China

• 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

• There were a bunch of rebalances on Friday across Asia resulting in big flows across multiple stocks and countries.
• The coming week is quieter with no scheduled rebalances – though the KOSDAQ 150 Index rebalance could take place dependent on Kuk Il Paper Mfg (078130 KS)‘s trading resumption. 
• Inflows to China and Taiwan ETFs while Korean ETFs had outflows. Market volatility resulted in redemptions from iShares MSCI Emerging Markets (EEM) and IShares MSCI Min Vol Emerging Markets (EEMV).

• 25% reduction on hardware cost of car production in one year would be remarkable if achieved
• Integrating two sales systems into one is a positive move, but not good enough in our view.
• Mr. He taking direct resposibility of styling design division is a sign that the company acknowledges that it is a key improvement area for estabilishing brand image

• PDD stock price has been increasingly driven by TEMU as of late, thanks to TEMU’s fast growth and aggressive geographical expansion.
• TEMU rollout introduces more variables to upcoming 4Q results , especially with regard to incremental investments that pose downside risks to earnings, which will sharply decelerate in 4Q and beyond.
• We are turning more constructive on TEMU, but acknowledge the challenges in trading off between topline growth and bottom line deceleration in a potentially prolonged tightening cycle. Stay neutral.

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 Jinmao Holdings
2. Lifestyle International Holdings
3. Geely Auto
4. First Pacific Co
5. Tata Motors Ltd

and more…

The Asia HY Trade Book for March 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 (ex-Japan) HY and crossover credits.

• DPC Dash (1405 HK) is now looking to raise up to US$90m, after having shelved its last attempt to raise around US$75m in its Hong Kong IPO in December.
• The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 604 stores across 17 cities, as of Feb 2023.
• In this note, we run the deal through our ECM framework and talk about valuations.

• We believe revenue will grow by 2.5% YoY in 4Q22 and 9% in 2023.
• We believe EPS will decrease by 62% YoY in 4Q22 and increase by 16% in 2023.
• We expect the stock has an upside of 42% for yearend 2023. Buy.

• In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in June 2023.
• According to our estimation, there could be one ADD/DEL for the HSTECH in June 2023 triggering total one-way index flows of US$238mn.
• The final index changes along with indicative capping and index weights will be published in Mid/Late-May 2023.

• The exclusive master franchisee of Domino’s Pizza in mainland China, Hong Kong and Macau, DPC Dash’s IPO opened for subscriptions today at a price range of HK$ 46.0-55.0 per share.
• The IPO valuation is not particularly enticing to lure us as we don’t think it’s at a sufficient discount to Yum China Holdings Inc (9987 HK)’s multiples.
• DPC Dash (1405 HK) is also relatively more expensive than Domino’s Pizza (DPZ US) master franchisees in other regions.

• The slight dip in FY22 earnings for AviChina Industry & Technology H (2357 HK) is due to product restructuring at Avicopter (600038 CH) and higher impairment/fair value losses.
• It should return to growth track in the next two years, with rise in product demand, recovery in Avicopter, further restructuring and M&As being major drivers. 
• Share price has increased 15.9% YTD but it is just on 9.2x FY23 PER. Its market cap is at 58.5% discount to holdings in its four listed A-share subsidiaries. 

• Chinese solar wafer giant LONGi Green Energy Technology Co. Ltd. will partner with U.S. solar developer Invenergy to build a $600 million, 5-gigawatt solar panel assembly factory in Ohio
• The project will be LONGi’s first entrance into the U.S. manufacturing market.
• What will eventually be the largest crystalline silicon solar panel factory in the U.S. will create 850 jobs, and operations are expected to start by the end of 2023

• Giant Biogene has been added to Hong Kong Stock Connect.There’s also positive sentiment driven by the consumption recovery after China reopens. But the Company is overvalued if compared with peers.
• The subsequent product pipeline progress is relatively slow, with a gap of nearly two years in the middle. So, Giant Biogene’s stock price performance may be relatively weak after 2024.
• Due to various restrictions, the actual market space of collagen in the future may not be as large as expected. This is a point investors need to be aware of.

• Akeso reported C2H22 total sales, net revenue 41% and 67% above our estimates. Non-IFRS operating loss, however, was in-line with our estimate, thanks to higher OPEX; 
• Given Summit’s US$500mn upfront and up to US$5bn upfront payment for Ivonescimab (PD-1/VEGF) (AK112), we now forecast Akeso to achieve non-IFRS breakeven in C1H23 and all subsequent years;
• We raise TP by 18% to HK$59 and maintain BUY.

