China: Hong Kong Hang Seng Index, Pinduoduo, Arrail Group, Alibaba Group, Jiangsu Recbio Technology, China Power International, Country Garden Holdings Co and more

• HSI’s short squeeze spike is due for a pullback to the 20,200 to 19,700 support. We liked layering into a short near 21,700-22,500 for a pullback.
• RSI kissed the ideal sell barrier. Sell volumes on a slip as well as buy volumes on a reaction rise will shed light on participation/repositioning.
• Short for a pullback with a second trade to buy the sub 20k zone for a reaction rise.

• PDD’s total revenue growth was low 4Q21, as the company gave up on direct sales.
• However, we believe the revenue growth will bounce back in 2023.
• PDD cut sales and marketing expense, so we believe operating margin will improve in following two years.

• Arrail Group raised HKD 589.9 million (USD 75m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, Mar 22nd.
• In our previous notes, we looked at the company’s background, its operation, its financials, and its expansion plan, compared its key metrics with peers and provided thoughts on valuation.
• In this note, we look at the updates since our last note and prior to debut.

• The US just expanded travel bans against Chinese officials said to be repressing ethnic and religious minorities. 
• The timing, a few days after a Biden-Xi call on Russia that appeared to achieve little of substance is telling. 
• Noises out of the UK have been similarly aggressive here and the question now is how Europe responds.

• RecBio is an innovative vaccine company with a focus on HPV vaccines. The company started book building to raise up to USD 98m via a Hong Kong listing.
• In the previous note, we looked at the company’s core products, including its HPV portfolio and the COVID-19 vaccine and the valuation.
• In this note, we provide an update for the book building. We will run the deal through our ECM framework and provide an update on the deal.

• 2H21 is bad for China Power International (2380 HK) as coal price surged. But the positive news is that its wind and solar segments logged a 50.6% full-year profit growth.
• There is good progress on transformation and it has 7GW of clean energy capacity to come on stream in FY22. This is equivalent to 46% of the existing capacity.
• CPI said coal-fired plants are marginally profitable in Jan-Feb; meanwhile, hydropower will do better in this year. Overall, these set the stage for a turnaround.

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.

• Country Garden Holdings Co
• Fosun International
• Sunac China Holdings