China

• Li Ning (2331 HK) announced yesterday that the company has acquired a HK office project, the Harbour East, from Henderson Land, for a total consideration of HKD2.2bn. 
• The acquisition is quite unexpected given that Li Ning has had a clean corporate governance track record.
• The company now trades at 11x foward PE, assuming no growth in 2023 and 2024 earnings.  It is now a value stock, though the visibility is very low. 

• REPT BATTERO Energy (1998104D CH), a leading EV battery manufacturer, has launched an HKEx IPO to raise up to US$306 million. Pricing is on 14 December.
• We previously discussed the IPO in Rept Battero IPO: The Bull Case and Rept Battero IPO: The Bear Case. 
• There are no cornerstone investors. Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would pass on the IPO.

We believe China South City’s (CSC) proposed bond extension is overall acceptable to bondholders. The company plans to continue paying coupons in cash, albeit at a reduced coupon rate. In addition, the absence of a haircut would preserve bondholders’ claims.

We note negatively that the amortisation payments would only begin in 2026. This reflects the company’s very tight liquidity, considering its failure to pay the coupon in November 2023 and the dismal H1/23-24 results. Moreover, CSC is not proposing to add new credit enhancement measures, even though the latest extension has demonstrated the failure of the existing keepwell deed and asset pledge to ensure offshore debt repayment.

CSC has ceased disclosure of quarterly contracted sales since 2022, and we believe it has now fully shifted business focus to commercial properties. However, the company’s commercial properties were affected by a depressed macro market and lower demand for leasing, and we do not foresee a related turnaround in the near future. Liquidity was extremely weak, with Cash/ST Debt of only 9% as of end-September.

• Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
• The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
• Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.

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
• NagaCorp Ltd

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
• The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series.
• We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

• Recently, Yunda Holding has lost volume share to rival STO Express 
• One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
• For Yunda, this dynamic adds to intense near-term pressure on margins

• SOUTHBOUND flows showing reversion tendencies continues for a second or third week after weeks of momentum. 
• SOUTHBOUND saw HK$11.2bn of INFLOWS on the week, a chunk of which was net buys on HK-listed ETFs, but Hs underperformed their A counterparts in the H/A pairs once again. 
• High-Div SOEs again saw action. This time with both CNOOC Ltd (883 HK)andChina Mobile (941 HK) seeing strong net buying as a percentage of volume. Tech was sold.  

• The New and Better (5mos old) 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.
• Hs with H/A pairs under-perform their As on average by 70+bp. Liquid HK H/A Pairs saw H/As -66bp. H/A Pair intracorrelation is down but it feels like liquidation.
• SOUTHBOUND and NORTHBOUND flows were buys, and sells, respectively, but Hs have had two bad weeks in a row, and high premia A/H pairs have seen premia rise significantly.

• REPT BATTERO Energy (1998104D CH) is looking to raise up to HK$2.39bn (US$306m) in its IPO by selling 116.07m shares at HK$20.6/share, valuing the company at HK$46.9bn (US$6bn).
• The H-share market cap is a lot lower at HK$6.33bn (US$811m) since most of the pre-IPO shares will remain as Domestic Unlisted Shares.
• The stock will be eligible for HSCI inclusion in March but will need to trade higher than the upper end of the IPO range to be added to the index.

• Travelers increased by 75% YoY and traveling spending increased by 144% YoY in China in 9M2023.
• TCOM’s total revenue rose by 31% in 3Q23 over 3Q19 before COVID.
• We conclude an upside of 33% and a price target of US$43.70.

• We set out to compare prices & the “retail experience” at AMZN, SHEIN
• Selecting comparable items, we looked at landed costs, transit times, returns
• SHEIN’s value proposition is obvious; will consumers accept its drawbacks, too?

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.
• Last week saw NORTHBOUND net sell RMB 5.8bn of A-sharesin higher-than-normal activity.
• Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start).

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• BYD offers a reward up to RMB5 million for reporting defamation.
• NIO denied further layoff after releasing the 3Q23 results with both revenue and loss increasing significantly.
• Meituan’s GMV of live broadcasting food delivery reached RMB2 billion.

