China

• Back on the 16th July, furniture trader Samson Holding (531 HK) announced an Offer, by way of a Scheme, from Shan Huei Kuo, Samson’s Chairman.
• The Cancellation Price is $0.48/share (final), a 50% premium to last close; but more notable if going back a month. This looks done. However, Samson is an illiquid micro-cap.
• The Scheme Doc is now out, with a Court Meeting to be held on the 21st October. Expected payment on the 14 November. The IFA says fair & reasonable.

• Samson Holding (531 HK)’s IFA opines that Mr Samuel Kuo (Chairman)’s HK$0.48 privatisation offer to be fair and reasonable. The vote is on 21 October. 
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). Despite the market rally, most peers’ shares have declined since the offer announcement. 
• The attractive premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. At the last close, the gross/annualised spread is 3.2%/29.8%.

• The Hang Seng Index is the benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to predict index changes.
• In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes during the next review in December 2024.
• The index changes for the December 2024 index rebal event will be announced after market close on 22nd November 2024.

• Nanshan Aluminium International Holdings (NAI HK)  is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai International.
• Nanshan Aluminium International is a leading alumina manufacturer in Southeast Asia.
• The firm’s primary focus has been tapping into Indonesia’s abundant bauxite and coal reserves, utilizing the low-temperature Bayer process to produce metallurgical-grade alumina in sand form.

• China Resources Beverage (CRB HK), China’s largest purified drinking water company, is premarketing an HKEx to raise US$0.5-1 billion.
• We previously discussed the IPO in CR Beverage IPO: The Bull Case and CR Beverage IPO: The Bear Case. In this note, we examine the latest updates in the PHIP.
• The investment case rests on core business offsetting slowing growth with margin improvement, beverage’s fast-paced growth, narrowing the margin gap with Nongfu Spring (9633 HK), and return to FCF generation.

• Oriental Watch (398 HK) will report its H1 FY25 result in mid-November. We expect earnings to be down 5-10% YoY, as SSSG would be flattish for the period.
• We expect a 25-26 cent dividend ( ~14% yield annualized). With the stimulus measures in place, we expect China’s mood to be slightly more upbeat.
• Oriental Watch (398 HK) goes ex-dividend today (23.5 cent/share dividend). As we enter trading today, it may be available at a higher yield. 

• Shenzhen Mindray Bio-Medical Electronics (300760 CH) reported double-digit growth in revenue and net profit in 1H24.
• In-Vitro diagnostics and medical imaging systems segments drive performance, while patient monitoring and life support lagged.
• International market continues to show strength, while China lingers for now.

• Chongqing Terminus (2471080D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by CITIC Securities and Haitong.
• Chongqing Terminus is a leader and pioneer in China’s public realm AIoT (Artificial Intelligence of Things) industry.  
• It leverages its innovative AIoT operating system, TacOS, to provide enterprises, public administrators and public realm participants with full stack AIoT products i.e. software, hardware and services. .

• Biokin’s traditional chemical drug and TCM businesses would continue to shrink and their valuation contribution can be negligible. The collaboration agreement for BL-B01D1 with BMS changes the outlook of Biokin.
• The clinical data of BL-B01D1 look good so far, but the R&D failure risk of BL-B01D1 is not low. It is uncertain if BL-B01D1 would finally be druggable.
• Biokin is overvalued and there is big bubble in valuation. If BL-B01D1 fails in R&D or its clinical data fail to meet high expectation, Biokin’s market value will plummet.

• QuantaSing Group Limited (QSG) is a leading provider of “lifestyle solutions” (i.e., high-demand products and services) catering to middle-aged (45-64 years old) and elderly (65+) individuals, also known as the “silver” demographic, in China.
• The company’s legacy education business offers online courses across recreation and leisure, skills upgrading, and financial literacy programs.
• In addition to QuantaSing’s online education platform focused on individuals, the company provides marketing services to corporate enterprises.

