China: Evergrande, ABM Investama, Anhui Anke Biotechnology (Group) and more

• Aggressive foreclosure of Evergrande assets suggests a sea change in how mainland China is handling real estate company defaults – especially with foreign creditors;
• Creditor China Cinda’s involvement on the seven-member risk management committee and the appointment of a Cinda senior executive is an alarming conflict of interest; and
• 4Q21 earnings season will be huge tell for mainland Chinese NPLs which likely peak at 20% of total loans.  

This month, we undertake a study of the ratings evolution of all the issuers that have been included in the Lucror Asia HY index (commenced in 2013).

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• The recent plunge in share price of Anhui Anke Biotechnology  and Changchun High & New Tech (000661 CH) (CCHT) was mainly due to the volume-based purchase (VBP) on recombinant human growth hormone. 
• The best result is both CCHT and Anke quit this VBP.However,if CCHT quits but Anke wins the bidding and applies low-price strategy,CCHT couldn’t keep its price system and market share. 
• Overall, growth hormone is a market with increasing competition and shrinking market size as fewer babies are born in China. So, developing more new indications would be the way out.