China: JD.com Inc., JD Logistics, Beijing Tiantan Biological Products, Cimc Enric Holdings, CSPC Pharmaceutical Group, Greenland Hong Kong Holdings and more

• We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
• JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
• The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

• JD Logistics (JDL) aims to raise around US$1.1bn, with US$400m coming via an institutional placement. The balance will be funded by issuing shares at the same price to JD.com.
• We have covered the stock extensively, links to our previous notes are below.
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

• In the context of both the war and the pandemic, the blood products market would be a field of high-quality investment. 
• Due to strict policy supervision, the number of plasma stations is the core competitiveness of enterprises in this industry, which basically determines the scale and outlook of blood products enterprises. 
• With the background of state-owned enterprise and also having the most plasma stations among peers,Tiantan Biological Products (600161 CH) has an innate advantage over other competitors, with more certainty in long term.

• Cimc Enric Holdings (3899 HK) posted a set of encouraging result for FY21. It achieved a 37.4% YoY growth in 2H21 even after a 77.5% growth in 1H21. 
• Management suggests that gross margin will improve in this year as measures have been taken to cope with the factors that lead to the 2.3pp contraction in FY21.
• Hydrogen energy is a bright spot – though contribution is still small, it expects to at least double its revenue in FY22, and remains bullish on the long term prospects.

• CSPC Pharmaceutical Group (1093 HK) shares climbed nearly one-month highs after strong 2021 results and new drug approval. The company has recommended final dividend of HKD 0.10/share.  
• 2021 revenue increased 12% y/y to RMB28 billion, mainly driven by the growth in the finished drug businesses. This has eased concern of CSPC’s revenue sensibility to pricing headwind.
• The company is on track to launch more than 30 innovative and new-formulation drugs, and over 60 generic drugs in the next five years.

• JD.com Inc. (9618 HK) has been able to sustain its relative market share gains, in Chinese online retail sales, over the past two years, despite increased competitive pressure.
• Recent weakness in its margin progression trajectory has cast doubts on its ability to realise its potential for long-term margin expansion.
• With net cash at 31% of its market cap, relative valuation levels seem attractive.

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.

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