China: AKM Industrial, Yashili International Holdings, Meituan, Akeso Biopharma Inc, Shangri-La Asia, JD.com Inc., Shimao Property Holdings and more

• AKM Industrial (1639 HK)’s privatisation offer from Alpha Luck and AKM Meadville of HK$1.8345 consists of a base offer (HK$1.82) and a final dividend (HK1.45 cents). 
• Approval from the State Administration of Foreign Exchange is the remaining pre-condition. The Court hearing of the petition for the sanction of the scheme is set for 19 July.
• At last close and for a July end effective date, the gross and annualised spread to the total offer of HK$1.8345 is 3.6% and 11.2%, respectively.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only). 
• This week, the highest gross spreads are Yashili International Holdings (1230 HK), Razer Inc (1337 HK), 51 Job Inc Adr (JOBS US), Sezzle Inc (SZL AU)
• Lowest gross spreads CIMIC Group Ltd (CIM AU), Z Energy Ltd (ZEL NZ), China Logistics Property Holdings (1589 HK), Virtus Health (VRT AU), Mapletree North Asia Commercial Trust (MAGIC SP)     

• Meituan’s total revenue continued to rise strongly by 31% in 4Q21.
• Initiatives businesses are losing money, but two of them are in leading positions.
• We believe the stock has a 20% upside for this year.

• Akeso has a very high starting point, and was regarded as the leader of domestic second-tier biotech companies. However, in current unfavorable market sentiment, it’s necessary to re-examine the Company.
• In Akeso’s pipeline, there are some valuable and differentiated candidates, especially in the field of bispecific antibodies. Its R&D capability is also well recognized.
• However, due to the rich pipeline, related clinical trials will drain money fast. So, investors are advised to be cautious until Akeso has ensured sustainable and stable cash flow.

• There is a strong recovery in Shangri-La Asia (69 HK) in 2H21 as its losses narrowed 36.4% HoH and by 57.5% YoY – hotels and investment properties are primary drivers.
• 1Q22 momentum is solid with occupancy outside of Hong Kong and mainland China saw good YoY rebound. In FY21, room rates in France, Australia and UK have surpassed 2018 levels.
• Refinancing for FY22 has almost completed, implying minimal liquidity risks. Trading at 76% discount to adjusted NAV of HK$25.44, the stock is way too cheap.

• JD.com (9618) HK denotes formidable resistance  at 260 that will induce a downside re test toward the low zone. 
• High sell volumes on the decline followed by weak buy volumes on the recent rise makes for a vulnerable rise with risk of a hard giveback.
• Low re test/new low sets up a buy for a rally to 310/350 in Q3/Q4. Bullish macro A-B-C pullback sequence stands out.

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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