China: Lenovo, NIO Inc, China Communications Construction, Innovent Biologics Inc, Shanghai Jin Jiang Capital Company Limited, Health And Happiness (H&H) and more

• Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
• If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
• Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)‘s real float. Short interest is over 17 days of ADV.

• NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
• Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO. 
• Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies. 

• China Communications Construction (1800 HK) targets for at least 6% growth in revenue with slight operating margin expansion for FY22; and these should sustain its stable growth trend. 
• It will increase focus on “big city” projects where there are more opportunities. We think its target of at least 11.8% new contract value growth in FY22 is conservative.
• Reduction in losses at concessionary projects, improvement in operating cash flow and lowering of gearing levels all indicate that CCCC is moving in the right direction.

• The biggest characteristic of Innovent Biologics Inc (1801 HK) is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&D productivity, Innovent deserves credit.
• If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent’s upgrade from biotech to biopharma is almost complete. 
• Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. 

• Hotel operator Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s Composite Doc is out. The H-Class meeting on the 26 April, with expected payment on the 17 May.
• The IFA considers the Offer to be fair and reasonable. 
• This is done and trading tight at a gross/annualised spread of 1.6%/14%. 

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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