China

• Tuhu Car (2007986D HK) is looking to raise around US$160m in its Hong Kong IPO. Tuhu is an integrated online and offline platform for automotive services in China.
• In earlier notes, we had looked at the firm’s past performance, discussed our earnings assumptions and our thoughts on Tuhu’s valuation.
• In this note, we discuss valuations at the final price range.

• IMAX China Holding (1970 HK)‘s scheme document is out, with the court meeting scheduled for 10 October. The IFA considers IMAX Corp (IMAX US)‘s HK$10.00 offer fair and reasonable.
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• A recovering box office, early indications of an effort to rally retail NO votes and a high minority participation rate in AGMs pose a risk. The risk/reward profile is unfavourable. 

• 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 brief look at the index selection methodology and the historical price and volume performance of ChiNext and ChiNext 50 rebalance baskets.

• Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, has launched its HKEx IPO at a price range of HK$28.00-31.00 per share.
• In TUHU Car IPO: The Investment Case, we highlighted the key elements of the investment case. In this note, we present our forecasts and discuss valuation.
• Our valuation analysis suggests that Tuhu is reasonably priced at the IPO price range. We would participate in the IPO. 

• Back on the 13 July, IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share. Terms have been declared final.
• The price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day, suggesting apparent news leakage.
• The Scheme Doc is out and independent shareholders get to vote on the transaction on the 10th October. This vote could – should – be close. Only for the brave.

• Chinese automotive maintenance services platform Tuhu Car (2007986D HK) is planning to raise around US$160m in its upcoming HKEx IPO.
• The company’s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
• In this insight, we take a look at Tuhu Car’s business model, business segments and financials and we will discuss the company’s valuation in a follow-up insight.

• Perfect Medical Health (1830 HK) will report its H1 2024 results in late November 2023. We expect slow China growth to result in revenue/profit growth of 10%/15% YoY. 
• The company will continue to open outlets in HK, and the plan is to open ten by the end of FY24 (3-4 at the end of H1FY24e).  
• The stock trades at 12.7x PE FY24e, with an 8.7% dividend yield and around 16% of the market capitalization in net cash and investments (~800 mn HKD). 

• Health And Happiness (H&H) (1112 HK) has transformed from an infant formula company to a nutritional supplements company.
• The company currently trades at 5.3x 2024E PE – still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
• As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. 

The Asia Trade Book for September 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

• Troubled Chinese electric-vehicle startup WM Motor Holdings Ltd.’s hopes of a business turnaround were dashed as a white knight investor bailed out of a $2.02 billion takeover.
• Hong Kong-traded Apollo Future Mobility Group Ltd. Friday dropped its planned acquisition of WM and said a related share placement plan will no longer proceed.
• The deal, announced in January, was seen as a survival move for embattled WM as it was intended to float the EV maker in Hong Kong through a backdoor listing.

• After Sun Hung Kai Properties (16 HK) released its interim results, shares declined 12.7% intra-day this past Monday, touching a 14-year low, before closing down 9.5%. 
• The same day, the Kwok family increased their stake in the company, purchasing ~2.2mn shares for ~HK$175mn.  
• SHKP is currently trading a trailing P/B of 0.36x versus its five-year average of 0.54x, and the five-year average preceding Covid of 0.68x.

• The review period for the December rebalance ends 31 October. We expect the changes to be announced 24 November with the implementation taking place after the close on 8 December.
• We expect the index committee to continue using a 6-month minimum listing history resulting in one change to the index.
• One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 2,259m. The impact on the deletion will be much larger than that on the inclusion.

• Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates. 
• Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing. 
• We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents  FY22: 43 cents).

• Shulan Health Management (1807987D CH) is looking to raise around US$150m in its Hong Kong IPO. The deal will be run by CICC, and Citic Securities.
• Shulan Health Management (SHM) is a technology-driven healthcare group in China that integrates healthcare services and medical research and education.
• The firm owned and operated three private general hospitals and provided hospital management services to 14 partner hospitals in China as of March 31, 2023.

• The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
• We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
• Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 

• 4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.
• In 4Paradigm 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 Sage Platform’s rapid slowdown, high customer concentration risk, recent gross margin pressure, FCF burn, rising cash collection cycle and BIS entity list designation. 

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.

