In today’s briefing:
- Hong Kong CEO & Director Dealings – 11th July 2022
- China’s Crackdown on Big Tech: Not Over by Any Means
- Tencent Fined for Violating Disclosure on Past Transactions; Anti-Monopoly Probe Is Far From Over
- China Internet Weekly (11Jul2022): JD.com, Alibaba, Suning.com, GoGoX
- Tianqi Lithium A/H Trading – A-Shares Have Done Relatively Well, H-Shares Should Follow
- EVA Precision 838 HK: Play on EV Market Growth
- Hope Education (1765 HK): More than Just Hopes
- MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization
- Morning Views Asia: Bharti Airtel, Guangzhou R&F Properties, Indika Energy, Longfor Properties
Hong Kong CEO & Director Dealings – 11th July 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- This insight also flags those companies where shares have been pledged, both recently and ongoing.
China’s Crackdown on Big Tech: Not Over by Any Means
- Just as investors were starting to get comfortable investing in Chinese big tech, the Government has imposed new fines on a range of tech companies.
- Meanwhile, the June ending quarter could yet again be a disspointment with growth curtailed through lack of funding for loss making businesses.
- Having gained around 50% in June 2022 through signs of easing the tech crackdown, these new fines and a weak June-ending quarter could resend tech valuations to March-2022 lows.
Tencent Fined for Violating Disclosure on Past Transactions; Anti-Monopoly Probe Is Far From Over
- On 10th July, SAMR published 28 administrative penalties for violating anti-monopoly law related to disclosing past transactions on firms including Tencent, Alibaba, Didi, Weibo and Bilibili.
- A fine of RMB17.2m (US$2.56m) was imposed in total and were fined for not properly reporting past deals between March 2011 to July 2021.
- The market has come to believe that the anti-monopoly investigation in China is easing off, however, the recent development suggests that the anti-monopoly normalisation will continue.
China Internet Weekly (11Jul2022): JD.com, Alibaba, Suning.com, GoGoX
- JD.com opened a physical shopping mall and we believe it is following Alibaba.
- JD.com signed contract with a state-owned power company for two reasons.
- Two suppliers applied for the liquidation of Suning.com to the court.
Tianqi Lithium A/H Trading – A-Shares Have Done Relatively Well, H-Shares Should Follow
- Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
- TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
- In this note, we talk about the updates since our last note, along with the trading dynamics.
EVA Precision 838 HK: Play on EV Market Growth
- Eva Precision Industrial Holdings (838 HK) is a supplier of office and automotive equipment (seat/battery frames and moulds), trading at 8.1x PE FY22 with an inflection point in earnings growth.
- As a supplier to Tesla Motors (TSLA US), Great Wall Motor (2333 HK), and Lucid, it is a play on the expansion of the EV space.
- Legacy business of office equipment will also experience growth due to the exit of foreign businesses like Fuji and Samsung enabling the company to have 25% CAGR revenue growth.
Hope Education (1765 HK): More than Just Hopes
- Hope Education Group Co Ltd (1765 HK) achieved good student enrollment quota increase for 2022/2023 academic year and student recruitment results at overseas schools are also very encouraging.
- Improvement in teaching quality and better facilities should narrow the gap of fees per student (Rmb11,814) with the national average (Rmb20,000), driving net profit growth in 3-5 years.
- Capex will come down over time given good upside in utilisation and the removal of management fees will relieve financial position. Its relative valuation is also inexpensive.
MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization
- To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.
- The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&D/selling/administrative expenses.
- Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.
Morning Views Asia: Bharti Airtel, Guangzhou R&F Properties, Indika Energy, Longfor Properties
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.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars