![](https://wp-static.smartkarma.com/../assets/uploaded/2022/06/ChinaGclPolyEnergyHoldingsLimitedMeituanJDHealthLepuBiopharmaChinaGasHoldingsBosidengInternationalHo.jpg)
In today’s briefing:
- GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
- Meituan Push into Sell Resistance
- JD Health (6618.HK) – Logic Change Due to the New Policy?
- Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing
- China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt
- Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic
- Morning Views Asia: China South City, HPCL-Mittal Energy Ltd
GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
- After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
- We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
- Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.
Meituan Push into Sell Resistance
- Meituan is starting to show waning upside momentum as it near key resistance at 220/230 (sell or short zone) ahead of a harder pullback cycle that will be choppy initially.
- Meituan has outperformed its peer group but due for a pullback. Price and RSI rising wedges are maturing and nearing a bearish inflection point to short (watch poor buy volume).
- Tactical rally window in mid July with a better rally cycle slated for August head of a negative September.
JD Health (6618.HK) – Logic Change Due to the New Policy?
- The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.
- Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.
- As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.
Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing
- Lepu Biopharma (2157 HK) has filed NDA for its lead drug candidate pucotenlimab (HX008) for two indications in China, having a combined estimated market opportunity of RMB8 billion by 2030.
- Overcrowded PD-1 mAb drugs market in China, with 10 marketed drugs, may limit the growth potential of pucotenlimab. However, pucotenlimab has better efficacy than existing drugs.
- Lepu’s other core assets are also progressing and the company has sufficient cash to fund its R&D and commercialization initiatives.
China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt
- We continued to be cautious on China Gas Holdings (384 HK) given the challenges faced. It guided for a flat dollar margin in FY23 but we think this is optimistic.
- Connection fees are likely to stay under pressure after a 42.1% decline in FY22. It only projects 2.6-2.9m new residential connections for FY23, compared with 2.9m in FY22.
- Although China Gas is now the cheapest Hong Kong-listed China gas utilities company, it takes time to regain market confidence. At similar valuation, Kunlun Energy (135 HK) looks more interesting.
Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic
- The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion.
- Management expects double-digit profit growth for FY23 as it pursues targeted “2+13” expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
- Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified.
Morning Views Asia: China South City, HPCL-Mittal Energy Ltd
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.
Before it’s here, it’s on Smartkarma