In today’s briefing:
- Baidu to Sell Its Stake in IQiyi
- China Insurance: PICC P&C Vs. CPIC
- China United Lines Pre-IPO – Profitable and Growing Rapidly, However Market Is Concentrated
Baidu to Sell Its Stake in IQiyi
- Reuters and several other news media outlets reported that Baidu (BIDU US) is planning to sell its stake in iQIYI Inc (IQ US) .
- Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.
- IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.
China Insurance: PICC P&C Vs. CPIC
- China’s motor insurance has been showing signs of growth after years of decline due to deregulations and reforms in the sector.
- Motor insurance tailwind will benefit large players the most. Bullish on PICC P&C since it’s the largest player in motor insurance and to likely benefit the most from the tailwind.
- Bearish on CPIC since its P&C business is much smaller than PICC P&C and Ping An P&C, while its L&H growth continues to be under pressure.
China United Lines Pre-IPO – Profitable and Growing Rapidly, However Market Is Concentrated
- China United Lines (CUL HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
- China United Lines (CUL) is a container shipping company in China. CUL has grown rapidly and its large proportion of vessels being chartered-in, has allowed it to scale its capacity.
- Shipping volume growth was accompanied by topline growth, and margins have been on the uptrend. However, the firm is only a small player in a concentrated market.
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