In today’s briefing:
- Bytedance Tearsheet – Doesn’t Need Much of an Introduction
- Tencent (700 HK): Besieged Game Business
- Pre-IPO Yunkang Group – Lack of New Growth Point
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- China Everbright Water (1857 HK): Good New Project Flow Is the Key
Bytedance Tearsheet – Doesn’t Need Much of an Introduction
- Bytedance doesn’t need a whole lot of introduction as it runs one of the most popular global apps, TikTok, and one of the largest domestic apps in China, Douyin.
- The company undertook a funding round in Dec 2020, which valued the company at around US$180bn. Its valuation has touched US$425 bn in June 2021 in private market transactions.
- Rumours about listing have been doing the rounds since as far back as 2019. Although there are no confirmed listing plans.
Tencent (700 HK): Besieged Game Business
- Short video has been taking time on site from game players.
- Main games are shrinking, but the authorities have not been granting license to new games.
- The authorities also banned Chinese players from playing with overseas game players.
Pre-IPO Yunkang Group – Lack of New Growth Point
- Benefiting from the opportunities brought to the healthcare industry by the COVID-19 pandemic in 2020, Yunkang Group (YK HK) took a ride and ushered in a turning point in performance.
- As the pandemic stabilizes and gets gradually under control, the revenue generated from COVID-19 tests may significantly decrease, which means Yunkang may return to net loss again in the future.
- We currently haven’t seen any new growth point with high certainty. Therefore, we are conservative about Yunkang’s outlook.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets ended registered another strong day of gains on Friday with the S&P and Nasdaq ending 2.2% and 1.6% higher. All sectors ended in the green, led by Materials and Financial, up 3.2-3.5%. US 10Y Treasury yields eased 5bp on Friday. European markets also rallied sharply – DAX, CAC and FTSE were up 3.6%, 3.7% and 3.9%. Brazil’s Bovespa closed 1.4% higher. In the Middle East, UAE’s ADX was up 0.6% and Saudi TASI was up 1%. Asian markets have opened with a negative bias – Shanghai, HSI, STI and Nikkei are down 0.3%, 1.5%, 2.2% and 0.3% respectively. US IG CDS spreads tightened 2.1bp and HY spreads were 9.9bp tighter. EU Main CDS spreads were 6.5bp tighter and Crossover CDS spreads were a sharp 38bp tighter. Asia ex-Japan CDS spreads were 0.6bp wider.
China Everbright Water (1857 HK): Good New Project Flow Is the Key
- Full-Year earnings growth of 17% suggested a slowdown in 2H21, but this is mostly a result of higher base. A 3pp increase in dividend payout ratio also demonstrated management’s confidence.
- Focus should be on the positive new project momentum – 10 secured in 2H21, versus only 4 in 1H21. More special purpose bonds issuance should drive project pipeline.
- CE Water’s valuations are cheap at 0.43x P/B and 3.8x PER for FY22F. Its prospective dividend yield of 7.9% also provides an appealing income component.
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