China

• 1983 was the year both TMNT and Mario Bros were created by two different animation studios
• Mario Bros latest movie has now grossed $1.3 billion in box office receipts YTD, entering the all-time top-3 of animated movies 
• TNMT will see its debut in US theatres on the 2nd of August 2023. Will the turtles get the same reception as Mario Bros?

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• Back on the 8 May, small-cap PRC property play Hailan Holdings (2278 HK) announced a voluntary Offer from Yueng Man, Hailan’s controlling shareholder.
• The Offer Price is HK$3.38/share, a miserly 5% premium to last close, and a 60% discount to the RNAV. The Composite Doc is now out. 
• The key condition is Yueng getting 90% of disinterested shareholders to tender. That looks a stretch, yet minorities are disengaged. Not one has turned up at the last three AGMs.

• We conducted fundamental analysis on Link REIT, the largest REIT In Asia, who owns and operates retail assets, office buildings and logistics in the APAC region
• Link REIT has strong track record for capital management, we expect that to continue.  In the LT, Link REIT is on the path to grow its fund management business
• Link REIT is currently trading at 0.64x P/B and 6% dividend yield, which is attractive from a historical perspective

For our next Corporate Webinar, we are glad to welcome UMP Healthcare’s  Chief Investment & Project Officer, Patrick Cheung. 

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

The webinar will be hosted on Monday, 19 June 2023, 17:00 SGT/HKT.

About UMP Healthcare

Founded in 1990, UMP Healthcare is a medical group listed on the main board of the Hong Kong Stock Exchange (stock code 722.HK) and is one of the leading comprehensive healthcare service platforms in the Hong Kong market. We have been committed “To provide comprehensive, diversified and coordinated care for everyone” by creating a network of high-quality and effective medical services for patients, payers, providers and partners.

Along with providing healthcare services that address a wide range of individual needs, UMP closely works with more than 2,000 local and international businesses and insurance organizations to establish and administer corporate healthcare benefit programs for members. The medical service network spans over 1,000 self-owned and affiliated institutions across Hong Kong, Macau, and Mainland China, offering services such as family medicine, specialist consultation, dental care, diagnostic imaging and laboratory testing, preventive medicine and health examination, physical therapy, day surgery, and endoscopy, among others. In 2022, the annual volume of outpatient visits under UMP exceeded 1.1 million.

• We think by adopting the new strategy to unbind vehicle sales with battery swapping, NIO could broaden its customer base to non-Yangtze-Delta regions and regain price competitiveness.
• We upgrade to BUY and raise TP to US$ 10.5, due to 1) recovered growth outlook brought by widened customer base, more competitive pricing and intact model cycle
• And 2) smaller-than-feared margin pressure. Our TP implies 2x PS. 

• If you look up history, Laekna has certain connection with Novartis. However, Novartis seems to have not made much progress in small-molecule targeted oncology therapies in the past few years.
• LAE001 would face fierce competition. Its new mechanism may not be accepted by doctors/patients in front of many mature drug options in the market. LAE002 has high R&D failure risk.
• Since the stock price performance of a number of innovative drug companies based on license-in model in HKEX is unsatisfactory, together with the weak sentiment, we remain conservative about Laekna. 

• YSB’s business model is closer to that of pharmaceutical distribution enterprises, who could carry out businesses similar to YSB based on huge market share/resource advantages/financial strength. YSB’s moat isn’t high.
• The business structure of “Self-operation Business + Online Marketplace” of YSB could involve certain policy risks. Given the nature of its business, YSB’s profit margin is difficult to improve significantly.
• YSB Inc (YSB HK)’s revenue scale could encounter bottlenecks after reaching a certain stage of growth. The valuation of YSB should be lower than that of traditional pharmaceutical distribution enterprises.

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.

• O-Net Technologies (Group)

• Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
• Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
• Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK). 

• Hailan Holdings (2278 HK)‘s voluntary conditional offer from its controlling shareholder at HK$3.36 per share is open. The IFA opines that the offer is fair and reasonable.
• The offer is subject to a 90% minimum acceptance condition – the offeror holds at least 90% of the offer shares and the disinterested shares.
• The acceptance condition is daunting due to the high hurdle rate and the lack of a bump. The current gross spread of 5.0% equals the premium to the undisturbed price.  

