China

• Alibaba Group (9988 HK)’s 1QFY23 results were above consensus but it was still quite disappointing with revenue and OP declining 0.1% and 19.1% YoY respectively.
• Withholding the disclosure of active buyers, which Alibaba was proudly speaking of in the previous quarter, is a tell-tale sign that the business is undergoing some serious trouble.
• With expectations of 9.4% YoY OP growth in the next 3-quarters and 42% YoY OP growth in FY24, we think consensus is optimistic from 2QFY23 and bound for a correction.

• Lifestyle International Holdings (1212 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• Thomas Lau is the largest shareholder with 74.97%, as he has been since April 2019.
• A possible Offer ahead of a (potentially) improving retail outlook and the imminent opening of its Kai Tak project? 

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

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. Gajah Tunggal
2. China Hongqiao
3. Logan Property Holdings
4. Sino-Ocean Group
5. Softbank Group

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. Gajah Tunggal
2. China Hongqiao
3. Logan Property Holdings
4. Sino-Ocean Group
5. Softbank Group

and more…

• SJM Holdings (880 HK) announced earnings on Monday and a HK$3bn Rights Issue last night designed to inject capital into Macau gaming licensee SJM Resorts. 
• An increase in share capital is required to pre-qualify for then tender process where the Macau Govt would allocate a 10-year gaming concession starting 1 Jan 2023. 
• 54.7% SJM Holder/Parent Sociedade de Turismo e Diversões de Macau (STDM) had previously extended a loan to SJM designed to allow SJM to inject capital to SJM Resorts.

• Alibaba’s revenue stopped growing for the first time on record.
• We still believe the revenue growth rate will recover in the December quarter.
• We believe the stock price will have at least an upside of 29% after a significant plunge.

• AMTD Digital’s stock price has started to sink and now there are news that the Cheung Kong (CK) Group (HK) wants to sell its stake in AMTD Group Co.
• The discussion of the CK Group disposing its stake in AMTD Group altogether is likely to further negatively impact AMTD Digital’s share price.
• Li Ka-Shing and his family probably want to distance themselves from all the unnecessary media attention given to AMTD Digital (HKD US) and AMTD Idea Group (AMTD US). 

• Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
• GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
• In this note, we talk about the not-so-positive aspects of the deal.

• Shenzhou Intl Group Holdings (2313 HK) is a high probability deletion in September, while JD Health (6618 HK) is currently the highest ranked non-constituent stock.
• There are a couple of other stocks that are close to the inclusion/exclusion thresholds and price changes over the next few weeks will determine if there are any more changes.
• Short interest on JD Health (6618 HK) is high in terms of days to cover and as a percentage of free float. Covering could take the stock higher.

• Chongqing Hongjiu Fruit (CHF HK), a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.
• The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.
• Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.

• The Hong Kong Indices have been much weaker than Taiwan & China due to liquidity and open capital account.
• It is a canary for global indices and should be analyzed accordingly.
• There is no change in views of real estate and technology sector stocks mentioned in previous updates on Hang Seng constituents.

• Biocytogen, a China-based pre-clinical research and biopharmaceutical company, will pre-market its IPO to raise USD 25m, which is a significant downsize from the previous USD 300m fundraising target.
• In our previous note, we covered the company’s fundamentals and compared its business with its peers.
• We will provide an update on its latest prospectus and its peer performance in this note.

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.

• Adaro Minerals
• China Hongqiao
• Gajah Tunggal
• Sino-Ocean Service

• Both the postoperative pain management and the expansive application of anesthetics in various fields would increase the market demand for ropivacaine.
• Cali Biosciences (CALI HK)’s core product, the ropivacaine long-acting analgesic injection drug candidate CPL-01, would have to face the challenges of fierce competition, uncertain market acceptance, and negative policy impact.
• Together with other concerns such as slow development progress, “not rich enough” pipeline and potential liquidity risk, we are conservative about Cali’s outlook at the current stage.  

• After a disastrous April and May due to lockdowns resulting in >-50% SSSGs, the company is seeing the situation stabilize in June and July.
• We remain cautious on H1 2023, as margins and revenue will likely decline, with gross margins likely to drop 300-400 bps and revenues down 10-15% YoY.
• Expect a generous dividend with over a 100% payout. Since >50% of the market cap is in cash, a special dividend could also be expected. 

• Community group buying is starting to face multiple headwinds from funding shortages to excessive price competition.
• Even though Pinduoduo (PDD US) is yet to announce any job cuts or scaling back of operations, we think the operating environment shouldn’t be much different from competitors.
• With QoQ revenue growth at a standstill and sales and marketing cost cutting almost fully exhausted, we think the current consensus expectations are too optimistic and bound for a correction.

• Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
• Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
• It appears that CHJF had benefited from a slight increase in margins of certain core fruit products. However, we continue to remain doubtful of its long-term prospects. 

• EVOC Intelligent Technology Company Limited H (2308 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 1 August.
• It is likely that after two failed attempts, Mr Chen Zhi Lie, the ultimate controlling shareholder, will try a third time to privatise EVOC.
• The previous offer of HK$1.50 per H Share in 2020 marginally missed the 90% minimum acceptance condition. Expect a similar structure with a likely slightly higher offer price.  

• China’s gaming regulator has granted publishing licenses to 69 online games, which excludes Tencent (700 HK) and NetEase (9999 HK) again for the fourth time.
• Though 9-month long game approval freeze was lifted in April, both Tencent and NetEase failed to make it into the approved list of more than 200 titles so far.
• Chinese gaming companies have been seeking for overseas expansion as domestic gaming market is struggling with ban on new approvals and new restrictions.

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.

• Bright Scholar Education
• Times China
• UPL Ltd
• Yuexiu Property

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.

• Bright Scholar Education
• Times China
• UPL Ltd
• Yuexiu Property

• Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
• GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
• In this note, we talk about the positive aspects of the deal.

• China Communications Construction (1800 HK) sealed Rmb371bn of new contract in 2Q22, or a 35.2% YoY growth, representing a sharp acceleration from just 4.9% in 1Q22. 
• We estimate backlog is now around Rmb3.5trn and this equals to 5.2x FY21 revenue. This should have improved from 4.6x at end-FY21 and provides CCCC a secured pipeline.
• CCCC is well positioned to gain more contracts in 2H22 as driven by the local government special purpose bonds issue. Such issue reached Rmb1.5trn, or a 166.1% growth, in Jun.

• The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current ‘headcount test’.
• Those companies incorporated in the Cayman Islands, and subject to a members’ Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.
• This development clarifies previous uncertainty/ambiguity which could arise, with ‘take private’ deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.

• HSI remains a top short bet from the C wave dual top at 22,500, the break below wedge support and now the bear triangulation support breach targets new lows.
• A50 weakness is weighing on HK. HSI clear break down will lead the upcoming risk off cycle in Asia.
• We like adding to a short on upticks with near resistance at 20,500. 19,700 is the pivot support to break below that will open the way to 18,200.

• 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. However, such disclosures are by no means an absolute. 
• These insights also flag those companies where shares have been pledged, both recently and ongoing.

• Blue Orca issued a damning short-seller report on Miniso (MNSO US) on the 25th of July 2022, stating that the company’s asset-light and high-margin franchise business is mostly a lie.
• Miniso responded rather quickly but its response lacks evidence and does not do anything to contradict the facts presented by the short seller.
• Thus, it is Miniso’s word against Blue Ocra’s facts and it is quite obvious which side investors should take.

• China just announced game approval for August batch. More games were approved in August compared to July and June.
• Pace of China game approval continued to pick up albeit at a much slower pace than pre-tightening.
• Both Tencent and Netease will be under increasing pressure as the duo continue to score zero in August, making it the fourth time with no games approved since resumption . 

• China Tourism Group Duty Free Corporation Limited (CDF) now aims to raise US$2-3bn in its H-share listing in Hong Kong.
• As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
• In this note, we will talk about the recent updates from its revised filings and revisit valuations.

• It seems that Mr Market was not satisfactory with WuXi AppTec’s 2022H1 performance. If excluding COVID-19 projects (which are regarded as a one-time increment), the performance growth was not high.
• Considering that the CXO preliminary bid winning has declined largely in the US, domestic CXO would not begin to gradually reflect the slowdown of newly added orders until Q4.
• We are concerned about WuXi AppTec’s performance in 2023. As an old generation CXO, it’s hard to achieve V-shaped rebound. So, 2022 is a good time to offload the Company.

• Kingsoft Cloud (KC US) is the largest independent cloud service provider in China in terms of revenue in 2021 and its clientele includes the likes of ByteDance and Xiaomi.
• KC is listed in NASDAQ and has filed for a dual primary listing on HKEx and has not disclosed the amount that it plans to raise from the stock issuance.
• We are broadly positive on the company’s growth prospects and discuss the details below.

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.

• Pan Brothers
• Sino-Ocean Service
• Vedanta Resources

• Chipotle Mexican Grill has been in the news for an amazing rebound in its stock price after delivering a robust set of results surpassing Wall Street expectations in terms of earnings.
• The in-restaurant sales increased while digital sales were also up and the management added 51 new restaurants in 42 locations.
• We provide the stock of Chipotle Mexican Grill with a ‘Hold’ rating with a revision in the target price.

