China: Melco International Development, Alibaba Group, DiDi Global, BYD, Shijiazhuang Yiling Pharmaceutical, China Energy Engineering, Hygeia Healthcare Group, ABM Investama, First Pacific Co and more

• Both Melco International Development (200 HK) and Melco Resorts & Entertainment (MLCO US) have underperformed peers. But Melco is unjustifiably “outperforming” MLCO.
• Preceding my comments on Melco, are the current setup/unwind tables for Asia-Pacific Holdcos. 
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Over the last year, we have highlighted some extremely damaging risks to Alibaba Group (9988 HK)’s cloud business.
• The exit of senior leadership, right before the data migration deadline and the cybersecurity deal reassessment, arouse suspicion.
• We suspect Alibaba could be using this “leadership reshuffle” to hide the reality of the Cloud business from investors.

• Didi on Monday announced that it will hold an EGM of shareholders on 23rd May for a vote on the voluntary delisting of the company’s ADS’ from the NYSE.
• The company has mentioned that it will not apply for listing it shares on any other stock exchange before the completion of delisting.
• Didi also has reported its 4Q2021 results and we take a look at the company’s recent results in this insight.

• BYD (1211 HK) is the most vertically integrated with its own chip manufacturing facility (BYD Semiconductor) and battery production unlike the rest of the Chinese auto OEMs.
• The lockdown may not last that long as the Chinese authority is reportedly seeking to create a white list to resolve the supply chain issue.
• It announced that Q1 22 net profit will range between RMB 650 to 950 million, an increase between 174% to 300% YoY which will make its forward PE cheaper. 

• There are doubts about the efficacy of Lianhua Qingwen to treat mild cases of COVID-19 in China, leading to the plunge of Yiling’s share price.
• Fully evaluating the efficacy of Lianhua Qingwen requires larger double-blind randomized clinical trials. Data from other than double-blind controlled clinical trials are hard to be conclusive and can be controversial.
• Even if Yiling could escape unscathed from the controversy, Yiling’s achievements since 2020 in capital market may not have sustainability.Together with the potential risks, investors are advised to remain cautious.

• We believe strong orders and backlog, increase in installed capacity and development of new business initiatives are the key drivers for brighter outlook of China Energy Engineering (3996 HK). 
• Its new orders grew 51% YoY in FY21, with its backlog is enough to cover the revenue more than the next three years mean solid earnings security and visibility.
• Development of hydrogen energy and pumped storage businesses may take longer to contribute, but they also represent significant upside when enter into commercial launch. 

• Driven by the development mode of “organic growth + strategic acquisitions + cooperation with hospital partners”, Hygeia Healthcare Group (6078 HK) could rapidly expand nationwide, with solid business logic. 
• Hygeia’s delicacy management and the strength in operation help the Company to break the limits of the expansion of private hospitals, helping shorten the time it takes to break even.
• However, the high uncertainties on policy and State’s attitude towards private hospitals cast shadow on Hygeia’s long-term prospects, but investors could still trade this stock in short term.

The Asia HY Trade Book for the month of April includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

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.

• China Vanke
• First Pacific Co

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.

• China Vanke
• First Pacific Co