• JD Property (JDP HK)/JDP, a leading modern infrastructure provider in Asia, has filed for a US$1 billion HKEx IPO. JD.com Inc (ADR) (JD US) owns a 74.96% stake.
• JDP is the third and second largest modern infrastructure provider in Asia and China, respectively, in terms of GFA, according to JLL.
• The key elements of the bull case rest on large addressable markets, market share gains, reducing dependence on JD Group, core business’ accelerating organic growth and improving margin.

• Mobvoi is getting ready to complete its IPO in Hong Kong in the coming weeks. Mobvoi is aiming to raise US$200 million to US$300 million in this IPO.
• Given the exceptional interest in AI  related companies such as ChatGPT and NVIDIA, the current environment should be an opportune time for Mobvoi to complete its IPO. 
• Furthermore, Mobvoi has achieved a strong growth in sales and operating profits in 2022 which is also likely to drive higher interest in this IPO.

• JD Property (JDP HK) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• JD Property (JDP) develops and manages modern infrastructure, consisting primarily of logistics parks, as well as business parks and other assets in China and in Asia.
• We have looked at the company’s past performance in our earlier notes, in this note we will undertake a peer comparison.

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.

• NagaCorp Ltd
• Sino-Ocean Service
• Tata Motors ADR

• Weilong Delicious Global (9985 HK), a spicy snack food company in China, raised around US$130m in its Hong Kong IPO in Dec 2022.
• According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in September 2023.
• Based on the latest available data, I see two ADDs and two DELs. 
• For the September 2023 rebalance, I expect one-way capping flows to be around US$234mn.

• In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in September 2023.
• Based on the latest available data, I expect two ADDs and two DELs for HSCEI in the September 2023 Rebalance.
• I estimate one-way flow to be US$276mn. Only the two ADDs and two DELs involved in the index changes are likely to have more than one day to trade. 

• Oriental Watch is a prominent luxury watch retailer in the Greater China region.
• While the company offers various brands, the majority of its sales, over 80%, come from its core brands, particularly Rolex and Tudor, a sister brand of Rolex.
• Over the past two years, Oriental Watch has benefited greatly from the strong popularity of Rolex watches and has rewarded its shareholders with a dividend payout of over 100%.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  111 Inc (YI US), Mason Group Holdings (273 HK), United Malt Group Ltd (UMG AU), HKBN Ltd (1310 HK), Silk Laser Australia (SLA AU), Chindata Group (CD US). 
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Musgrave Minerals (MGV AU), Lian Beng (LBG SP), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU). 

• Mason Group Holdings (273 HK) announced a privatisation offer from Red Emerald Capital at HK$0.0338 per share, a 20.7% premium to the undisturbed price of HK$0.0280 per share (30 May). 
• The key conditions are SFC approval and the scheme being approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The offer price has not been declared final.
• Four shareholders hold a blocking stake – three have provided irrevocables while the other will accept due to the attractive ROI. Therefore, there is a clear pathway to completion.

• We explored the primary share price drivers for HKL, the prime office landlord in Hong Kong, including share buybacks, HK office recovery and as a reopening/ESG thematic play. 
• HKL has been constantly evaluating its capital management strategy.  Despite interest rate environment has changed substantially, HKL still sees buyback (7% earnings yield) as a good option
• Valuation remains attractive.  Part of the risks is priced in.  Although it can remain as a value trap, it can unlock its value and re-rate over the long term.

• Anhui Conch Cement (914 HK) has been facing numerous challenges, but at 0.5x P/B (2SD below average) and 36.4% of share price is net cash, it pays not overly bearish. 
• Government stimulus measures may not be effective immediately, but should pave the way for better cement demand. A 16.5% increase in special purpose bond issuance in 4M23 is positive.  
• Depressed cement price is bad, but this will drive small and inefficient players out of the market. This will bring more orderly competition and allow Conch Cement gain market share. 

