In today’s briefing:
- SSE180/SSE380 Index Rebalance: Potential MSCI/FTSE Adds & Deletes
- Conch Environment (587 HK): Don’t Overly Bet on the Blue Sky Scenario
- Huadong Medicine Co Ltd (000963.CH) – A “Dark Horse” to Reverse Performance Dilemma
SSE180/SSE380 Index Rebalance: Potential MSCI/FTSE Adds & Deletes
- There are 18 changes to the SSE180 Index and 38 changes to the SSE380 Index that will be implemented at the close of trading on 9 June.
- There will be 9 deletions from the MSCI Standard Index and 22 deletions from the FTSE All-World/All-Cap indices at the close on 9 June.
- Currently, 16 stocks meet the threshold/are close for inclusion in the MSCI China Index while there are 38 stocks that meet the threshold for inclusion in the FTSE All-World/All-Cap indices.
Conch Environment (587 HK): Don’t Overly Bet on the Blue Sky Scenario
- The sharp plunge in share price of China Conch Environment Protection Holdings (587 HK) has not yet brought its valuations back to more reasonable levels and we see more downside.
- Its 10.1x PER for FY22F is at a significant premium over peer average. Even taking into account the impressive ROE, we still cannot find justifications for its high P/B multiple.
- Negative catalysts include overly aggressive expansion target, slower profit growth than rise in capacity and surge in gearing and finance costs – they will potentially lead to earnings disappointment.
Huadong Medicine Co Ltd (000963.CH) – A “Dark Horse” to Reverse Performance Dilemma
- The most recent two quarters have maintained positive growth. It is of great significance for Huadong, who once suffered a significant decline and now in a critical period of transformation.
- The large growth potential of medical cosmetology and industrial microbiology would be important driver for future development. It’s also wise to strike a balance between current performance and future strategy.
- Huadong’s revenue growth would be above 10% in next few years. It would have higher valuation than Imeik. Investors are advised to follow Huadong. It could be a “dark horse”.
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