• SenseTime Group (20 HK) stock has been crushed following the lock-up expiry at the end of June with the stock now trading 40% below the IPO price.
• The company has recently bought back stock providing some support. More importantly, SenseTime Group (20 HK) was included in Southbound Stock Connect on 29 July.
• We expect a big increase in the free float adjustment factor (FAF) in the Hang Seng Indexes at the September rebalance that will provide some much needed passive inflows.

• The approval by Yashili International Holdings (1230 HK) independent shareholders of the proposed transactions at the 16 August EGM is a pre-condition to the HK$1.20 per share privatisation proposal.
• Shareholders will pass the ordinary resolutions at the EGM so that they can vote on the attractive privatisation proposal. The key risk is timing around the satisfaction of the pre-conditions.
• China Mengniu Dairy Co (2319 HK)’s offer remains attractive in the context of multiples and historical share prices. At the last close, the gross spread to the offer is 10.1%.

• Several news media outlets reported that Meituan (3690 HK)  Ele.me and other food delivery platforms were summoned over food safety problems as well as price war among them.
• Food delivery platforms are ordered to strictly follow food safety management responsibilities and also prevent price wars that disrupt the market order.
• Though the anti-trust fine of RMB3.44bn was thought to be the end of an almost year long regulatory crackdown on Meituan, it seems that this is far from over.

• After a prolonged delay, the Cayman Islands legislative gazette was published on 29 July, which stated that the amended Cayman Islands Act would come into force on 31 August. 
• The Act will remove the headcount test for schemes, eliminating a layer of uncertainty for controlling shareholders wishing to privatise listed Cayman-incorporated companies.
• In light of this development, we look at current active privatisations, past failed privatisations and rumoured transactions which stand to gain a new lease of life from this Act.

• Tencent and Huawei launched beta tests for car-hailing platform almost simultaneously.
• Alibaba begins to disconnect Ant Group to avoid implicating each other.
• Missfresh dismissed almost all employees in its headquarters in Beijing.

• A “Long China Three Gorges Renewables (600905 CH), short Huaneng Power Intl Inc-A (600011 CH)” pair trade should generate good return in China’s utilities sector given the current industry dynamics.
• The key supporting factors are: CTGR has pure exposure to renewable, faster capacity growth and a stronger balance sheet. They should underpin better earnings quality and outlook relative to HPI.
• CTGR trades on higher PER and P/B multiples, but these should not be hurdles as they are just reflection of more promising prospects. We expect CTGR’s YTD outperformance to continue.

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

• Evergrande
• China Vanke
• Indika Energy
• Japfa Comfeed Indonesia
• China Datang Corp Renewable Power

• Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
• Lepu’s expansion mainly relies on continuous M&A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
• Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&D,which is good for sustainable long-term growth. Such business transformation takes time.

• Given recent corporate events in S-REIT land, there could be some considerable money to be allocated to the sector near-term
• Alibaba (ADR) (BABA US) / Alibaba Group (9988 HK) issued an announcement it would pursue a primary listing on the HKEX. This will make BABA Southbound-eligible
• At 0.81x newly-lowered book value, Australian Unity Office Fund (AOF AU) is trading at a relatively low multiple. 

• Chinese banks are out of favour given the China GDP growth concerns and property sector headwinds; yet we see selective opportunities in the stronger, higher return banks
• Our core picks are unchanged, with the core holding being CCB, and also PSBC; both have healthy credit quality and coverage, double digit ROEs and are attractive on valuations
• We remain negative on China Minsheng due to its low ROE, poor delinquency and NPL coverage, and its relatively high exposures to real estate relative to its peers

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• There were no major IPO launches during the week. Soosan will list early next week.
• There were a number of placements/blocks across the region, including GDR launches for Swiss listing.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

• Cryofocus Medtech is a China based medical device company with a focus on cryoablation. The company is look to raise $50-100m to list in Hong Kong.
• We take a quick look at Cryofocus’ key products, including AF cryoablation system and bladder cryoablation system.
• We think its products are not impressive. Neither does its investor line-ups and management team impress us much.

