In today’s briefing:
- MTR (66): Open or Closed?
- Nio: Difficult to Refute Most of Grizzly’s Allegations
- GOME Retail Placement: The Crisis Persists
- Weilong Delicious IPO: In a Pickle
- Arrail Group (6639 HK): Full-Year FY22 Results Indicate Demand Is Recovering
- Pre-IPO Rainmed Medical – The Industry, the Business and the Concerns
- Morning Views Asia: Central China Securities, Greenland Holdings Corp
MTR (66): Open or Closed?
- HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive.
- The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price.
- Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now.
Nio: Difficult to Refute Most of Grizzly’s Allegations
- Nio Inc. was targeted by Grizzly Research and accused of likely using an unconsolidated related party to exaggerate revenue and profitability. This unconsolidated related party was named as Wuhan Weineng.
- As per the report, Weineng had helped Nio inflate revenue and net income by approx. 10% and 95% respectively in 9M2021, and FY2021 earnings beat by at least 60%.
- In this insight, we take a look some of the allegations and have assessed the merits of the claims by Grizzly Research.
GOME Retail Placement: The Crisis Persists
- As the mismatch between short-term assets and liabilities expands, GOME is raising HK$776.5m at HK$0.40 per-share, which is a 12.1% discount to the closing price on 27th June 2022.
- This is clearly insufficient to pay down GOME Retail Holdings (493 HK)‘s RMB 40.0bn short term debt and accounts payable obligations falling due in the next 12 months.
- With the omni-channel transformation taking longer than expected to turn around performance, the company might find it difficult to refinance the debt and maintain the supply chain as usual.
Weilong Delicious IPO: In a Pickle
- Weilong Delicious Global (WDG HK) has refiled its PHIP with an aim to raise US$500 million, half of its previous ambition to raise US$1 billion.
- We have previously discussed the IPO in Weilong Delicious IPO Initiation: Tasty Bite and Weilong Delicious IPO: Mixed Update.
- The PHIP which discloses the 2021 results and recent developments point to reducing growth rates and cost pressures. We would pass on the IPO.
Arrail Group (6639 HK): Full-Year FY22 Results Indicate Demand Is Recovering
- Despite regional lockdowns caused by COVID-19 during most part of FY21, Arrail Group (6639 HK) posted 7% y/y growth in revenue, driven by 14% y/y growth in total patient visits.
- China dental services market is growing at an average 20% per annum. Arrail’s low debt and strong cash position should support its business expansion plans to grab the market opportunity.
- Despite competition, the company is expected to report accelerated double-digit revenue growth in next three years, by leveraging on its market leadership positioning and favorable macro tailwind.
Pre-IPO Rainmed Medical – The Industry, the Business and the Concerns
- The combination of FFR and IMR can provide a complete functional evaluation from epicardial arteries to myocardial microcirculation,pushing the precise diagnosis and treatment of coronary disease into a new era.
- Rainmed’s caFFR System and caIMR System have obvious technical and first-mover advantages; The CE certificate also opens up the imagination space of product commercialization (such as developing markets).
- However, the concerns on current sales model, market acceptance, medical insurance coverage, cash flow pressure and market sentiment when IPO should also not be neglected.
Morning Views Asia: Central China Securities, Greenland Holdings Corp
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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