Daily Brief China: Tencent Music Entertainment Group, Qingdao Haier Biomedical, Tencent, Greatview Aseptic Packaging, Evergrande, XPeng, Shanghai MicroPort MedBot Group, Alibaba Group, Seazen (Formerly Future Land), Hong Kong Hang Seng Index and more

• In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng Tech Index (HSTECH INDEX) in March 2023.
• According to our estimation, there could be two changes for the HSTECH in March 2023 and there could be one-way index flows of US$365mn.
• The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

• The review period for the March rebalance ends today. We forecast 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
• We expect the index committee to continue using a 6-month minimum listing history. The impact on the potential deletes is a lot higher than the impact on the potential adds.
• With 5 changes to the index, estimated one-way turnover is 5.1% resulting in a one-way trade of CNY 4,549m. There is a reasonably large reverse funding trade.

• We believe total revenue growth rate will accelerate from 4Q22 and grow by 9% in 2023.
• We believe the operating margin will be stable from 4Q22 to 2Q23, but the margin will climb up from 3Q23.
• We believe that EPS will increase by 16% and the stock will have an upside of 21%~44%.

• Shandong Xinjufeng Technology Packaging (301296 CH) agreed to acquire Jardine Matheson Holdings (JM SP)’s 28.22% stake in Greatview Aseptic Packaging (468 HK) at HK$2.65 per share.
• Post-Completion, Xinjufeng will be the largest shareholder. As Xinjufeng’s shareholding will remain below the 30% voting threshold, the transaction will NOT result in a mandatory general offer. 
• The transaction price, which is a 22.7% premium to the last close, highlights Greatview’s value. Greatview’s forward P/E multiple is undemanding in comparison to peer P/E multiples.

• The company has defaulted since 2021 and has already missed a few payments as well as the deadline to deliver a restructuring blueprint at the end of 2022.
• We believe the Chinese government is looking now to rescue developers (such as Country Garden) which are seen as systemically important.  
• We are of the opinion that the sector is not investable for the general public  in 2023 and only the Distressed specialists should endeavor investing in Chinese high-yield property developers.

• Xpeng has announced it is speeding up its new model launch pipeline by launching 5 new models this year
• If all go to plan, Xpeng’s sales may hit 30k vehicles/month end of ’23 or early ’24
• The appointment of new President from ICE sector may lead to some market confusion on management and branding in the short term

• New policy about surgical robots was released, which is conducive to the promotion and popularization of surgical robots in China. However, the situation is not as simple as it seems.
• We deep dive the business environment of surgical robots in China.Even with favorable policies, both surgical robot systems and consumables have to reduce price largely so as to be affordable.
• It’s difficult to make profits in China. Medbot could lose money for quite some time.Without solid internationalization, the rally cannot be sustained for a long time only by policy catalyst.

• In this note, we will take a look at the performance of bookrunners for ASEAN placements from 2019-2022.
• The following dataset includes all ASEAN placements above US$100m for the period of Calendar Years 2019-2022, which amounted to a total of 54 deals.
• The deals you see in this note are based on our historical placements tracker. Feel free to drop us a message for additional information on any of these placements.

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.

• The PBOC has extended the use of its policy tools to support the green loan industry as part of the country’s’ drive towards carbon neutrality.
• China’s green loan market is already the largest in the world, if you agree with its definitions and can look past its limitations.
• The state of green finance matters to investors, and not just those with explicit ESG mandates. We look at the potential pitfalls in the China.