In today’s briefing:
- Contemporary Amperex Technology – King of the Overweights
- Qingdao AInnovation Technology Group IPO Trading – Lukewarm Subscription Rates, Peers Have Corrected
- Pre-IPO Medbanks Network Technology – Conservative About the Outlook
- China Banks – Credit Quality Snapshot Ahead of 4Q21
- China Education Group (839 HK): Further Regulatory Headwinds?
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Contemporary Amperex Technology – King of the Overweights
- In this analysis, we review allocations in Contemporary Amperex Technology among 3 sets of active China managers. MSCI China Funds, China A-Share Funds and Greater China Funds.
- We find that exposure in Contemporary Amperex Technology has risen to peak levels across all 3 investor sets, making it one of the largest overweight positions in China.
- Outside of dedicated China, we also see ownership growth among Global Emerging Market and Asia Ex-Japan active strategies.
Qingdao AInnovation Technology Group IPO Trading – Lukewarm Subscription Rates, Peers Have Corrected
- Qingdao Ainnovation Technology Group Co Ltd (1853807D CH) raised around US$151m after pricing its IPO at HKD26.3/share, at the bottom end of its IPO price range.
- Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.
- In this note, we will look at the trading dynamics and current valuation.
Pre-IPO Medbanks Network Technology – Conservative About the Outlook
- For Medbanks, who entered the market from the SMO business and then PBM business, building core competitiveness around this closed loop may be quite challenging.
- The PRS business has growth ceilings; The low margins of PBM and PPS business and the increasing competition make Medbanks difficult to generate solid financial position for future business expansion.
- Therefore, based on the analysis above, we are conservative about this Company’s outlook.
China Banks – Credit Quality Snapshot Ahead of 4Q21
- The China real estate situation remains challenging for banks credit quality, with more real estate developers in financial difficulties, with them either close to, or at default
- The macro-economic picture is challenged by China’s zero-Covid policy hurting supply chains, and PBOC is tightening liquidity despite the recent small cuts to reserve requirements and benchmark rates
- Before 4Q21 results, the larger cap banks’ credit quality snapshot shows that China Minsheng is very challenged, with Postal Savings Bank and China Merchants in strong positions
China Education Group (839 HK): Further Regulatory Headwinds?
- The 42% collapse in share price of China Education Group (839 HK) (CEG) seems to be overreaction to the speculated regulatory measures which we think many of them are counter-intuitive.
- These measures center around the legality of Variable Interest Entity, ban on future M&As, ownership of school assets and prohibition of increase in tuition fee at will.
- Higher education, unlike after school tutoring, supports government policy, lightens governments’ financial pressure and enhances common prosperity; and CEG remains the best play on this angle.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets ended lower again with the S&P and Nasdaq ending up 1.2% and 2.3%. Sectoral losses were led by IT, Communication Services and Consumer Discretionary, down 1.8-2.3%, while Energy was the only gainer, up 4%. US 10Y Treasury yields were 2bp lower at 1.76%. European markets recovered slightly yesterday with the DAX, CAC and FTSE up 0.8%, 0.7% and 1%. Brazil’s Bovespa closed 2.1% higher. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI was up 0.3%. Asian markets have opened broadly higher – Shanghai, HSI and STI were up 0.1%, 0.2% and 0.9% while Nikkei was down 0.4%. US IG CDS spreads were 1.2bp tighter and HY CDS spreads were 7.5bp wider, EU Main CDS spreads were 0.9bp tighter and Crossover CDS spreads were 4.3bp tighter. Asia ex-Japan CDS spreads were 0.8bp wider.
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