In today’s briefing:
- Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- Cainiao Smart Logistics IPO: The Bear Case
- Lalatech (货拉拉) Pre-IPO: To Understand Revenue Growth from Drivers’ Complaints and Strike
- CIMC Enric (3899 HK): Surge in Overall New Order Momentum
- China Consumption Weekly (30 Oct 2023): Alibaba, Trip.com, New Oriental, Weibo
- Aier Eye Hospital (300015.CH) 23Q3 – While Enjoy the Rebound, Recognize the Endgame Behind the Story
- Quiddity HK Connect SOUTHBOUND (To 27-Oct-23); Meituan & Tech IN, High Div SOEs OUT, Financials MIA
- Morning Views Asia: China Vanke , Gajah Tunggal, Reliance Industries, Xiaomi Corp
Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- Onewo (2602 HK) has announced the full conversion of 1.05bn Domestic Shares and Unlisted Foreign Shares to H-shares. The increased market cap will help in HSCI inclusion.
- Onewo (2602 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect soon after index inclusion.
- Onewo (2602 HK) has drastically underperformed its peers since listing and the HSCI inclusion could mark a turning point for the stock.
Cainiao Smart Logistics IPO: The Bear Case
- Cainiao Smart Logistics (1437124D HK), a global leader in e-commerce logistics, has filed for a HKEx IPO to raise at least US$1 billion at a US$15-20 billion valuation.
- In Cainiao Smart Logistics IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on declining global cross-border market share, China logistics decelerating growth, high related-party transactions, and FCF burn.
Lalatech (货拉拉) Pre-IPO: To Understand Revenue Growth from Drivers’ Complaints and Strike
- Lalatech charges drivers more commissions but less membership fees to raise the general fees.
- Drivers went on strike to protest against the income squeeze, but they did not achieve their target.
- We believe Lalatech is the dominator of the low-end truck-hiring market.
CIMC Enric (3899 HK): Surge in Overall New Order Momentum
- CIMC Enric Holdings (3899 HK) has a solid 3Q23 with excellent new order pick-up, surging by 52.8% YoY on the back of strengths in clean energy and liquid food segments.
- Hydrogen energy revenue is on target to reach Rmb700m in FY23. Meanwhile, management revealed that there is a slight gross margin expansion so far this year.
- With order backlog rising 27.6% YoY to Rmb22.2bn at end-9M23, earnings outlook is well protected. Its net cash position is another credit, making its premium multiples justified.
China Consumption Weekly (30 Oct 2023): Alibaba, Trip.com, New Oriental, Weibo
- JD is in fact competing with a broadcaster on Alibaba’s app, but not Alibaba itself.
- Trip.com’s domestic orders during National Holidays were double last year.
- New Oriental’s revenue increased strongly with new learning centers in 1Q24.
Aier Eye Hospital (300015.CH) 23Q3 – While Enjoy the Rebound, Recognize the Endgame Behind the Story
- Aier’s 23Q3 profit growth exceeded expectations. Considering the low base in 22Q4, Aier’s 23Q4 performance could show an obvious rebound. Then, the 2023 full-year results would be more certain.
- Aier has a considerable amount of “off-balance-sheet profits” that can be incorporated into statements in the future. So, although Aier’s growth rate has decreased, it wouldn’t collapse in short term.
- More hidden problems would be exposed in the process of transferring off-balance sheet profits to the on-balance sheet. All the repurchased shares should be cancelled to reduce Aier’s registered capital.
Quiddity HK Connect SOUTHBOUND (To 27-Oct-23); Meituan & Tech IN, High Div SOEs OUT, Financials MIA
- This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
- Last week, China Mobile (941), SMIC (981) and CNOOC (883) all saw total SOUTHBOUND turnover top 75% of value traded on a gross basis, indicating huge participation.
- Meituan was again the top SOUTHBOUND inflow, now net inflow every day for more than a month. Total Net Inflows at HK$6.9bn now 14 weeks straight in the positive column.
Morning Views Asia: China Vanke , Gajah Tunggal, Reliance Industries, Xiaomi Corp
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.