• After broker Mason Group (273 HK) was suspended pursuant to Hong Kong’s Takeovers Code on the 31 May, it has now announced a privatisation by way of Scheme at HK$0.0338/share.
• The Offer price is only a 20.7% premium to last close, and a 12.7% premium to the three-month average closing price. It has not been declared final.
• The Offeror is Red Emerald. Shareholders with 47.55% of shares out have given irrevocables in support of the Scheme. 

• 2022 was a turning point for China Resources Pharmaceutical (CRP), because performance of core subsidiaries saw a historic improvement.After China reopens, CRP is expected to achieve double-digit growth in 2023.
• CRP’s development history indicates that its current scale/industry position are mainly due to continuous M&A based on SOE resource advantages/background, but holding platform companies have valuation discounts in secondary market.
• Different business models lead to different valuation logic. But Sinopharm/SH Pharma/CRP all enjoy SOE background dividends+valuation system with Chinese characteristics. If investors mainly focus on industry trend, they can all be invested.  

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.

• Central China Securities
• Powerlong Commercial Management Holdings
• Sunny Optical

• 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

• The changes for the KOSPI2 INDEX, KOSDAQ150 Index, CSI300 Index, STAR50 INDEX and a bunch of other onshore China indices were implemented last week.
• The coming week has a lot of rebalance implementations on Friday with the S&P/ASX family and the MVIS family, among others.
• AUM for the Yuanta/P-shares Taiwan Top 50 ETF (0050 TT) has continued to increase with big inflows in the last week.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, Australia finally got its IPO counter ticking for the year with Redox (RDX AU).
• On the placement front, Infratil Ltd (IFT NZ) raised to increase its stake in One NZ. While Skymark Airlines (9204 JP) will see a lockup expiry in the coming week.

• The General Office of National Health Commission issued a notice on further strengthening the management of clinical medication for children. Pediatric TCM is more popular, with decent growth potential.
• Long-Term money choosing to leave A-share isn’t due to geopolitical risks. If outlook isn’t good, the logic of capital’s allocation in A-share isn’t based on promising growth, but on liquidity instead.
• We analyzed key points of Clover Biopharmaceuticals (2197 HK). The Company has entered a vicious cycle. If Clover is abandoned by the market, it will lead to lack of liquidity.

• There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were discussed on Smartkarma this week: Chinachem’s Offer Enm Holdings (128 HK); Bain’s non-binding Offer for Chindata Group (CD US).
• Key updates took place for Estia Health (EHE AU), Inner Mongolia Yitai Coal Company Ltd (3948 HK), and Challenger Technologies (CHLG SP).

• The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
• There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
• The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.

• Allied (373 HK) took Allied Properties (H.K.) (56 HK) private in 2020, followed by SHK Hong Kong Industries (666 HK) in 2021. Now it’s Tian An China (28 HK)‘s turn.
• Preceding my comments on Tian An and AGL 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%.

• Google-backed Chinese artificial intelligence company Mobvoi Inc. filed Tuesday for an initial public offering on the Hong Kong Stock Exchange.
• The Beijing-based startup, valued at $756 million in its last round of fundraising three years ago, didn’t disclose the size of the IPO.
• Bloomberg reported that the company aims to raise $200 million to $300 million, citing people familiar with the matter.

• In May, JD Health made a voluntary announcement that the company has made operating income of RMB795.4m (5.7% of revenues) in 1Q2023 vs RMB61.6m (0.7% of revenues) reported in 1Q2022.
• JD Health’s share price been down more than 25% despite the company announcing strong 1Q2023 results, as the market has become concerned over the company’s ability to sustain its profits.
• Our quantamental analysis proves that JD Health may not be able to generate OPM in excess of 2-3% as there is very little room for GPM to improve.

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. China SCE
2. China Hongqiao
3. Times China
4. Greentown China
5. Seazen (Formerly Future Land)

and more…

• Dalian Wanda Group Co.’s property management unit expects to scrape up enough cash to pay off a 2 billion yuan ($281 million) note due this Saturday, the company said.
• But with 8.9 billion yuan of domestic notes and offshore bond due within two months, Dalian still needs to dump some of its shopping malls and hotels.
• The troubled property-to-entertainment conglomerate was reported to be considering such moves earlier this week.