• Bloomberg reported that KKR has made a non-binding, preliminary approach to taking ASM Pacific Technology (522 HK) private. ASMPT has been the subject of takeover rumours in the past.
• The trading patterns of the substantial shareholders suggest a willingness to exit. However, past privatisation rumours suggest issues with the offeror matching key shareholders’ price expectations. 
• A binding proposal is unlikely as the timing would be viewed as opportunistic, with the recent market rally eroding a potential takeover premium and ASMPT’s premium multiple compared to peers.

• Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
• The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.   
• Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management. 

• The second PE rumoured interest in ASMPT in 18 months, with KKR circling.
• Semiconductor M&A has surged in 2024 YTD with a 33% increase in deal activity compared to 2023.
• ASM’s leadership in TCB, potential growth within HBM, expansion at TSM and enabling the Nvidia Blackwell platform are all reasons for M&A interest.

• China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO. 
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.

• Argyle Street Management (ASM), a 9.01% shareholder in China Merchants China Direct Investments (133 HK), has been (very) publicly angling for change in this closed-end fund. Here is their website.
• The core issue is CMCDI’s P/NAV ratio of 0.41x compared to closed-end fund peers of 0.8x-0.9x. 
• CMCDI has finally responded to ASM’s overtures with the prospect of a share buyback and a special dividend. But details are thin on the ground. 

• Reportedly – Bloomberg – KKR has made a non-binding proposal for ASM Pacific Technology (522 HK), the world’s leading back-end semiconductor production equipment supplier. 
• ASMPT’s largest shareholder, ASM International Nv (ASM NA), with 25%, has been the focus of activists for some time to sell its stake. 
• This bid has all the hallmarks of the approach (also cited by Bloomberg) by PAG last year. Which came to nought. From a regulatory standpoint, I can’t see this happening.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
• We do not expect any changes for the HSTECH index in December 2024. However, we expect there to be capping flows of US$1,079mn one-way.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in December 2024.
• We see two ADDs/DELs – the same names we had in our last insight. At present, we expect US$474mn capping flows one-way but this can change by early-December 2024.

• China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and provided our initial thoughts on valuations. In this note, we will relook at valuations post its PHIP updates.

• Nongfu Spring is able to take a price war to grab market share,but the strategy of CR Beverage forced to cut prices may not work,making its profit margin further decline.
• CR Beverage’s business model is “single business + scale expansion”, worse than “multi-category structure + new product incubation”.Future performance growth may inevitably slow down if without the second growth curve.
• Whether in terms of product/revenue structure, profitability, or sustainability of growth momentum, CR Beverage isn’t as good as Nongfu Spring. Valuation of CR Beverage should be lower than Nongfu Spring.

• The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
• We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
• If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

• PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
• There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
• There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

• China Dongxiang (3818 HK) stands on a discount of 82.1% to NAV after factoring in the recent market rally, not limiting to its Alibaba Group Holding (9988 HK) holdings.
• Its listed equities may have gained Rmb314m, but the HK$41m market capitalisation growth has not reflected this. The gains on its unlisted investments have not been included yet.  
• CNDX is now more likely to have a positive swing in the bottom line in FY25. Its tiny sportswear business has also witnessed a sequential moderation in sales decline. 

In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in September 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan.

In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on developments in the Asian corporate USD bond market.

• Considering 23H1 high base, it can be understood that 24H1 achieved a low single-digit growth. If excluding gain on disposal of subsidiaries, net profit in 24H1 would have negative growth.
• Mainland China contributed about 90% of total revenue, but an imminent risk is VBP, which will pose a challenge to the pricing autonomy of Tong Ren Tang’s OTC TCM drugs. 
• After absorbing the high base impact of 2023 this year, performance growth would return to double digits in 2025. Tong Ren Tang is undervalued. Reasonable valuation is P/E of 15.

• UMP Healthcare (722 HK) reported a tepid FY24 owing to weak sentiment in HK. Revenues were up 3% YoY; profits were down 27% YoY ( adj profits -34% YoY). 
• The environment in HK is gradually improving, and we believe there is a steady recovery on the horizon for the company.
• The stock trades at 7x FY25 PE and more than 58% of its market cap in net cash, with a yield trending towards 9%. 

• Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
• It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. 
• But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• China announced game approval for the September batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening.
• Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

• Midea debuted on HKEx on 17th September and shares last closed at HK$74.25 per share, up by about 35% compared to final HK offer price of HK$54.80 apiece.
• We previously suggested that Midea’s HK offering was attractive as HK shares were priced at a 25% discount to its A-shares, and was at a discount to Haier Smart Homes.
• The PBOC announced several measures to revive the housing market in the country which contributed to the recent rally in the China home appliance sector.

• Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
• The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
• We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

• In this insight we compare Hive Box to InPost, a smart locker specialist
• The firms play in different geographies, making apples:apples comps tough
• In the absence of better comps, comparing Hive Box to InPost still useful

• 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: Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP). 

• Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
• Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
• Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.

• The medical insurance statistics reflected that medical insurance funds are facing increasing pressure. If income/expenditure maintain average growth rates in recent years, there would be a deficit state in 2024.
• Due to increasing pressure on medical insurance fund, the entire process of innovative drug evaluation/NRDL negotiation this year will be more strictly enforced, but Hansoh (3692 HK) is an exception.
• For Henlius’ privatization, completing Pre-Conditions in 24Q4 looks tight. Considering Chinese New Year holiday, the privatization may not be completed until at least mid-to-late February 2025.The deal will get up.

• SOUTHBOUND was a net buyer this week. But who cares. They actually net sold US$2bn of everything which was not Alibaba Group Holding (9988 HK). 
• Bigger news, of course, was China’s “Bazooka” which LOOKS exciting. Stocks are up 15-20% in four days. Lots of BIG numbers are being thrown around. Not everything is “real money.”
• It takes a little sleuthing to figure out where the real money is. For that, I suggest reading China’s [Maybe] Biggish [Quasi?] Bazooka and more below.

• The Chinese drinking water and beverage maker, China Resources Beverage (CRB HK) has filed for an IPO on the HKEx to raise around US$1.0bn.
• The company’s operations are heavily concentrated towards drinking water products where the market competition is intensifying leading into a price war.
• CR Beverage’s margins are inferior compared to peer Nongfu Spring (9633 HK) who has diversified into other beverage products from drinking water to grow its financials.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Despite weak consumer spending in China, there are a few bright spots—an example is Pop Mart International Group (9992 HK)’s strong sales growth partly driven by the “red lipstick effect.”
• Miniso (MNSO US)’s stock plunged early last week but quickly recovered, reinforcing our view that its deal with Yonghui Superstores Co., (601933 CH) has some promise.

• Temu as a subsidiary of PDD becomes the second largest global e-commerce website.
• Meituan merges departments into fewer business units to cut expenses further.
• Mercedes-Benz left the joint venture with BYD, as its high end products are not as popular as Tesla models.

• China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
• Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
• While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.

• The weak business, social entertainment, become insignificant in recent quarters.
• All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
• We set an upside of 20% and a price target of US$14.80 for the end of 2025.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front,  it hasn’t been this busy for a while, with deals live in Japan and Korea, and possible launches in Hong Kong and India as well.
• On the placements front, there were a few China ADR blocks and other placements across the region.

• NWD reported HKD20bn loss attributable to shareholders.  There is no dividend declared.  However, we view this as kitchen sink.  The stock rallied 22% on Friday
• CEO Adrian Cheng stepped down and COO Eric Ma, former Secretary for Development for HK, is the new CEO.  This represents a shift from family business to professional management
• As Fed initiated new rate cut cycle, NWD will benefit most given high gearing.  With macro backdrop in U.S. and China, NWD is the Best stock to buy now

• Sun Art Retail (6808 HK) entered a trading halt under the Code on Takeovers and Mergers. Bloomberg suggests Alibaba Group Holding (BABA US)’s stake is attracting preliminary interest from PE.
• Alibaba built its 78.70% stake through two purchases in 2017 (HK$6.50) and 2021 (HK$8.10). An exit would align with the strategy to focus on the core business segments. 
• The recent Miniso-Yonghui transaction could have prompted PE to act. An offer at book value would imply HK$2.50, a 40% premium to the last close price. 

