Daily Brief China: Greatview Aseptic Packaging, JD.com Inc., Li Auto, Zai Lab Ltd, Shiyue Daotian, China SCE and more

• Back on the 1 January, Shandong Xinjufeng Technology Packaging (301296 CH) sought to acquire Jardine Matheson Holdings (JM SP)‘s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65/share.
• It was hardly a knockout price. However, Mathson had been itching to exit. Even if it involved selling its stake to one of Greatview’s competitor. 
• Greatview’s board is unimpressed, and now reckons Matheson’s initial buy-in may be in breach of PRC anti-monopoly laws. 

• JD replaces its CEO, Mr. L Xu, with the former CFO, Ms. S. Xu.
• As we expect, the revenue growth slowed down and the operating margin improved in 1Q23.
• We believe the stock has an upside of 92% for 2024.

• Li Auto reported solid 1Q23 performance, with top line in line with cons/our est., and non-GAAP net margin beating cons/our estimate by 4.0/2.7ppt. 
• We reiterate Li Auto as our top pick, because of 1) positive growth outlook in 2023 driven by strong model cycle (L9/L8/L7) and channel expansion; 
• 2) margin upside due to improved opex efficiency. Our TP implies 2.8x PS.

• Zai Lab (ZLAB) reported C1Q23 top line in-line with our estimate but operating/net loss much smaller than our estimate due to cut in R&D spending. 
• ZLAB’s narrower losses in C4Q22 and C1Q23, achieved through R&D cut, do demonstrate the viability of the company achieving commercial breakeven by 2023 and full breakeven by 2025. 
• We still think these viabilities have difficulties to achieve and even achieved, hurt the LT value of the company; We raised our TP from US$25 to US$29 but maintain SELL.

• Shiyue Daotian (1892269D CH) is looking to raise about US$200m in its upcoming HK IPO. 
• Shiyue Daotian is a pantry staple food company in China, providing consumers with pre-packaged premium rice, whole grain, bean, and dried food products. 
• Shiyue Daotian’s largest revenue contributor is its rice products segment. However, the company experienced declining ASPs over the track record period while production and sales volume growth fell.

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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