Daily Brief China: Alibaba Group Holding , Alibaba (ADR), Taste Gourmet, Central China Real Estate, Deshengtang Pharmaceutical Co Ltd and more

• Daniel Zhang stepped down from the Chair and CEO and moved to be the head of cloud intelligence.
• The retail focus will move from physical store and branded product to a platform for third-party retailers.
• We believe the strategy change is correct in the weak consumption market.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH),  Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN) IPOs.
• Event-Driven developments – Invocare Ltd (IVC AU), Arcland Service (3085 JP), JSR Corp (4185 JP), SBI Shinsei Bank (8303 JP), Amara Holdings (AMA SP), Yashili International Holdings (1230 HK).       

• Taste Gourmet (8371 HK) reported earnings of 68 mn HKD for FY23 (including impairments of 3.2 mn HKD). Adjusting for impairments, earnings were in line with our estimates.
• The company signed ten new leases in HK, which are expected to commence over the next 5-6 months taking the total restaurant count in HK to 49. 
• Trading at 5.6x PE FY24e with a dividend yield of 10.7% based on a 60 payout ratio, we see a further inflection in earnings in FY24 with new restaurant openings.

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.

• Central China Securities
• UPL Ltd

• Due to COVID-19, the consumption pattern of customers has changed.The rapid development period of pharmacies is coming to an end and the industry has entered a new era of integration.
• The essence of Deshengtang’s business model is more like traditional retail offline pharmacies, relying heavily on selling drugs. The Company’s healthy gross margin gives hope for an early turnaround. 
• However, no matter from which field to seek expansion, Deshengtang would encounter strong competitors.It remains to see if Deshengtang can survive in the industry rather than be acquired by competitors.