• Outbound & domestic travel activity continued to recover nicely in August
• Initial reports suggest Mid-Autumn Festival travel activity was solid, too
• After recent surge, we’ve cut Trip.com to HOLD; check out airlines instead

• Alibaba Group Holding (9988 HK)-backed hypermarket play Sun Art Retail (6808) is currently suspended pursuant to the Takeovers Code.
• Reportedly, SASAC-backed COFCO Group may acquire Alibaba’s 78.7% stake. Sun Art’s shares are up 45% since the middle of the month.
• Alibaba exiting – if true – follows JD.com (9618 HK) (and DFI Retail Group Holdings (DFI SP)) selling their respective stakes in Yonghui Superstores Co., (601933 CH) earlier this week.

• LFX is a heritage jewelry retailer with almost 180 years of history, traded on the Shanghai Stock Exchange
• A shares trade at around 14-15x TTM earnings with a 3% yield, while B shares trade at a significant discount of 5x TTM earnings and a 7% yield
• Opportunity for investors to own stake in a growing business with strong returns on capital and conservative management at a discounted price, due to lack of attention to the B share class.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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
• Continuum Green Energy

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. Biocon Ltd
2. Yankuang Energy Group
3. Wynn Macau Ltd
4. Rakuten
5. China Jinmao Holdings

and more…

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. Biocon Ltd
2. Yankuang Energy Group
3. Wynn Macau Ltd
4. Rakuten
5. China Jinmao Holdings

and more…

The Asia Trade Book for September 2024 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.

• I am quite sick so I will keep it short.
• I am closing Lufax (LU) here and would at least take something off the table for JD holdings (JD) 
• Honestly Lufax business is too much of a black box, and the forward PE multiple isn’t low enough anymore for my taste.

• Hong Kong is now the top-performing major world market this year.  With a large valuation disparity, both Hong Kong’s and China’s markets have more upside potential.
• Haidilao International Holding (6862 HK) and Anta Sports Products (2020 HK) are benefiting from the improvement in consumer sentiment with government stimulus targeting housing payments and consumption.
• Citic Securities (H) (6030 HK) surged in anticipation of increased market trading and IPOs.  Industry consolidation is also part of the improved sentiment.

In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in August 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan.

In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on developments in the Asian corporate USD bond market.

New World Development’s (NWD) FY 2023-24 results were weak, but in line with expectations as flagged by the company’s profit warning earlier in September. We expect the company’s revenue and EBITDA to improve in FY 2024-25, supported by new project launches in Hong Kong as well as contributions from new K11 commercial assets in Hong Kong and Mainland China.

While NWD has continued to reduce net debt, leverage weakened on account of the weaker earnings and smaller asset base (due to disposals). Cash/ST Debt is inadequate, though we believe the company’s liquidity is manageable due to its continued access to financing. In particular, we note positively NWD’s receipt of a HKD 1 bn unsecured loan, as well as its ability to tap the USD bond market in August 2024.

The resignation of Adrian Cheng as NWD’s CEO (as well as from the Boards of NWD’s sister companies) is surprising in our view, though we believe the impact is credit neutral.

We move to “Buy” from “Hold” on the NWDEVL notes, as we view the yields as attractive.

• On Tuesday, China announced fresh stimulus measures targeting the stock market and property sector.
• The PBoC reduced the main policy rate and cut the RRR, signaling that further cuts were on the cards for later this year.
• Further stimulus measures were announced today ahead of the Golden Week holiday. The discounts of Naspers and Prosus have rallied on the news, we see room for further upside.

• This is a short follow-up on HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 
• To make the list more comprehensive, we added JNBY Design Ltd (3306 HK), which trades at 8x PE, has a 9% dividend yield, and is net cash.
• We also have updates from Crystal International’s (2232 HK) interim report, which has a very positive future outlook. 

