Daily Brief China: Yuexiu Property, Xiabuxiabu Catering, China Mengniu Dairy Co, Shui On Land, iQIYI Inc, Tencent, Legend Biotech Corp, iMotion Automotive Technology and more

• After being halted this morning before the start of trade, post-close, Yuexiu Property (123 HK) announced a fully-underwritten Rights Offering. 
• The Rights Offering intends to raise HK$8.36bn issuing 30 Rights for every 100 Shares held, at a subscription price of HK$9.00, a 23.3% discount to TERP. 
• This will take a moderately-levered property/services/leaseco and add more capital to it. Not terribly bullish. Looks opportunistic. And one has to look through 3 capital actions to see dividends ahead.

• Yuexiu Property (123 HK) will raise US$1.1bn through a rights offering – 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.
• As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.
• Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.

• We believe the recovery of China consumption is “not yet solid”, but not faltering.
• China catering sector’s recovery stays on track, although Q2 has historically been a low season.
• Long Xiabuxiabu and short Jiumaojiu to play the sector’s recovery while hedging against potential macro weakness.

• 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.
• China Mengniu Dairy Co Ltd (2319 HK), ANTA Sports Products Ltd (2020 HK) and Baidu Inc (9888 HK) are all trading at significant discounts to 2023 highs and LT highs.
• Today we highlight targeted support levels / buying opportunities in the coming 1-2 days in 2319 HK, 1-3 weeks in 2020 HK and 1-3 months in 9888 HK). 

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.

• Renewable Energy Group
• Sands China
• Shui On Land
• Vedanta Resources
• Yuexiu Property

• We forecast iQIYI 1Q23 top line/bottom line to miss cons. by (3.6%)/(6.3%), largely due to the rebound of content costs to cope with competition pressure. 
• We raise our full year ads revenue estimate slightly to reflect the better-than-expected macro recovery. Our top and bottom lines in 2023 are (3.3%)/(7.0%) vs cons, due to long-term competition. 
• Maintain SELL but slightly raise TP to US$ 5.60, implying 18.4X PE in 2023.

• China just announced game approval for April batch. The number of games approved is in-line with the pace of approval in recent month.
• Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Both Tencent and Netease received approval for none. Tencent is behind its peers since the approval resumed.

• Legend Biotech Corp (LEGN US) shares broke into a new high after a leaked abstract showed Carvykti cuts risk of progression or death by 74% in earlier multiple myeloma therapy.
• Success of Carvykti in earlier lines of MM therapy will lead to rapid intake of the drug and increase the drug’s peak sales opportunity to $5B.
• During 2022, Carvykti generated ~$134M in net trade sales. With label and geography expansion of Carvykti, Legend Biotech shares still have further upside potential.  

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$300m in its upcoming HK IPO. 
• The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series. 
• In this note, we talk about the not-so-positive aspects of the deal.