Daily Brief China: Trina Solar Co Ltd, Tian Tu Capital, Shenzhou Intl Group Holdings, Sunshine Insurance, Growatt Technology, BOC Hong Kong (BOC HK), CIFI Holdings, Medbanks Network Technology and more

• There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
• China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
• The round-trip turnover at the close of trading today should be in excess of US$8bn.

• Tian Tu Capital (1390587D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Tiantu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
• The fund manages capital from investors including institutional investors, multinational corporations, financial institutions, and high net-worth individuals. It also directly invests through its own capital as well.

• Gross margin is under pressure throughout 2022 but will recover in 2023
• Brands have been focusing on destocking and the inventory levels trend down
• Capacity is expected to grow by 10% to low teens y/y in 2023

• Sunshine Insurance (6963 HK) priced its IPO at HK$5.83 per share to raise net proceeds of HK$6.4 billion (US$824 million). The shares will start trading tomorrow.
• We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case, Sunshine Insurance Group IPO: The Bear Case and Sunshine Insurance Group IPO: Valuation Insights. 
• Peers have modestly re-rated and the IPO price continues to imply a premium to the median peer CY2022 P/EV and P/B multiples. Therefore, the IPO price remains unattractive.

• Growatt is a distributed energy solution provider with the #1 market share for PV inverters and energy storage inverters, allowing them strong potential to benefit from a growing market.
• In November 2022, the company received approval from the Hong Kong Stock Exchange and the IPO has a placeholder value of US$1bn, making it HKEX’s fourth largest IPO of 2022.
• In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s latest Post Hearing Information Pack (PHIP).

• Credit costs at present are only 20bps of loans, these can move to 100bps or higher
• Population data even before 2H22 shows contraction, with negative implications
• Property prices are turning down even faster, which is banks’ loan collateral

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 SCE
• CIFI Holdings
• Greentown China
• Hopson Development
• Sino-Ocean Service

• Specialty Pharmacy Business is the main revenue contributor,but it’s hard for Medbanks to achieve breakeven or turn loss into profits by relying on this business due to its low margin.
• Physician Research Assistance and Health Insurance Services have higher margin, but they have to face different challenges based on our analysis. They are hard to turn things around.
• In fact, Medbanks does not control the core resources or establish high barriers in front of competition. Whether its ecological story would finally work still needs time to verify.