• 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 include: Dongyue Group (189 HK), C&D International Investment (1908 HK), and China Aoyuan Property (3883 HK).

• China’s securities industry is under a wave of consolidation. China International Capital Corporation (3908 HK) is interesting given its leadership in the investment banking business.
• A combination with China Galaxy Securities (H) (6881 HK) may bring synergy, given their different focuses. This will create the 3rd largest securities house in China. 
• Even without a merger, CICC also looks attractive with the US interest rate trending down. It is best set to gain upon the revival of the Hong Kong IPO market. 

• Evidently the influence of a younger hip third-generation tycoon-scion was not the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
• As widely expected, Adrian Cheng is stepping down as NWD’s CEO, to be replaced by Eric Ma,  Hong Kong’s former secretary for development.
• NWD will also sell the rights to provide property management services under the K11 brand to Adrian; and potentially sell its stake in Kai Tak Sports Park to its parent.

• Taste Gourmet (8371 HK) will report its H1 FY25 earnings in early November. The company isn’t reporting quarterly earnings because GEM board stocks are no longer required to do so. 
• We expect revenue and profit growth of 22% %/20% YoY, as the average number of HK restaurants has increased from 45 to 54, and most have ramped up. 
• Trading at 4.5x PE with a 12% dividend yield, 27% of the market cap in cash and a mainboard listing on the horizon there abundant catalysts for the future. 

• The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.
• The situation and prospects of China’s perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.
• Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China’s domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.

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.

• New World Development

• Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
• The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
• Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.

• Xingda International (1899 HK) has disclosed a voluntary conditional offer from Mr Liu Jinlan (Chairman) at HK$1.30 per share, which aligns with the last close price. 
• The offer is conditional on the offeror and concert parties representing more than 50% of voting rights. The offeror and concert parties represent 37.03% of voting rights.  
• The offer is a reaction to Mr Zhao Yue’s “hostile” emergence as a substantial shareholder. It is unattractive and will require a bump to satisfy the minimum acceptance condition.   

• After tyre component manufacturer Xingda International (1899 HK) was suspended recently pursuant to the Takeovers Code, an Offer seemed more likely, not another Partial Offer. 
• On cue, Liu Jinlan, chairman and executive director, plus concert parties (collectively holding 37.03%), have tabled a voluntary conditional Offer (50% acceptance hurdle). But the price? A surprising zero-premium HK$1.30/share
• However, this Offer is a pre-emptive strike against former employee Yue Zhao, who holds 9.24%; and was recently appointed ED and vice-chairman of Shougang Concord (103 HK), Xingda’s major competitor.

• ADD slapped on the US, the EU, the UK, and Singapore imports
• ADD probe initiated against Canada, Japan and India
• Russia to be a major beneficiary of the measures

• MINISO‘s  acquisition of a 29.4% stake in the loss-making supermarket chain Yonghui  for USD 890 million has been viewed negatively by investors, leading to a sharp decline in Miniso’s stock.
• The deal’s size, combined with Yonghui Superstores (601933 CH) unprofitable track record and   MINISO(9896 HK) ‘s unexpected move into the low-margin, highly competitive supermarket space, has likely fueled investor concerns.
• However, we believe the acquisition provides Miniso with a strategic opportunity for growth and diversification to a sector that remains vital in the offline retail landscape at undemanding valuations.  

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.

• Samvardhana Motherson International Ltd
• Wynn Macau Ltd
• Yankuang Energy Group

• The imagination brought to the market by Kelun’s traditional businesses (infusion business, antibiotics and bulk pharmaceutical chemicals, generic drugs) is not high. So, the only highlight is Kelun-bio’s ADC pipeline.
• Considering that Kelun has lost pricing power due to VBP, and both Chuanning and Kelun bio have been spun off and listed independently, Kelun’s valuation will not be too high.
• Our forecast is net profit attributable to shareholders in 2024-2026 is in the range of RMB3-5 billion. Reasonable market value is RMB30-50 billion. Subsidiary Kelun Bio is a better bet.

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.

• Meituan