Daily Brief China: L’Occitane, YTO Express, Li Auto , Hopson Development, Hygeia Healthcare Group and more

• According to Bloomberg, L’Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
• The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
• The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples. 

• In late 2018, there were reports that French beauty retailer L’Occitane (973 HK) had drawn interest from Advent International. That rumour came to naught. 
• Similarly, late last month, L’Occitane clarified media reports that it had not received any Offer or proposal. 
• After going into a trading halt this morning, reportedly (Reuters) Chairman Reinold Geiger has been discussing a possible offer of ~HK$35 for each L’Occitane share he doesn’t already own.

• STAR 50 Index represents the performance of the top 50 securities by market capitalization and liquidity listed on the Science and Technology Innovation (STAR) Board of the Shanghai Stock Exchange.
• This is one of the most significant indices in Mainland China when considering the average passive AUM per stock as a percentage of float.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of STAR 50 index rebalance baskets.

• Li Auto reported solid 2Q23 results, with both top line beating cons/our est. by 5.3%/3.6% and GPM of 21.8% beating cons/our est. by 1.1/1.7ppt.
• We reiterate that capacity ramp-up is the key for Q3/Q4 delivery. Q3 sees a temporary capacity bottleneck albeit this is likely to be resolved in Q4.
• We expect the launch of MEGA BEV in 4Q23 to be the next catalyst. We reiterate Li Auto as our top pick and raise TP due to better-than-expected margin 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
• Hopson Development
• Sunny Optical Technology Group

• Based on endogenous development and external M&A, the outlook of Hygeia is full of imagination. Hygeia also start to expand business in northwest region of China by acquiring Chang’an Hospital.
• If public hospitals have a role in “guiding patients” to Hygeia, anti-corruption campaign would affect Hygeia’s future performance, which is a significant uncertainty that could also shake its investment logic.
• There may be short-term chaos. It remains to be seen whether performance can sustain growth of around 30%. The 23H2 revenue growth would be an important guidance for Hygeia’s outlook.