Daily Brief China: Binjiang Service Group, Jingdong Property, Zhejiang Supcon Technology, China Overseas Land & Investment, ADICON Holdings Limited, Dongfang Electric, China Traditional Chinese Medicine, Anton Oilfield and more

• Binjiang Service Group (3316 HK) reported a solid earnings growth of 28% YoY, with revenue up 41%. Binjiang has outperformed its peers in the PMC space by a long way.
• Net cash on the balance sheet increased to 37% of the current market capitalization, led by the growth of operating profits and payables.
• The PE FY23e/24e now is a modest 11.2x FY23e/9.2x FY24e with dividend yield of 5.4%/6.5% FY23e/24e (assuming a 60% payout ratio).

• Jingdong Property (JDP HK) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• JD Property (JDP) develops and manages modern infrastructure, consisting primarily of logistics parks, as well as business parks and others in China and in Asia.
• As of Dec 22, the firm’s portfolio of Modern Infrastructure Assets has a total AUM of RMB93.7bn, occupying a total gross floor area (GFA) of 23.3m sqm. 

• Zhejiang Supcon Technology (688777 CH) is looking to raise around US$347m in its Swiss GDR listing. Huatai and CLSA are bookrunners on the deal.
• The firm is offering 12.5m GDRs (1 GDR to 2 ordinary A-shares) for sale, at a 8.1-10.8% discount to last close on the A-share leg.
• The deal is a relatively small one for the firm to digest, representing just 5.9 days of three month ADV on its A-share leg.

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• A large triple bottom in 2021/2022 has confirmed a likely multi-year base and evolving multi-year uptrend. Q1 2023 has delivered a correction within the evolving uptrend.
• A bullish weekly reversal pattern last week has confirmed that the 2023 correction is likely complete. Initial target at 23.20 (+11%), the break above which will target 27.35 (+30%).

• ADICON Holdings is one of top three independent clinical laboratories (ICL) in China based on total revenues. The company offers testing services primarily to hospitals and health check centres.
• The company’s application for a HKEx listing has been approved and according to news media outlets, ADICON plans to raise around US$400m through the IPO.
• Over the last three years, most of ADICON Holdings Limited (ADI HK) ’s growth were driven by Covid-19 related testing services which are likely to see huge decline going forward.

• Dongfang Electric (1072 HK)‘s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  
• It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.
• While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.

• China TCM’s concentrated TCM granules business improved significantly in 22H2, and the total revenue in 22H2 also increased by 42% YoY, indicating that the decline trend has been significantly curbed.
• Due to its SOE background+ national standard setters with the largest number of national standards filed, China TCM would be the beneficiary of the industry’s transformation during this dividend period.
• Due to low base last year, China TCM’s performance would rebound this year. Considering favorable policies and large growth potential in TCM granules, we’re optimistic about its share price performance.

• ADICON Holdings Limited (ADI HK) is looking to raise about US$400m in its upcoming HK IPO. 
• Adicon Holdings is one of the top three independent clinical laboratory (ICL) service providers in China in terms of total revenue during the Track Record Period, according to F&S. 
• Adicon’s revenue growth has been driven by its medical diagnostic testing services segment, during the track record period. However, much of its growth appears to be driven by COVID-19 testing. 

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.

• Anton Oilfield
• Greentown China
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