• ENN Natural Gas

• Either from business model or investment logic, the key is to increase the revenue proportion of cloud hospital platform services. However, many restrictions have led to difficulties in nationwide expansion.
• Overreliance on government projects and public hospitals makes it difficult to generate high profits. Xikang may continue to suffer loss in the future, and its profitability is worrying. 
• Based on our analysis, it could be difficult for Xikang to achieve good valuation performance in the future. we think its valuation should be lower than that of ClouDr.

• Back on the 27 June, art and culture play Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation at HK$8.88 per H-share.
• This Offer from SOE Poly Group is by way of a Merger by Absorption, incorporating a Scheme-like vote. There is no tendering condition.
• The pre-cons have now been fulfilled. The Composite Document, including the H Share Class meeting/EGM date and IFA opinion, is expected to be despatched on or before the 30 September. 

• Innovent is actually not short of money, so the Placing this time looks “strange”.If Innovent is unable to deliver performance that matches expectations, investors would reconsider its future financing needs.
• Innovent is undergoing important transition from quantitative change to qualitative change as turning losses into profits is within reach. So, the “concept validation” of Innovent’s business model has been completed.
• Innovent decides to place the shares at this moment reflects that its stock price is already high. Based on our forecast, there could be limited upside room for share price.  

• News broke yesterday that Daniel Zhang is no longer leading Alibaba (ADR) (BABA US)‘s Cloud Business unit.
• The statement from Alibaba’s current chairman, in which he mentions that Zhang would “switch to a different approach and continue to fight alongside us at Alibaba” raises skepticism.
• We also think that the $1.0bn Alibaba committed to a technology fund could be seen as a form of compensation to ensure Daniel Zhang’s silence.

• With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
• Capping changes will result in a one-way turnover of a touch below 1% and that will result in a round-trip trade of US$255m.
• The impact on the stocks is relatively small for now but that could increase till the end of November when the stocks will be capped.

• 4Paradigm is a pioneer and leader in enterprise AI. The company offers platform-centric AI solutions to enterprises that can be deployed on a large scale to support decision making.
• The company’s application for HKEx IPO has been approved and this insight focuses on new data points from the company’s latest PHIP release (dated 07th Sep 2023).
• 4Paradigm (1764934D HK) revenues have continued to expand with significant reduction in operating losses, and we remain positive on the company’s growth prospects.

• Zhongsheng Group (881 HK) is a potential deletion in December and that could result in China Unicom Hong Kong (762 HK) being added to the index.
• Estimated one-way turnover at the rebalance is 1.36% resulting in a one-way trade of HK$845m. Passives will need to trade over 1x ADV on both stocks.
• There is a very small impact on the fair value of the HSCEI 2023 dividend futures but there will be a larger impact on the dividend futures expiring in 2024.

• Foshan Haitian Flavouring & Food (603288 CH), the largest condiment player in China is facing structural weakening of moat from a changed operating environment post-COVID. 
• Both catering and home consumption segments are faced with structural growth pressures that are difficult to solve for the company. 
• Expect further earnings weakness and derating in valuation multiple in the near term. 

• 4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.  
• 4Paradigm was the largest player by revenue in China’s platform-centric decision-making AI market with a market share of 22.6% in 2022, according to CIC. 
• The bull case rests on the success in increasing key account customer numbers, net dollar expansion rates, improving revenue visibility, strong growth in application development services and reducing loss margin.

• We think the mild recovery is driven by the delayed orders in Jul. and Aug, thus expect transaction volume to be flattish MoM in Sep.
• We think the recovery is on-track and expect Oct. volume to begin recovery and expect more meaningful rebound in Mar.-Apr. 2024, supported by 1) strong leading indicators from property agents, 
• 2) refer to the recover trajectory in 2014-2015.  We maintain the stock as BUY rating and maintain TP at US$24/ADS.

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
• Vedanta Resources

• Innovent Biologics Inc (1801 HK) (IB) aims to raise around US$313m for R&D and marketing.
• The company has undertaken a number of deals in the past, with the overall results being mixed.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• The pre-condition relating to Poly Culture Group Corp H (3636 HK)’s privatisation offer from Poly Group at HK$8.88 per H Share has been fulfilled. 
• The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
• The offer’s 77.6% premium to the undisturbed price and no minimum acceptance condition will help completion. At the last close and for 1 November completion, the gross/annualised spread is 7.1%/64.3%.

