Daily Brief China: Alibaba Group, Tian An China Investment, Kelun Biotech, Mobvoi, PDD Holdings Inc, Hopson Development and more

• Positive surprises in profitability during Q1 2023 failed to reverse the long-term decline of Chinese e-commerce, possibly due to market recognition of the temporary impact of cost-cutting and monetization efforts.
• In our opinion, robust growth in GMV is fundamentally essential to reverse the long-term downward trend of the Chinese e-commerce sector.
• Chinese e-commerce sector no longer discloses GMV, but Express delivery volume indicates a 20% decline in parcel volumes compared to 2021, potentially reflecting a decrease in GMV.

• Tian An China Investment (28 HK) and Allied (373 HK) entered a trading halt “pursuant to The Hong Kong Code on Takeovers and Mergers.” Allied owns 55.72% of Tian An.
• It is likely that Allied Group is seeking to privatise its subsidiary Tian An. Tian An’s other substantial shareholders have a history of sell-downs which facilitate an offer.
• Allied Properties (H.K.) (56 HK)/APL’s partial offer for Tian An in 2011 and Allied’s privatisation of APL in 2020 point to a 20.8%-34.3% premium or HK$5.01-5.57 per share offer.

• Kelun-Biotech, a China-based integrated innovative biopharmaceutical company, plans to raise up to US$400m via a Hong Kong listing.
• In our previous note, we examined the company’s two core products, namely SKB264, a TROP2-ADC, and A166, a HER2-ADC.
• In this note, we will provide a valuation for the company’s key products.

• Mobvoi (2185047D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC and CMBI.
• Mobvoi is an AI company with a focus on generative AI and voice interaction technologies.
• As per CIC, the firm is the largest revenue-generating AI company focusing on AI-generated content (AIGC) technologies in terms of 2022 revenue from AIGC solutions.

• We recently interviewed some Temu merchants, and the main conclusion is that Temu continues to experience rapid growth despite the chaos. 
• Temu’s GMV reached a new high in May; Temu faces upcoming challenges from Shein and TikTok, as they are also about to launch their fully managed models.
• Moreover, Temu’s unit economics (UE) has not seen further improvement for several months, and the supply of goods has been a problem;

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 SCE
• Hopson Development