In today’s briefing:
- China Mobile (941 HK) Buyback Period Starts
- Smoore (6969 HK): Expanding Market Sizes, Both Domestic and Global
- Anta (2020 HK) Inventory Analysis – Structural Tailwinds from the Olympics
- Huitongda IPO – Valuation
- China Everbright Environment (257 HK): Roaring in the Year of Tiger!
- MicroPort NeuroTech IPO: Impressive Product Portfolio Offsets Profitability Concerns
- Shanghai MicroPort MedBot Group (2252.HK) – Optimistic About the Outlook
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
China Mobile (941 HK) Buyback Period Starts
- China Mobile (941 HK) announced an H-share buyback program which had as its upper limit the purchase of 37% of the H-share CCASS position.
- After that, the SOE parent announced a plan to buy RMB shares in Shanghai.
- The virtuous cycle of shareholder return starts today. Today is the first day China Mobile can start buying its H-shares.
Smoore (6969 HK): Expanding Market Sizes, Both Domestic and Global
- The growth rate of the Chinese e-cigarette market bounced up to 73% in 2021 from 7% in 2020.
- The global e-cigarette market increased by 23% in 2021, but Smoore is only good at vaping components.
- We conclude that Smoore has an upside of 86% for year end 2022.
Anta (2020 HK) Inventory Analysis – Structural Tailwinds from the Olympics
- Anta benefits from strong tailwinds of the two Olympic events and the Chinese government’s support for citizens’ sports engagement
- Anta’s inventory position has improved relative to H1 2020. However, it remains weaker than pre-pandemic levels in 2019
- We analyse Anta’s inventory and highlight key factors to watch in its upcoming FY2021 results
Huitongda IPO – Valuation
- With churn rates as high as 50% and wholesale customers declining by 27.7% in 9M21, we are not particularly interested in Huitongda (9878 HK) over long term.
- The valuation looks cheap compared to peers on the surface, but when compared after considering Huitongda’s 1P exposure its at a significant premium to peers.
- Given that the market takes time to pick up similar mispricing situations, we think its advisable to wait and see where Huitongda opens, before arranging a short position.
China Everbright Environment (257 HK): Roaring in the Year of Tiger!
- The FY21 result of China Everbright Environment (257 HK) (CEE) should look impressive and we see improvement in cash flow to relieve market concerns on leverage and financial position.
- New project addition is solid over the last three months, adding about 5% to operational project portfolio. Strong special purpose bonds issuance in 4Q21 and 2022 will fuel pipeline momentum.
- Valuations look undemanding at 4.1x PER and 0.65x P/B for FY22F; and by maintaining payout ratio at c.30%, dividend yields are at attractive 6.4% and 7.4% for next 2 years.
MicroPort NeuroTech IPO: Impressive Product Portfolio Offsets Profitability Concerns
- MicroPort is the largest Chinese neuro-interventional medical device company and has filed for an IPO on the Hong Kong Stock Exchange. Its Portfolio consists of 30 commercialised products and candidates.
- Although struggling with margins, the company has an impressive product portfolio with a majority of them having strong competitive advantages.
- As most of the products are poised for growth, we are largely positive on the company.
Shanghai MicroPort MedBot Group (2252.HK) – Optimistic About the Outlook
- Recently, MicroPort MedBot’s Toumai laparoscopic surgical robot has obtained a registration certificate for launching by NMPA, indicating the hope of breaking the monopoly of Da Vinci robots in the market.
- The strong policy support as well as the medical insurance coverage offer a viable way for the commercialization of surgical robots in China, which is very important.
- Although it would take some time to improve the overall market penetration in China, we are still optimistic about the outlook of Shanghai MicroPort MedBot Group (2252 HK).
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets rose with the S&P and Nasdaq ending 0.5% and 1.6% higher. Sectoral gains were led by Consumer Discretionary, up over 3%. US 10Y Treasury yields rose 7bp to 1.90%. European markets were lower with the DAX, CAC and FTSE down 1.8% 0.8% and 0.2%. Brazil’s Bovespa closed 0.5% higher. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.5% higher. Asian markets have opened mixed with HSI and Nikkei down 0.31% and 0.73% while STI and Shanghai are up 0.32% and 1.91% respectively. US IG CDS spreads were 1bp wider and HY CDS spreads were 9.5bp wider. EU Main CDS spreads were 3.1bp wider and Crossover CDS spreads were 14.3bp wider. Asia ex-Japan CDS spreads were 3.2bp wider also.
Before it’s here, it’s on Smartkarma
