Daily Brief China: Tencent, Pinduoduo, Shanghai Junshi Bioscience, PICC Property & Casualty H, Greentown China, Zhejiang Hangke Technology-A, Remegen Co Ltd, Greatpower Nickel & Cobalt Materials and more

• WeChat Usage increased by 23% YoY in physical store during Chinese New Year holidays.
• JD.com will close its e-commerce platforms in Indonesia and Thailand in March.
• Microsoft denies a layoff plan in China, but the details of the plan are spreading.

• The MSCI EM vs.EAFE ratio (local currency) shows EM has outperformed relative to EAFE since the DXY peaked in November 2022, and also shows signs of reversing the 2-year downtrend.
• As long as the DXY remains below $103.50-$106, we expect outperformance from EM to continue.
• China/Hong Kong, Greece, South Africa, and Mexico stand out as attractive countries. Our top actionable Sectors include Communications, Consumer Discretionary, and Technology. We highlight 76 attractive EM stocks.

• Shanghai Junshi Bioscience (688180 CH) did not receive FDA approval for toripalimab in US, as the agency could not conduct on-site inspection of the company’s manufacturing facility for the drug.
• Toripalimab (branded as TUOYI) is showing decelerated revenue growth rate in China. Besides being approved for small patient population, TUOYI has seen reduction in price after being included in NRDL.
• In May 2022, the company launched adalimumab biosimilar in China. It marks a late entry in a highly competitive market. COVID-19 oral drug should not bode well for the company.

• PICC P&C was a shelter for investors in 2022, as its earnings were largely shielded from the pandemic. However, momentum has shifted in favor of the rest of the sector.
• As the reopening story tails off, we expect the stock’s performance to recouple to the broader H-Financials index. 
• Valuation is undemanding, but the same can be said of almost any other stock in the space. If the HKD7.25/share resistance level breaks, we may see a major correction.

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.

• Country Garden Holdings Co
• Greentown China

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• January completed a bullish 3 month reversal pattern in 688006 CH and thus confirmed a likely MT bottom.
• 688006 CH has had an incredible pivotal relationship with its 50 week MA since 2020. A weekly close above the 50 week MA will confirm a high probability MT uptrend.

• RemeGen’s revenue declined in 22H2, leading to lower-than-expected performance last year.However, 2022’s low base is good for the growth this year,especially when non-COVID treatment returns to normal after China reopens. 
• We analyzed our revenue forecast on RC48 and RC18. We don’t think there should be big difference between the market value of RemeGen and Akeso. So, RemeGen’s valuation is attractive.
• The sentiment in HKEX has changed this year, so the trading strategy should be different. The pullback could be a buying opportunity, especially for good biotech companies such as RemeGen.

• Greatpower Nickel & Cobalt Materials (1919613D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO.
• Greatpower Nickel and Cobalt Materials (GNCM) is a supplier of new energy battery materials in China, with a dual focus on nickel and cobalt for the production of cathode materials. 
• The firm has made itself one of the top Chinese players in terms of cobalt refining by sales volume and nickel by trading volume. However, its profitability was significantly impacted.