Daily Brief China: Shanghai Henlius Biotech , Xiamen Amoytop Biotech Co Ltd, Sinopep-Allsino Bio Pharmaceutical, Semiconductor Manufacturing International Corp (SMIC), Zhejiang Taimei Medical Technology Co Ltd, Medco Energi and more

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP). 

• 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
• We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
• The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

• CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
• We expect up to five ADDs and five DELs for the CSI Medical Service index during this index review event based on the latest available data.

• SMIC’s revenue might be looking at around US$2bn in 4Q24 and it’s a bit reduction of GM from 3Q24 because of the seasonality at the year end.
• Since around 2019, US was putting an sanction on China, no matter how the argument is true.
• SMIC continued delivering 7nm chips, and even the 5nm chips could be further delivered using a similar method, although the yield rate may be a concern.

• Declining customer retention rate indicates that a slowdown in future revenue growth seems inevitable. If revenue growth stagnates, it means Taimei’s business model hasn’t been fully validated by the market.
• Taimei’s IPO on SSE STAR Market was rejected. This means regulatory authorities don’t recognize Taimei’s core technology/performance prospects. Taimei has to take a step back and list on the HKEX.
• Post-Investment valuation reached RMB8.1 billion after Series F financing. However, considering the continuous decline in valuation of its peers, we are concerned about Taimei’s future stock price performance after IPO.

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.

• Adaro Energy
• Medco Energi
• Meituan