China

• In three more weeks, the index changes and the indicative capping changes for the September 2023 rebalance will be officially announced. 
• We first looked at the potential HSCEI index changes and the resultant capping flows for September 2023 in Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way 
• In this insight, we take a look at Quiddity’s updated flow expectations which account for the changes in prices in the last ~1.5 months.

• In Quiddity HSTECH Sep 23 Flow Expectations: Two ADDs/DELs Possible, I discussed my initial flow expectations and potential index changes for the September 2023 Rebalance.
• The suggested (previous insight) SHORT Ping An Healthcare and Technol (1833 HK) is down 10.6% vs the hedge JD Health International (6618 HK) in ~1.5 months. 
• In this insight, I have presented my updated flow expectations and some new trade ideas for the next few weeks.

• Tencent (700 HK) ’s online games business grew for the first time in 1Q2023 (+10.8% YoY) after four consecutive quarters of YoY decline followed by regulatory hurdles.
• Our app data analysis reveals that online games revenue would grow by about 12% YoY in 2Q2023E driven by increases in both domestic and international games revenues.
• On Monday, it was also reported that Tencent is in the process of acquiring a majority stake in Polish gaming studio Techland, expanding the long list of overseas gaming acquisitions.

• In June, mainstream parcel pricing declined by over 10% Y/Y, but SF Holding saw ASPs rise
• We believe J&T Global Express’ planned IPO could negatively impact the industry in H2
• Pricing pressure has increased, in our view, and we expect margins to decline in H2 23

• Lalatech Holdings filed for an IPO in March. I have tried to come at an IPO valuation for the company using a mix of methodologies: EV/Revenue, EV/GTV and EV/Gross Profit.
• Taking a weighted average of peer group multiples-based valuation methodologies, I arrived at a ~$7B IPO valuation for Lalatech Holdings, including ~$1.65B of cash and cash equivalents.
• From a peer group perspective, I arrived at a fair IPO valuation close to ~$7B, using a ~5x EV/CY22 Revenue, ~0.7x EV/CY22 GTV, and a 10x EV/CY22 Gross Profit multiple. 

• L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
• The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
• L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples. 

• Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.   
• Lianlian ranked first among the independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost & Sullivan.   
• The key elements of the bull case rest on rising market share, doubling of active customers, resilient core business growth and rapidly growing additional revenue streams.

• Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• In this note, we will talk about the not so positive aspects of the deal.

• Based on the current situation, sales of MCV4 in 2023 could still be unsatisfactory. We think MCV4 is hard to become the second growth curve of CanSino in post-COVID era.
• Whether CanSino’s zoster vaccine is able to become Best-In-Class would largely determine whether this product would truly become the next blockbuster vaccine to turn the situation around for CanSino. 
• CanSino’s commercialized products cannot contribute large-scale revenue in time to prevent continuous deterioration of performance. Results in 2023 could be lower than expected, and investors are losing confidence in CanSino.

• Robosense Technology (ROBO HK) (RT) is looking to raise around US$400m (estimated) in its upcoming Hong Kong IPO. 
• 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.
• In this note, we talk about the not-so-positive aspects of the deal.

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
• Greenland Holdings Corp
• Sino-Ocean Service

• Share price of Travelsky Technology Ltd H (696 HK) is still down YTD as investors are still overly cautious on Chinese travel data. 
• YTD operational data shows that the number of flights processed is very close to the pre-COVID era. 
• The company announced a profit alert recently, that should help to boost share price. 

• As of 24 July, there could be one set of changes for the iShares China Large-Cap (FXI) (FXI US) in September.
• There should be less than 1x ADV to buy on ZTE Corp H (763 HK) while there will be nearly 2x ADV to sell on Anhui Conch Cement (914 HK). 
• Short interest has been inching higher on ZTE Corp H (763 HK) while it is barely moving on Anhui Conch Cement (914 HK) as the stock trades near its lows.

• Lianlian DigiTech  is looking to raise at least US$500m in its upcoming HK IPO. The deal will be run by CICC and JP Morgan.
• LianLian DigiTech is a digital technology company that provides a range of digital payment services and value-added services to customers in China and around the world.
• The firm ranked first among all independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost & Sullivan.

• We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. 
• However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
• We maintain a SELL rating, and investors may consider shorting BILI after <Uma Musume> is launched.

• Understanding the essential differences in business characteristics of CRO and CDMO could help investors better understand the differences between Asymchem and Pharmaron in terms of investment logic, financial performance, and prospects.
• Since Pharmaron didn’t obtain COVID-19 big orders, it would maintain normal revenue growth in 2023. However, increasing labor costs and uncontrollable investment business would lead to unsatisfactory net profit performance.
• Asymchem’s performance would be disappointing in 2023. However, its growth momentum is expected to restore after it digest the impact of COVID-19 orders. Then, Asymchem’s valuation could surpass Pharmaron afterwards. 

