Daily Brief China: Canvest Environmental Protection Group, Sunny Optical Technology Group, China National Nuclear Power C, Bloks Group, Saint Bella, Sino-Ocean Group and more

• Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
• The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
• While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.

• The Hong Kong market trades about 30% below analysts’ estimated 12 month target price.
• Analysts are raising forecasts forXiaomi Corp (1810 HK) as it meets success with new phone rollouts and its EV business. 
• Sunny Optical Technology Group (2382 HK) had a positive profit alert and Minth Group Ltd (425 HK) is showing growth in its international business. Both are rated BUY from analysts.

• Based on the close of 22 July, there could be two changes for the iShares A50 China (2823 HK) / CSOP China A50 (2822 HK) ETFs in June.
• China National Nuclear Power and Huaneng Lancang River Hydropower could replace China Tourism Group Duty Free Corp Ltd and Yihai Kerry Arawana Holdings in the ETFs. 
• China Tourism Group Duty Free (1880 HK) could be deleted from a global index in August, so there could be selling in the A-shares and H-shares.

• Bloks Group (1850960D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
• In this note, we will talk about the positive aspects of the deal.

• Bloks Group (1850960D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
• In this note, we will talk about the not so positive aspects of the deal.

• SAINT BELLA’s revenue growth fluctuated because the pandemic led to the delay in the pregnancy plan of many families and an increase in the rate of abortion or miscarriage. 
• The increasing contract liabilities indicate that short-term performance growth of SAINT BELLA is guaranteed, but the declining fertility rates in China will bring challenges to SAINT BELLA’s long-term growth momentum.
• After Series B round financing in 2020, post-investment valuation was already about US$100 million. Valuation of SAINT BELLA should be higher than Aidigong Maternal & Child Health Limited (286 HK).

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.

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