Daily Brief China: 3peak , Bank of Communications , CSPC Innovation Pharmaceutical-A, China Shineway Pharmaceutical, China Vanke and more

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the June 2024 index rebal event.
• I currently expect three changes resulting in a one-way flow of around US$531mn but there is still room for the expectations to change.

• With the review period nearing completion, 6 stocks are in inclusion zone and 8 are in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 7% at the June rebalance leading to a one-way trade of CNY 9.7bn (US$1.34bn). Index arb balances could increase the impact on the stocks.
• The inflows into mainland China ETFs have further increased the flow and impact on the potential changes. The potential adds have continued to outperform the potential deletes.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

• Shineway’s performance in 23H2 was disappointing, mainly due to the VBP of formula granules and anti-corruption campaign. Accordingly, TCM injection and TCM formula granule businesses had negative growth in 23Q4.
• As the NHSA has further lifted the reimbursement restrictions on Chinese medicine injections, Shineway’s injection business is expected to help “hedge against” the headwinds in TCM formula granule business.
• 24H1 growth is under pressure due to 23H1 high base. Growth in 24H2 would pick up.As long as TCM favorable policies remain, profit is expected to increase by 20%-30% annually.

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.

• China Vanke
• Melco Resorts and Entertainment (Philippines)