China: Greatview Aseptic Packaging, CNOOC Ltd, 21Vianet Group, Zhihu Technology, Tencent, China Conch Venture Holdings, Asymchem Laboratories, Sino Ocean Land and more

• Earlier this year, Jardine Matheson Holdings (JM SP) was understood to be exploring the sale of its 28% stake in Greatview Aseptic Packaging (468 HK).
• GA Pack announced its full-year results late last month and for the first time since 2012, opted not to pay a final dividend.
• Shares are down 20% since that non-dividend announcement. That’s convenient.

• CNOOC’s RMB Issue of 2.6bn Shares (about US$5bn with over-allotment) was priced at a 14.2% premium to Friday’s close. Not Great Bob.
• But 31 March indications of Q1 results, and the promises of an H-share buyback noted in the Annual Results a day earlier are worthwhile noting.
• CNOOC continues to trail Global Peers in Price and Forward EBIT multiple since the Executive Order 13959 dampened share demand and booted it from global indices. It’s still cheap though.

• VNET, formerly known as 21Vianet Group (VNET US), is a leading carrier and cloud-neutral data centre services provider in China. 
• It has received a non-binding privatisation proposal from The Hina Group and Industrial Bank Co Ltd A (601166 CH) at $8.00 per ADS, a 48.1% premium to the undisturbed price. 
• The Board has not made any decisions on the offer. Despite the juicy premium, the offer is unattractive in the context of historical multiples and share prices.    

• Zhihu plans to raise around US$130m via a dual primary listing in Hong Kong.
• Unlike all the prior dual primary/secondary listings which have been done via offering either only primary or a mix of primary+secondary shares, Zhihu’s offering will consist of only secondary shares.
• In this note, we’ll talk about the deal dynamics and structure.

• China announced game approval last night, after 8 months of silence.
• We discussed in our previous note that China would resume game approval.
• There is no game approved for Tencent and Netease this round but we believe their approval will come in due time.

• Zhihu has filed for a dual primary listing on the HKEx through offering of 26m shares (Class A) by existing shareholders at a maximum offer price of HK$51.8 per share.
• Two ADS represent one Class A ordinary share and shares closed at US$2.56 per ADS, and the maximum offer price implies a 31.5% premium to the last close.
• Zhihu’s business model seems to work in favour and the company’s shares are extremely cheap at the current multiples. There is upside but we would remain cautious.

• Following CCEP spin-off and share price decline, China Conch Venture (586 HK) is now at more attractive valuations relative to the stub, on sum-of-the-parts and on PER multiple. 
• Growth profile should improve in next two years and it has an optimistic expectation of of 76% increase in waste treatment and 79% growth in on-grid electricity for FY22.
• New business initiatives including anode and cathode materials of lithium iron phosphate and lithium batteries and used lithium batteries treatment may provide potential medium term upside.

• The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, Asymchem Laboratories (6821 HK)‘s performance could decline from a high base.
• In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.
• Overall, Asymchem’s moat is not strong enough, and the certainty of the Company’s long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Honghua Group
• Sino-Ocean Service