Daily Brief China: Midea Group Co Ltd A, BeiGene , ARM Holdings, 4Paradigm, Genting Bhd, Hywin Holdings, Kweichow Moutai, DPC Dash, Miniso, Digital Yuan and more

• Midea Group Co Ltd A (000333 CH) announced on September 18 the approval for H-share listing for a total of not more than 10% of its outstanding shares (before overallotment).
• Reasons for the listing include the possible share incentive program for overseas employees and more exposure to foreign investors. 
• The H-share listing could be a safe bet given the current valuation profile, especially if the discount to A-share is larger than 10%. 

• Novartis’ return of PD-1 to BeiGene may actually have nothing to do with TIGIT project. Long-term strategic adjustment and decreasing value of tislelizumab to Novartis could be the core reasons.
• Abandoning PD-1 is a simple decision for Novartis, but not for BeiGene, who will do its best to promote FDA approval for tislelizumab, aiming to expand internationalization and stabilize valuation.
• We advise investors not to focus too much on whether or not tislelizumab will eventually get FDA approval,because the actual peak sales tislelizumab can contribute to BeiGene could be disappointing.

• British chip designer Arm Holdings Plc remains committed to China and to working closely with its mainland-based partner following its $4.87 billion IPO, according to chief executive Rene Haas.

• The Softbank-backed firm floated in New York last week via the world’s largest public offering year-to-date. But that has not affected its strategy globally.

• Shanghai-headquartered Arm Technology (China) Co. Ltd., also known as Arm China, operates independently and is the exclusive licensing platform of Arm’s global intellectual property in China

• 4Paradigm has announced the terms for its IPO. The company plans to raise gross proceeds of $131-144m through issuing 18.4m shares at an indicative price range of HK$55.6-61.16 per shares.
• The company’s IPO is timed perfectly when AI adoption is expected to expand on a large scale with the popularity of ChatGPT and other AI applications.
• Though we liked 4Paradigm (1764934D HK) for its improving financials and growth prospects, our analysis suggests that the IPO is expensive.

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.

• First Pacific Co

• Active clients increased 6.5% to 46,627 [roughly 30% of total], despite challenging domestic markets. Note: this metric surged 27% sequentially
• 82% of client activity focused on international markets/products, highlighting the diverse, value-added nature of Hywin’s offerings
• Transaction value of overall wealth products declined -9%, asset-backed products down -5.8%, reflecting weak equity & property markets

• Luxury liquor-maker Kweichow Moutai has teamed up with candy giant Mars Inc. to launch an alcohol-infused chocolate.
• The state-owned Chinese company’s latest move to introduce its brand of fiery spirits to a new, and preferably younger, group of consumers.
• The chocolate is Moutai’s latest effort to give its brand a bit more cache through partnerships with well-known consumer brands.

• DPC Dash (1405 HK) raised around US$75m in its Hong Kong IPO in Mar 2023. Its IPO linked lockup is set to expire soon.
• The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 672 stores across 20 cities, as of Jun 2023.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• MNSO’s FY23 SEHK filing updated its operation metrics post C2Q23, where domestic was in-line but overseas beat our estimates. We attribute this performance to direct store expansion in North America;
• We raise 2024/25 top line by 14%/19% and operating profit by 22%/25%;
• We maintain BUY and raise TP by US$4.5 to US$30.5 to factor in the profitability ramping up of oversea businesses.

• China further expanded the use of the digital yuan by enabling consumers to use it to pay utility bills. 
• The digital yuan, also known as the e-CNY, is a legal currency in digital form issued by the central bank.
• The People’s Bank of China (PBOC) recently updated its e-CNY mobile wallet app, adding new features that allow users to pay water, gas, electricity, heating and phone bills with the digital yuan.