In today’s briefing:
- Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits
- Byd (1211): Better Number but Let’s Wait
- WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data
- Compare and Contrast: Energy China 中国能建 (3996 HK/601868 CH) And Power China 中国电建 (601669 CH)
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits
- Meituan (3690 HK) share price is down more than 20.0% from Thursday’s close following announcement on new regulations for food delivery platforms.
- New regulation states that food delivery platforms should further reduce the service fee charged from restaurants to lower operating costs for food and beverage businesses.
- Meituan’s food delivery business makes about 88% of its revenues from commissions while the remainder comes from online marketing services.
Byd (1211): Better Number but Let’s Wait
- Subsidy removal spooked investors but as proven, January 2022 sales number is even higher than last year.
- The main concern is the expensive valuation among the other Hang Seng Index Constituents rather than anything else.
- In the medium term, and upon the cessation of the Ukraine-Russia tension, BYD (1211 HK)could be an interesting name to have in the portfolio, especially at a lower valuation.
WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data
- WuXi AppTec Co. Ltd. (2359 HK) released the preliminary financial data for 2021. It is not surprising that the Company could maintain its outstanding performance.
- We listed some interesting points to ponder, such as projected declining performance of WuXi DDSU and related chain reaction, the change in fair value of financial assets, overseas anticipation, etc..
- It’s understandable if investors choose to start making layout at this point due to attractive valuation and longer “reflection arc”,but need to be patient for WuXi AppTec to achieve reversal.
Compare and Contrast: Energy China 中国能建 (3996 HK/601868 CH) And Power China 中国电建 (601669 CH)
- China Energy Engineering (3996 HK) and Power Construction Corporation Of China (601669 CH) are the two giants in power construction industry in China; but there are significant differences between them.
- Power China has better business and generation mix while Energy China won in terms of margin and profitability, leverage and financial position, new order momentum and hydrogen energy expansion.
- We like Energy China “H” for cheap valuation, secured earnings and deep discount to Energy China “A”. For just the A-shares, we prefer Power China “A” to Energy China “A”.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets were closed due to President’s Day holidays. The US 10Y Treasury yield dropped 6bp to 1.93%. Risk-off Russia-Ukraine sentiment however continues to weigh on markets with the European markets closing lower – DAX, CAC and FTSE were down 2.1%, 2% and 0.4% each. Brazil’s Bovespa closed 1% lower. In the Middle East, UAE’s ADX was down 1.2% while Saudi TASI closed 0.8% higher. Asian markets have opened lower again today with Shanghai, HSI, STI and Nikkei down 1.2%, 3%, 0.8% and 2.2% respectively. US IG CDS spreads were 0.9bp wider and HY CDS spreads were 4bp wider. EU Main CDS spreads were 2.4bp wider and Crossover CDS spreads were 6.7bp wider. Asia ex-Japan CDS spreads were 0.7bp wider.
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