• The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
• We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings. 
• These assets only accounted for 8% and 5% of SZI’s total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.

• Now that the pandemic has passed, Yiling’s performance has to face a sharp decline due to the high base before, but in our view, the situation is not so bad.  
• According to the management,sales of cardiovascular and cerebrovascular products would gradually increase to make up for the sales decline of Lianhua Qingwen, which would still be higher than pre-pandemic level.
• About 15-20% performance growth is still reachable in the future. PE of 20-30 is a reasonable range for Yiling. Being included in CSI 300 Index helps to improve the liquidity.

• REPT BATTERO Energy (1998104D CH), a leading EV battery manufacturer, has launched an HKEx IPO to raise up to US$306 million. Pricing is on 14 December.   
• In Rept Battero IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on market share losses, high related party revenue, weak outlook, EV battery weak performance, FCF burn, high impairments and receivable financing. 

• China’s innovative drug sector remains a liquidity driven sector, as investible choices are limited, which include Akeso and BeiGene as our BUY ideas.
• We also notice positive change in Innovent but opt to keep rating unchanged;
• We upgrade BeiGene from SELL to BUY and maintain SELL on RemeGen, Innovent, JUNSHI and ZaiLab. We discontinued coverage on Legend Biotech.

• I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Four new deals discussed this week: WashSoul‘s tilt for Perpetual (PPT AU); CPMC (906 HK)‘s SASAC Offer; Weiqiao Textile  (2698 HK)‘s Offer; and Tokyo Rakutenchi (8842 JP)‘s Tender Offer.
• Key updates took place on: Origin Energy (ORG AU), Healius (HLS AU), Toyo Construction (1890 JP), Eoflow (294090 KS), and Chindata Group (CD US).

• 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 – REPT BATTERO Energy (1998104D CH) IPO and Denso Corp (6902 JP)‘s US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback.
• Event-Driven developments – Benefit One Inc (2412 JP), Tokyo Rakutenchi (8842 JP), CPMC Holdings (906 HK), Weiqiao Textile Co (2698 HK), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US). 

• We summarized some important opportunities and trends that we think would emerge in the pharmaceutical industry in the future.
• Considering the current unfavorable financing situation of Biotech in the domestic primary market, we anticipate that there would be significant discounts in the sale of equity in the future.
• Topchoice has not yet out of trouble. Most of its business diversification could end in failure. It is difficult to support high valuation only by one hospital and one region.

• REPT BATTERO Energy is looking to raise around US$300m in its Hong Kong IPO.
• REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
• We have looked at the company’s past performance in our previous notes. In this note, we talk about valuations.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Kawasan Industri Jababeka
2. China Jinmao Holdings
3. Vedanta Resources
4. Yanlord Land
5. Geely Auto

and more…

For our next Corporate Webinar, we are glad to welcome Kuaishou Technology’s Head of Capital Market and Investor Relations, Matthew Huaxia Zhao.

In the upcoming webinar, Matthew will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Eric Wen . The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 12 December 2023, 17:00 SGT.

About Kuaishou Technology

Kuaishou is a leading content community and social platform with its mission to be the most customer-obsessed company in the world. Kuaishou has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. At Kuaishou, any user can chronicle and share their life experiences through short videos and live streams and showcase their talents. Working closely with content creators and businesses together, Kuaishou provides product and service offerings that address various user needs that arise naturally, including entertainment, online marketing services, e-commerce, online games, online knowledge-sharing, and more.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in March 2024.
• Based on the current data, I see only one low-conviction ADD and one low-conviction DEL.

• Electric-vehicle (EV) startup Nio Inc. looks set to begin building its cars independently, announcing plans to acquire two manufacturing assets shortly after a subsidiary was added to a government database for companies approved to produce vehicles.
• Nio on Tuesday entered into “definitive agreements” to buy equipment and assets from two “advanced manufacturing” bases from state-owned automaker Anhui Jianghuai Automobile Group Corp. Ltd. (JAC) (600418.SH +1.67%) for approximately 3.16 billion yuan ($443 million), excluding tax, according to a Hong Kong Stock Exchange filing accompanying its third quarter results the same day.
• JAC has been producing all of Nio’s cars on a contract basis since 2018.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2024 index rebalance.
• Based on the current numbers, our estimate shows there could be one ADD and one DEL but there are some question marks due to the past index review outcomes.

