Daily Brief China: CALB, Tencent, iQIYI Inc, ZTO Express Cayman Inc, YSB Inc, Sirnaomics, Onewo Space-Tech, CIFI Holdings and more

• CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
• According to Frost & Sullivan, in terms of installed capacity in 2021, CALB ranked seventh globally among EV battery companies with a 3.2% market share.
• The key elements of the bull case rest on a large and growing market, rising market share, explosive top-line growth and ambitious capacity expansion plans.

• It was reported in August that Tencent was looking to raise its stake in Ubisoft and had reached out to Ubisoft’s founding family Guillemot who currently owns 14.0% of Ubisoft.
• Tencent has acquired a 49.9% economic stake in Guillemot Brothers for EUR300m and as part of the deal, will be allowed to up its current stake in Ubisoft.
• Ubisoft announced on Tuesday that its board of directors have authorised Tencent to increase its direct stake in Ubisoft from 4.5% to 9.99%.

• IQIYI Inc (IQ US) reported 2Q2022 earnings last week. Revenue decreased 12.5% YoY to RMB6.66bn (vs consensus RMB6.67bn) and reported an OP of RMB125.8m (vs consensus RMB30.4m).
• The company also announced a US$500m private placement of convertible notes with PAG (PAG HK)  and the transaction is expected to close in 4Q2022.
• The company also has entered into a content licensing agreement with Douyin which will likely bring in high-margin business for content distribution segment.

• The Aug China Express Development Index points to further industry recovery; and as the leader with 23% (+2pp YoY) market share, ZTO Express (2057 HK) should ride on the uptrend. 
• Sustained volume outperformance, upside on pricing and excellent cost control capability are drivers in 2H22. We are also comfortable with its solid financial position. 
• ZTO Express has above-average earnings quality and enjoys benefits from industry consolidation. Its on par valuation with the industry makes the stock appealing.

• YSB Inc (YSB HK) is looking to raise about US$500m in its upcoming Hong Kong IPO.  
• YSB Inc. (YSB) operates a pharmaceutical platform, digitizing the pharmaceutical transaction and service segment.
• Throughout its history, YSB has been evolving its business model and has been growing its user base rapidly as well, thereby leading to GMV growth and in turn, sales growth.

• The current two mainstream delivery platforms such as LNP delivery platform and GalNAc RNAi platform have been verified and recognized, with products using these platforms successfully launched on the market.
• Sirnaomics has developed its own differentiated delivery platforms, but the druggability has never been verified in trials, like a blind box. They will not be valuable until they are proven.
• Sirnaomics has cashflow pressure and is uncertain if it can survive “this winter”. It’s also difficult for Sirnaomics to find suitable valuation anchor in HKEX. Share price may fluctuate largely.

• Onewo Space-Tech (ONEWO HK) aims to raise upto US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke (2202 HK). 
• As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
• In this note, we undertake a peer comparison with some of its larger listed peers.

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.

• Central China Securities
• CIFI Holdings
• Fosun International
• Sino-Ocean Service
• Times China