• The street’s expectations for Meituan’s bottom line have gone too pessimistic for 2023 while in the meantime too optimistic for 2024 and beyond.
• Besides the macro weakness, we see the company’s growth increasingly be constrained by the business model itself, resulting in only 14% CAGR for bottom line over 2023-25 by our calculation.
• We take investors’ indifference to Meituan’s strong bottom line growth for 2023 as a signal they are discounting the sharp deceleration kicking in from 2024. Stay neutral.

• After announcing full year results, one investment bank revised down share price target excessively (we will look at reasons).  On Monday, HSBC also announced adjustment of mortgage rate cap
• These 2 events caused a sell-off in the property sector, SHKP, in particular, was down 10% and trading at HKD80 per share. We think it is overdone
• At this valuation, market is pricing in super bearish scenario.  At 0.38x P/B, I think it is a bargain to buy now.  It is a value trade.

• Grizzly Research’s track record, especially with accusations against well-known Chinese ADRs like NIO (NIO US), ZTO Express Cayman (ZTO US), and Gaotu Techedu (GOTU US), hasn’t been successful lately.
• Despite past setbacks, the company has recently targeted another renowned Chinese ADR, PDD Holdings (PDD US).
• Grizzly Research alleges that Pinduoduo’s shopping app, “TEMU,” is a harmful malware/spyware secretly extracting user data.

• We contacted drivers here in Shanghai and asked about their experience at Tuhu stores.
• Franchised stores are well positioned in the aftermarket and Tuhu is the largest store chain among them.
• However, Tuhu sets high standards for workshops, but average standards for mechanics.

• Our previous insight correctly predicted the current pullback for the Hang Seng Index (HSI), now let’s analyze MRM WEEKLY support prices, to identify when/where a bounce could begin.
• The 17835-17105 support price area is where the index should stop and bounce, however depending on the duration of the pullback the % correction could vary wildly.
• If the index is about to bounce, it should bounce this week or the next, if it falls >3 weeks down, it could enter a downward spiral towards 15707.

• The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.
• Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.
• We believe the stock has an upside of 41% for yearend 2024.

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.

• Pakuwon Jati
• Pertamina Geothermal Energy PT
• Sunny Optical Technology Group

• Mindray’s 23H1 results were in line with expectations. The high growth in Q2 has given us more confidence in the “complementarity of performance” between different business lines of the company.
• Mindray is right to acquire DiaSys,but Mindray should disclose the impact of M&A on financial statements.When investors understand how to “quantify” M&As, positive news would be reflected in stock price.
• The anti-corruption campaign and foreign capital outflows have weighed on Mindray’s share prices. Based on our analysis, the decline offers a good buying opportunity and share price will rebound afterwards.

• Over 85% of the way through the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.4% at the December rebalance resulting in a one-way trade of CNY 7.22bn.
• With the market being stabilised through the ETF route, the index constituents have outperformed the non-index constituents over the last 6-7 weeks. That could reverse over the near term.

• This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
• We like the nifty interactive tables and charts. We welcome feedback on how to make it more useful going forward.

• Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, is set to open books for its US$300 million IPO.   
• Among independent aftermarket (IAM) stores in China, Tuhu ranked first in terms of both number of stores as of 31 December 2022 and annual automotive service revenue in 2022.
• The investment case rests on the return to growth, improving gross margin, a shift to profitability and a return to cash generation.

• With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK) 
• We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized). 
• With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.

• Weigao’s 23H1 performance was unsatisfactory. 2023 full-year performance may continue to be under pressure because Weigao needs some time to digest the negative impact of centralized procurement on orthopaedic business.
• Weigao has hired advisers to find potential buyers for Argon. if Argon is ultimately sold, then the long-term prospects of Weigao’s interventional business and internationalization need to be reassessed.
• The unsatisfactory share price performance is related to Weigao’s business model – spin-off subsidiaries and IPO separately. There could be rebounds, but it is still possible for Weigao to underperform.

• H1 results from KEX Thailand and Kerry Logistics can help us understand J&T Global Express
• Thailand likely to be a medium-term drag on J&T’s earnings, in our view
• But if KLN’s H1 results are representative, rest of SE Asia is probably OK

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.