• Positive surprises in profitability during Q1 2023 failed to reverse the long-term decline of Chinese e-commerce, possibly due to market recognition of the temporary impact of cost-cutting and monetization efforts.
• In our opinion, robust growth in GMV is fundamentally essential to reverse the long-term downward trend of the Chinese e-commerce sector.
• Chinese e-commerce sector no longer discloses GMV, but Express delivery volume indicates a 20% decline in parcel volumes compared to 2021, potentially reflecting a decrease in GMV.

• Tian An China Investment (28 HK) and Allied (373 HK) entered a trading halt “pursuant to The Hong Kong Code on Takeovers and Mergers.” Allied owns 55.72% of Tian An.
• It is likely that Allied Group is seeking to privatise its subsidiary Tian An. Tian An’s other substantial shareholders have a history of sell-downs which facilitate an offer.
• Allied Properties (H.K.) (56 HK)/APL’s partial offer for Tian An in 2011 and Allied’s privatisation of APL in 2020 point to a 20.8%-34.3% premium or HK$5.01-5.57 per share offer.

• Kelun-Biotech, a China-based integrated innovative biopharmaceutical company, plans to raise up to US$400m via a Hong Kong listing.
• In our previous note, we examined the company’s two core products, namely SKB264, a TROP2-ADC, and A166, a HER2-ADC.
• In this note, we will provide a valuation for the company’s key products.

• Mobvoi (2185047D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC and CMBI.
• Mobvoi is an AI company with a focus on generative AI and voice interaction technologies.
• As per CIC, the firm is the largest revenue-generating AI company focusing on AI-generated content (AIGC) technologies in terms of 2022 revenue from AIGC solutions.

• We recently interviewed some Temu merchants, and the main conclusion is that Temu continues to experience rapid growth despite the chaos. 
• Temu’s GMV reached a new high in May; Temu faces upcoming challenges from Shein and TikTok, as they are also about to launch their fully managed models.
• Moreover, Temu’s unit economics (UE) has not seen further improvement for several months, and the supply of goods has been a problem;

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 SCE
• Hopson Development

In this next installment of our #webinar Wednesdays, we welcome Smartkarma Insight Provider, Nicolas Van Broekhoven, as he shares his thoughts and insights on three different small cap stock ideas. From Hong Kong to Canada, tune in as Nicolas delves deeper into stock ideas from across the globe.

The webinar will be hosted on Wednesday, 14 June 2023, 17:00 SGT/HKT.

Nicolas Van Broekhoven was on the buyside for 15 years, and most recently at a medium-sized boutique asset management firm. Having grown up in Europe, attending university in the US and living in Singapore for the last 7 years, this has given him a broad scope on the world and investing in general. He considers himself as a generalist investor with a preference for small and mid-cap companies and special situations. However, a large cap that has gone temporarily out of favor might also pique his interest. His style of investing could be categorized as more of value investor, rather than growth at any cost. Learning from Charlie Munger on the importance of quality of a company has been of tremendous value over the years. Nicolas likes businesses with real earnings, cash flows, dividends, book value and insider ownership.

• Chindata Group (CD US) disclosed a preliminary non-binding proposal from Bain Capital at US$8.00 per ADS, a 27.4% premium to the undisturbed price of US$6.28 per ADS.
• For privatisation to succeed, shareholders representing two-thirds of the shares present and voting need to approve the deal. The offeror represents 87.39% of the total voting power. 
• While the offer is unattractive, Bain Capital’s voting rights ensure that the vote will pass. The key risks are regulatory approvals and timing. 

• HSI has been our top short bet where we locked in some short gains at 18,100/300 and now see this bounce as an opportunity to re set the HSI short.
• Underlying weakness in China A shares sets the tone for HK.
• Trend and price resistance at 19,300/500 stand out as a key turn zone with a little help from an SPX give back sequence.

• Further evidence of BILI’s user base peaking reinforces our bearish view on its growth outlook.
• BILI’s business model is broken and we believe significant downsizing is unavoidable in the next 12- 18 months to achieve profitability.
• The company will survive as a leaner and slightly profitable business valued at high single-digit P/E. We still see tremendous downside from here and advise investors to avoid the stock.