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. Lifestyle International Holdings
2. Vedanta Resources
3. Tata Motors Ltd
4. China South City
5. Seazen (Formerly Future Land)

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. Lifestyle International Holdings
2. Vedanta Resources
3. Tata Motors Ltd
4. China South City
5. Seazen (Formerly Future Land)

and more…

• Baijiu, the most popular liquor in China, is perhaps one of the most addictive and profitable alcoholic beverages in this planet.
• The focus of this insight is a pair trade (go long on Luzhou Laojiao and go short on Jiangsu Yanghe Brewery).
• The major reasons for this pair trade include higher sales growth rate and ROE for Luzhou Laojiao as well as capitalize on the recent share weakness of Luzhou vs Jiangsu.

• Pacific Basin Shipping (2343 HK) had an impressive 1H22 with 204.2% YoY growth in underlying profit. Overall dividend payout ratio of 75% is also ahead of expectations.
• It covered 58% Handysize days and 64% for Supramax for 2H22, though rates are lower HoH as spot market retreated. However, low costs mean it’s still enjoying very fat margin.  
• Its 0.96x P/B for FY22 and 0.85x for FY23 look well justified by ROEs of 40.4% and 25.6%. Strong profitability and cash flow will allow for sustained high dividend yield.

• Growatt Technology (1833969D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO. 
• Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption and energy digitalization. 
• The firm has seen strong revenue growth on the backdrop of global PV inverter and energy storage industry tailwinds despite the effects of COVID-19.

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.

• KWG Living Group
• Lifestyle International Holdings
• Vedanta Resources

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.

• KWG Living Group
• Lifestyle International Holdings
• Vedanta Resources

• Alibaba Group (9988 HK) announced yesterday that it is seeking to change its listing status in Hong Kong to a primary listing before the end of 2022.
• With the risk of de-listing from the US, a dual-primary-listing in Hong Kong would allow Alibaba (ADR) (BABA US) to smoothly transition all its trading from the US to Hong Kong.
• In addition, the company could possibly use this opportunity to raise more money from capital markets as it is desperately seeking funding for its loss making ventures.

• Bloomberg reported that MBK Partners is in talks to team up with a partner on a joint offer for 21Vianet Group (VNET US). Considerations are at a preliminary stage.
• A potential bid would compete against The Hina Group and Industrial Bank’s $8.00 per ADS offer. The Board has not provided an update on its stance on this offer.   
• Takeover interest is unsurprisingly due to VNET’s depressed share price, unchanged FY22 guidance and ongoing data centre M&A activity.     

We view Country Garden as “Medium Risk” on the LARA scale. The company’s projects are geographically spread across China, albeit concentrated in Tier 3 and 4 cities. Demand in lower-tier cities is weak, amid poor market sentiment and strict COVID-19 related measures. Positively, Country Garden has a broad debt maturity profile and access to onshore markets.

Our fundamental Credit Bias on Country Garden is “Negative”, given expectations of a significant decline in contracted sales and weakening credit metrics amid challenging market conditions. The company has substantial exposure to low-tier cities with weak economic fundamentals. Recovery in these cities will likely be much slower than in high-tier cities, especially with pandemic-related disruptions that would further dampen market sentiment. That said, we believe Country Garden maintains a good cash collection rate, has an adequate liquidity buffer and enjoys good access to onshore funding.

Controversies are “Material”, with the escrow account for Country Garden’s Fuzhou projects having been frozen by local authorities due to customer complaints about poor quality. The matter has since been resolved, with the freeze being lifted. However, this may raise concerns over the quality of the company’s projects. In addition, escrow account freezes may impact Country Garden’s liquidity. Hence, we view the ESG Impact on Credit as “Moderately Negative”. 

• On 22nd June, China released a draft rule that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.
• Alibaba Health’s share price is down more than 10% since the announcement of the draft rule, however, third-party e-commerce platforms accounts for about 10% of Ali Health’s revenues.
• Pharmaceutical direct sales business has been generating lower GPM compared to JD Health’s direct biz, and the company’s margins have continued to deteriorate during the last 2-years.

• This is our first report on the mobile growth platform provider, Digital Turbine.
• Digital Turbine is now in an expansion mode as evident from its recent results as well as its acquisition-oriented strategy.
• However, in recent quarters, the investors of Digital Turbine have turned against various technology-focused assets, and its stock price also lost much value.

The Asia HY Trade Book for July 2022 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.

• The main logic of Micro-Tech’s performance growth is import substitution, but the Company is facing some challenges in the short term, such as centralized procurement, pandemic, inflation, etc.
• Micro-Tech will face lower-than-expected performance growth in 2022. Since the whole series of products would be covered by centralized procurement, the valuation of Micro-Tech should be lower than Mindray.
• However, there are possibilities for Micro-Tech to achieve a turnaround (with bottom-fishing opportunity) if it could make a breakthrough in internationalization and product innovation. We recommend investors follow Micro-Tech closely.

