Daily Brief China: Swire Pacific (B), Times Neighborhood, MTR Corp, Bharat Petroleum Corp, J&T Express and more

• Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
• I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
• This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.

• Times Neighborhood (9928 HK) is a China property management company headquartered in the Big Bay Area, trading at 3x 2023 P/E and below net cash.
• China property management as a sector has lost most of its value given close relationship with China property.  However, there are still some investable property management companies.
• Upcoming catalysts include interim results in August, potential favorable policies in China property sector, and potential shareholder actions.  

• The share price of MTR Corp (66 HK) has not moved and lagged behind other transport operators in Asia.
• High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.
• The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come. 

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.

• Bharat Petroleum Corp
• Meituan
• Pertamina Geothermal Energy

• J&T’s China growth will slow from a lack of (1) M&A targets, and (2) cash to sustain a price war. SEA’s growth will slow, and profit margin decline due to
•  (1) Shopee in-sourcing of high-profit parcels(2) PE-backed rivals using price wars to gain market share. Lower penetration of China supply-chain platforms will stunt J&T’s growth in New Markets, we expect.
• In our base case we value J&T at US$ 10 bn, which is (25%) vs. J&T’s valuation in its latest round of funding.