run according to other competitors’ failure.
• We believe EPS will reach RMB0.35 in 4Q23 and RMB2.23 in 2023.

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.

• Agung Podomoro Land
• China Vanke

• Qunabox Group Limited (QUNA HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The bookrunner on the deal is Haitong.
• Qunabox Group Limited (Qunabox) is a marketing service provider in China, focusing on outdoor marketing for fast-moving consumer goods (FMCG).
• As per CIC, the firm was the fifth largest FMCG outdoor marketing service provider in China in terms of 2022 sales, with a market share of 0.9%.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the June 2024 index rebal event.
• I currently expect three changes for the STAR 50 index in June 2024 but there are some questions marks over the names leading the race to become ADDs.

• 2023 results came in broadly in line with expectations but included a concerning step up in ex-fuel unit cost inflation.
• We cut our 2024 EBITDAR by 10% to HK$22.2bn, which drives net income down 21% to HK$6.6bn, leaving us well below consensus.
• We revisit Cathay’s margin generation problems from the last cycle, illustrating structural problems which require structural solutions.

• Auntea Jenny (Shanghai) Industrial (AJI HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Auntea Jenny (Shanghai) Industrial (Auntea) is a freshly-made beverage producer.
• In this note, we will talk about the positive aspects of the deal.

• We cut Luckin Coffee’s 1Q24 revenue estimate by 3% to RMB7.9bn with 79% yoy and cut non-GAAP net income estimate by 42% to RMB318mn due to (1) weak sales；
• We expect 2Q24 to be the turning point for earnings due to (1) sales improving with weather warm-up (2) ASP rebound from easing competition 
• We maintain the stock as BUY rating but lower TP by US$4 to US$37 to factor in the temporary near-term weak sale.

• FY23 net profit of HKD9.1b, easily beating the consensus forecast of HKD8.5b, and announced a surprise dividend, the first since 2019, signally pandemic effects are over 
• Perfect execution from the team, leveraging on a strong market 
• Cathay Pacific is a value BUY, our target price of HK$9.90 (+10% UPSIDE) implies 10x FY2024 PE. We will update more after tuning in the 2 pm analyst briefing 

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

• JD.com’s latest earnings showed a strong commitment to growth, navigating a mix of macro recoveries, seasonality factors and strategic refocus.
• They delivered a growth in net revenues by 4% and recorded a non-GAAP net income attributable to ordinary shareholders of RMB 8.4 billion.
• Cash and cash equivalents, restricted cash, and short term investments totaled RMB 198 billion.

• The biggest concern here is the uncertain commercialization outlook of Qyuns’s pipeline, mainly due to both industry factors in the field of autoimmune and allergic diseases and Qyuns’s own problems.
• Qyuns is overvalued. There’re rumors that Qyuns was “not popular” in primary market when fundraising, perhaps due to Dr. Yu Guoliang’s past unsuccessful experience which made investors suffered losses before.
• By reducing the size of IPO to maintain high share price, this IPO may “look successful”.Investors can seize this opportunity to take profits in time, but long-term hold isn’t recommended.

• Belle Fashion (BF) aims to raise up to US$1bn in its Hong Kong listing. The company recently refiled its application proof after a gap of two years.
• As per F&S, it was the largest player in China’s fashion footwear market with a 12.3% market share, based on 2022 retail sales.
• We have looked at the company’s past performance based on its earlier filings in 2022. In this note, we talk about the updates from its recent filings.

• Auntea Jenny (Shanghai) Industrial (AJI HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Auntea Jenny (Shanghai) Industrial (Auntea) is a freshly-made beverage producer.
• In this note, we will talk about the not so positive aspects of the deal.

• As the Hong Kong bourse languishes, recent Hong Kong privatisation include mainland Chinese firms such as Vinda International (3331 HK) and China Traditional Chinese Medicine (570 HK) . 
• Reportedly (Reuters) Li Ning (2331 HK) is now in the crosshairs.  Shares are up 7.8% as I type.
• Olympic champion Li Ning holds ~10.5% in his self-named company, which was recently in the news after acquiring a HK$2.2bn commercial building from Henderson Land (12 HK)  as its headquarters.

