Daily Brief China: Tuhu Car, IMAX China Holding, Shenghe Resources Holding, Perfect Medical Health, Health And Happiness (H&H), AAC Technologies Holdings, WM Motor Technology Co Ltd and more

• Tuhu Car (2007986D HK) is looking to raise around US$160m in its Hong Kong IPO. Tuhu is an integrated online and offline platform for automotive services in China.
• In earlier notes, we had looked at the firm’s past performance, discussed our earnings assumptions and our thoughts on Tuhu’s valuation.
• In this note, we discuss valuations at the final price range.

• IMAX China Holding (1970 HK)‘s scheme document is out, with the court meeting scheduled for 10 October. The IFA considers IMAX Corp (IMAX US)‘s HK$10.00 offer fair and reasonable.
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• A recovering box office, early indications of an effort to rally retail NO votes and a high minority participation rate in AGMs pose a risk. The risk/reward profile is unfavourable. 

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange. 
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of ChiNext and ChiNext 50 rebalance baskets.

• Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, has launched its HKEx IPO at a price range of HK$28.00-31.00 per share.
• In TUHU Car IPO: The Investment Case, we highlighted the key elements of the investment case. In this note, we present our forecasts and discuss valuation.
• Our valuation analysis suggests that Tuhu is reasonably priced at the IPO price range. We would participate in the IPO. 

• Back on the 13 July, IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share. Terms have been declared final.
• The price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day, suggesting apparent news leakage.
• The Scheme Doc is out and independent shareholders get to vote on the transaction on the 10th October. This vote could – should – be close. Only for the brave.

• Chinese automotive maintenance services platform Tuhu Car (2007986D HK) is planning to raise around US$160m in its upcoming HKEx IPO.
• The company’s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
• In this insight, we take a look at Tuhu Car’s business model, business segments and financials and we will discuss the company’s valuation in a follow-up insight.

• Perfect Medical Health (1830 HK) will report its H1 2024 results in late November 2023. We expect slow China growth to result in revenue/profit growth of 10%/15% YoY. 
• The company will continue to open outlets in HK, and the plan is to open ten by the end of FY24 (3-4 at the end of H1FY24e).  
• The stock trades at 12.7x PE FY24e, with an 8.7% dividend yield and around 16% of the market capitalization in net cash and investments (~800 mn HKD). 

• Health And Happiness (H&H) (1112 HK) has transformed from an infant formula company to a nutritional supplements company.
• The company currently trades at 5.3x 2024E PE – still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
• As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. 

The Asia Trade Book for September 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

• Troubled Chinese electric-vehicle startup WM Motor Holdings Ltd.’s hopes of a business turnaround were dashed as a white knight investor bailed out of a $2.02 billion takeover.
• Hong Kong-traded Apollo Future Mobility Group Ltd. Friday dropped its planned acquisition of WM and said a related share placement plan will no longer proceed.
• The deal, announced in January, was seen as a survival move for embattled WM as it was intended to float the EV maker in Hong Kong through a backdoor listing.