Daily Brief China: Ant Financial Services Group, Alibaba Group, Youlife International Holdings, Yanlord Land, Perfect Group Corp Ltd, Shanghai Junshi Bioscience Co. Ltd. and more

• The announced restructuring of Ant Group holding companies will block founder Jack Ma from achieving majority voting on the board following the implementation of the holdcos adjustment
• The majority of board directors will be “independent” post the holdco restructuring and they are likely to drive a more social policy focused agenda, as the 2021 sustainability report suggests
• We see these developments, and especially the lack of IPO plan, to be negative for non-government aligned Ant Group shareholders, such as the international private equity groups and especially Alibaba

• A state-owned company invested in Ant Group, which boosted Alibaba’s stock price.
• Tencent obtained five new game licenses in December, three of which are imported games.
• China Literature’s daily active users increased by 80% in 2022 and reached the historical high.

• Youlife International Holdings (1759732D CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Macquarie and CCB International. 
• Youlife International is a blue-collar lifetime service platform in China. It assists blue-collar talent with upskilling and lifetime career development. 
• According to CIC, Youlife ranked first among all blue-collar lifetime service platforms in China in terms of revenue generated from blue-collar lifetime services in 2021. 

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.

• Sands China
• SJM Holdings
• Yanlord Land

• Artificial Intelligence (AI) and Deep Learning Applications are all the rage, primarily thanks to the likes of OpenAI’s ChatGPT being used for text and Dall-E being used to generate digital images.
• ChatGPT’s popularity has soared, reaching a user base of 1 million users in 5 days, and OpenAI itself is benefiting from the surge in users, now valued at $29 Billion.
• Investors are already looking for the next wave of AI products that can make a big splash and potentially disrupt legacy industries. 

• CBIRC approved the capital replenishment plan of RMB10.5bn of Ant CFC on Dec 30, 2022
• Under the regulatory guidance, Ant Group needs to complete a multifaceted rectification plan
• After the fund raising, Ant Group’s next step is to obtain FHC license and credit bureau license

• Junshi once generated sales and profits in scale, but lost money again. Its story suddenly changed from cancer drugs to COVID-19. We have lost sight of its development direction.
• Junshi’s commercialization history has lost its reference value for confirming the outlook. The calculation of peak sales doesn’t make much sense, because they cannot help Junshi turn losses into profits.
• The current market value still has too much “bubble”, and COVID-19 drug is a major “interference” to the valuation. We analyzed our thoughts on future valuation by excluding COVID-19 projects.