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In today’s briefing:
- Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash
- (Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan
- [Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use
- China Oil & Gas – Earnings Flash – FY 2023 Results – Lucror Analytics
- Morning Views Asia: Nickel Industries , West China Cement
- Hansoh Pharmaceutical (3692.HK) – Growth Would Remain Strong in 2024, but Ameile Is Facing Headwinds
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Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash
- Super Hi International Holding (9658 HK) aims to raise around US$100m in its US ADR IPO. MS and Huatai are on the deal.
- Super Hi International (SHI) is a Chinese cuisine restaurant brand, operating Haidilao hot pot restaurants in the international market.
- In this note, we talk about the deal dynamics and the listing impact.
(Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan
- For the month of April 2024, 7 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
- The average premium for the new transactions announced (or first discussed) in April was ~55%. The average premium YTD is ~42%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use
- Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.
- We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion
- We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.
China Oil & Gas – Earnings Flash – FY 2023 Results – Lucror Analytics
COG’s FY 2023 results were acceptable in our view. Importantly, the audit issues resulting in the belated publication of results appear to be minor, with auditor PwC giving a clean audit opinion overall. Leverage was largely stable despite the soft earnings, thanks to debt reduction. In addition, we view positively that the guarantees provided to associate Shandong Shengli (which we classify under debt) have largely fallen away. COG’s liquidity is adequate, as the company is poised to refinance the bridge loan using a new syndicated loan facility.
We move our recommendation to “Buy” from “Hold” on the CHIOIL 4.7 ’26s.
Morning Views Asia: Nickel Industries , West China Cement
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.
Hansoh Pharmaceutical (3692.HK) – Growth Would Remain Strong in 2024, but Ameile Is Facing Headwinds
- Hansoh’s performance in 2023 beat expectations, which was mainly driven by collaboration revenue. Revenue proportion of innovative drug business made breakthrough and has become the major performance driver.
- Ameile’s future revenue growth is critical to Hansoh, but it faces increasing competition. EGFR/c-MET BsAb represents the future trend. If HS-20117 is successful, then the story of EGFR would continue.
- In 2024, Hansoh is expected to receive an upfront payment of US$185 million from GSK. According to the management, revenue is expected to have double digit growth this year.