• Chinese data centre outfit Chindata (CD US) has no end of alleged suitors, rumoured to include SOE-backed China Merchants, GDS (GDS US), PE outfit PAG, and EQT (EQT SS)-backed EdgeConneX.
• Now Bain Capital, Chindata’s largest shareholder with 42.17% (and 87.39% of the voting power) has made a non-binding proposal of $8/share per ADS, a 33% premium to last close.
• Chindata’s board has made no decision on the proposal. It’s hardly a knockout Offer. But the key question is whether Bain will get regular approval to take Chindata private. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Times China’s ESG as “Adequate”, in line with its “Adequate” Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

• YSB Inc (YSB HK) is a digital pharmaceutical platform serving businesses outside of hospitals in China. The company operates a self-operating business as well as an online marketplace.
• The company’s application for a HKEx IPO has been approved and according to news media outlets, the company plans to raise proceeds of around US$300-500m.
• The company’s core business; Self-operations accounts for around 95% of revenues, however, it is a low-margin business and the other businesses help absorb most of the costs.

• Q123 Net Revenue was strong, exceeding Q119 (pre-Covid) levels by over 12%
• Almost six months into recovery, Trip.com (TCOM US) has also managed SG&A expenses well
• A good result for the company, but we see no reason to alter our long-term view

• The industrial sector is exhibiting signs of a prolonged slowdown, similar to Real Estate and Household trends.
• This Note is the third in a series on China’s econChina’scovery; we update key charts and add charts relevant to the Industrial sector.
• Qingdao City on Friday reduced the deposit requirement for purchasing homes, following a trend set by several other cities.

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 Hongqiao
• China Jinmao Holdings
• Greentown China
• Times China

• On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
• Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
• In this note, we will talk about some of the company’s investments and how the overall Holdco would look post restructuring.

• Late March, SOE-backed power play China Resources Power Holdings Co Ltd. (836 HK) announced it intends to spin off its energy unit via an A-share listing. 
• Shares gained 4.9% on the news – gains which were promptly given back over the ensuing fortnight.
• Renewable energy profits have been the driving force behind CRP’s bottom line strength the last two years. But how best to assign a value to the remaining loss-making thermal ops? 

• Freshippo (Hema) is set to be the first Alibaba (ADR) (BABA US) company to have an IPO after the business split into six units.
• Two key concerns for Freshippo’s IPO are its failure to secure outside funding in two attempts last year and the potential conflict of interest arising from competition with Tmall Supermarket.
• While it is still premature to make a definitive assessment of Freshippo’s IPO prospects, we maintain a level of skepticism towards the company.

• Beauty Farm Medical and Health Industry (BFM HK) reported decline in revenue and net profit in 2022, due to the implementation of nationwide pandemic prevention and control policies.
• The company is seeing recovery in 2023. During January–May, customer traffic and average transaction value achieved double-digit growth YoY, while customer spending increased 20%+ YoY.
• In 2023, revenue and EPS are expected to grow 34% and 106%, YoY, respectively. The preliminary business operation overview seems to fall short of the expectations.

• We don’t think A166 makes much sense on the commercialization level when faced with DS-8201. Unsatisfactory sales of Trodelvy also makes us start worrying about SKB264 after its market launch.
• MNCs are scrambling to in-license ADC products, which actually reflected their “general anxiety”, leading to a “sentiment-driven valuation premium”. Would the final outcome of ADC be the same as PD-1?
• We’re “confused” about the valuation of Kelun-Biotech if look deeper. The valuation in last round of financing before IPO wasn’t cheap, which makes us cautious considering the outlook and sentiment.

• Tencent has been busy distributing shares in some of its investments over the past two years, with JD.com’s distribution announced in 2021 and Meituan’s in 2022.
• In our earlier note in 2022, Tencent Investee Selldown – The US$120bn Global Overhang, we had looked at its overall investment portfolio.
• With two of its large investments spun-out, we now re-look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how. 

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.

