Daily Brief China: iClick Interactive Asia Group, BYD, Hainan Jinpan Smart Technology, HKEX, Giordano International, China Medical System, HashKey Digital Asset Group Lt, Hopson Development and more

• The EGM to vote on the privatisation of iClick (ICLK US) takes place on the 8th March.  The Offer price is US$4.08/ADS (US$0.816/share), bang in-line with iClick’s 1H23 net cash/share. 
• That’s a far cry from the 2021 non-binding Offers of US$75/ADS and US$67.50/ADS from Infinity Equity Management and PAG/Oasis respectively – after adjusting for November 2022’s reverse share split. 
• The Buyer Group owns 35% of shares out and 69% of the vote. The Merger requires at least two-thirds of the voting power of shares out. So this is done. 

• BYD released its result estimate for 2023, in which net profit rose by 74% to 86% over 2022.
• Li auto delivered 31,165 vehicles in January 2024, up by 106% over 2023.
• As per rumors reported in the media, Alibaba will sell RT-Mart, a supermarket brand.

• The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
• There are 10 stocks in inclusion zone and 11 in deletion zone. There should be 10 changes since that is the cap for the maximum changes at a single rebalance.
• The potential adds and deletes are down between 37-47% over the last 6 months and a long/short trade could provide superior risk-adjusted returns.

• Even the company itself shows in its recent presentation that a substantial portion of its revenue growth was due to rising rates on its cash deposit balances. This should wane.
• The company’s effective tax rate moved from 14% in the past few years, when it was stable to 10% in most recent period, this is not a core positive attribute.
• Geopolitical risk, economic malaise in both Hong Kong and China, can lead to less interest in the market, trading, placements, perhaps suggesting its 6x PB is not warranted?

• Some 17 months after the Cheng Family failed to secure 50%+ of Giordano International (709 HK), the family are now calling an SGM to install friendly directors. 
• Sino Wealth, a Cheng family’s vehicle with 24.06% of shares, has requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus appoint three other NEDs/INEDs.
• If this were to come to pass, the family would have (almost) effective control of the board. The vote will be close. And David Webb is now below 5%. 

• CMS’s way of in-licensing products has shifted from CSO model to asset-purchase model so as to enhance control on the assets. But the transformation hasn’t been recognized by the market.     
• Despite outstanding fundamentals, CMS’s valuation remains low. Doubts about the Company’s real R&D capabilities/core competitiveness and the negative image due to past financial fraud could be the reasons.
• CMS would encounter performance headwinds in 2023/2024 due to VBP, but revenue/profit growth is expected to pick up in 2025. It’s still a good defensive choice in a bear market.

• HashKey Group, an end-to-end digital asset financial services group based in Hong Kong, has completed a Series A financing round of nearly US$100 million at a pre-money valuation of over US$1.2 billion.
• The round attracted new and existing investors, including prominent institutional investors, leading Web3 institutions, and strategic partners.
• The group will use the money to accelerate the product diversification of its licensed business in Hong Kong and drive development globally.

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.

• Hopson Development