• UBTech Robotics (1683374D HK) is looking to raise about US$200m in its upcoming HK IPO, after downsizing from an earlier reported float of up to US$700m.
• UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
• We have looked at the company’s past performance in our previous note. In this note, we talk about its PHIP updates.

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.

• Kawasan Industri Jababeka
• Yuexiu Property

• Yesterday afternoon, Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) announced a new buyback program. The last one was announced August 2022 and ran until the AGM.
• That was HK$4bn. In the meantime the company paid an HK$8.12 special div on the Swire As (14%) in September (on top of the HK$1.20 regular div). 
• Now they have announced a new HK$6bn buyback buying both A Shares and B shares. Details, index impact, historical B/A trading patterns, etc, below.

• We prepared high beta and low risk recommendations for 2024:
• With 2024 YE as horizon, we recommend JD.com, JD Logistics, JDHealth, Tencent and Luckin.
• With 1H24 as horizon, we recommend KE Holdings, NetEase and Kuaishou.

• Yesterday afternoon (5th Dec), Swire Pacific (A) (19 HK) (and Swire Pacific (B) (87 HK)) announced a large (HK$6bn) buyback.
• The response this morning sees Swire A up 14.4% (as I type), and 11.8% for Swire Bs.
• I still like the idea of buying Swire A and Swire B outright here.

• CPMC Holdings (906 HK) has announced a pre-conditional voluntary offer from Changping Industrial at HK$6.87 per share, a 32.1% premium to the undisturbed price (16 August). 
• The pre-condition mainly relates to Chinese approvals. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.
• The 50% minimum acceptance condition should be met due to COFCO’s irrevocable and the second-largest shareholders’ past dealings with COFCO. At the last close, the gross spread was 6.0%.

• Local indices in China including the CSI 300 Index, CSI 500 Index, STAR50 Index and SSE50 Index will rebalance at the close tomorrow.
• There are many changes for the indices and there are stocks that are adds and/or deletes from multiple indices which results in cumulative or offsetting flows.
• We estimate turnover at the close tomorrow in China will be around US$7.5bn with big impact on a lot of stocks.

• China NEV market grew by 35% YoY in first ten months and by 39% YoY in October 2023.
• BYD’s production is significantly larger than other NEV producers in China.
• We believe the stock has an upside of 80% and a price target of HKD387. Buy.

• SenseTime Group Inc. shares plummeted nearly 5% Tuesday after U.S.-based short-seller Grizzly Research released a report accusing the Chinese AI software developer of inflating its revenues.
• Grizzly’s report, citing court documents and social media posts, alleged that SenseTime engaged in what it called round-tripping, where it provided funds to customers who in turn used the money to purchase products from SenseTime that might never have been delivered.
• Its Hong Kong-listed stock tumbled as much as 9.7% before closing 4.86% lower to HK$1.37 ($0.18), down 64% from its IPO price of HK$3.85.

• REPT BATTERO Energy (1998104D CH), a leading EV battery manufacturer, is premarketing a US$300 million HKEx IPO, according to press reports.  
• According to Frost & Sullivan, in 1H23, Rept was the tenth-largest lithium-ion battery manufacturer globally for annual installations for new energy applications. 
• The bull case rests on rapid ESS revenue growth, reducing customer concentration risks, ambitious capacity expansion plans, promising margin trajectory and improving cash collection cycle. 

• Robosense Technology (ROBO HK) (RT) is now looking to raise up to US$150m in its upcoming Hong Kong IPO, down from US$300-400m earlier.
• As of Mar 23, it had earned design wins for mass production of LiDAR for 52 vehicles with 21OEMs and Tier 1 suppliers, ranking No. 1 globally, according to CIC.
• We looked at its past performance in our earlier notes. In this note, we talk about its PHIP updates.