• Country Garden Holdings Co
• Yuexiu Property

• Fashion wear retailer ENM Holdings (128 HK) has received a delisting Offer from major shareholder, Chinachem.
• The Scheme consideration of HK$0.58 is a 24.7% premium to last close, although shares popped 24% prior to suspension. 
• The Offer price is final. There is probably enough here for the Offer to get up. But there is potentially significant value to be unlocked from recent land rezoning. 

• Inner Mongolia Yitai Coal Company Ltd (3948 HK)‘s H Share buyback offer at HK$17.50 per H Share is open. The H class meeting is on 30 June.  
• The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is a 90% minimum acceptance condition.  
• The de-rating of the peers, likely supportive substantial H Shareholders and no major retail opposition should help hit the 90% threshold. At the last close, the gross/annualised spread is 4.7%/23.9%.   

• Back on the 9 May, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced an H-share buyback at HK$17.50/share.
• With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August. 
• The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.

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
• KWG Living Group

• Against a backdrop of slowing revenue/active users growth, a return to profit in FY2023, while welcome, is shaky.We think Alibaba Health’s growth would continue to slow down in the future.
• The low gross profit and strong regulatory characteristics of drug sales indicate that Alibaba Health Information Technology (241 HK) is difficult to replicate the scale effect brought by traditional internet platforms. 
• The current business model and revenue structure have already made Alibaba Health lack imagination space.From a comprehensive perspective, its valuation should be lower than JD Health but higher than PAGD.

• Fenbi Ltd (2469 HK) was added to the Hang Seng Composite Index (HSCI) at the close Friday and will be added to Southbound Stock Connect from open of trading today.
• We see 22 potential adds, 19 potential deletes, couple of close deletes, 5 deletes on prolonged suspension and 4 close liquidity deletes for the HSCI in September.
• There are 11 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.

• Enm Holdings (128 HK) announced a privatisation offer from Chime Corporation at HK$0.58 per scheme share, a 54.7% premium to the undisturbed price of HK$0.375 per share (24 May). 
• The key condition is the scheme be approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No shareholder holds a blocking stake. The offer price is final.
• Detractors will argue the offer is low due to ENM’s net cash (75% of the market cap). However, the offer is reasonable compared to historical multiples and share prices. 

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 111 Inc (YI US), Enm Holdings (128 HK), United Malt Group Ltd (UMG AU), Estia Health (EHE AU), HKBN Ltd (1310 HK), Hailan Holdings (2278 HK).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Challenger Technologies (CHLG SP), Lian Beng (LBG SP), SBI Shinsei Bank (8303 JP), Newcrest Mining (NCM AU). 

• In the second half of this year, innovative device companies could be listed on the SSE STAR Market one after another, which is a systematic opportunity.
• Shareholders’ reduction in CXO will continue. Then, CXO could become a company mainly controlled by various funds, with the original owners all cashing out and leaving, such as WuXi AppTec. 
• We analyzed some key points of CStone Pharmaceuticals (2616 HK). We remain conservative about the Company, and its stock price may continue to remain weak.

• Different from peers whose pharmaceutical assets are scattered in different listed companies, all assets/resources of SH Pharma are integrated within the Company. The intrinsic value of this model is greater.
• SH Pharma is in a traditional industry, facing weak profitability and negative policy impacts, Thus, the Company lacks attractiveness and imagination space for investors, leading to long-term undervaluation. 
• Considering the transformation to more high-margin businesses, SH Pharma’s performance/profitability would improve. Since China hopes to establish a valuation system with Chinese characteristics, there’s valuation repair opportunity for SH Pharma.

• In terms of fleet characteristics, market exposure, and recent financial performance, we believe T.S. Lines (TSL HK) and Taiwan’s Wan Hai Lines (2615 TT) are directly comparable
• WHL has more exposure to the Transpacific, but still boasts a much larger Intra-Asia operation owing to its scale advantage (fleet and revenue about four times the size of TSL)
• Given the similarities we outline in this insight, we believe TSL’s shares should trade at EV/Fleet and EV/Revenue multiples in line with WHL’s; no premium is justified, in our view

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.

• NagaCorp Ltd