• Robosense Technology (ROBO HK) (RT) is looking to raise around US$400m (estimated) in its upcoming Hong Kong IPO. 
• 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.
• In this note, we talk about the positive aspects of the deal.

• Qiniu Limited (1045102D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Qiniu is an intelligent audiovisual service provider. According to iResearch, the firm is the third largest audiovisual platform as a service (PaaS) provider in China in terms of FY22 revenue.
• Qiniu’s revenue has primarily been driven by its MPaaS segment over the track record period. However, the firm’s losses are still widening while its balance sheet health deteriorates. 

• Since my last order filled today, here is my write-up on a special situation in Hong Kong.
• Stock is NVC International holdings (NVC ticker HKG:2222) .
• A Hong Kong nano cap stock. And it is quite illiquid, so beware.  I first learned of it through a Tweet from Writser .

• 111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS. 
• The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
• The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

• We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
• The takeaway is mixed as we see both positives and negatives relative to our expectations.
• We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

• Vancocin/Ceclor/FPN are currently the “cash cow” for Edding, but they’re facing the challenges of generics, VBP and increasing competition. Their current market leading position may be lost in the future.
• Edding seeks business transformation as its CSO model doesn’t work under domestic negative policies. But peak sales of three innovative drugs Vascepa/Mulpleta/EDP 125 may not reach the level of Vancocin/Ceclor.
• Edding’s core advantage still lies in sales capabilities. Its R&D capabilities have always been questioned. It’s unsure whether the market would give high valuation to a company without core competitiveness.

• SATP Holding, a leading China-based SMB finance and taxation solution provider, filed to go public in Hong Kong. The company is led by visionary Founder and CEO Shugang Zhang.
• SATP Holding offers scalable SaaS-based bookkeeping and taxation solutions to SMBs in China. The proprietary SaaS system (SATP) automates tax filings and financial statement submissions.
• According to Pitchbook and the company’s IPO prospectus, the founder-led software provider has raised ~$226M in funding across nine funding rounds.

• Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
• Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
• We expect Q2/H1 results to support our view that the worst of the storm has passed

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.

• AAC Technologies Holdings
• JSW Steel Ltd
• Reliance Industries

• Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• In this note, we will talk about the positive aspects of the deal.

• We expect Kuaishou to report C2Q23 revenue and non-IFRS net income that are in-line and 27% vs consensus, respectively.
• We slightly cut our revenue forecast for live streaming but increased our revenue forecast for online ads. Kuaishou’s margin beat is mainly due to efficient cost control, especially in overseas.
• Kuaishou still has several minor positive catalysts, but WeChat Video Accounts is the major short thesis in the long run. We raise EPS forecasts, but maintain SELL.

• 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

• NDRC issued “Guiding Catalogue for Industrial Structure Adjustment“. The newly proposed adjustments deserve investors’ attention, because they are the areas where investors could receive excess returns in China healthcare.
• Obtaining assets from external sources remains paramount for MNCs. License-in mode isn’t outdated. As long as companies can make money, the ways to acquire assets can be diversified.
• Intco’s performance/stock price has bottomed out, and would gradually resume growth/rebound afterwards. Its market value would return to RMB20-30 billion. Intco would achieve a distress reversal, with attractive investment value.

• We think the tailwinds of China’s consumption downgrade for PDD are overblown, while TEMU will be more of a drag than a support for bottom-line in quarters ahead.
• 2Q results to be announced next month will finally validate our thesis on the company’s earnings risk which we flagged back in last December.  
• The markets have been pricing in a sharp slowdown after a short-lived euphoria around its seemingly strong 1Q results, yet downside surprises could still catch investors off guard. Stay neutral.

• 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.
• During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.

• China Resources Beer Holdings (291 HK) is a USD21bn red-chip company, and the largest beer company in China in terms of sales volume.
• The company is a perfect fit for the GARP (growth at a reasonable price) strategy, and visibility in earnings is also high for the next 3-5 years.
• Weak sentiment in H-share stocks and in overall China macro/consumption numbers provide a good entry opportunity for the stock.  

• Huawei Technologies Co. Ltd. on Tuesday launched the first commercial use of its artificial intelligence (AI) large language model (LLM) Pangu for the mining industry, as it seeks to make use of the next-generation technology to improve the sector’s safety and productivity.
• Developed in partnership with state-owned Shandong Energy Group Co. Ltd. and its unit Yunding Technology Co. Ltd. (000409.SH), the Pangu Mine Model has been deployed in the coal giant’s mines in East China’s Shandong province, Huawei said in a press release Wednesday.
• It also touted the launch as the world’s first commercial large AI model for the energy sector.

