In today’s briefing:
- CSI500 Index Rebalance Preview: ETF Inflows Lead to Performance Skew
- Quiddity Mainland Connect NORTHBOUND Flows (Week to 8Sep23) : BYD, ZTE, Zhongji Innolight, Amperex
- TUHU Car IPO: The Investment Case
- Taste Gourmet: Reaching an Inflection Point on Earnings Solid H1 FY24 Expected
- Shandong Weigao Group Medical Polymer (1066.HK) – Performance Rebound May Not Be as Fast as Imagined
- J&T Global Express Pre-IPO, Part 4: Read-Through from KEX (Thailand) And Kerry Logistics H1 Results
- Morning Views Asia:
- Full Truck Alliance Q223 Earnings: Strong Top-Line | Sharp Margin Expansion | Shares Inexpensive
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CSI500 Index Rebalance Preview: ETF Inflows Lead to Performance Skew
- Over 85% of the way through the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.4% at the December rebalance resulting in a one-way trade of CNY 7.22bn.
- With the market being stabilised through the ETF route, the index constituents have outperformed the non-index constituents over the last 6-7 weeks. That could reverse over the near term.
Quiddity Mainland Connect NORTHBOUND Flows (Week to 8Sep23) : BYD, ZTE, Zhongji Innolight, Amperex
- This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
- The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
- We like the nifty interactive tables and charts. We welcome feedback on how to make it more useful going forward.
TUHU Car IPO: The Investment Case
- Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, is set to open books for its US$300 million IPO.
- Among independent aftermarket (IAM) stores in China, Tuhu ranked first in terms of both number of stores as of 31 December 2022 and annual automotive service revenue in 2022.
- The investment case rests on the return to growth, improving gross margin, a shift to profitability and a return to cash generation.
Taste Gourmet: Reaching an Inflection Point on Earnings Solid H1 FY24 Expected
- With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK)
- We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized).
- With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.
Shandong Weigao Group Medical Polymer (1066.HK) – Performance Rebound May Not Be as Fast as Imagined
- Weigao’s 23H1 performance was unsatisfactory. 2023 full-year performance may continue to be under pressure because Weigao needs some time to digest the negative impact of centralized procurement on orthopaedic business.
- Weigao has hired advisers to find potential buyers for Argon. if Argon is ultimately sold, then the long-term prospects of Weigao’s interventional business and internationalization need to be reassessed.
- The unsatisfactory share price performance is related to Weigao’s business model – spin-off subsidiaries and IPO separately. There could be rebounds, but it is still possible for Weigao to underperform.
J&T Global Express Pre-IPO, Part 4: Read-Through from KEX (Thailand) And Kerry Logistics H1 Results
- H1 results from KEX Thailand and Kerry Logistics can help us understand J&T Global Express
- Thailand likely to be a medium-term drag on J&T’s earnings, in our view
- But if KLN’s H1 results are representative, rest of SE Asia is probably OK
Morning Views Asia:
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.
Full Truck Alliance Q223 Earnings: Strong Top-Line | Sharp Margin Expansion | Shares Inexpensive
- In Q2, Full Truck Alliance posted strong revenue growth and dramatic margin expansion
- Revenue mix continues to improve, which is driving down unit costs and lifting margins
- At just 19x forecast 2023 adjusted net earnings, the company’s shares are not expensive