Daily Brief China: China Datang Corp Renewable Power, Giant Biogene Holding, BYD, CIFI Holdings and more

• After one month from the September batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 12 stocks. 
• We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
• We continued to observed outperformance post the HSCI announcement but not the actual inclusion despite the fact that southbound inflows has a significant impact on the trading volume. 

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• In Giant Biogene IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
• The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&M expenses and margins on a downward trajectory.

• BYD (1211 HK) has recorded a more respectable result this year compared to the peers such as Tesla, Nio, and Xpeng. 
• Overseas sales could be the next growth engine if the domestic market sales may stall. 
• The price increase early this year to the customers did not deter the company’s growth rate which indicates its pricing power. 

• The strength about Giant Biogene is that the founders have R&D background, which helps build trust. Meanwhile, the financial performance was good, with three years of consistent high margins.
• The sustainability of high-profit model will face pressure due to increasing competition. The establishment of long-term core competitiveness and second growth point is important. Complex related-party transaction is another concern.
• Giant Biogene is in an industry that has a large potential for future growth in valuation. Its valuation should be lower than that of Bloomage and Imeik.

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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