In today’s briefing:
- Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
- China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
- China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)
- Route Mobile Ltd: Forensic Analysis
- Lasertec (6920) | Mind the Guidance Gap
- Sweet Deal
Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
- Several news media outlets reported that Meituan (3690 HK) Ele.me and other food delivery platforms were summoned over food safety problems as well as price war among them.
- Food delivery platforms are ordered to strictly follow food safety management responsibilities and also prevent price wars that disrupt the market order.
- Though the anti-trust fine of RMB3.44bn was thought to be the end of an almost year long regulatory crackdown on Meituan, it seems that this is far from over.
China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
- Tencent and Huawei launched beta tests for car-hailing platform almost simultaneously.
- Alibaba begins to disconnect Ant Group to avoid implicating each other.
- Missfresh dismissed almost all employees in its headquarters in Beijing.
China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)
- A “Long China Three Gorges Renewables (600905 CH), short Huaneng Power Intl Inc-A (600011 CH)” pair trade should generate good return in China’s utilities sector given the current industry dynamics.
- The key supporting factors are: CTGR has pure exposure to renewable, faster capacity growth and a stronger balance sheet. They should underpin better earnings quality and outlook relative to HPI.
- CTGR trades on higher PER and P/B multiples, but these should not be hurdles as they are just reflection of more promising prospects. We expect CTGR’s YTD outperformance to continue.
Route Mobile Ltd: Forensic Analysis
- Route Mobile operates as a cloud communication provider to enterprises, OTT players and mobile network operators. The company got listed on the bourse in September 2021.
- Route is a growing company, and derives a significant chunk of its business internationally.
- Route Mobile is a story centralized by grey areas, be it accounting or management’s stance on contingent liability, or impairment in investments.
Lasertec (6920) | Mind the Guidance Gap
- We turn tactically bearish on Lasertec as we expect the stock to dip on weak order guidance
- After an exceptionally strong past year, we expect the order outlook to normalise
- Risks include weaker macro, Intel capex delays and restrictions on equipment sales in China
Sweet Deal
- Tim Horton China has bucked the recent trend of Chinese Companies, opting to list in the US through a SPAC rather than aiming for an IPO on shore.
- The company is looking to capitalize on the rapidly growing Chinese Coffee market by tapping into capital from US investors.
- However, growing geopolitical tensions and a regulatory crackdown from the SEC could dampen deal prospects.
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