• Reuters reported that due to the steep share price declines, Mr Li Ning is considering leading a consortium to privatise Li Ning (2331 HK). 
• The shares have been weighed down by concerns about channel inventory, steep retail discounts, and unauthorised distributor sales. To counter this, Li Ning aims to achieve RMB50bn sales by 2028.
• The probability of an offer is low as funding the scheme consideration could prove challenging. Nevertheless, the downside is low as Li Ning trades at an undemanding valuation. 

• According to public news today afternoon during trading hours, the founder and biggest shareholder of Li Ning (2331 HK), Mr. Li Ning, is mulling privatizing the public company. 
• Mr. Li Ning has shown the opposite intention over the last few years, with several major sell-down of stake.
• The company is trading at 16x 2024 PE, with visibility being quite low. 

• We believe revenue will grow by 44% in 2023 according to the sales volume and the price trend.
• We believe net profit will increase by 100%, higher than the company’s estimate.
• We conclude an upside of 54% and a price target of HK$304. Buy.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
• I continue to expect 5 changes for SSE 50 and 18 changes for SSE 180 but some names have changed since my last insight.

• In Q423 JD Logistics booked 10% top-line growth & solid margin improvement
• We analyze the impacts of JD.com & Deppon Logistics on JD Logistics’ Q423
• Given still-low profitability, JD Logistics does not appear cheap, in our view

• We preview Shougang Fushan Resources (639 HK) earnings for FY23. We expect revenue /profit growth of -15%/12% YoY with H2FY23 revenue/profit -1.7%/2.3% YoY due to lower coking coal prices.
• We expect the company to pay an FY23 dividend of 36 HKD cents, implying an 11.3% yield. At the current spot price, the implied yield is 11.3%. 
• The company’s balance sheet is rich in cash, with more than a billion USD (~50% of market capitalization). However, we are skeptical that the company will pay big special dividends. 

• PB-119 (T2DM) has the fastest R&D progress, but this is a highly competitive market.China’s diabetes drug market is dominated by traditional drugs. It’s not easy for PegBio to break through. 
• Since the future competitive landscape of GLP-1s (obesity) would present a very different situation.If PB-119 fails to have better weight loss effect, it would be eliminated due to fierce competition.
• PegBio’s IPO on SSE STAR Market was rejected. We’re not optimistic about its future commercialization performance. Together with cash-flow issues, we doubt whether PegBio would bring expected returns to investors.

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 South City
• Greenko Energy Holdings
• Road King Infrastructure

• CIMC Vehicle Group Co Ltd (1839 HK) announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.
• The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.  
• Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable. 

• Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
• This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
• Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.

• Q423 revenue growth, core margins, and expense control all looked strong
• Evolving revenue mix bodes well for long-term improvement in core margin
• Buyback update & Q124 guidance both +ive; appears cheap at 14x consensus

• CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
• In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in June 2024.
• There are some changes to the list of expected ADDs/DELs since I published my last insight on this roughly a month ago.

• Lianlian DigiTech (2104619D CH)  is a digital payment solution provider in China has filed for an IPO on the Hong Kong Stock Exchange.
• As per news media outlets, the company plans to raise US$500m to help enhance its technological capabilities and expand global operations.
• In this insight, we have discussed the company’s business model, key financials and the outlook on the company.

• China set a growth target of “around 5%” for 2024, according to the “Government Work Report” released Tuesday as part of the opening of the National People’s Congress annual meeting.

• Last year China’s economy grew by 5.2%, matching the official target of around 5%.

• China set a deficit-to-GDP ratio of 3% for the year, down from a rare upward revision to 3.8% late last year from the original 3%.

• Bank of Ningbo saw its margins decline dramatically from 1.79% to 1.55% from 3Q22 to 3Q23. This is of concern for earnings power in coming quarters.
• The bank’s loan-to-deposit ratio (LDR) is now down to 73% from 78% YoY which tends to act as a dampener on NIM and core income.
• Credit metrics are worsening with NPLs up from RMB7.9bn to RMB9.3bn YoY in 3Q23. This rise is not easily visible in the NPL ratio due to rising total loans.

