Daily Brief China: Meituan, Giant Biogene Holding, Taste Gourmet Group, Anhui Conch Cement, Powerlong Real Estate Holdings and more

• Several news media outlets reported that food delivery giant Meituan (3690 HK) is preparing to enter the food delivery market in Hong Kong as domestic market is slowing down.
• Slowdown in Chinese economy coupled with regulatory hurdles have made it impossible for Meituan and other domestic tech players to expand locally.
• Online food delivery market in HK is dominated by Foodpanda and Deliveroo, and we think Meituan will have to offer deep discounts to grab market share from these two dominants.

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• According to Frost & Sullivan, Biogene was China’s second-largest professional skin treatment product company by retail sales in 2021.  
• The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and high cash generation. 

• Taste Gourmet Group (8371 HK) is a play on the HK recovery with a promising outlook in the long-term at 5.7x/4.3x FY23/24e PE (10.5%/14.1% dividend yield assuming 60% payout).
• The company recently initiated a buyback mandate on the 20th of September for (10% of outstanding shares) and has repurchased 2.2% of outstanding shares so far.
• We believe the company will report strong earnings for its quarterly release on November 11th and payout a good dividend which will be a further catalyst for rerating.

• We see improvements in the underlying drivers of Anhui Conch Cement (914 HK) over the last two months, and we believe value has emerged for long-term investors.
• There is a slight recovery in cement price in Sep, and the proceeds from local governments’ special purpose bonds issuance will make incremental stimulus to demand. 
• Net cash now amounts to 37.5% of share price, providing support to its over 9% prospective dividend yield as well as potential value-enhancing M&As. 

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.

• Powerlong Commercial Management Holdings
• Sino-Ocean Service