China: New Oriental Education & Technology Group, Baidu, Deewin Tianxia, Shimao Property Holdings, Central China Real Estate, Hong Kong Hang Seng Index and more

• Oriental Selection achieves high-speed user growth through bilingual livestreaming, thanks to Douyin’s  algorithmic recommendation mechanism before 6/18 ecommerce, after 6/18 the increase in the follower numbers & GMV dropped sharply.
• The unit price of the product is below average, due to the focus on produce and books, Agricultural livestreaming has always been a difficult to grow category
• 10%-15% Commission  is lower than industry average, and subsequent supply chain control and 1st party products have lower margins.

• Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
• We list 11 stocks that could be added to the index in September – with one-way turnover just over 5%, the actual number of inclusions will be lower.
• There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.

• Deewin Tianxia (2418 HK) is looking to raise up to US$147m in its Hong Kong IPO.
• Deewin Tianxia (DT) is a service provider in the commercial automobile service industry in China. 
• The firm continues to generate the bulk of its revenue from its controlling shareholder and the latter’s associates. 

• A lack of prediction accuracy leads us to advise against investing in risky credits.
• We expect up 1/3 of Chinese property developers to either default or negotiate with their creditors and see a few sovereigns running out of cash, following Sri Lanka’s demise. 
• Shimao’s failure to negotiate with its creditors leads us to believe the liquidity situation at many Chinese developers is worse than expected.

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.

• Central China Securities
• China Vanke

• Over the last few days, the banks and financials have been acting very poorly.
• The gap down on Wednesday in a few sectors and stocks got my attention as there was a bearish setup before today’s trading day.
• A gap, if not filled, will usually mark a change or acceleration of a trend.