Daily Brief China: Eoptolink Technology Inc Ltd, Kelun Biotech, Chindata Group, Alibaba (ADR), HighTide Therapeutics, China SCE, PDD Holdings Inc, Syngenta Group, Unisound AI Technology and more

• One third of the way through the review period, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
• Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
• The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the 5 months. We’d wait for a pullback to re-enter positions.

• Kelun-Biotech raised HKD 1,259m (USD 161m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, July 10th.
• In our previous note, we looked at the company’s business lines of ADC products. We were of the view that the IPO is fairly priced, at best.
• In this note, we provide an update for the IPO before trading debut.

• China Merchants Capital (CMC) disclosed a competing preliminary non-binding proposal to acquire Chindata Group (CD US) at US$9.20 per ADS, a 15.0% premium to Bain Capital’s US$8.00 per ADS offer.
• Astonishingly, Chindata did not publicly disclose the CMC offer, which was sent to the special committee on 9 June, i.e., 34 days ago.
• CMC must get Bain Capital’s support due to its 92.34% voting rights. The presence of a credible competing proposal will require Bain Capital to match CMC’s offer.

• We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants, 
• (2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP, 
• Due to 1) merchants return to Taobao/Tmall;  2) independent listing of groups; and 3) improved incentive structure after the organizational change.

• The mechanism of NASH has not yet been accurately determined. Among the major players, FDA has postponed the approval of OCA (FXR) for NASH. THR-β is currently the most promising. 
• HighTide claims that HTD1801 is able to achieve the goal of improving effectiveness and reducing toxicity. However, HTD1801 hasn’t reached pathological endpoints. We’ll have to wait for future clinical data.
• This Company actually has high risk due to cash shortage and uncertain R&D progress, which could lead to lower-than-expected stock price performance. We are conservative about HighTide based on analysis.

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.

• China SCE
• Hopson Development
• Reliance Industries
• Sino-Ocean Service
• Vedanta Resources

• PDD delivered an all-around beat in the previous quarter and the company saw clear recovery trends.
• Revenue increased in the quarter and contributed to a total of RMB37.6 billion.
• PDD has also launched its electronic shopping season and invested millions of RMB for promoting universal and high-quality access to reading.

• 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 positive aspects of the deal.

• Unisound AI Technology (1053075D CH) is looking to raise at least US$300m in its upcoming HK IPO. The deal will be run by CICC and Haitong International.
• The firm offers AI solutions centered around its computing cluster, scheduling computing power for machine learning tasks. It provides support to the development, optimization and commercialization of frontier AI models. 
• Its computing cluster currently harbors a computing power of over 200 peta floating point operations per second (PFLOPS), and a storage capacity of over 1.6 petabytes (PB).