Daily Brief China: 111 Inc, Hainan Meilan International Airport, Edding Group, SATP Holding Inc, AP Moeller – Maersk A/S, JSW Steel Ltd, Black Sesame Technologies and more

• 111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS. 
• The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
• The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

• We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
• The takeaway is mixed as we see both positives and negatives relative to our expectations.
• We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

• Vancocin/Ceclor/FPN are currently the “cash cow” for Edding, but they’re facing the challenges of generics, VBP and increasing competition. Their current market leading position may be lost in the future.
• Edding seeks business transformation as its CSO model doesn’t work under domestic negative policies. But peak sales of three innovative drugs Vascepa/Mulpleta/EDP 125 may not reach the level of Vancocin/Ceclor.
• Edding’s core advantage still lies in sales capabilities. Its R&D capabilities have always been questioned. It’s unsure whether the market would give high valuation to a company without core competitiveness.

• SATP Holding, a leading China-based SMB finance and taxation solution provider, filed to go public in Hong Kong. The company is led by visionary Founder and CEO Shugang Zhang.
• SATP Holding offers scalable SaaS-based bookkeeping and taxation solutions to SMBs in China. The proprietary SaaS system (SATP) automates tax filings and financial statement submissions.
• According to Pitchbook and the company’s IPO prospectus, the founder-led software provider has raised ~$226M in funding across nine funding rounds.

• Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
• Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
• We expect Q2/H1 results to support our view that the worst of the storm has passed

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.

• AAC Technologies Holdings
• JSW Steel Ltd
• Reliance Industries

• Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• In this note, we will talk about the positive aspects of the deal.