Daily Brief China: Taste Gourmet, People’s Insurance (PICC), BYD Electronics, Cloudbreak Pharma, SJM Holdings and more

• We expect Q3 FY24 revenues/profits to be >40%/>70% YoY for Taste Gourmet (8371 HK) for their results in early February. 
• Another catalyst we look forward to in CY24 is the main board listing on HKex. The timeline, we believe, should be in the second half of the year.
• Trading at 6x PE with an 8.5% dividend yield and cash of 130 mn HKD, or about 21% of the market cap, is one of our top dividend gems.

• Back in October, I wrote in PICC’s (1339 HK) Lifetime Low Implied Stub that People’s Insurance (1339 HK) was trading at an all-time low implied stub. It’s widened further since. 
• Over the past 12-months, excluding PICC’s 68.98% stake in PICC Property & Casualty (2328 HK), the market has assigned HK$42.6bn less for PICC’s steady and profitable life/health insurance stub ops.
• What gives? Falling interest rates is one. EV insurance in another. Yet this bifurcation is extreme.

• In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.
• The index changes for the March 2024 index rebal will be announced on 16th February 2024.
• While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.

• Cloudbreak Pharma, a China-based clinical-stage biotechnology company, plans to raise up to US$200m via a Hong Kong listing.
• In this note, we examine the company’s core products, namely CBT-001 and CBT-009, for pterygium and juvenile myopia respectively.
• We are seeing a lack of convincing sustainable innovation from the company. Pre-IPO investors and management are mediocre.

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.

• China Vanke
• SJM Holdings