Daily Brief China: Water Oasis, Chindata Group, JD.com Inc (ADR), Atour Lifestyle Holdings, China Vanke , Dekon Food and Agriculture Group, Huaxia Eye Hospital Group, ZKH Group and more

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks: Perfect Medical Health (1830 HK) , Water Oasis (1161 HK) , Taste Gourmet (8371 HK) , Uchi Technologies (UCHI MK) , and The Keepers Holdings (KEEPR PM) .
• We have included Sitoy Group Holdings (1023 HK) in our library. Given the low ROIC nature of the business, it’s more of a value trade with dividends. 

• Back on the 11 August, Chinese data center provider Chindata Group (CD US) and major shareholder Bain Capital entered into a definitive agreement at US$8.60/ADS.
• The EGM was held yesterday, the 4 December, and the merger was approved by 97.75% of the total votes cast. No specific PRC regulatory approval is needed for this merger. 
• All good right? Not quite. There’s still the nagging issue involving 22.79% of shares out objecting to the deal, exceeding the 12% dissenting threshold, a condition to the merger. 

• In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.
• We prepared high beta and low risk recommendations for 2024
• For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.

• Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$124m through a secondary selldown. 
• The deal is a large one to digest, at approximately 22.6 days of three month ADV and 5.5% of current mcap.  
• In this note, we will talk about the placement and run the deal through our ECM framework.

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

• Dekon Food and Agriculture Group (DFAG CH) raised around US$128m in its Hong Kong IPO. 
• Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.
• Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.
• The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.

• ZKH Group (ZKH US) is looking to raise about US$150m in its upcoming US IPO, after downsizing from an earlier reported float of US$300m.
• ZKH Group is a leading maintenance repair and operations (MRO) procurement service platform in China, according to CIC, providing one-stop MRO procurement and management services and digital and fulfillment solutions.
• We have looked at the company’s past performance in our previous note. In this note, we talk about its PHIP updates.