Daily Brief China: Link REIT, Hang Seng China Enterprises Index, JD Health, Shum Yip Property Operations Group, Lenovo, DPC Dash, Seazen (Formerly Future Land) and more

• In early February, Link REIT (823 HK) announced it would do a 1 for 5 rights offering, with the Exercise Price well below TERP.
• The REIT units dropped in price as the already unlevered REIT was not seen to be needing further deleverage and early debt repayment in a rising rate environment.
• Units went ex-Rights on 24 February. The rights start trading tomorrow. That means flows. Of multiple kinds. Worth thinking about.

• The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
• With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
• We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.

• JD Health’s dependence on direct sales business wouldn’t change. But the gross profit of prescription drugs is low. If JD Health increases its revenue proportion, overall gross margin would decline.
• The business supporting JD Health’s high growth in the future is more dependent on the second growth point, but we haven’t seen any new business with high certainty so far.
• The essence of JD Health’s business is “product sale e-commerce” rather than “a comprehensive online healthcare platform” at the current stage, which cannot support high valuation in our view.

• Shum Yip Property Operations Group (SYPOG HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Shum Yip Property Operations Group (SYPOG) is a property management, commercial operational and city services provider in China.
• As per Frost & Sullivan (F&S), the firm was eighth among comprehensive property management, commercial operational and city services providers in China as per 2021 revenue.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• Stocks mentioned include Lenovo (992 HK), CLP Holdings (2 HK), GoFintech (290 HK), and North Asia Strategic Holdings (8080 HK).

• DPC Dash (1405 HK) aimed to raise around US$75m in its Hong Kong IPO in December. The company is now back with a revised PHIP which incorporates its FY22 performance.
• The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
• In this note, we talk about the updates from its refiled PHIP.

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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