China: Baidu, Yanzhou Coal Mining, Medlive Technology, China Longyuan Power Group Corp, JD Health, ABM Investama, First Pacific Co, Logan Property Holdings and more

• We expect Baidu (9888 HK), Bilibili (9626 HK), GDS Holdings Ltd (9698 HK) and New Oriental Education & Technology Group (9901 HK) to replace their ADRs in the MSCI indices.
• The subsequent increase in CCASS shares and/or shares held outside the ADR depositary will result in an increase in the weights of the stock in the HSCEI INDEX and HSTECH INDEX. 
• The higher index weight for Baidu (9888 HK) in the HSCEI and potential inclusion of Bilibili (9626 HK) will add downward pressure on the HSCEI 2022/23 dividend steepener.

• With a few weeks to the end of the review period, we see 30 potential changes (the maximum allowed at a review) to the index in June.
• Most of the changes are high probability ones. We estimate a one-way turnover of 4.48% at the June rebalance leading to a one-way trade of CNY 7.86bn.
• The potential inclusions have outperformed the potential deletions over the last couple of months. There could be more to go here as positions are built in the next few weeks.

• Medlive’s shares are currently trading at HK$8.15 per share and lost almost 70% YTD which we think was due to the ongoing regulatory crackdown on tech platforms in China.
• Medlive’s 2021 revenues grew 33.2% YoY to RMB284m while adjusted OP grew 19.0% YoY to RMB123m. Shares reacted negatively due to slowdown in top line growth.
• Medlive is currently trading at FY2 EV/Revenue of 0.97x compared to 34.3x when we last wrote. We think shares are extremely cheap and offers a good entry point.

• China Longyuan Power Group Corp (916 HK) is expected to see an exciting year on the back of faster capacity growth, increase in utilisation hours and higher average tariff.
• Potential asset injection from its parent CHN Energy remains a wild card. It may grow its capacity by an average of 30% over the next three years if materialises.
• Lower funding costs and the return to A-share are positive to Longyuan’s expansion. We think consensus forecasts for next 2 years are too low and represent potential upside surprises.

• The 2021 performance of JD Health (6618 HK) beat market expectation. The scale of annual active users, commodity SKU, warehouse, logistics, medical resources, etc. all had breakthroughs.
• The growth rate and gross margin of service revenue were higher than that of product revenue. So, the performance of service sector can better determine JD Health’s future outlook.
• The outlook of online healthcare service is uncertain.Whether successful or not, JD Health still has other businesses to support future development, and is therefore our top pick in this sector.

This month, we undertake a study of movements in the Lucror Analytics Risk Assessment (LARA) for issuers in the Lucror Asia HY index over the last five years.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

First Pacific’s FY 2021 results were robust, with good performance across the investee companies. Management’s guidance is positive for FY 2022 and beyond. The financial risk profile remains stable, with no real improvement as excess cash flows are mainly returned to shareholders. Liquidity is adequate.

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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