Daily Brief China: ZJLD Group , WuXi XDC Cayman Inc, Shenzhen International, China Minsheng Banking H, WuXi AppTec, ZTO Express Cayman , Midea Group Co Ltd A, Health And Happiness (H&H) and more

• Late last night (near mid-night), Kweichow Moutai (600519 CH) shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. 
• The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. 
• Moutai’s Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting ZJLD Group (6979 HK).

• WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
• In WuXi XDC IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on margins on a downward trend, large customer concentration, high related party transactions and volatile FCF generation.

• Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
• The sum equals a significant 9% of SZI’s market capitalisation. The agreement also kick-started the project’s long-term contribution, which may provide an income stream lasting 3-5 years.
• The deal showcased SZI’s ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.

• NII decline has slowed but the overall profitability is lacklustre
• Asset quality stabilized for now, real estate exposure remains a concern
• We believe the turnaround of the bank is still pretty far off. 

• 23Q3 results has sounded an alarm for investors. Obviously, the deterioration of financing situations both domestically and internationally has forced WuXi AppTec to readjust projected revenue growth.
• Almost all of the important logic at the moment is negative for CXOs.Revenue growth in TIDES business alone is hard to offset the decline in WuXi AppTec’s other businesses/industry trend.
• After a pullback, investors can bet on the next rebound, but we still recommend taking profits in time, because without persuasive fundamentals, rebound driven by sentiment is difficult to sustain.

• Given declining prices and slowing volume growth, we anticipated lower Q3 express margins
• The four China-listed express firms saw Op Inc margin fall from 5.3% in Q2 to 3.9% in Q3
• SF fared better than ‘sort & transport’ names, but its freight forwarding segment still a drag

• Two of the biggest deals in the Hong Kong pipeline are A/H listings for S.F. Holding (002352 CH) and Midea Group (000333 CH), both looking to raise around US$3bn.
• Prior to the deals going live, we had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
• Overall, most of the recent A/H listings haven’t done much in the near term.

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.