• The Link REIT (823 HK) rights offering caused some upset amongst investors. They got dilution where they did not need it, and de-leveraging from a REIT wanting to invest.
• The units fell in price, then fell some more. Then the rights started trading.
• Last week in Link REIT (823) – Nil Paid Rights Start Trading Tomorrow – The Trades I said strategy was to be long by Tuesday or Wednesday. It’s Wednesday.

• On the 17 February, AAG Energy Holdings (2686 HK) announced an Offer of HK$1.85/share (declared final) by way of a Scheme from major shareholder Xinjiang Xintai Natural Gas (603393 CH).
• At a 10.1% premium to undisturbed and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year, the Consideration price was unreasonable. 
• FY22 numbers are now out, which further illustrates the Offer price’s inadequacy. AAG’s trailing PER and EV/EBITDA are  3.6x and 1.4x. Net cash accounts for 41% of AAG’s market cap.

• Aag Energy Holdings (2686 HK) released solid FY22 results which magnify the scheme risk of Xinjiang Xintai Natural Gas (603393 CH)‘s pre-conditional privatisation offer of HK$1.85 per share.
• The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.
• The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.

• SVB Financial’s (SVBF) liquidity risk sparked by high interest rate is unlikely to happen on Futu, as the two have different asset structures and business models. 
• Futu is benefits under the rising interest rate environment, as its interest income generated from clients’ idle cash goes up, 
• With also help from the floating rate of margin financing and mortgage lending business. We maintain BUY rating and the TP at US$51.

• Over 85% of the way through the review period, we see 14 potential index changes at the June rebalance that will be implemented at the close on 9 June.
• We estimate a one-way turnover of 2.28% at the June rebalance leading to a one-way trade of CNY 5.95bn.
• The potential adds have outperformed the CSI 300 Index over the last two months but have underperformed the potential deletes. The gap has been narrowing recently.

For our next Corporate Webinar we are glad to welcome Comba Telecom’s Executive Director and Group CFO, Ken Chang Fei Fu.

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

About Comba Telecom

Established in 1997 and listed on the Main Board of the Hong Kong Stock Exchange in 2003 and the Main Board of the Singapore Stock Exchange in 2013, Comba Telecom is a global leading wireless solutions provider with its own R&D facilities, manufacturing base, and sales and service teams. The Company offers a comprehensive suite of products and services including base station antennas and subsystems, wireless access, wireless enhancement, and wireless transmission to its global customers. Headquartered in Hong Kong, with manufacturing bases and R&D centres in China, Comba Telecom provides wireless communication solutions and information application services to customers in more than 100 countries and regions around the world.

• The logic of Duoning’s business layout is that self-produced upstream products reduce the cost and increase customer stickiness, then lock in the purchase of future customers from the source.
• Although lagging behind imported enterprises in product performance, the upstream production cost control is one of the driving forces for the localization of pharmaceutical supply chain. Duoning has growth potential.
• A slow-down or reversal of trend related to life sciences industry growth could have an adverse effect on Duoning’s business. Overseas sanctions and policy risks are also the concerns. 

• The strong travel demand in Jan. and Feb. had pushed up the industry-wide ADR nearing the 2019 level due the temporary hotel shortage, Atour especially benefited from the trend . 
• Except the positive industry trend, we think the releasing of requisitioned hotels and the expansion of Atour Light are the near-term catalyst for Atour. 
• We maintain the BUY rating and raise TP by US$1.5 to US$36.5

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• On 9 February 2023 we published a bullish recommendation in China Resources Beer Holdings (291 HK), targeting an 8.75% multi-week rally in Q1 2023.
• 291 HK rallied from 58.75 on 9 February to 63.90 on 7 March (15 trading days), a rise of  8.75%. Target achieved on 7 March 2023.  

• China Shenhua Energy Co H (1088 HK) could replace Country Garden Holdings Co (2007 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance.
• Short interest on China Shenhua Energy Co H (1088 HK) is pretty small while the short interest on Country Garden Holdings Co (2007 HK) is large and possibly getting bigger.
• The change could result in a big increase in the fair value for the HSCEI 2023 dividend futures. Currently, we estimate an increase of up to 9 DIPS.

• After rallying a fair bit at the beginning of 2023, we have seen sharp pullbacks in Eva Precision Industrial Holdings (838 HK) and China MeiDong Auto (1268 HK) share prices.
• We believe the price cuts highlighted by Victoria Li in her insight China Auto: ICE Price War Triggered by Dongfeng, JV Players Under Pressure are a significant cause. 
• While we like both stocks and they are cheap, we feel both companies will face short to medium-term pain in their businesses and share prices as the saga unfolds.

