Daily Brief China: HKBN Ltd, Miniso, Leapmotor, China Longyuan Power, MedSci Healthcare Holdings, Kanzhun, Central China Real Estate, iMotion Automotive Technology and more

• HKBN Ltd (1310 HK) spiked 12.3% yesterday in response to media reports (like this one) that China Mobile (941 HK) was running a ruler over the company.
• This follows Bloomberg reports last month and in May last year, that I Square’s HGC Global Communications and numerous PE outfits were kicking tyres of the Hong Kong broadband play.
• Over the weekend, Hong Kong’s security chief was quoted as saying “the internet could become a major loophole when maintaining national security“. HKT (6823 HK) is a potential privatisation candidate. 

• Despite a 15% drop in March 2023, Miniso (MNSO US) remains relatively expensive compared to peers, having rallied 330% between October 2022 and March 2023.
• We think this is a good opportunity to short MINISO Group Holding (9896 HK) as we see around 35% downside purely from a valuation angle.
• Meanwhile, red flags like insider selling, Blue Orca’s accusations, senior management departures, and a mature domestic market could send the share price back below $5.0.

• Several news media outlets reported that Leapmotor (9863 HK) had inflated its sales data for December 2022 based on distributor claims.
• With China ending its new energy vehicle subsidy policy in 2022, EV makers were rushing to sell as many units as possible before embracing price hikes and face competition.
• The company announced a price hike in January and sales volumes have declined in 1Q2023. We think the company will struggle to increase its sales volume going forward.

• YTD, China Longyuan Power (916 HK) has seen its share price weak, but we believe focus should not be on the poor FY22 result and the moderate 1Q23 generation growth.
• Based on 5.5-6.5GW planned capacity expansion in FY23, this will mean a solid growth of 17.7-20.9% YoY. Coupled with efficiency improvement, we expect a sharp rebound in FY23 profit.
• With impairment on Ukraine mostly made and reversal of exchange and trading losses, there will be a big swing in bottom line. We welcome the improvement in cash flow too.

• MedSci’s profit quality/business structure is “healthier” than Medlive. MedSci is better able to cope with the negative impact of external changes, and its performance growth is more resilient than Medlive.
• MedSci’s physician platform solutions business is stronger than Medlive’s medical knowledge solutions business. Considering the logic and significance of this business, MedSci is expected to have bigger growth potential.
• If considering the cash balance, MedSci’s IPO valuation seems not that cheap. However, we think MedSci’s valuation would narrow the gap with Medlive or even surpass it in the future.

• We expect BZ to report 1Q23 revenue and non-GAAP net income in-line with consensus. Our 2023 revenue and non-GAAP net income are (5.3%) and (37.8%) 
• Lower than consensus, mainly due to  1) weaker growth outlook, 2) lower gross margin and 3) higher S&M cost; 
• BZ platform’s supply side growth outpaced demand side in the spring season, indicating a weak recovery in recruiting. We maintain SELL rating and TP at US$13.5.

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.

• Central China Securities
• Nickel Industries Ltd
• China Datang Corp Renewable Power
• Yankuang Energy Group

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$300m in its upcoming HK IPO. 
• The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series. 
• In this note, we talk about the positive aspects of the deal.