Daily Brief China: Haidilao, Alibaba (ADR), Xtep International, Acotec Scientific Holdings, Weilong Delicious Global, Seazen (Formerly Future Land) and more

• On 11 July, Haidilao (6862 HK) announced it would propose to spin off its international restaurant business (13-15% of revenue) to shareholders and employees. Shareholders approved in August.
• There were interim announcements and indeed interim reports with some information, but not a lot. But Super Hi International Holding was headed for separate listing in HK. 
• Last week, Haidilao said it was going ahead with a Listing by Introduction pending listing approval by HKEX. Haidilao shares go ex- 16 December. Index providers have announced treatment.

• PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
• The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
• In this note, we’ll talk about the latest developments, possible outcomes and implications.

• In November we published on the upside potential in Alibaba 
• Stock has rallied and the call ratio we recommended has performed very well
• We evaluate the trade and look at potential trade options

• 4Q22 retail sales was negatively affected by the covid restrictions
• Sales growth is expected to recover in 1Q23 with China’s nationwide loosening policy.
• Long term growth is intact with continued upgrades of brands, products and channels

• Boston Scientific angles for majority stake with US$523 million for Acotec Scientific Holdings (6669HK), which is the largest acquisition of a Chinese medical device company by a MNC since 2014.
• Completion of the Partial Offer would further strengthen Boston Scientific’s presence in China and create the potential for commercialization of Acotec products globally. It’s a win-win deal for both sides.
• Companies listed in HKEX don’t have to seek valuation within HKEX system. If they can find “new anchor points”, they’ll have higher valuation.Chapter 18A companies’ future stock prices would diverge.

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.

• Yuexiu Property

• Weilong Delicious Global (WDG), a spicy snack food company in China, raised around US$130m in its Hong Kong IPO.
• According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
• We have covered various aspects of the deal in our previous notes. In this note we will talk about the demand and trading dynamics.

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.

• Yuexiu Property