Daily Brief China: Golden Eagle Retail, L’Occitane, Trip.com, China Longyuan Power, WuXi AppTec, Lenovo and more

• Back on the 28th May, PRC department store play Golden Eagle (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
• The Offeror is the Wang family, who together with concert parties, held 80.29%. 7.18% of the 19.71% held by the disinterested stakeholders have given irrevocables in favour of the Scheme.
• Ahead of the Scheme Meeting on September 15th, a significant amount of shares have moved out of CCASS. This is not something to concern investors. 

• L’Occitane (973 HK) announced after market close yesterday that the controlling shareholder has terminated the potential general offer. 
• Shares trade at a significant discount to global cosmetics peers and its own historical trading range, while brands’ growth momentum remain intact. 
• Take advantage of any potential significant sell-down caused by the drop of the privatization attempt. 

• Strong Q2 results out Tuesday morning beat consensus Revenue and core EPS estimates
• But concerns remain about expense control and longevity of ongoing demand recovery
• Great Q2 results, yes, but we think investors want more clarity about H2 demand

• China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
• Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
• There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.

• 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. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are WuXi AppTec (2359 HK), Peking University Resources (618 HK), and FriendTimes Inc (6820 HK).

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 Vanke
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• Yuexiu Property