• Packaging play CPMC Holdings (906 HK) has announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China.
• The joint offerors have offered $6.87/share, an okay 32.1% premium to last close. Pre-cons involve the standard PRC regulators. The Offer itself is contingent on a 50% acceptance hurdle. 
• China Foods (506 HK) has given an irrevocable for its 29.7% stake.  This will turn unconditional. The timing of the Offer is interesting as a VP is under graft investigation.

• 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: Perfect Medical Health (1830 HK) , Water Oasis (1161 HK) , Taste Gourmet (8371 HK) , Uchi Technologies (UCHI MK) , and The Keepers Holdings (KEEPR PM) .
• We have included Sitoy Group Holdings (1023 HK) in our library. Given the low ROIC nature of the business, it’s more of a value trade with dividends. 

• Back on the 11 August, Chinese data center provider Chindata Group (CD US) and major shareholder Bain Capital entered into a definitive agreement at US$8.60/ADS.
• The EGM was held yesterday, the 4 December, and the merger was approved by 97.75% of the total votes cast. No specific PRC regulatory approval is needed for this merger. 
• All good right? Not quite. There’s still the nagging issue involving 22.79% of shares out objecting to the deal, exceeding the 12% dissenting threshold, a condition to the merger. 

• In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.
• We prepared high beta and low risk recommendations for 2024
• For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.

• Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$124m through a secondary selldown. 
• The deal is a large one to digest, at approximately 22.6 days of three month ADV and 5.5% of current mcap.  
• In this note, we will talk about the placement and run the deal through our ECM framework.

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

• Dekon Food and Agriculture Group (DFAG CH) raised around US$128m in its Hong Kong IPO. 
• Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.
• Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.
• The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.

• ZKH Group (ZKH US) is looking to raise about US$150m in its upcoming US IPO, after downsizing from an earlier reported float of US$300m.
• ZKH Group is a leading maintenance repair and operations (MRO) procurement service platform in China, according to CIC, providing one-stop MRO procurement and management services and digital and fulfillment solutions.
• We have looked at the company’s past performance in our previous note. In this note, we talk about its PHIP updates.

• Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation offer from Weiqiao Chuangye at HK$3.50 per H Share, a 104.7% premium to the undisturbed price.
• The pre-condition of regulatory approvals from the NDRC, MOC and SAFE. The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). 
• The offer price is final. Despite the premium, the offer is struck materially below net cash. Nevertheless, the irrevocable from the largest H Shareholder should help the offer get up.

• The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• Hs with H/A pairs under-perform their As on average by 220+bp. Liquid HK H/A Pairs saw H/As -244bp. H/A Pair intracorrelation is up and A premia continue to trend better.
• SOUTHBOUND and NORTHBOUND were net buys overall but Hs had a VERY BAD WEEK vs their A-Shares where pairs were concerned.

• According to China state media reports, a record number of more than 3 million people attended China’s annual civil service exam last weekend, up from 2.6 million last year. 
• A civil servant job is viewed in China as highly stable.  In the current weak macro environment where youth unemployment is high, job security is increasingly vital.
• The company now trades at 18x forward earnings, with around 30% expected earnings growth. 

• After shares were suspended on the 27 November, Weiqiao Textile Co (2698 HK) has now announced a pre-conditional privatisation at HK$3.50 per H-share.
• This Offer, from its parent, is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
• The Offer Price is a premium to last close is a hefty 104.68%. and around a six-year high. This is done. 

• SOUTHBOUND flows the last several weeks clearly indicated a momentum move. The top net sells were all down. The top buys were all up. This week saw reversion.
• SOUTHBOUND saw net buys of HK$3.5bn this week, breaking a nascent sell streak. Meituan dip-buying Wednesday to Friday was worth the entire net buy.
• High-Div SOEs remain mixed. CNOOC (883) saw decent net buying, and China Mobile saw decent net selling. Again.

• Stock price starting to recognise the increase in  Chinese demand for Gold.
• Helped by a bottoming and a revival in Hong Kong retail sales and tourist arrivals.
• SPDR Gold Shares (GLD US) close to a new all time high

• PDD’s market cap has exceeded Alibaba’s due to PDD’s overseas performance and price sensitive consumers.
• Great Wall Motor plans to enter eight countries in Europe to bypass the investigation on Chinese export subsidies.
• ByteDance plans to close its game subsidy and, 2,000 employees may lose their jobs.