• In Q2, Full Truck Alliance posted strong revenue growth and dramatic margin expansion
• Revenue mix continues to improve, which is driving down unit costs and lifting margins
• At just 19x forecast 2023 adjusted net earnings, the company’s shares are not expensive

• There is one add and two deletes for the MVIS Global Rare Earth/Strategic Metals Index at the September rebalance. Plus there are free float and capping changes.
• One way turnover is estimated at 11.1% and will result in a one-way trade of US$58m. There are a few stocks with over 0.5 days of ADV to trade.
• The inclusion of Sociedad Quimica y Minera de Chile (SQM US) and deletion of Zhejiang Huayou Cobalt (603799 CH) are surprises.

• The 9th national VBP has begun. We analyzed the major big varieties with sales over RMB1 billion included in this VBP and the impact on related domestic pharmaceutical companies. 
• “Concept validation” of the business model of Chinese Biotech companies has been completed. Even under enormous pressure of medical insurance fee control policy, drug sales remain a reliable profit model.
• Medlive’s weak share price performance has a reason. The significant profitability increase in 23H1 wasn’t from the improvement of main business. Its business model needs time to be further validated.

• NetEase delivered a mixed set of results in the quarter, with revenues well below expectations, but managed an earnings beat.
• Revenues from the Fantasy Westward Journey Saga continued to increase year over year in the quarter, again impressing the industry with this IP’s enduring appeal.
• In the second quarter, Cloud Music’s GP margin increased significantly because of the growth of membership services and ongoing cost-cutting initiatives.

• The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
• New stimulus measures appear to be triggering FOMO on real estate stocks, but a foreshortened week, yet again, makes one wonder. There IS money being applied though.
• I expect more measures and more buying. I am not sure I would want to be short any Hs with a deep discount to the A the next few months.

• Nongfu Spring (9633 HK) has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.
• We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.
• A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world. 

• Tuhu Car (2007986D HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
• Tuhu is an integrated online and offline platform for automotive services in China.
• We have looked at the firm’s past performance and undertaken a peer comparison in earlier notes. In this note, we will discuss our earnings assumptions and thoughts on valuation.

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. Country Garden Holdings Co
2. Hopson Development
3. Greentown China
4. ReNew Energy Global
5. China Jinmao Holdings

and more…

• 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

• SPACs – remember them? US offerings in 2021 topped ~US$150bn, falling to US$13bn in 2022. Singapore joined the bandwagon in January 2022  and Hong Kong two months later.
• That Hong Kong stock is Aquila Acquisition Corporation (7836 HK), and it recently announced a merger with ZG Group, a Chinese steel trading website.
• That’s positive. Less positive is how de-SPACed shares tend to trade in the US. 

• Rolex acquisition of Bucherer signals the company’s intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.
• We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making Oriental Watch (398 HK) a target.  
• Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity. 

• Mason Group Holdings (273 HK)‘s scheme document is out, with the vote scheduled for 3 October. The IFA considers Red Emerald Capital’s HK$0.0338 per share offer fair and reasonable. 
• The key conditions are SFC approval and the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). Peer de-rating has helped the attractiveness of the offer.
• Shareholders with blocking stakes have provided irrevocables or will accept due to the attractive ROI. At the last close and for the 21 November payment, the gross/annualised spread is 9.0%/52.1%.

• Tuhu Car (2007986D HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO. 
• Tuhu is an integrated online and offline platform for automotive services in China.
• We have looked at the firm’s past performance and PHIP updates in earlier notes. In this note, we undertake a peer comparison.

• In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
• There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.
• At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.

• Aquila Acquisition Corporation (7836 HK) agreed to a De-SPAC transaction with ZG Group (formerly Zhaogang.com), the world’s largest digital platform for third-party steel transactions.
• ZG has a questionable business model, struggling to generate profits or underlying FCF. This dynamic suggests that ZG has not established a sustainable competitive advantage. 
• The negotiated value of ZG in the De-SPAC transaction is HK$10,004 million (US$1,277 million). Our valuation analysis suggests that this negotiated value is unrealistic.

• Luckin Coffee is creating a stir with an unusual offering to capture the attention of Chinese coffee drinkers: lattes with a nip of Kweichow Moutai’s baijiu.
• The coffee chain partnered with China’s luxury liquor maker Kweichow Moutai to launch an alcohol-infused coffee drink, the so-called “sauce-flavored latte,” referring to the popular savory notes of Moutai liquors.
• The tie-up between Luckin and Moutai, the maker of China’s national liquor baijiu, triggered a buying frenzy. Discussions about whether it is safe to drive after consuming the alcohol-infused drink topped China’s social media Monday with 430 million views.

