China: Alibaba Group, JD Health, Smoore International, JCET Group, Times China, Country Garden Holdings Co, China SCE, Wuxi Biologics and more

• On 2nd Apr 2022, CSRC put out a draft for public comments on the revision of certain provisions which would allow easier access by overseas regulators to China ADRs audits.
• On 8th Mar 2022, Securities Exchange Commission (SEC) had added five China ADR names to its provisional list of issuers under HFCAA, which set the clock ticking for their delisting.
• In this note, we’ll talk about the latest developments and its implications.

• The YoY growth rate of product revenue accelerated in 2H21, compared to 1H21.
• In China, many cities are locked down; therefore, we believe people need online medical shopping.
• However, the stock is overvalued compared with other online and offline medical stores.

• The new draft of the e-cigarette law will crack down the domestic market.
• The revenue growth rate plunged in 2H21 despite the fact that the growth rate accelerated for the whole year 2021.
• We set a downside of 27% and a price target of HK$13.90 for 2022.

• JCET has reported 2021 annual results, and there was RMB$8.59bn/9.5% of revenue/NM percentage in 4Q21. JCET 2021 grew 6.0% QoQ and 11.5% YoY respectively.
• Despite US-China trade war, the revenue from US clients are taking 50.2% in 2021, which is growing 23% from 2020 to 2021. 
• Given the 5G and China Automotive are developing actively, we believe these two applications shall be keeping the energetic momentum.

Times China’s top line strengthened in FY 2021, owing to higher ASP and an increase in property sales. We note that H2 sales remained resilient against the negative headwinds in the industry, with aggregated contracted sales amounting to CNY 96 bn in FY 2021 and H2 contracted sales to CNY 51 bn.

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.

• Country Garden Holdings Co
• Guangzhou R&F Properties
• KWG Living Group

SCE’s FY 2021 results were satisfactory, with sustained contracted sales and revenue despite weaker margins. The pace of property delivery remained decent, reflecting the company’s efficient execution and good access to financing to support construction works. The softer margins stemmed from price controls and increasing land prices. Going forward, management’s strategy includes progressing steadily to deal with the volatility in the industry.

• The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of Wuxi Biologics (2269 HK) in 2022.
• Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.
• There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics.