In today’s briefing:
- HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- Guodian Tech’s Privatisation Offer
- Huitongda IPO: Huge Churn Rate Indicates That Things Could Go Bad Very Quickly
- Peijia Medical (9996.HK) Vs Venus MedTech (2500.HK) Vs CardioFlow (2160.HK)-Pain Points and Solution
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Beijing Yuanxin (北京圆心) Pre-IPO – Growing at the Expense of Margins
- Pre-IPO OrbusNeich Medical Group: A Scale Player, With Comprehensive Portfolio in PCI Balloon Market
- Microport NeuroTech (微创脑科学) Pre-IPO: Decent Name for Neuro-Interventional Devices
HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
- SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
- Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.
Guodian Tech’s Privatisation Offer
- Guodian Technology & Environment Group (1296 HK) announced a pre-conditional privatisation offer from China Energy at HK$1.08 per H share, a 47.59% premium to the last close.
- The key conditions for the delisting will be approval by at least 75% independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.
- The offer is attractive in comparison to long-term historical share prices and multiples. We think that the privatisation proposal will likely succeed.
Huitongda IPO: Huge Churn Rate Indicates That Things Could Go Bad Very Quickly
- Alibaba Group (9988 HK) backed B2B e-commerce business, Huitongda (1566215D CH) is looking to go public to raise $500m to save the business.
- With churn rates as high as 50%, things could get ugly rather quickly if customer acquisition falls below sub optimal levels.
- We fear this is an attempt to save a failing business that could be worthless in few years.
Peijia Medical (9996.HK) Vs Venus MedTech (2500.HK) Vs CardioFlow (2160.HK)-Pain Points and Solution
- Venus MedTech (2500 HK) is taking the lead in TAVR industry, but Peijia Medical (9996 HK) has advantages in development progress of future products. So, the market pattern is not yet determined.
- The high cost of TAVR surgery is the main reason for lower-than-expected sales performance of related companies and low market penetration. The fierce competition would also bring more challenges.
- A good solution is to enter developing markets with CE mark, which would offer a new commercialization option and also a wider expansion beyond just European and American markets.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets dropped yet another day on Friday, with the S&P and Nasdaq down 1.9% and 2.7% as the risk-off sentiment continued to weigh on markets. Most sectors were in the red with Communication Services and Consumer Discretionary down 3.1% and 3.9%. US 10Y Treasury yields were flat at 1.77% after easing 8bp on Thursday. European markets closed mostly higher with the DAX and CAC down 1.9%, 1.8% and 1.2%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI was down 1.1%. Asian markets have broadly opened in the red – HSI, STI and Nikkei were down 1%, 0.1%, 0.6% while Shanghai was up 0.2%. US IG CDS spreads were 1.1bp wider and HY CDS spreads were 5.7bp wider, EU Main CDS spreads were 1.7bp wider and Crossover CDS spreads were 7.9bp wider. Asia ex-Japan CDS spreads were 1.5bp wider.
Beijing Yuanxin (北京圆心) Pre-IPO – Growing at the Expense of Margins
- Beijing Yuanxin Tech (BYT) is looking to raise US$500m in its upcoming Hong Kong IPO.
- As per F&S, the firm is the No. 1 integrated healthcare fulfilment platform in China focusing on prescription drugs
- In this note, we look at the company’s fundamentals and operations and share our thoughts about the IPO.
Pre-IPO OrbusNeich Medical Group: A Scale Player, With Comprehensive Portfolio in PCI Balloon Market
- OrbusNeich Medical Group focuses on coronary and peripheral interventional instruments, such as balloons and stents used in PCI (coronary)/PTA (peripheral) procedures.
- Comprehensive and innovative product portfolio for endovascular interventional procedures, established global sales network, and robust pipeline are the major strength of OrbusNeich.
- Fierce competition, commoditized nature of the offering, centralized procurement leading to substantial price drop are some of the concerns for the company.
Microport NeuroTech (微创脑科学) Pre-IPO: Decent Name for Neuro-Interventional Devices
- Microport NeuroTech is a leading neuro-interventional device company in China. The company is looking to raise up to USD 300m via a Hong Kong listing.
- We look at the company’s key segments and products. We like the company’s comprehensive coverage of neuro-interventional devices.
- Its management team has decent experience as it is a spin-off from Microport. We also highlight the risk of the stock.
Before it’s here, it’s on Smartkarma
