China: Guodian Technology & Environment Group, Chindata Group, AKM Industrial, Tencent, InnoCare Pharma Ltd, Uju Holding, Kwg Property Holding, Lanzhou Zhuangyuan Pasture and more

• Guodian Technology & Environment Group (1296 HK)‘s (GTE) pre-cons are now fulfilled – bang in line with my timetable estimate.
• The Composite Document should be despatched to the shareholders on or before 29 April 2022. 
• Assuming all goes to plan – and there is every indication it will – payment under the Offer is expected around mid-June.

• A Bloomberg article claimed that Chindata Group (CD US) is attracting takeover interest from GDS Holdings (ADR) (GDS US), PAG and EdgeConneX. Shares rose 9.8% to close at $4.81.
• Potential privatisation will require the blessing of Bain Capital, the largest shareholder. Chindata’s track record of beating guidance, modest leverage and the beaten-down rating make it a target. 
• A forward EV/EBITDA multiple of 8.9x, in line with 21Vianet Group (VNET US)’s proposed acquisition multiple, would imply $6.85 per ADS. 

• AKM Industrial (1639 HK)’s privatisation offer from Alpha Luck and AKM Meadville of HK$1.8345 consists of a base offer (HK$1.82) and a final dividend (HK1.45 cent).
• The pre-condition was fulfilled on 22 April. The latest date for the despatch of the scheme document has been extended to 10 June. 
• Shareholders with blocking stakes have previously provided irrevocables. At last close and for an early-August effective date, the gross and annualised spread to the offer is 3.1% and 10.7%, respectively.

• Tencent (700 HK) will announce its first quarter 2021 results on 18th May 2022.
• Since 3Q2021, Tencent’s earnings have started to decelerate, and the previous quarter marked the slowest ever revenue growth for the company since 2004.
• We expect Tencent’s earnings weakness to continue well into 1H2022E due to slowdown in online games and online advertising businesses.  

• InnoCare was approved to list in the SSE STAR Market, and the Company also released its improving financial performance in 2021. However, the outlook for InnoCare remains challenging and uncertain.
• Either orelabrutinib or the pipeline, they don’t have pricing power due to lack of sufficient competitiveness and slower development progress, which means that their commercialization performance is highly uncertain.
• There’s no definite commercialization outlook for InnoCare, with a far distance from becoming a biopharma. InnoCare was overvalued and could be attractive if the market value could be 50% off.

• Uju Holding raised US$103m from its Hong Kong IPO in Nov 2021, where the IPO had been priced at the bottom end.
• The offering was only mildly oversubscribed and the two cornerstones in the deal, Bytedance and Green Better (Xiaomi), had combined to subscribe to 12.6% of the offer shares
• The cornerstones and Pre-IPO investors’ stake are coming up for lockup expiry. The latter will see half of their stakes unlocked, with the remainder locked up for another six months.

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.

• KWG Living Group

• PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) has announced a Conditional Cash Offer for all H-shares at $10.89/share.
• The Offer is being done via a Voluntary Cash Offer, therefore an onerous 90% tendering condition is present.
• This transaction could potentially be wrapped up late-July. The FY21 dividend may also be added to terms.