Daily Brief China: Chindata Group, Shougang Fushan Resources, Playmates Toys, Ant Financial Services Group, J&T Global Express, BeiGene Ltd, Syngenta Group, Tencent, Shui On Land and more

• My read of Bain’s Offer last month, was a tactic to flesh out a competing Offer.  It seemed unlikely Bain would get the regulatory approval to take Chindata (CD US) private. 
• Now state-backed China Merchants Capital Holdings International Ltd. has made a non-binding offer of $9.20/ADS, compared to $8/ADS from Bain.
• This Offer is indicative. But an SOE taking over data centres makes a lot of sense. 

• Shougang Fushan Resources (639 HK) has launched a partial offer to acquire a maximum of 125.0m shares (2.47% of outstanding) at HK$2.40 per share, a 17.6% premium to the undisturbed price.
• The partial offer is conditional on approval by more than 50% of disinterested shares and the shareholder approval of the whitewash waiver. There is no minimum acceptance condition.
• The 2020 partial offer, which was at a 9.3% premium to the undisturbed price and -17% below the current offer, was overwhelmingly approved. Therefore, the current offer should be approved.  

• Three weeks ahead of the global launch of TMNT Mutant Mayhem momentum is building
• Google Trends searches reveal rising interest in both movies and toys
• Risk/Reward is still highly attractive, last time a TMNT movie was a success stock hit 4 HKD

• Ant Group Co. Ltd. has offered to buy back some shares at a whopping 70% discount to the unrealized valuation for its ill-fated IPO, shortly after regulators hit the fintech giant with an almost $1 billion fine.
• Ant Group announced Saturday that it had proposed to repurchase as much as 7.6% at a price that values the company at approximately 567 billion yuan ($78 billion).
• The offer represents a roughly 40% discount to the approximate 960 billion yuan figure achieved in Ant Group’s last fundraising round in 2018, and is around 70% cheaper than the 2.1 trillion yuan valuation touted in its planned 2020 IPO.

• After analyzing J&T’s Chinese and SE Asian operations in previous insights, in this note we turn to the company’s ‘Others’ segment, made up of New Markets and X-Border logistics
• Compared to China and SE Asia, J&T’s New Markets and X-Border logistics business lines are small (just 11% of 2022 Revenue) but could offer attractive growth in the medium-term
• We conclude this insight with a preliminary sum-of-parts valuation of J&T as a whole. Based on available information, our initial estimate of J&T’s EV is US$8.6 bn (pre-IPO)

• BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.
• Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.
• We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).

• Syngenta Group (1844795D CH) is looking to raise around US$9.2bn in its upcoming China A-share IPO.
• Syngenta Group (Syngenta) is one of the largest agricultural firms globally, developing, producing and commercializing a portfolio of crop protection, seeds, crop nutrition products.
• In this note, we will talk about the not so positive aspects of the deal.

• We expect that Tencent’s 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. 
• We raise Tencent’s ads growth in 2Q23 from 18.2% to 28.4% YoY per our recent checks with ads agencies. 
• There is an increasing possibility that “DNF Mobile” could be launched in the next several quarters. We raise the TP to $450, which implies 20.1X PE in 2023.

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.

• Agung Podomoro Land
• Shui On Land