Daily Brief China: Playmates Toys, Koolearn, Hailan Holdings , Link REIT, UMP Healthcare, NIO Inc, Laekna, YSB Inc, Health And Happiness (H&H) and more

• 1983 was the year both TMNT and Mario Bros were created by two different animation studios
• Mario Bros latest movie has now grossed $1.3 billion in box office receipts YTD, entering the all-time top-3 of animated movies 
• TNMT will see its debut in US theatres on the 2nd of August 2023. Will the turtles get the same reception as Mario Bros?

• We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
• Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
• Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.

• Back on the 8 May, small-cap PRC property play Hailan Holdings (2278 HK) announced a voluntary Offer from Yueng Man, Hailan’s controlling shareholder.
• The Offer Price is HK$3.38/share, a miserly 5% premium to last close, and a 60% discount to the RNAV. The Composite Doc is now out. 
• The key condition is Yueng getting 90% of disinterested shareholders to tender. That looks a stretch, yet minorities are disengaged. Not one has turned up at the last three AGMs.

• We conducted fundamental analysis on Link REIT, the largest REIT In Asia, who owns and operates retail assets, office buildings and logistics in the APAC region
• Link REIT has strong track record for capital management, we expect that to continue.  In the LT, Link REIT is on the path to grow its fund management business
• Link REIT is currently trading at 0.64x P/B and 6% dividend yield, which is attractive from a historical perspective

For our next Corporate Webinar, we are glad to welcome UMP Healthcare’s  Chief Investment & Project Officer, Patrick Cheung. 

In the upcoming webinar, Patrick will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Monday, 19 June 2023, 17:00 SGT/HKT.

About UMP Healthcare

Founded in 1990, UMP Healthcare is a medical group listed on the main board of the Hong Kong Stock Exchange (stock code 722.HK) and is one of the leading comprehensive healthcare service platforms in the Hong Kong market. We have been committed “To provide comprehensive, diversified and coordinated care for everyone” by creating a network of high-quality and effective medical services for patients, payers, providers and partners.

Along with providing healthcare services that address a wide range of individual needs, UMP closely works with more than 2,000 local and international businesses and insurance organizations to establish and administer corporate healthcare benefit programs for members. The medical service network spans over 1,000 self-owned and affiliated institutions across Hong Kong, Macau, and Mainland China, offering services such as family medicine, specialist consultation, dental care, diagnostic imaging and laboratory testing, preventive medicine and health examination, physical therapy, day surgery, and endoscopy, among others. In 2022, the annual volume of outpatient visits under UMP exceeded 1.1 million.

• We think by adopting the new strategy to unbind vehicle sales with battery swapping, NIO could broaden its customer base to non-Yangtze-Delta regions and regain price competitiveness.
• We upgrade to BUY and raise TP to US$ 10.5, due to 1) recovered growth outlook brought by widened customer base, more competitive pricing and intact model cycle
• And 2) smaller-than-feared margin pressure. Our TP implies 2x PS. 

• If you look up history, Laekna has certain connection with Novartis. However, Novartis seems to have not made much progress in small-molecule targeted oncology therapies in the past few years.
• LAE001 would face fierce competition. Its new mechanism may not be accepted by doctors/patients in front of many mature drug options in the market. LAE002 has high R&D failure risk.
• Since the stock price performance of a number of innovative drug companies based on license-in model in HKEX is unsatisfactory, together with the weak sentiment, we remain conservative about Laekna. 

• YSB’s business model is closer to that of pharmaceutical distribution enterprises, who could carry out businesses similar to YSB based on huge market share/resource advantages/financial strength. YSB’s moat isn’t high.
• The business structure of “Self-operation Business + Online Marketplace” of YSB could involve certain policy risks. Given the nature of its business, YSB’s profit margin is difficult to improve significantly.
• YSB Inc (YSB HK)’s revenue scale could encounter bottlenecks after reaching a certain stage of growth. The valuation of YSB should be lower than that of traditional pharmaceutical distribution enterprises.

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.

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