Daily Brief China: Hong Kong Hang Seng Index, Lifestyle International Holdings, Jiangsu Expressway (H), Antengene, Dingdang Health Technology Group, Country Garden Holdings Co and more

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US).
• Lowest spreads – Tyro Payments (TYR AU), OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), MACA Ltd (MLD AU), Singapore Medical (SMG SP), Jinke Smart Services (9666 HK).

• With share price of Jiangsu Expressway (H) (177 HK) now back to the 2013-2014 level, the stock is very attractive on secured yield of 8.6% based on its dividend record. 
• Fundamentally, we expect sequential recovery in earnings in 2H22. Its diversification into clean energy will provide a quality earnings stream. Longer-term, new projects will add to earnings. 
• It has a healthy gearing level and the Rmb denominated borrowings means it will benefit from lower interest rate and lack of exposure to Rmb depreciation.  

• On May 13, Antengene (6996 HK) launched first drug, Xpovio in China as fourth-line treatment of relapsed/refractory multiple myeloma. Xpovio has also been launched in South Korea, Australia, and Singapore.
• Xpovio reported revenue of RMB54 million in H1 2022. Antengene has guided for 2022 revenue of RMB180–200 million from Xpovio.
• Late-Line MM therapy market is small and dominated by blockbuster drugs and low-cost generic versions of erstwhile blockbuster drugs, indicating muted growth potential for Xpovio in its current approval status.

• Dingdang has formed a system integrating front-end consultation, self-built pharmacies and back-end distribution. The “heavy asset model” leads to large liabilities, negative equity balance, cash flow pressure and poor profitability.
• Dingdang lacks core competitiveness in introducing customer flow or rapidly expanding user base. Together with fierce competition, the gap between the Company and JD Health/Alibaba Health will become bigger.
• It’s difficult to achieve high profits based on the business model when break-even is barely achieved. Dingdang has it hard to successfully run through its ecosystem.We’re bearish on the outlook.

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 SCE
• China Vanke
• Country Garden Holdings Co
• Tata Motors ADR