In today’s briefing:
- Chindata: China Merchants Potentially In The Mix
- Buy Country Garden Services on China Property Sector Recovery
- Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase
- Yungkang Group Lock-Up – Shares Benefited from a Protracted Lockdown. Shareholders Could Monetise
- Dongfang Electric (1072 HK) And CIMC Enric (3669 HK): Two Stocks for the Next Five Years
- Micro-Tech Nanjing (688029.CH)-Worth a Spot on the Watch List Due to Possibility of Dilemma Reversal
Chindata: China Merchants Potentially In The Mix
- Bain Capital-backed Chindata Group (CD US) is on the move after Bloomberg flagged – again – interest from industry players.
- This time, SOE-backed China Merchants Group is understood to be mulling a takeover of Chindata. Shares are up 23% since that article earlier this month.
- Back in April, Bloomberg mentioned GDS Holdings (ADR) (GDS US), PE outfit PAG, and EQT AB (EQT SS)-backed EdgeConneX were rumoured to be interested in merging with Chindata.
Buy Country Garden Services on China Property Sector Recovery
- Chinese government outlined 16 steps to support the property industry on Nov 11
- The newly released measures clearly show that the government has reversed its attitude toward property industry, which may trigger the end of the downcycle.
- During the property sector rebound, Country Garden Services (CGS) can be a good investment. The company has a solid track record and shows attractive valuation.
Chindata Takeover: China Merchants Enters as Government Interest in Data Centers Increase
- Chindata Group (CD US) is the leading carrier-neutral hyperscale data center solutions provider in Asia Pacific emerging markets.
- At the beginning of the month, Bloomberg reported a takeover offer for Chindata from China Merchants Group, which is a state-owned company.
- Several state-owned companies have shown interest towards acquiring data centers and data center companies, which is likely to be in line with China’s strategy of digitization.
Yungkang Group Lock-Up – Shares Benefited from a Protracted Lockdown. Shareholders Could Monetise
- Yunkang Group (2325 HK) was listed on 18th May 2022, with its six month lockup expiring on 17th November 2022.
- Yunkang Group is a medical operation service provider in China and as per F&S, had a market share of 3.7% in China’s medical operation service market as per 2020 revenue.
- Coming up for six-month lockup expiry are the controlling shareholders and cornerstones. With protracted lockdowns underway in China, this stock has continued to benefit, currently trading 86.3% above IPO price.
Dongfang Electric (1072 HK) And CIMC Enric (3669 HK): Two Stocks for the Next Five Years
- China’s ambition to build into a strong manufacturing country as revealed in 20th Party Congress should place Dongfang Electric (1072 HK) and CIMC Enric Holdings (3899 HK) in excellent positions.
- The leadership in power and new energy equipment industry, improving gross margin outlook, well-covered order book and undemanding multiples are the key merits of Dongfang Electric (1072 HK).
- CIMC Enric Holdings (3899 HK)‘s good presence in clean energy, chemical/environmental and liquid food segments, global product competitiveness, secured order backlog and net cash position are its major edges.
Micro-Tech Nanjing (688029.CH)-Worth a Spot on the Watch List Due to Possibility of Dilemma Reversal
- Micro-Tech Nanjing Co Ltd (688029 CH) would face lower-than-expected performance growth in 2022, but the logic of import substitution and increasing demand for endoscopy consumables would help drive future growth.
- Centralized procurement is a problem, but Micro-Tech’s leading position of endoscopy consumables in China is stable, which wouldn’t be easily affected by centralized procurement when compared with other domestic companies.
- The valuation of Micro-Tech should be lower than Mindray and Sonoscape, since these two companies have much better performance (both growth and profitability), product competitiveness, business layout and outlook.
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