• In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.
• Based on the latest available data, I expect one ADD and one DEL for HSCEI in December 2023. 
• There is more than one potential ADD in the top 40 according to my estimates but recent history tells us some of these names are not “index-provider-friendly.“

• Chinese consumers have been buying Huawei’s latest flagship smartphone faster than stores can keep up with online and in some parts of the country, sources tell Caixin, amid mounting speculation the telecom giant has been able to weather U.S. sanctions.
• Huawei Technologies Co. Ltd. began shipping the new Mate 60 Pro Sunday, several people familiar with the matter told Caixin, five days after the phone’s discreet launch.
• A number of distributors told Caixin on Monday that the Mate 60 Pro had immediately sold out upon delivery.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
• We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.
• The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.

• JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.
• The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.
• JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.

• Modern Dental Group (3600 HK) reported strong 1H23 performance, with 12% YoY revenue growth to HK$1.6B, driven by increase in demand for its products from existing, returning, and new customers.
• With increasing economies of scale resulting from China re-opening and global dental industry recovery and increase in the proportion of digital solution cases, net profit jumped 109% YoY to HK$210M.
• Despite macroeconomic headwinds, the company is confident that the medium and long-term global demand for dental prosthetics is expected to continue due to key irreversible demographic factors and trends.

• With shares trading near its all-time low since its listing on HKEX in 3Q19, we think it could be worthwhile taking another look at Budweiser Brewing APAC (1876 HK)’s valuation.
• China’s beer industry and regional markets are expected to sustain growth momentum in Q3, driven by tourism’s impact on increased beer consumption.
• We think it’s worth keeping an eye on Budweiser APAC, as we suspect that it could start to break out from the current downtrend in the near term.

• Luckin Coffee’s new blockbuster Moutai Latte achieved 5.42mn cup sold with RMB100mn GMV in first day. 
• We think Luckin Coffee had effectively achieved two goals through the new premium product: 1) de facto price lifting; 2) extend potential customer base and step into the monetization stage.
• We raised our 2023 revenue and non-GAAP NI on Luckin by 1.6%/4.4%. We maintain the stock as BUY rating and raise TP by US$1 to US$44/ADS.

• PICC P&C’s thesis has materialized and played out well this year, with the stock being HK’s best-performing Chinese insurer.
• Samsung Life’s share price recovered slightly since our last update as LT Korean government bond yields further increased.
• Prudential’s thesis is slowly being played out, with its P/BV discount to AIA having narrowed; but still a long way to go. 

• Although Yan Palace prioritizes R&D capabilities in prospectus, its revenue growth and business model are mainly relied on large investment in marketing/promotion.The root cause is the efficacy problem of EBN.
• Whether Yan Palace’s future performance growth can be sustained is a question mark if marketing/promotion cannot drive growth anymore. Net profit margin is low. EBN is not a profitable business.
• Yan Palace’s products do not have core competitiveness or high moat. Compliance risks are also worth being vigilant about. The valuation of Yan Palace should be lower than Giant Biogene.

• Back on the 28th May, PRC department store play Golden Eagle (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
• The Offeror is the Wang family, who together with concert parties, held 80.29%. 7.18% of the 19.71% held by the disinterested stakeholders have given irrevocables in favour of the Scheme.
• Ahead of the Scheme Meeting on September 15th, a significant amount of shares have moved out of CCASS. This is not something to concern investors. 

• L’Occitane (973 HK) announced after market close yesterday that the controlling shareholder has terminated the potential general offer. 
• Shares trade at a significant discount to global cosmetics peers and its own historical trading range, while brands’ growth momentum remain intact. 
• Take advantage of any potential significant sell-down caused by the drop of the privatization attempt. 

• Strong Q2 results out Tuesday morning beat consensus Revenue and core EPS estimates
• But concerns remain about expense control and longevity of ongoing demand recovery
• Great Q2 results, yes, but we think investors want more clarity about H2 demand

• China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
• Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
• There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.

• 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 WuXi AppTec (2359 HK), Peking University Resources (618 HK), and FriendTimes Inc (6820 HK).

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
• Lenovo
• Vedanta Resources
• Yuexiu Property