Daily Brief China: Giordano International, Consun Pharmaceutical, Central China Real Estate and more

• Giordano International (709 HK)’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.
• Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.
• While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.

• After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
• Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
• Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our 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.

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