China

• We estimate that the revenue growth will rise to 11.5% YoY in 4Q22 from 9.7% YoY in 3Q22.
• Freshippo is the store chain closest to the operation before the lockdown among all large retailers.
• We believe the stock has an upside of 27% for March 2023.

• The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.
• Recently, China Resources is rumored to be in talks to privatize Sihuan Pharmaceutical Hldgs (460 HK), but Sihuan denied it.
• Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.

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.

• Powerlong Commercial Management Holdings
• SJM Holdings

• The 1Q22 revenue/GM/OPM was US$215mn/55%/36% respectively, with revenue growing 50% YoY and -2.6% QoQ. Silergy considers its own business will grow quarter by quarter in 2022.
• Silergy expects to see ~3% revenue contribution for Automotive in 2022, which means it should grow over 3% by the end of 2022.
• Silergy’s order visibility is extended from 3 quarters to over 6~8 quarters now. Meanwhile, Silergy aims to split the share to let more retail investors to hold their shares.    

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPOs front, LIC’s lists tomorrow, while Delhivery’s bookbuild wasn’t great.
• There were no major placements this week, with even Air New Zealand failing to hold its deal price.

• There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
• The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
• Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.

• Sihuan Pharmaceutical (460 HK) has shot down rumours that it is under negotiation with potential investors in respect of privatisation.
• Reportedly SOE China Resources is in talks with Sihuan Pharma’s chairman in a deal valuing the company at US$3bn or a 114% premium to the current price. 
• The logic of a privatisation makes sense. I would not be so quick to dismiss the denial. Plus Sihuan Pharma is very cash-rich.

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.

• Polen Capital is a high-conviction growth investment manager.
• Over the first quarter of 2022, the Polen Global Emerging Markets Growth Composite Portfolio returned -14.68% gross and – 14.96% net of fees.
• The top relative and absolute detractors over the quarter included Yandex N.V.

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. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

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. China Jinmao Holdings
2. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

and more…

• JD is facing a severe logistics problem due to the lockdowns in many cities of China.
• We believe JD is trying to secure its revenue no matter how large the fulfillment expense is.
• We believe the stock has a downside of 22% for the year end 2022.

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.

• Greenland Holdings Corp
• Softbank Group

• China’s Sinosteel Corp. has struck a deal with the Cameroonian government to begin production of iron ore at a mine, becoming the latest Chinese firm to tap the valuable resource in West Africa.
• According to a company statement, Sinosteel obtained a permit to exploit the Lobé mine after signing a contract with Gabriel Dodo Ndoke, Cameroon’s minister of mines, industry and technological development
• The state-owned mining giant will invest about $700 million to develop the Lobé mine, which is estimated to have about 600 million tons of iron ore reserves

• Beijing Enterprises Water Group (371 HK) (BEW) has effectively increased its stake in Beijing Enterprises Urban Resources (3718 HK) (BEURG) after entering into Acting In Concert agreements (AIC). 
• Parties to the AICs “irrevocably and unconditionally” undertake to vote in the same manner as BEW in BEURG shareholder meetings. 
• There was no update on the timing of the MGO, which is expected to open for tendering on the 20 May. 

• China Longyuan Power (916 HK) will see accelerating earnings momentum in the rest of the year – after a weak start due to high base for YoY comparison.
• We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.
• Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.

• We think SMIC is likely to reach the high-end of 1Q22 guidance, which was US$6,259~6,368mn/36~38% respectively.
• We thick SMIC is likely to reach ~US$6,680mn/39% for revenue/GM respectively in 2Q22.
• SMIC cannot have the EUV machine because of the Wassenaar Arrangement. Therefore, SMIC has to optimize its operation and to expand 28nm and above technologies.

• Aikya Investment Management is an independent, employee-owned, investment management company that specialises in managing Emerging Markets equity portfolios.
• The strategy has returned 14.6% returns in USD terms since its inception in March 2020.
• We remain highly optimistic on the long-term prospects of Emerging Markets.

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.

• Sunac China Holdings
• Wynn Macau 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.

• Sunac China Holdings
• Wynn Macau 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.

• Adani Transmission
• Hopson Development
• Reliance Industries
• Sino-Ocean Service

• Following listing of China Conch Environment (587 HK), China Conch Venture (586 HK) is seeking a spin-off of CV Green Energy in A-share market and we view this move positively.
• Limited details are currently available, but we think CV Green Energy, which operates WTE businesses, will trade at significantly higher multiples than its Hong Kong peers. 
• Assuming CV Green Energy to hold all Conch Venture’s WTE businesses, we estimate the IPO will boost the latter’s sum-of-the-parts value by 8% or HK$2.14 per share.

• I think most (value) investors go through four stages: Stage 0: Buy stuff that goes up. Especially when a lot of people around you get rich from doing it.
• Stage 1: Invest in the future! Buy into some fancy exciting new technology that will become big some day! The Cathie Wood stage. Usually stage 1 and stage 0 go hand in hand.
• Stage 2: Buy at low PE multiples. Some are smart and skip the first two. This stage is not bad, it should lead to slight outperformance. Can be dangerous without wide diversification as a lot of them are value traps.

• The aortic product line would bring strong growth in 1-2 years. From 3 years or longer term, Endovascular’s peripheral vascular interventional devices would be the main driver for high growth.
• We don’t think the centralized procurement would be a concern for the time being. As many products are or will apply for CE Mark, the progress of internationalization is promising.
• The current valuation is very attractive. Due to the pandemic/lockdown in China and many external uncertainties, share price could go lower, but it’s still a good company to invest in.

• For Q1 2022, Aristotle Capital’s International Equity ADR Composite posted a total USD return of -9.75% gross of fees.
• The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management for institutional and advisory clients worldwide.

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.

• Japfa Comfeed Indonesia
• Melco Resorts & Entertainment
• Powerlong Commercial Management Holdings
• Road King Infrastructure

• Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
• With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
• Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

• JHBP (Genor) (6998 HK) received approval in China for its first commercial drug, GB242, a biosimilar to Remicade (infliximab). Approved indications have an addressable patient population of 10 million.
• The company is also expected to obtain marketing approval for its drug candidate for the treatment of relapsed and refractory peripheral T-cell lymphoma (PTCL) in China this year.
• In-Licensed GB491 (lerociclib) has entered in two phase 3 clinical trials for first and second-line treatments of breast cancer. NDA for GB491 is expected to be filed in 2023.

• We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
• However, due to strong R&D and technology platforms, the value of CanSino’s pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
• We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.

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 Green Energy
• Azure Power Global Ltd
• Central China Securities
• China Hongqiao
• Country Garden Holdings Co
• Jingrui Holdings
• Ronshine China Holdings
• Times China

• Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
• The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
• Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili;  yet apart from timing, which is contingent on regulatory approvals, this looks done. 

• The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
• The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
• ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

• Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  
• The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by <10% of all disinterested shareholders.
• The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).

• JCET reported revenue/GM RMB$8,138mn/10.7% in 1Q22, which grew 21.2% YoY and 0.5% QoQ.
• We expect that its growth would continue and likely reach to revenue/GM for about RMB$8,234.5mn/10.8% in 2Q22.
• Although the mainland China insists in the Zero Policy against COVID-19, the GDP growth was targeting at ~5.5% in 2022. 

• Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
• Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
• However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.