In today’s briefing:
- New Oriental Education & Technology: Back From the Dead
- Quiddity A/H Premium Tracker (To Oct27): Volatility Off, Spreads Still Volatile. GreatWall Q3!
- Country Garden : Not a Nickel Play
- Travelsky (696): Cheaper Now
- Monthly Chinese Tourism Tracker | Tourism Recovery Derailed By Normal Seasonality | (October 2023)
- Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable
- Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products
New Oriental Education & Technology: Back From the Dead
- MSCI China Funds are starting to engage with New Oriental Education & Technology after a big exodus in 2021 following China’s Tech Crackdown.
- Since the lows of 2022, New Oriental Education has been one of the key beneficiaries of active fund rotation.
- Previous holders such as HSBC, Mirae and BlackRock have bought back in after closing out in 2021, but there is still a long way to go to reach previous highs.
Quiddity A/H Premium Tracker (To Oct27): Volatility Off, Spreads Still Volatile. GreatWall Q3!
- The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- Last week the portfolio bounced back, erasing the previous week’s losses. Southbound continues to see net inflows and this week all H/A Pair sectors saw Hs outperform except Energy.
- High-Div SOEs continue to be weak. Banks, Pharma, Industrials, and Utilities spreads continue to be Very Volatile. Quiddity Favourite Great Wall Motor (2333 HK) up 7% after Q3 results Friday.
Country Garden : Not a Nickel Play
- Country Garden should not be a surprise. The bond price at 5 cents is based on much uncertainty.
- We list a few caveats why the bonds at 5 cents are not investible.
- The potential wind-up order by the Hong Kong court will be a big test of the rule of law in China.
Travelsky (696): Cheaper Now
- Travelsky Technology Ltd H (696 HK) share price was unjustly sold off due to flows rather than operational performance.
- The key business is processing flights for domestic tourism, with a lesser correlation to geopolitical issues.
- Due to the strong earnings growth, PER is adjusted from 60x to 25x.
Monthly Chinese Tourism Tracker | Tourism Recovery Derailed By Normal Seasonality | (October 2023)
- September outbound tourism metrics plummeted, in some cases to levels seen in Q223
- Domestic air travel demand also fell vs August; normal seasonal patterns are dominating
- As recovery fizzles, travel shares languish, and we see few reasons for optimism, near-term
Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable
- Mindray’s Q3 revenue growth slowed significantly, dragging down the overall revenue growth. This was related to China’s anti-corruption campaign, the impact of which is expected to linger for some time.
- Our 2023 forecast is revenue up 15-18% YoY. Anti-corruption campaign would lead to declining demand and growth ceiling of domestic medical equipment market, thus negatively affecting Mindray’s future performance growth.
- Investors may need to prepare in advance for Mindray’s future revenue growth to fall to 15%.Based on this, PE TTM of around 30 is reasonable valuation for Mindray, not undervalued.
Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products
- Qyuns Therapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$ 100m via a Hong Kong listing.
- In this note, we examine the company’s core products, namely QX002N, an IL-17A antibody, and QX005N, an IL-4Rα antibody. We also look at the company’s management and pre-IPO investors.
- We are of mixed views for its two core products. We also think the management and pre-IPO investors are of mediocre quality.
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