• Dismal share price performance for China Gas Holdings (384 HK) has created an opportunity for bottom fishing. Management also looks positive with 30% profit growth guidance for FY23.
• There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is also a value-enhancing move. 
• De-Rating over the last three years has put the stock on undemanding multiples of 8x PER and 0.75x P/B. Its 14.8% 3-year EPS CAGR is also better than sector average.

• Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.  
• In Lalatech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on market share pressure, KPIs declining growth, declining revenue visibility, maiden profitability built on a shaky foundation and barely positive underlying FCF. 

• In this insight, we conducted fundamental analysis and look at major share price drivers for Hysan Development, who is a major landlord in Hong Kong
• Hysan Development has a simple business model and owns a retail/office portfolio in Causeway Bay, Hong Kong.  Its retail properties are largely tourist-centric
• Despite trading at attractive valuation, the stock has low trading liquidity.  Also there is no visible catalyst which means there is little chance for re-rating for the stock

• Yibin City Commercial Bank Co Ltd (1315463D CH) is looking to raise around US$300m in its upcoming Hong Kong IPO. The bookrunners on the deal are CCBI and ICBC.
• Yibin City Commercial Bank (YCCB) is a city commercial bank in Yibin, Sichuan Province of China.
• As per CBIRC Yibin Office, it was the largest bank in Yibin in terms of total assets as of Dec 22.

• We raise iQIYI’s membership/ads growth in 2Q23 from 12.9%/10.6% to 15.7%/22.4% YoY because of high quality content and recovery of major advertisers.
• We upgrade iQIYI’s rating to BUY because:1) iQIYI exhibits advantages in content quality and production capabilities. 2) Major advertisers are expected to increase their advertising budgets continuously.
• Emergency of mini drama is another variable for the Chinese online video industry. However, we anticipate the impact on iQIYI is relatively limited currently.

• Rookie International (1962144D CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Citic Securities and CMBI. 
• Rookie International is a fully-integrated operator of childrenswear brands in Greater China. It operates a portfolio of childrenswear brands, by designing, manufacturing and distributing branded products in Greater China. 
• It generates revenue primarily by selling licensed products which it has self-designed or curated under the brands (for which it has access to licenses) in Greater China. 

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.

• Greenland Holdings Corp
• Sunny Optical Technology Group

• Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and  51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
• Preceding my comments on SZ Int’l/SZ E’Way are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.   
• Lalatech is the largest logistics transaction platform in the world by closed-loop freight gross transaction value in the first half of 2022, according to Frost & Sullivan. 
• The key elements of the bull case rest on solid growth, rising monetization rates, achieving maiden profitability, a shift to cash generation and a debt-free balance sheet.

• The Hong Kong Hang Seng Index (HSI) last week closed strongly up. This week it’s pulling back, but MRM pattern readings forecast a very short-lived pullback (-1 to -2 weeks).
• The suggested strategy is: let the index play out its pullback (warning: it can be volatile) and then enter LONG trades when the probability is good.
• Suggested support price areas are between 18965 (Q2) and 18732 (Q3) – or this Friday at Close (as long as the close is negative).

• The company has shifted its growth driver from rail equipment to EV parts supplier.
• Q1 23 growth came from emerging equipment coming to the rescue at a double digit rate when the train equipment segment recorded a slight decrease. 
• Compared to last year, the company is trading at a lower valuation, yet its key growth driver has a better and more sustainable quality. 

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.

• Shui On Land
• Sino-Ocean Service

• Porton’s performance declined significantly in 23H1 compared with high base last year, because most of Pfizer’s COVID-19 big orders have been completed. Porton’s performance in 2023 would be under pressure.
• Porton isn’t a first-tier CXO and lags behind industry leaders in terms of new businesses (CGT/ADC CXO). Valuation of entire CXO sector and Porton hasn’t yet reached an inflection point.
• Market’s expectation for CXO would decrease and then bottom out in 2023H2. Whether CXO’s performance would rebound in 2024 still needs to wait for the turnaround in macro environment.

• Mobvoi (2185047D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO. 
• Mobvoi is an AI company focusing on generative AI and voice interaction technologies. As per CIC, the firm is the largest revenue-generating AI company focusing on AI-generated content in 2022.
• Mobvoi’s revenue growth was primarily driven by its AI enterprise solutions segment, which led to gross margin expansion and profitability turning positive on all fronts in FY22. 

• We expect JD to report C2Q23 revenue in-line vs. cons., and non-IFRS net income 6% vs. consensus.
• Although we raised our GMV estimate, our 5% YoY revenue growth estimate is unchanged as we expect 3P take rate decline to partially offset GMV growth.
• We maintain SELL and TP but cut FY23 non-GAAP net margin to 3% due to the greater share of lower margin 1P revenue vs. our prior estimate.

