China: CNOOC Ltd, Hang Seng China Enterprises Index, Beijing Enterprises Urban Resources, Taste Gourmet Group, HKEX, Scivita Medical Technology, Kwg Property Holding and more

• CNOOC Ltd (883 HK) released fantastic, above-consensus earnings for Q1, which were minimally impacted (positively) by non-recurring profits. 
• The driver was higher gas production on much higher prices. At current price, the implied PER is 3.0x for 2022.
• And the company also announced a Special Dividend of HK$1.18/share or 10.9% of yesterday’s share price. 

• Last evening CNOOC Ltd (883 HK) announced a special div of HK$1.18/share – that is higher than market expectations. JD.com Inc. (9618 HK) could announce a special div next week.
• Fair value for the HSCEI 2022 dividend futures moves higher to 250 DIPS off the back of CNOOC Ltd‘s special div and the estimated JD.com Inc. (9618 HK) special div.
• The HSCEI 2022/23 steepener had dropped to -29 yesterday and should drop even lower today where we could see some covering.

• Beijing Enterprises Urban Resources (3718 HK) (BEUR) has announced a mandatory general cash offer from Beijing Enterprises Water Group (371 HK) (BEW). 
• This Offer was triggered by BEW increasing its stake to 31.23% from 29.97%. The Offer price is HK$0.78/share, a zero premium to last close and 20% above the 30-day average. 
• This is an underwhelming privatisation Offer. BEUR traded through terms as recent as last November. The Offer price has not been declared final.

For our next Corporate Webinar, we are glad to welcome Taste Gourmet Group (8371 HK) CFO and Company Secretary, Gerald Yu. In the upcoming webinar, Gerald will share a short company presentation with on-the-ground insights from Hong Kong, after which he will engage in a fireside chat with Smartkarma Analyst Sameer Taneja. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 17 May 2022, 17:00 SGT.

Taste Gourmet Group Limited is a Hong Kong-based restaurant group offering a variety of cuisines, under a portfolio of brands, to a diversified customer base. Since the opening of its first restaurant in 2007, the group has owned and operated a total of 34 restaurants offering Vietnamese, Japanese, Chinese, Western, and Drink under 14 brands, including 11 self-owned brands such as La’taste Vietnamese Cuisine, Dab-Pa Peking & Szechuan Cuisine, Dab-Pa Peking & Szechuan Bistro, Dab-pa Modern Chinese Cuisine, Urawa Japanese Restaurant, Nabe Urawa, Rakuraku Ramen, Wasyohuya Yamaichi, Moments Together, Yakiniku Guu, San-Kinn, three licensed brands known as Parkview, Takano Ramen, and Tirpse, and one joint venture brand known as Xianghui.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• HKEX (388 HK) core businesses such as cash market and stock connect remain robust against the backdrop of relatively low expectation.
• Mark-To-Market investment loss underscored the volatile fixed income market, we expect the negative impact will continue into 2Q22 as the shift in rate environment.
• MSCI China A50 future continues its rapid ramp-up, ADV is up 86% quarter-over-quarter. Overall future trading is strong, ADV is up 39% quarter-over-quarter.

• Scivita Medical Technology (SMT HK) has certain technical advantage and a comprehensive portfolio of products and candidates, which would help the Company seize a position in this market.
• There are also some potential risks and concerns that could be unfavorable for Scivita’s development, which should be aware of by investors.
• In terms of the valuation, SonoScape and Aohua Endoscopy (688212.CH) could be the comparable companies, but the valuation of Scivita should be lower than either of them.

KWG Group’s disclosure and transparency during the investor call are encouraging, though we believe that its plan to repay the USD 900 mn notes in September is subject to some executional risk. In particular, the raising of additional secured loans would be subject to banks’ willingness to lend against the Ap Lei Chau project. We stated previously that it was unclear if KWG and Logan would be able to profitably launch the project for sale, as the record land price would be a stumbling block. That said, KWG should be able to receive steady cash collections from the sale of the remaining units at its Kai Tak project. Assuming a 50% sell-through rate, this could fetch an attributable HKD 1.5-1.75 bn in the coming months. In addition, KWG might be able to supplement its liquidity with asset disposals, particularly if it is willing to dispose of them at a discount.