• Questionable marketing practices and cheap counterfeits could make TEMU a legal nightmare for Pinduoduo (PDD US).
• Meanwhile, SHEIN doesn’t seem ready to give in easily to the competition. Thus, TEMU could be a significant burden on Pinduoduo’s profitability in the medium-long term.
• Considering the discounts, advertisements and promotional spending done by TEMU in the fourth quarter, we think it is unlikely that Pinduoduo will meet the 4Q22 consensus OP of RMB 11.7bn.

• ZKH Group (ZKH US) is looking to raise about US$300m in its upcoming US IPO.  
• ZKH Group is a leading maintenance repair and operations (MRO) procurement service platform in China, according to CIC, providing one-stop MRO procurement and management services and digital and fulfillment solutions.
• ZKH Group’s revenue has been primarily driven by its product sales segment during the track record period. However, its GMV growth slowed dramatically and its sales growth doesn’t appear sustainable. 

• NWD has the highest gearing among all HK real estate names.  It has significantly underperformed since the rate hike cycle begun.  Now it has the biggest potential to rebound
• The stock is trading at attractive valuation, 0.27x P/B, like a distressed Chinese developer.  The major market concerns are potential earnings downgrade and dividend cut
• I am quite convicted on the stock for rebound given 1) company has clear de-leveraging plan 2) no plans for equity-raise 3) lots of corporate actions ahead to unlock value

• PAGD intends to switch from 2C model to 2B model and to reduce losses ASAP at the expense of revenue scale, so as to prove its profitability to the market. 
• B-End corporate customers with high quality and sufficient budget are limited. Once the growth of B-end corporate customers meets a bottleneck, its performance may face another decline.
• Despite the improving financial performance in 2022, we still think that we need to further observe the effect of strategic transformation and future performance of PAGD before making judgments.

• Recent pullback of Trip.com (9961 HK) has made this China’s tourism recovery play even more attractive.  Since end-Feb, consensus earnings forecasts have been upgraded by 19-20%.
• It is best positioned to capture the revival in China’s domestic and outbound travels. Forward booking data has pointed to very solid momentum over the next few months.
• We anticipate good margin expansion going forward, and its resilient financial position provides opportunities for value-enhancing M&As. These all justify a premium valuation over peers. 

• ADICON Holdings Limited (ADI HK) is looking to raise about US$400m in its upcoming HK IPO. The deal will be run by Morgan Stanley and CICC. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S.
• It offers comprehensive testing services primarily to hospitals and health check centers through an integrated network of self-operated laboratories across 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.

• Fosun International

• Grizzly Research LLC publishes a short selling report on ZTO.
• Meituan plans to shift car hailing from direct operation to a platform for third-party operators.
• Dada, which was acquired by JD.com last year, posts good 4Q22 results.

• Several news media outlets reported last week that Meituan (3690 HK) is restructuring its ride-hailing services business to cut down costs as top line growth is slowing down.
• Meituan launched ride-hailing services as a stand-alone app in 2017, it was merged into Meituan Super App in 2019. Relaunched as a stand-alone app in 2021 following Didi’s app removal.
• Meituan has increased its headcount to compete with Douyin while has started hiring riders to launch services in Hong Kong which would likely to further drag down margins.

• Total revenue increased by 41% YoY and revenue from external customers increased by 69% YoY in 4Q22.
• We believe total revenue will grow by 26% in 2023 and 17% in 2024.
• We also believe the stock has an upside of 58% and a price target of HK$20.

• Several original shareholders reduced their holdings of Mindray, which indicates that the senior executives and major shareholders aren’t optimistic about Mindray’s outlook, putting the Company’s long-term growth under scrutiny.
• Mindray’s performance in overseas markets could be under pressure, which is an uncertain factor to drag down this year’s performance growth. Supply chain issue would hinder Mindray’s breakthrough in high-end fields.
• Performance slowdown could continue if without breakthroughs in new growth points or internationalization. Our forecast on 2023 growth is about 15%-18%. Mindray’s valuation may fall back to 30-35 PE TTM.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Transmission
• Country Garden Holdings Co

• We are concerned that BZ will incur higher sales marketing cost to maintain its increasingly sluggish MAU growth. 
• We expect BZ to post C4Q22 revenue 2% higher than consensus, but with non-GAAP net margin 5.7ppt lower, due to lower GM and higher S&M.
• We downgrade BZ from BUY to SELL rating, and cut TP to US$12.4, imply 51x PE in 2023, and the stock currently trading at 76x PE in 2023.

