China: JD Logistics, Tencent Music, JD.com Inc (ADR), Hong Kong Hang Seng Index, Topchoice Medical, Country Garden Holdings Co and more

• JD.com (JD)’s revenue growth is a strong support for JD Logistics’ revenue.
• JDL successfully acquired corporate clients and expanded warehouse network in 2021.
• We believe the stock has an upside of 40% and a target price of HK$27.

• The US traded unit of China’s Tencent entry into digital music has lost exclusive rights to its foundational music and entertainment content due to Beijing policies.
• Stock price has been in free fall from a $31 high last March to $3.44.
• The historic term “fallen angel: applies to bonds but TME ‘s current trade suggests it could well apply to special situations in common.

• On 23rd Dec, Tencent declared a dividend in the form of distribution in specie of 457.326m shares of JD.com, i.e. 1 share of JD.com for every 21 shares of Tencent.
• While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is expected to happen on or about 25th Mar 2022.
• In this note, we look at Tencent’s shareholding in order to decipher the impact on JD.com’s shares once the distribution is settled to determine who the sellers could be.

• HSI sliced below the 19,600 projection with the next level at 18,450 and the big dual lows from 2012 and 2016 at 18,100 and a big level to hold.
• Sell volumes and sell momentum remain high, equating to more short term pain.
• HK tech index break below 4,000 support set to test key lows from 2018 and 2019 as the levels to hold to avert new chart lows.

• Policy risk is the biggest uncertainty for domestic medical service sector, without any overseas revenue to “hedge” such risk.
• The market places great hope on Topchoice to become a cross-regional enterprise with high growth sustainability. Without a reliable and replicable expansion model, the high valuation is not logical.
• Therefore, our view is that the Company’s investment logic has been shaken. Topchoice Medical (600763 CH) could be a short-term trade, but not 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.

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