China: Tencent, Alibaba Group, Shenzhen Expressway Co H, Lenovo, Activision Blizzard and more

• The Hang Seng index constituents have moved away from just local Hong Kong shares to being dominated by China H and China-centric shares
• Focusing on these constituents adds much value, especially with shifting liquidity away from US-listed ADS to HKEX listed shares.
• It brings together a more diverse investor base ranging from local Hong Kong, mainland China and the rest of the world.

• Operating margin improved in 4Q22 due to well controlled expenses in minor businesses.
• We believe the state council meeting will provide a turning point in June.
• We set an upside of 31% and a price target at HK$106.

• Shenzhen Expressway Co H (548 HK) guided that many drivers are presented for the rest of the year to support growth, after a 24% YoY decline in 1Q22 net profit. 
• Toll road business should benefit from organic growth and project completions, while clean energy and waste treatment businesses will experience astronomical growth from capacity acquisitions. 
• There exists room to leverage up for growth as liabilities-to-asset ratio is still 11pp below its tolerance level of 65%. Besides below-average PERs, FY22F yield of 10% is attractive too.

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.

• Adani Ports & Special Economic Zone
• Bharti Airtel
• Lenovo
• Vedanta Resources

• FPA is a Los Angeles-based institutional money management firm practicing a disciplined approach to value investing, prudently seeking superior long-term returns while maintaining a focus on capital preservation.
• In the first quarter of 2022, the FPA U.S. Core Equity Fund, Inc.’s (“Fund”) performance was -12.25% (-12.01% before fees and expenses).
• I believe secularly growing mid- to large-capitalization companies trading at compelling valuations will continue to be a favorable place to invest for the long-term—especially relative to U.S. Treasuries and other investment alternatives.