• Wuxi Biologics (2269 HK) has guided for weaker-than-expected revenue and lower profit in 2023, as the operating industry is facing near-term challenges due to biotech funding slowdown.
• $300 million lesser revenue in development business due to reduced number of projects and manufacturing revenue deficit of $100 million due to CMO deferral contributed to the miss.
• Following the announcement, Wuxi Biologics shares nosedived 24% on HK stock exchanges, marking its biggest one-day slide since listing in 2017.

• In this insight we review important e-comm logistics transactions from 2023
• We also provide a preview of potential e-comm logistics deals in 2024
• Interested readers can also find links to HKEX filings and our earlier insights

• REPT BATTERO Energy (REPT HK) is now looking to raise around US$300m in its upcoming Hong Kong IPO, down from the US$1bn it was aiming for earlier.
• REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
• We have looked at the company’s past performance in our previous note. In this note, we talk about its PHIP updates.

• Want Want (151 HK) and China Mengniu Dairy Co (2319 HK) are both fairly liquid names in the China consumer staples sector. 
• Both companies trade at virtually the same forward PE of 14x.  However, I expect Want Want’s near term sales growth to be lower than market expectations.  
• The upside risk for Want Want could be its overseas expansion efforts, as overseas sales now account for mid to high-single-digit of sales and grew high-teens yoy in FY1H24. 

• The high growth in 23H1 is unsustainable. 23H2 YoY revenue growth would be single-digit. Due to 23H1’s high base, we cannot rule out the possibility of negative growth in 24H1.
• In the case of lower-than-expected external M&A activities, Fu Shou Yuan has accumulated a large amount of cash, which would drag down ROE. So, current dividend policy still needs improvement. 
• Fu Shou Yuan’s expansion would be relatively moderate. Double-digit revenue growth can still be expected in the long term. The market value of above RMB15 billion is more reasonable. 

• H World Group (1179 HK) has been over-penalised by market weakness as its share price was off 16.8% YTD. It turned around in 3Q23 and guidance for 4Q23 is solid.
• Surge in operating and adjusted EBITDA margins indicated high operating leverage. Occupancy has not returned to 2019 level, but there will be more margin expansion when this happens.
• 55% of rooms in China are of economy type, and 82% are in tier-2 and below cities. Such characteristics allow it to benefit from the prevailing consumption downgrade. 

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 stock market despair has brought down  China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years   
• Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins 
• Using the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)  

• Meituan reported C3Q23 top line (1.0%)/0.6% vs. our estimate/consensus, non-GAAP net income (9.7%)/8.3% vs our estimate/consensus. Subsidies and investment in in-store business is the main reason for bottom-line miss.
• Meituan in-store GTV increased 90% YoY in 3Q23, effectively counteracted Douyin’s attack and maintained size ratio at 3:1 vs. Douyin in-store, which scarified profit.
• Meituan OPM lowered 2.5ppt QoQ to 4.4% in 3Q23, and we expect it decline to 2.4% in 4Q23.

• Fufeng (546 HK)’s core businesses include food additives such as MSG, animal nutrition, high-end amino acids, and colloid such as xanthan gum. 
• Xantham gum is increasingly becoming popular as millions of people around the world purchase gluten free foods.
• Fufeng’s dividend yield averaged 7.5% annually from 2018 to 2022. Its current dividend yield is about 11-12%. Fufeng is trading at P/E of 2.9x and EV/EBITDA of 1.8x in 2024. 

• The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. 
• Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.
• Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.

• Bilibili reported  C3Q23 revenue, operating profit, and GAAP net income inline, 4.37%, (21.6%) vs. consensus. The miss was primarily due to ineffective investment in game studio and related costs.
• We are bearish on BILI’s game pipeline as ACGN is already a crowded market with well-entrenched competitors
• We maintain our SELL rating and cut the TP from US$ 12.3 to US$ 9.04, and consider that it is unlikely for them to breakeven in 2024