In today’s briefing:
- China Vanke Placement – A Placement Was Expected, Unclear if It Was This One
- China Vanke (2202 HK): Placement & Index Flows
- HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
- Meilan Airport (357 HK): Profit Warning Removed Share Price Overhang
- China Everbright Water (1857 HK): More to Look Forward
- Beisen Holdings Pre-IPO Tearsheet
- JF Wealth IPO – Has Grown Well over Track Period, but Questions on Sustainability Remain
- [Miniso Group (MNSO US) Target Price Change]: 2023 Catalyst Is Store Expansion, Raise TP to US$24
- Northeast Pharmaceutical Fined $19 Million for Jacking Up Drug Ingredient Prices
- [Vipshop (VIPS US) Rating Change]: UG to BUY for Immunity from Price War
China Vanke Placement – A Placement Was Expected, Unclear if It Was This One
- China Vanke aims to raise around US$500m in its H-share primary placement.
- Vanke had recently stated that it aimed to raise around US$2bn via an A-share private placement, so a placement was expected for sure.
- In this note, we will talk about the placement and run the deal through our ECM framework.
China Vanke (2202 HK): Placement & Index Flows
- News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
- The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.
- China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.
HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
- Reportedly (Bloomberg) Hong Kong broadband play HKBN Ltd (1310 HK) has received a takeover offer from I Square’s HGC Global Communications.
- HKBN’s shares were halted in the late afternoon trading session yesterday after gaining 11.6%. The reason stated for the suspension was “possible inside information“, not pursuant to the Takeovers Code.
- Last May, Bloomberg reported that KKR, PAG, and Stonepeak – amongst others – were considering bids for HKBN. The market cap at the time was US$1.6bn versus US$934mn now.
Meilan Airport (357 HK): Profit Warning Removed Share Price Overhang
- Meilan Airport issued a profit warning last night expecting a net loss of not more than RMB280 million for 2022.
- While the magnitude of loss surprised us, positive share price reaction suggests investors are ready to look beyond.
- We incorporate both higher passenger throughput and financial expenses estimate in our model and trim our net profit forecast for 2023 from RMB600 million to RMB500 million. Maintain Buy.
China Everbright Water (1857 HK): More to Look Forward
- Weaker 2H22 and FY22 earnings are primarily caused by disruption from the pandemic, and the 18.7% share price retreat since 2022 should have well factored in an unexciting year.
- Recovery of construction revenue, rebound in margin, completion of pipeline projects, increase in water tariffs and faster receivable collections are the key positive factors to watch.
- China Everbright Water (1857 HK) will generate ROE of 9.8% and 10.3% for FY23 and FY24. Such return profile renders its 3.5x PER and 0.35x P/B for FY23 inexpensive.
Beisen Holdings Pre-IPO Tearsheet
- Beisen Holdings (1667838D CH) is looking to raise about US$200m in its upcoming HK IPO. The deal will be run by Morgan Stanley and CICC.
- Beisen Holdings is the largest provider of cloud-based HCM solutions in China in terms of revenues in 2021, according to CIC. Its platform iTalentX delivers cloud-native SaaS products.
- Its platform is the first and the only in the industry to offer a suite of cloud-based applications covering organization’s HCM needs throughout the entire employee lifecycle, according to CIC.
JF Wealth IPO – Has Grown Well over Track Period, but Questions on Sustainability Remain
- JF Wealth Holdings (9636 HK) is looking to raise US$143m in its Hong Kong IPO.
- JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.
- With total gross billings of RMB2bn in 2021, it was the second largest online investment decision-making solution provider in China with a 5.9% market share.
[Miniso Group (MNSO US) Target Price Change]: 2023 Catalyst Is Store Expansion, Raise TP to US$24
- Miniso reported its C4Q22 revenue at RMB2,494mn, (2.6%)/1.1% vs. our estimate/consensus, non-GAAP net income at RMB373mn, 27.8%/29.0% higher than our estimate/consensus;
- We expect Miniso’s revenue to achieve 33% YoY in C2023, driven by 1) the store expansion in both domestic and overseas market, 2) domestic single store revenue recovered;
- We maintain the stock as BUY rating, and raise TP by US$2 to US$24, reflecting Miniso’s expansion of domestic store network in low tier cities
Northeast Pharmaceutical Fined $19 Million for Jacking Up Drug Ingredient Prices
- Leading Chinese drug-ingredients supplier Northeast Pharmaceutical Group Co. Ltd. was fined 133 million yuan ($19 million) for abusing its dominant market position in materials used to make a treatment for kidney dialysis patients.
- The market regulator in northeastern China’s Liaoning province conducted a three-year investigation of Northeast Pharmaceutical’s monopoly in the market for ingredients to make levocarnitine.
- The medicine is used to treat dialysis patients for a lack of carnitine, a substance that helps the body convert fat into energy
[Vipshop (VIPS US) Rating Change]: UG to BUY for Immunity from Price War
- VIPS reported C4Q22 total revenue largely in line. Non-GAAP net profit beat our est. and cons. by 12%, mainly due to gross margin improvement and reduction in G&A cost.
- The loyal customers of Super VIP program and strong focus on apparel category make the platform relatively immune to the pricing competition in eCommerce space.
- Despite intensifying competition, VIPS would maintain stable margin while enjoying gradual return of discretionary spending. Upgrade to BUY with TP of US$16.3, which implied 10x P/2023E.
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