In today’s briefing:
- Bank of Jinzhou (416 HK) To Be Taken Private
- Evergrande’s Wind-Up Ruling Implications
- Mixue Pre-IPO: Reliable Price Advantage – An On-The-Ground Viewpoint
- Xiaocaiyuan International Holding Pre-IPO Tearsheet
- Monthly Chinese Express Tracker | Volumes Remain Firm | Domestic Pricing Worsens (January 2024)
- Mindray to Acquire $927 Million Stake in APT Medical – the Logic and Concerns Behind
- China Beststudy Education (3978 HK): A Darkhorse Stock In The China Tutoring Sector
Bank of Jinzhou (416 HK) To Be Taken Private
- Back on the 20th January 2023, shares in Bank Of Jinzhou (416 HK) (BoJ) were suspended due to a delay in publishing its FY22 results.
- BoJ was previously bailed out in March 2020 by the PBOC and Liaoning Financial Holdings, owned by the finance authority of Liaoning province, via the placement of new domestic shares.
- Now Liaoning Financial is taking BoJ private at HK$1.38/share, or ~0.28x P/B.
Evergrande’s Wind-Up Ruling Implications
- Temporary implications of Evergrande’s court ruling on property sector sentiment and other troubled property developers’ restructuring plans
- Evergrande’s situation is more complicated than that of other troubled developers, as its founder is still under arrest and the company is unable to issue new debts.
- Cross-Border bankruptcy cases for Chinese companies are still relatively rare, making the recognition and enforcement of Hong Kong bankruptcy judgments by the PRC court uncertain
Mixue Pre-IPO: Reliable Price Advantage – An On-The-Ground Viewpoint
- We believe Mixue’s low prices are fit for the current weak economy.
- Any “freshly made” price lower than Mixue’s will compete with bottled drinks.
- We also believe low rental is the key for Mixue’s low prices.
Xiaocaiyuan International Holding Pre-IPO Tearsheet
- Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by Huatai and UBS.
- Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants.
- According to the firm, a Xiaocaiyuan restaurant offers approximately 45 to 50 menu items in each season, including cold dishes, stews and braised dishes, amongst others.
Monthly Chinese Express Tracker | Volumes Remain Firm | Domestic Pricing Worsens (January 2024)
- December: strong volume growth, but worsening price declines for STO, Yunda
- Recent trends in X-border parcel volume growth & pricing moderated in December
- In 2024, look for SF to continue its outpeformance; STO, Yunda should still lag
Mindray to Acquire $927 Million Stake in APT Medical – the Logic and Concerns Behind
- Mindray has encountered bottleneck in performance growth. So, it urgently hopes to bring “new growth stories”. APT Medical’s current growth momentum is commendable, and could also complement Mindray’s product line.
- We saw poor stock price performance of both after the announcement. High acquisition premium and the possibility that APT Medical’s future performance fall short of expectations are among the reasons.
- In fact, both sides got what they wanted. We advise investors to be patient.Perhaps, Mindray would indeed make a breakthrough from this acquisition, which is also a blow to Microport.
China Beststudy Education (3978 HK): A Darkhorse Stock In The China Tutoring Sector
- China Beststudy Education Group (3978 HK) is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area.
- The company is trading at 5x forward PE (2024), and I expect earnings to grow >100% in 2024 off of a low base, and >30% in 2025.
- I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU’s current 20x.
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