• The review period for the June rebalance ends 30 April. We expect the changes to be announced 26 May with the implementation taking place after the close on 9 June.
• We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
• One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 1,442m. The impact on the deletions will be larger than that on the inclusions.

• Based on our recent checks, we expect that Tmall sales in the march promo were weaker-than-expected, especially in apparel and beauty make-up. 
• Meanwhile, we maintain our prior forecast for Douyin’s overall eCommerce growth, and we expect that Douyin Mall’s share of Douyin eCommerce GMV is now higher than we previously estimated.
• We cut the GMV growth of Taobao and Tmall from 4.4% YoY to 1.4% YoY in FY24, and cut BABA’s TP to US$ 100, implying 12.6x FY23 PE.

• As a background, can I refer the reader to Substack Note No One Cares 有中国特色 Real Estate Liquidity Spiral to Solvency Challenge 31st October 2022 ?
• It bottoms ticked recovery in the highly leveraged Real estate Index Hang Seng Mainland Property Index (HSPMI) and rallied 103% from trough to peak 27th January 2023.
• The mainland listed Index CSI 300 Real estate (CSI300RE) trough (1^st November) to peak (27^th November) was 43.5%.

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
• Road King Infrastructure
• Sunny Optical
• Vedanta Resources
• Yanlord Land

• Bloomberg reported that PAG and other parties have expressed interest in taking ASM Pacific Technology (522 HK) private. PAG also sounded out several lenders.
• ASMPT has three substantial shareholders (Asm International Nv (ASM NA), FIL Limited and Schroders PLC (SDR LN)) which suggests a requirement for a reasonable takeover premium.
• ASMPT previously denied a privatisation rumour in 2020. Nevertheless, peers and historical multiples imply a fair price range of HK$82-97 per share, 11-31% premium to the last close.  

• After two months of zero buybacks under their HK$4bn buyback programme, on Friday Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) again bought back shares.
• Ostensibly, it was as Swire A shares fell below HK$60/share. They were 65% of B volume and 51% of A volume on Friday – not shy about their return.
• Assuming participation patterns normalise and the shares don’t bounce back above the self-imposed limit, the buyback will probably last 6-7 weeks more. The div arb is real if you hold. 

• Dai Nippon Printing (7912 JP) is a range trade. The juice is in the speed of the Corporate Buyback and how excited people get.
• With the renewal of the gaming concession in the bag and Melco Resorts (MLCO US) up 128% in the past six months, Melco (200 HK) has extracted ~HK$2.5bn from MLCO.
• Hosokawa Micron (6277 JP)‘s current PER of 9.9x ignores that net cash and securities holdings is about half of market cap. This is a cheap stock.  

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• IPO activity appears to be picking up across the region, with deal in Japan, Hong Kong, US and Indonesia being lined up.
• Placements as well picked up pace, despite the ongoing Japan Post Bank (7182 JP)‘s mega deal set to suck liquidity out of the system for a while. 

• 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

• Melco Resorts & Entertainment (MLCO US) has entered into a share repurchase agreement with a wholly-owned entity of Melco International Development (200 HK) to repurchase (and cancel) 40.37mn shares for US$169.8mn.
• Melco’s effective holding will decline to 51.7% from 53.1% currently. This is the second parent/sub repurchase agreement in the last 7 months. 
• MLCO’s previously announced US$500mn share repurchase program remains unaffected by this privately negotiated transaction, with US$412mn still available for future repurchases under the program.

• Playmates Toys (869 HK) just published its FY22 results showing a decrease in revenues of 19% but a consistent dividend of 2c HKD
• More importantly, it shared more details about the TMNT upcoming movie launch
• Reiterate thesis that upon TMNT relaunch Playmates toys could be a major beneficiary

• In C4Q22, JD reported in-line total revenue and beat in profit. We trimmed down our forecast on C1Q23 total revenue by 4% due to slower-than-expected rebound in retail spending. 
• JD is shifting its strategy to be more focused on low price and user, and we suggest that the repositioning period could be painful for the company.
• We cut our revenue forecast by 5%. Our estimates on top and bottom lines in 2023 are (6%) and (28%) below cons. Maintain SELL rating and cut TP to US$27.

