Daily Brief China: Bank of East Asia, XPeng , Innovent Biologics Inc, SITC International, Sunny Optical Technology Group, Full Truck Alliance , Legend Biotech Corp, Vipshop Holdings and more

• Data from Bank of East Asia (23 HK) is just out with poor 1H24 results YoY
• Notable in its release are its Hong Kong overdue exposure by over three months
• Hong Kong region income is the worst affected by credit costs, this does not seem to be over

• XPeng (XPEV) reported C2Q24 top line, non-GAAP operating loss and GAAP net income in line, 5.4% worse and 7.5% better than our estimate. 
• We raised our MONA forecast by 13% but still significantly below XPEV’s guidance. We believe management guidance is overly optimistic;
• We maintain a SELL rating on the stock and TP unchanged.

• Dupert, a drug for the special treatment of non-small cell cancer has been approved by the NMPA.
• In 2022, China recorded the highest number of new cancer cases, and their exceptional high incidence of smoking is of particular concern.
• Innovent’s portfolio of nine oncology drugs is very attractive in the biggest cancer market.

• SITC International (1308 HK)‘s management guided for a promising outlook for 2H24, with strong load performance in Jul-Aug, and better long-term contract rates YoY.  
• Gross margin expanded 4.5pp in 1H24 despite a 5.3% drop in average freight rate, thanks to good cost control with lower chartered-in costs and more self-owned vessels.
• Net cash increased 195% from end-FY23, and we are confident that its 70% payout ratio can be maintained. Its P/B is still below the 5-year average.

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.

• Sunny Optical Technology Group
• Xiaomi Corp

• Another set of strong results from YMM, revenue and core earnings both up
• Need to monitor orders per MAU; reason for decline in Q224 unclear
• Maintain US$9.45/ADS target price, ADSs are attractive closer to US$7

• Legend Biotech, during their second quarter 2024 earnings call, presented a detailed insight into its operations, financial health, and the strides it’s making in the pharmaceutical space, particularly regarding CARVYKTI, their FDA-approved treatment for multiple myeloma.
• The company reported an 18.5% quarter-over-quarter revenue growth amounting to $186 million for CARVYKTI, which marks a robust 60% increase year-over-year.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Vipshop reported C2Q24 revenue and profit were in-line vs. the street, but the mid-point of C3Q revenue guide missed by 8% due to soft apparel demand;
• VIPS has been post growth for some time. However, its healthy cash flow ensures a 75% dividend payout ratio as promised by the company. 
• We cut our CY24 EPS estimate by 8.4% due to soft apparel demand, leading to a US$ 14.5 TP, but maintain BUY on a post-subsidy recovery.