In today’s briefing:
- Alibaba Cloud IPO: Regulatory Optimism Amidst Stability Challenges
- Haitong Securities – Portugal Bank Goodwill Impairment Surge | Overall: High Costs, Poor Revenue
- HEC Pharma (1558 HK): Robust 1H23 Performance on Flu Outbreak in China
- Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows
- CaiNiao Smart Logistics Pre-IPO Part 1 | Business Model | Key Relationships | Differentiators
- China Population Policies Impact on Healthcare Companies Series – Part 2
- China Comm Const (1800 HK): Well Worth Revisiting
- China Shineway Pharmaceutical (2877.HK) – Optimistic About the Outlook Despite Short-Term Headwinds
Alibaba Cloud IPO: Regulatory Optimism Amidst Stability Challenges
- Last week, the Cyberspace Administration of China (CAC) put forth a proposal to relax certain stringent regulations concerning the transfer of sensitive data to foreign countries.
- This could be advantageous for Alibaba Group Holding (9988 HK)‘s Cloud business, especially as a potential candidate for an IPO following the recent IPO filing of the logistics arm, Cainiao.
- Despite improved regulations, concerns about stability, leadership, and financial performance pose hurdles for Alibaba Cloud’s IPO.
Haitong Securities – Portugal Bank Goodwill Impairment Surge | Overall: High Costs, Poor Revenue
- With the potential corporate action (see additional reading below) there is more interest in Haitong Securities but operationally it does not appear positive, for many reasons
- The company is seeing worse revenue growth in asset management, brokerage and investment banking, while its Haitong Bank can see far higher credit costs
- Total operating costs are now 63% of revenue, tax rate is a lot higher, litigation risks seem to be oversized, with potential impact to costs
HEC Pharma (1558 HK): Robust 1H23 Performance on Flu Outbreak in China
- Yichang HEC Changjiang Pharma (1558 HK) reported a whopping 148% YoY growth in revenue to RMB3,209M in 1H23. Net profit rebounded to RMB3,209M from a loss of RMB33M in 1H22.
- In H1 2023, revenue from Kewei, approved for first-line treatment of influenza, jumped 186% YoY to RMB2,881M, representing ~90% of total revenue, mainly due to spiking flu cases in China.
- Recently, the company obtained approval for premixed Protamine human insulin injection and submitted marketing application for its self-developed product, Yiqibuvir for the treatment of chronic Hepatitis C in China.
Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows
- The Brand-Spanking New (8 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
- We used to do it. We brought it back better, with lots of cool interactive tables, and charts, heat maps, and comparative data. And 47 Trade Recommendations.
- The last 7 weeks (since the start of the new Trcker and Portfolio 8 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%.
CaiNiao Smart Logistics Pre-IPO Part 1 | Business Model | Key Relationships | Differentiators
- Business model: how does CaiNiao get paid, and by whom, and for what?
- Key relationships with parent Alibaba and with China’s listed express companies
- Differentiators: what makes CaiNiao different from other e-comm logistics names?
China Population Policies Impact on Healthcare Companies Series – Part 2
- Several provinces have successively introduced policies to encourage childbirth. Increasing medical insurance reimbursement and special additional deduction standards for personal income tax would be the common direction.
- This year is mainly a period of intensive introduction of relevant fertility support policies, so the impact on company’s performance is limited.The focus would be on next year’s financial results.
- We analyzed the performance of Livzon Pharmaceutical Group In (000513 CH),BGI Genomics (300676 CH) and Jinxin Fertility Group (1951 HK) based on their 23H1 reports, and adjusted our forecast accordingly.
China Comm Const (1800 HK): Well Worth Revisiting
- The fall in share price in the last five months have sent China Communications Construction (1800 HK) back to very attractive level. The market has misread the strong 2Q23 result.
- 2Q23 recurring net profit surged 68.5% as 2Q22 has an inflated base. Gross margin has recorded meaningful YoY recovery while capex, particularly for BOT, has scaled back significantly.
- There should not be concerns about CCCC’s contract outlook. Its backlog is enough to cover 4.9x FY23F revenue and its PER of 2.7x has provided more than sufficient buffer.
China Shineway Pharmaceutical (2877.HK) – Optimistic About the Outlook Despite Short-Term Headwinds
- Shineway’s 23H1 performance exceeded expectations. High growth of injection products/TCM formula granules was commendable.But as pandemic is under control, sales of Shineway’s respiratory system prescription medications would decrease in 23H2.
- The national VBP of TCM formula granules and the anti-corruption campaign in 23H2 could be the short-term headwinds to Shineway’s performance, which could lead to lower-than-expected 23H2 performance growth.
- China’s favorable policies will provide strong support for the development of TCM industry. Shineway’s TCM formula granules business would have outstanding future growth. So, we’re optimistic about Shineway’s long-term outlook.
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