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In today’s briefing:
- Alibaba (9988 HK): Dual Primary Listing Implications
- Gotion High Tech GDR Listing – Recent GDRs Have Seen Narrowing Discounts
- GEM Co., Ltd. GDR Listing – Better Discount than Last Two and Ming Yang Has Held Up
- Pop Mart: Aggressive Overseas Expansion to Hurt Profitability
- Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out
- Pharmaron Beijing Co Ltd (3759.HK/300759.CH) – The Story May Have Changed
- Alibaba (9988 HK) Pre-Earnings: Lowest Growth, Will Recover in December Quarter, Buy
- Onewo Space-Tech Pre-IPO – The Positives – One of the Largest and Still Growing Fast
- Morning Views Asia: Honghua Group, Tata Steel Thailand
Alibaba (9988 HK): Dual Primary Listing Implications
- Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
- The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
- Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.
Gotion High Tech GDR Listing – Recent GDRs Have Seen Narrowing Discounts
- Gotion High-Tech Co Ltd (002074 CH) (GHT) is looking to raise US$1bn from its Swiss GDR listing. Bookrunners on the deal are CICC and Haitong International.
- The shares offered in GHT’s GDR offering ranges between 16.65m – 33.29m GDRs (83.24m – 166.47m A-shares), ranging the deal size between US$499m-US$1bn.
- At the top end, in terms of number of GDRs offered, the deal would represent 4.7 days of ADV on the A-share market and 9.6% of current mcap.
GEM Co., Ltd. GDR Listing – Better Discount than Last Two and Ming Yang Has Held Up
- Gem Co Ltd A (002340 CH) is looking to raise around US$245m in its Swiss GDR listing.
- Proceeds will be used mainly for overseas expansion, such as the development of the Indonesian Nickel Resource Base and development of its production base and recycling center in Europe.
- In terms of discount, relative to the most recent two deals, Keda Industrial and Ningbo Shanshan, GEM’s GDRs are offered at a more enticing 11.7-14.2% discount to its A-shares,
Pop Mart: Aggressive Overseas Expansion to Hurt Profitability
- Pop Mart’s share price has lost more than 50% YTD as resurgence of Covid in China has severely impacted the company’s operations including closure of physical stores and robo shops.
- The company also issued a profit warning last week for 1H2022 that was severely impacted by the spread of Covid-19 as well as business expansion related costs.
- We expect the company’s aggressive overseas expansion strategy to continue to impact the company’s profitability and there is further downside.
Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out
- Shenzhen Pagoda Industrial (1317437D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
- Shenzhen Pagoda Industrial (SPI) is a fruit retail operator in China. According to Frost & Sullivan, it ranked first among all fruit specialty retail operators in China in 2021.
- However, the firm operates in a highly fragmented industry with low market share of 1.0%, even as the largest player.
Pharmaron Beijing Co Ltd (3759.HK/300759.CH) – The Story May Have Changed
- Pharmaron’s share price plunged after the release of the estimate for 2022 interim results, even dragging down the entire CXO sector, which reflected the attitude of Mr Market.
- One important reason for low net profit growth is related to the development strategy – Even if Pharmaron achieves “integration”, its advantage/profit margin could largely shrink due to overcapacity/fierce competition.
- Pharmaron can only achieve V-shaped rebound by making breakthroughs in CGT CXO to boost valuations and expectations on outlook rather than pursue the strategy of “integration” as in the past.
Alibaba (9988 HK) Pre-Earnings: Lowest Growth, Will Recover in December Quarter, Buy
- We believe Alibaba’s revenue growth rate will reach historical low in 1Q23, but it will recover two quarters later.
- Alibaba’s stock price fell from HK$300 in October 2020 to HK$100 today.
- We believe Alibaba has at least an upside of 43%.
Onewo Space-Tech Pre-IPO – The Positives – One of the Largest and Still Growing Fast
- Onewo Space-Tech (OST) aims to raise around US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK).
- As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
- In this note, we will talk about the positive aspects of the deal.
Morning Views Asia: Honghua Group, Tata Steel Thailand
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.
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