• Through operating luxury shopping malls in China, Hang Lung Properties is the only HK-listed stock that provides exposure to the China luxury consumption story.  It is trading at attractive valuation.
• Major concerns are 1) leakage of retail sales after re-opening and 2) impact on luxury consumption from negative wealth effect.  Most of the risks are priced in at current valuation.
• Short-Term, China consumption will recover post-COVID as consumer sentiment rebounds.  Long-term, the structural story of China consumption remains intact, supported by growing middle class and increasing disposable income and savings.

• In C4Q22, JDL reported in line results for both revenue and profit. In C1Q23, we expect JDL’s topline growth continue to decelerate due to decline of parcels. 
• JD has adopted the low-price strategy, which hinders the growth of JDL. The price competition in eCommerce negatively affects JDL but benefits ZTO.
• We cut our 2023 revenue forecast by 6%, which is (5%) below cons. Downgrade JDL to SELL with TP of HK$10.

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. Road King Infrastructure
3. Sino-Ocean Group
4. Greentown China
5. Anton Oilfield

and more…

• Following Jehoshaphat’s allegations that profits are inflated dramatically over a decade with manipulative accounting, Techtronic Industries (669 HK) has issued a rebuttal clarifying that the accusations are without any merit.
• TTI’s beyond comparison performance is due to world class brands such as Milwaukee, Ryobi and Hoover which have helped top line grow at 13% CAGR over the past 13 years.
• Nevertheless, we have assessed some of the company’s clarifications here which seemed too good to be true.

• There were some positive takeaways from Swire stable’s set of FY22 accounts; however, the Hong Kong office segment faces increased vacancy rates, and new supply in 2023.
• Preceding my comments on Swire 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%.

• JD’s revenue growth rate reached its historical low in 2022, but we believe it will recover in following two years.
• JD’s operating margin hit its historical high in 2022 and we believe the improvement will continue.
• We believe EPS will grow by more than 100% in 2022 and the stock has an upside of 42%.

• Shougang Fushan Resources (639 HK) trades at 4.5x/5.1x FY22e/23e with 50% of the market cap in cash and a 17.8%/15.8% FY23e/24e dividend yield (based on an 80% payout ratio).
• Since our call in FY21, close to 64 cents of the share price (25% of the current share price value) has been returned as dividends making it a dividend machine. 
• We forecast at least another 70 cents of dividend for H2 FY22 and FY23, bringing the dividend in 3.5 years to more than half the current share price. 

• Yashili International Holdings (1230 HK) announced that the pre-condition is satisfied – around 10 months since the 6 May 2022 announcement of China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer. 
• Yashili has received an extension for the despatch of the scheme document to a date no later than 31 August. We think the scheme document is despatched by early April.
• The scheme risk is low. At the current price and for a late May payment, the gross and annualised spread is 2.6% and 12.2%, respectively.

• Fangda Carbon New Material Co, Ltd. (600516 CH) is looking to raise around US$124m in its Swiss GDR listing. Huatai is the sole bookrunner in the deal.
• The firm is offering 13.91m GDRs (1 GDR to 10 A-shares) for sale at US$8.63-8.9/GDR, or at a 8.3-11.1% discount to last close on the A-share leg.
• As per the firm, it plans to use the net proceeds from the offering to support its business expansion, repay debt, supplement working capital and for general corporate purposes.

• JF Wealth Holdings (9636 HK) raised around US$129m in its Hong Kong IPO.
• JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.
• We have covered various aspects of the deal in our previous notes. In this note we will talk about the demand and trading dynamics.

• After giving up the IPO plan late last year, DPC Dash (1405 HK) has restarted its IPO with hopes of capitalising on China’s reopening boom.
• DPC Dash is not positioned to benefit from the ending of lockdowns. It also didn’t outperform Pizza Hut when dine-in demand was absent.
• Therefore, DPC Dash is likely going to remain a minor player in a segment dominated by Pizza Hut.

• The 25% stake sale/acquisition in Yashili International (1230 HK) was expected five business days after the Dumex China Disposal  – and that is what transpired. This satisfies the Scheme conditions. 
• After ten months, Danone (BN FP) offloaded its chilled dairy business, acquired Yashili’s Dumex China baby formula ops, and offloaded its 25% stake in Yashili to China Mengniu (2319 HK).
• Now Yashili minority shareholders will get their chance to vote for China Mengniu’s Scheme, potentially in early May. 

• What may appear duplicative asset segment in MGM actually spreads risk and improves overall margin of safety for both stocks.
• MGM China is a pure Macau play while MGM Resorts International is a strong bet on global reach of its gaming properties.
• Buying both is insurance against a possible recession downside because of the geographically and demographically diverse customer bases of both enities.