China: Xiamen International Port H, China Shenshan Orchard, Meituan, Country Garden Holdings Co, Burning Rock Biotech, Air China Ltd (H) and more

• Xiamen International Port H (3378 HK) announced a pre-conditional privatisation offer from Xiamen Port Holding at HK$2.25 per H share + final dividend of RMB0.021 per share (ex-div: 15 June). 
• The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.  
• The offer is attractive in comparison to historical share prices and multiples. We think that the privatisation proposal will likely succeed. At the last close, the gross spread is 55.2%.

For our next Corporate Webinar, we are glad to welcome China Shenshan Orchard (DKNG SP) Executive Director, David Zhao.

In the upcoming webinar, David will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 28 June 2022, 17:00 SGT.

China Shenshan Orchard Holdings Co. Ltd. is a horticultural company in the business of planting, cultivating, and selling kiwi fruit in the People’s Republic of China (“PRC”). The Group holds forest use rights for eight strategically located orchards, spanning a total land area of 9,805 mu (approximately 6.5 million sqm), which is believed to be one of the largest domestic kiwi fruit orchards concentrated in Chibi City, Hubei, the PRC.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• Revenue growth mainly came from initiatives, which is the focus of April layoff.
• We believe revenue will slow down and the operating loss will shrink.
• We set a downside of 11.5% and a price target of HK$160.

• The government has taken several steps to improve supply-side restrictions on first and second homes.
• PBOC has added policy support by cutting longer-dated LPR rates for home loan pricing. Longfor Group and Country Garden are highly rated, large China Real Estate developers.
• They do not seem to respond positively to many tailwinds

• Burning Rock Biotech (BNR US) reported strong Q1 2022 results, with accelerated double-digit revenue growth of 27% y/y, higher than full year 2022 revenue growth guidance of 22%.
• Operating loss widened due to 41% y/y surge in opex, primarily attributed to higher staff cost, which resulted from an increase in headcount.
• Management reiterated 2022 revenue growth guidance of 22% y/y. With Shanghai re-opening, this seems to be achievable.

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.

• Evergrande
• Country Garden Holdings Co
• Jingrui Holdings
• Meituan
• China Datang Corp Renewable Power
• Ronshine China Holdings
• Times China

• National flag carrier Air China Ltd. (601111.SH) is planning to take control of Shandong Airlines as part of a bailout of the debt-ridden regional airline, it said this week.
• The state-owned giant is stepping in as its smaller peer suffers along with the rest of the country’s civil aviation industry, with companies racking up huge losses due to the Covid-19 pandemic.
• Air China is already the second-largest shareholder of Shandong Airlines Group Co. Ltd. with a 49.4% stake

• Meituan reported 1Q2022 results yesterday. Revenue grew 25.0% YoY to RMB46.3bn (vs consensus RMB45.3bn) while operating losses for the quarter slightly dropped to 12.1% of revenues from 12.9% in 1Q2021.
• As a result of Omicron spread in March, revenue declined sequentially as all three segments reported QoQ decline in revenue during 1Q2022.
• Meituan hasn’t reported GTV for food delivery as well as no. of domestic hotel room nights for In-Store, Hotel & Travel which seems strange, suggesting 2Q numbers could be worse.