Yuexiu REIT’s FY 2023 results were acceptable in our view, as earnings from its hotels and retail assets recovered y-o-y on the back of China’s resumption of economic activities following the pandemic. This was partly offset by lower earnings from its office buildings. The overall portfolio occupancy rate improved in H2, but was down marginally amid weakness in the office segment. Net debt decreased in H2, but was largely stable. Positively, the portfolio asset valuation was largely unchanged at CNY 42.6 bn. That said, the financial profile remains moderately weak.

We view refinancing risk as manageable, considering Yuexiu REIT’s healthy access to funding and large proportion of unencumbered assets. It will likely continue refinancing offshore floating-rate debt with onshore fixed-rate borrowings, which could help stem FX losses and lower interest costs.

We revise our fundamental Credit Bias to “Stable” from “Negative”, and move our trade recommendation to “Buy” from “Hold” on the YXREIT 2.65 ’26s. 

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
• China Vanke
• Pan Brothers

• HUTCHMED’s 2023 results were in line with expectation. It is gradually becoming a self-sufficient innovative drug enterprise with sufficient cashflow due to upfront/milestone payments of Takeda and increasing product revenue.
• 2024 revenue guidance seems very optimistic, which has to rely on fruquintinib’s global sales performance (or Takeda’s contribution), and also on the timing of approval of fruquintinib’s 2L gastric cancer.
• Starting from 2024, HUTCHMED will enter a period of accelerated growth in product revenue based on major catalysts.Market value of US$1,200 – US$1,800 million is a good place to long. 

• WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
• That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
• The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest 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 a net buyer every day since the end of Chinese New Year. NORTHBOUND a net seller this week for the first week in 6. AH premia slightly down.
• Wide spreads continue to narrow and narrow spreads continue to widen.

• A shares were up small on the week. HK stock indices were down. 
• Net SOUTHBOUND buying was HK$17.1bn in the third post-holiday week. SOUTHBOUND has net bought every day since the end of Chinese New Year.
• SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.

• Uni President China (220 HK), a F&B company in China, has an impressive track record of paying near 100% or over 100% of net profit in dividends since 2018. 
• The company has two segments, food (mainly instant noodle), and beverage.  Overall sales grew 1% yoy in 2023 while net profit jumped 36% yoy. 
• Given the reasonable valuation (13x forward PE), a near 40% net cash position, and most importantly a stable 8% dividend yield, the stock looks attractive.

• PegBio, a VC-backed biotech company, plans to tap capital markets in Hong Kong. CICC is leading the offering, and an IPO date has yet to be announced.
• The company’s pipeline features promising drug candidates designed for the treatment of type 2 diabetes mellitus (T2DM), obesity, NASH, OIC and congenital hyperinsulinemia. 
• PegBio employs a proprietary technology platform, called HECTOR, and has six drug candidates in the pipeline portfolio. PB-119 is their core product with the purpose to treat T2DM and obesity.

• We believe total revenue will grow by 11% in 4Q23 and 2024.
• We also believe the operating margin will improve slightly in 4Q23 and the following two years.
• Tencent sold weak business to China Literature in December 2024.

• JD.com stock price surged after its 4Q23 results and repurchase decision.
• It is not big issue that BYD sales decreased in the weak season.
• Alibaba began to close unprofitable Freshippo stores in February, but the company said it has expansion plan.

• We see further upside to our previous above-consensus 4Q23 results estimates on low base, enhanced monetization, and faster TEMU expansion.
• That said, we believe market focus already shifted to outlook for 2024, in particular an imminent slowdown in 1Q24 and renewed concern around US curb on TEMU.
• 30% share price correction is pricing in the above scenario and valuation should gradually improve as PDD delivers back-loaded bottom line growth in 2024.

• Since the domestic revenue scale of PD-1 has been much lower-than-expected, the market seems no longer willing to offer GLP-1 weight loss drug high expectations. However, that’s not right. 
• For China healthcare, the emergence of negative domestic policies is a time for reassessment and seeking opportunities, rather than a time of blind pessimism.
• Issuing convertible bonds is clearly a bad decision for Microport, which chose to sacrifice the interests of minority shareholders. Together with weak fundamentals/cashflow pressure, the management needs to take responsibility.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• We also provide updates on released earnings for Uchi Technologies (UCHI MK), Plover Bay Technologies (1523 HK), UMP Healthcare (722 HK), and Sitoy Group Holdings (1023 HK).