• Online game sales decreased for the first time in 1H22.
• The main problem is the unstable policy of the new game license.
• Big companies like Tencent and NetEase are seeking overseas markets.

• Digital Turbine is a major mobile growth platform provider across the globe and is operating in expansion mode as evident from its recent results as well as its acquisition-oriented strategy.
• However, in recent quarters, the investors of Digital Turbine have turned against various technology-focused assets, and its stock price also lost much value.
• Digital Turbine recently unveiled a single strategy and a unified corporate brand for its partners and clients.

• Concord Healthcare Group (CHG HK), the second largest private oncology healthcare company in China, has submitted application proof for an IPO on the HK Stock Exchange in May 2022.  
• The company has an accumulated loss of RMB1.7 billion during the last three years, with current net debt-to-capital ratio of 170.1%. Its finance cost account for 92.5% of total revenue.
• Concord has a cash balance of just RMB136 million, which makes it hard to grab the growth opportunities in China’s capital-intensive oncology healthcare services segment.

• This morning – 26 July – Alibaba (ADR) (BABA US) / Alibaba Group (9988 HK) issued an announcement it would pursue a primary listing on the HKEX.
• When Alibaba listed in NY, it was on ADRs. When it listed in HK, it was the shares underlying the ADRs but it was a quickie secondary listing.
• It will now seek a dual primary listing as others have. This will make BABA Southbound-eligible and will slightly improve BABA’s HSI funding trade prospects in future. 

• 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. However, such disclosures are by no means an absolute. 
• These insights also flags those companies where shares have been pledged, both recently and ongoing.

• China started mulling an expansion of its Stock Connect relationships in late 2021 with plans to allow GDR issuance in Switzerland and eventually Germany.
• New GDR issuance rules came into effect in February and companies started planning to issue GDRs in Switzerland in March.
• The new SIX Listing Rules went into effect 25 July. Two companies priced GDRs on 22 July and two more yesterday. US$1.5bn so far. There are 6 more near-term.

• 1H22 was a story of two halves: 1Q22 still showed record profits but 2Q22 got progressively worse. 3Q22 started weak with inventory clearance and Nvidia new GPU launch awaited.
• Even after paying a fantastic final dividend in June 2022, it is now trading below net cash on the balance sheet.  
• We estimate net cash on the balance sheet is now 9 HKD vs 7 HKD share price.

• Legend Biotech Corp (LEGN US), a non-wholly owned subsidiary of Hong Kong-listed Genscript Biotech (1548 HK), is planning to raise up to US$250m in its follow-on offering.
• The company last raised cash in Dec 2021 in a similar sized deal, which ended up doing very well after a sharp share price correction.
• In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.

• China Education Group (839 HK) has retreated 23% from recent high with no regulatory and company news. Given its secured earnings growth outlook, we see an opportunity. 
• We believe drivers are higher enrollment and tuition, further capacity growth, good progress in overseas education and light capex. There are positive developments in these aspects recently. 
• CEG may return unused share buyback funds to shareholders via dividend, suggesting a potential resumption of payout. At just 5.7x PER for FY23F, its growth prospect is undervalued.

• Plus Digital Technologies (PDT CH) is looking to raise about US$150m in its upcoming Hong Kong IPO. The deal will be run by Jefferies and Guotai Junan.
• Plus Digital Technologies provides digitalised sales and marketing and SaaS+ services to its customers to enhance their offline sales and marketing efficiency and drive their offline retail sales. 
• Its provision of services is supported by its Field Management Ecology System (FMES) platform, which contains a variety of digitalised products with different functionalities to meet customers’ various requirements.

• The disposal of generic drug segment would bring one-time cash flow. Together with the cash on hand, Sihuan Pharmaceutical Hldgs (460 HK) is undervalued based on its current market value. 
• In the context of its innovative drug segment facing long-term losses, and the decreasing profit margins of medical beauty segment due to increasing competition, Sihuan’s prospects are no brighter.
• Due to the concerns on outlook and its development mode, Sihuan’s upside potential could be lower than expected, and the share price could fluctuate largely. 

• This is our first report on diversified manufacturing services and solutions provider, Jabil Inc.
• The company has maintained a strong diversification strategy which has helped it perform despite a difficult supply chain environment and widely reported shutdowns in China.
• During the quarter, the company further collaborated with two companies, SolarEdge and Cardo Systems, to expand its supply chain.

• This is our first report on the leading global technology solutions provider to the banking and finance industry – Fidelity National Information.
• The company’s annual organic growth expectations were all exceeded with a 9% organic top-line growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.