• China has started taking measures to optimize fertility policies. The inclusion of assisted reproduction technologies in medical insurance is a general trend, which would generate increasing demand in the future.
• From the current domestic assisted reproductive industry chain, there is significant import substitution space and growth potential in the fields of related drugs, prenatal/newborn genetic testing, and downstream medical services.
• Companies such as Livzon/BGI/Jinxin would be the direct beneficiaries of related policy. We analyzed the industry characteristics, investment rationale, key risks and comparison with peers of these companies. 

• In this insight, we conducted fundamental analysis for SHKP, which is a proxy for Hong Kong given 70% of its GAV comes from Hong Kong
• SHKP has well diversified businesses in residential, retail and office in Hong Kong and China, and there are a lot of share price drivers
• We would recommend a BUY as long as the stock trades below HKD100, as the stock has a trading range of HKD100 to HKD 130

• We expect Shenzhen International (152 HK) to sustain efforts in realising and releasing the value of its assets, and this will be positive in narrowing its discount to book.
• The plan to issue REIT by using Hangzhou and Guizhou logistics projects as underlying assets will add to earnings. We estimate they account for 14% of SZI’s total project area.
• Subscription to A-share issuance of Shenzhen Expressway Co (548 HK) will increase its book value by Rmb5bn. This will lower its P/B multiple to 0.46x, from 0.54x.

We view Greentown China as “Medium Risk” on the LARA scale. The company is an established residential property developer targeting high-end markets, mainly in Eastern China (i.e. Zhejiang province). Greentown has an SOE background, with its largest shareholder China Communications Construction Group (CCCG; 28% stake) being an SOE under the central government. Greentown also has strong branding.

Our Credit Bias on the company is “Stable”, on account of the: [1] resilient contracted sales and revenue growth; [2] adequate liquidity; and [3] access to diversified onshore financing channels. We believe Greentown is well-supported by CCCG. That said, we remain concerned over the high JV usage, which diminishes financial transparency.

We maintain our “Hold” recommendation on the GRNCH curve. We note that Greentown no longer issues USD perpetuals and has limited offshore maturities. We also note that the GRNCH 2025 bonds are trading c. 150 bps wider than the notes by peer China Jinmao (BBB-). This is likely due to a three-notch rating difference, given Greentown’s higher leverage. However, the two developers share the same ultimate central state parent, and we believe Greentown does not lack financial access or liquidity.

• WuXi XDC Cayman Inc (1877628D HK) is looking to raise >US$100m in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, Goldman Sachs, and JP Morgan.
• WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• As per Frost & Sullivan (F&S), the firm was the second largest CRDMO for ADCs and other bioconjugates globally in terms of FY22 sales.

• As the core candidate in Everest Medicines’s current pipeline, the peak sales of Nefecon could be significantly lower-than-expected, mainly due to low diagnostic rate, limited applicable patient population, high price, competition from latecomers.
• For the rest late-stage candidates, such as Etrasimod, Eravacycline, Taniborbactam, their peak sales would all be lower than that of Nefecon. So, they are unable to bring enough imagination space.
• Based on license-in mode, cost of Everest Medicines is higher than independent-R&D companies. Whether products would be returned to licensors again because of weak sales prospects is also uncertain factor.

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.

• Evergrande

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  111 Inc (YI US), Chindata Group (CD US), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP). 

• Although WuXi XDC has financing needs, we’re more inclined to view this spin-off listing as another capital operation of WuXi AppTec/WuXi Bio, who may not want to take risks alone.
• Global ADC/broader bioconjugate market is at a nascent stage of development, with high R&D risks/commercialization uncertainties. We cannot guarantee whether WuXi XDC will maintain its industry-leading position in the future.
• Although high growth can bring good stories, we’re not sure how much actual market space WuXi XDC will have in the future,which is the key to determining the valuation ceiling.

• Guangdong Archealth Health Industry Group (GAHI HK) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC and ABCI.
• Guangdong Archealth Health Industry Group (GAHI) is a digital health management provider.
• According to F&S, the firm ranked first in the weight management industry and first in the digital weight management industry in China as per 2022 sales.

• New Horizon Health reported a solid set of preliminary results for 1H2023
• We speak to the company’s management post result announcement to figure out the key drivers and summarize the key points in this note.
• The company upgraded its full year guidance and is on track to meet its long term target.

• We expect JDL to report C2Q23 revenue and non-IFRS net profit margin (1.5%) and 0.4ppts vs. consensus. We expect 2Q revenue (excl. Deppon) to grow 5%~ YoY .
• JDL is facing increasing competition from (1) the recent launch of Cainiao’s high-end delivery service, (2) improved ZTO service, and (2) Douyin’s actions to increasingly in-source logistics.
• We maintain JDL’s SELL rating but raise its TP to HK$ 9.4, as we expect JDL will lower staffing costs, and by reducing staff redundancy.