China Archives | Page 26 of 153 | Smartkarma

• China East Education (667 HK) is interesting as it is probably the only education company with no debt. Net cash amounted to Rmb2.1bn, or 42% of its market capitalisation. 
• Earnings have bottomed out and the marginal YoY decline in 1H23 is due to upfront costs for staff recruitment. Its vocational education focus also faces fewer regulatory risks.
• We consider it a potential privatisation candidate at 0.8x P/B. Its major shareholders owned 75% of the company, leaving a free float of less than HK$1.4bn.

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.

• Yuexiu Property

• The market seems “not excited” with fruquintinib’s FDA approval.We analyzed the potential reasons behind.Beyond boosting market sentiment when license-out deal is announced initially,its practical impact on valuation could be limited.
• HUTCHMED’s financial performance is good. The deal with Takeda helps to relieve cash-flow pressure. We think HUTCHMED is a relatively safe bet for investors as eventual breakeven is drawing near.
• If based on conservative calculation, market value of about US$1,455-2,055 million is a good place to long.When market value is higher than US$3,500 million, it’s time to consider taking profits.

• In November, domestic parcel volume growth accelerated vs recent months
• International remains very strong; STO keeps taking share from Yunda
• Avoid domestic ‘ground’ segment, seek international growth in SF, CaiNiao

• East Buy’s stock price plunged after a conflict broke out between the top broadcaster and the management team.
• NIO will launch another brand for low price products, following BYD’s low price and Li Auto’s price reduction.
• Tencent will move its unimportant assets to China Literature again.

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.

• Meituan

• The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished. 
• Time to go long Hs vs As for the new year at 52wk wide discounts. 3 Short H/A pairs now switched to long. 3 new pairs long this week. 

• We don’t consider Douyin an existential threat to Meituan, but we see the company’s growth increasingly be constrained by its business model itself.
• We believe Meituan will disappoint the market with regard to its bottom line growth in 2024, barring major overhaul of its new initiative businesses.
• Meituan will have to make tough choice between growth and profitability and either scenario won’t bode well for its valuation. We value the company at RMB410 billion, meaning 18% downside.

• SOUTHBOUND flows showing reversion tendencies continues for a fourth week. Hs rebound vs their As on the week – especially the liquid ones.
• SOUTHBOUND saw HK$9.9bn of OUTflows on the week to 15 Dec, ALL of which was net sales of Tracker Fund of Hong Kong (2800 HK) and Tencent (700 HK). 
• High-Div SOEs again saw action. This time with both CNOOC Ltd (883 HK) and China Telecom (728 HK) seeing net buying as a percentage of volume. 

• Since SEC operates in US executive branch, Congress lacks power to stop IPOs
• But by passing new laws, Congress could potentially undermine SHEIN’s IPO
• Given current political climate in the US, SHEIN IPO faces real political risks

• Water Oasis (1161 HK) reported 16%/65% YoY revenue/PAT growth for FY23. For H2 FY23 revenue/PAT decelerated to 7% YoY/31% YoY. The company guided a positive outlook for FY24.
• Net cash increased to 271 mn HKD, representing 28% of market capitalization (990 mn HKD), as the company benefitted from positive working capital cycle changes. 
• Water Oasis (1161 HK) declared a 7-cent dividend for H2 FY23, bringing the overall dividend for FY23 to 14 cents (9.6% div yield). 

• REPT BATTERO Energy (REPT) raised around US$270m in its Hong Kong IPO.
• REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Haier Smart Home (6690 HK)‘s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. 
• With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business’ 9% earnings yield is attractive. 
• The transaction will extend HSH’s application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. 

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.
• Last week saw NORTHBOUND net sell RMB 18.6bn of A-shares on slightly lighter activity. Friday saw large NORTHBOUND net buys early in the day but ended a net sell.
• Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still. 

• Octillion Energy Holdings (OE HK) is looking to raise US$400m in its upcoming Hong Kong IPO.
• Octillion Energy Holdings (OE) primarily designs, manufactures and markets tailor-made battery systems for electric vehicles (EVs), and to a lesser extent, electric storage systems (ESS) and battery management systems (BMS).
• As per F&S, OE had a 9.6% market share and was ranked the third largest EV battery system provider for passenger battery EVs (BEVs) in China by FY22 shipment units.

• Recent business updates of WuXi Bio led to a decline in WuXi AppTec’s share price and changed investors’ expectations for CXO. Now is the time to adjust forecasts.
• We analyzed the growth rate of various business of WuXi AppTec in 2024. In a neutral scenario, growth next year could fall short of management’s guidance.Reversal in 2025 is uncertain.
• If WuXi AppTec “unexpectedly” receives blockbuster orders, which are large enough to hedge against the downward trend of WuXi AppTec’s other businesses, then it will help to change performance expectations.

• I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Four new deals discussed this week: Sigma Healthcare (SIG AU)‘s reverse takeover; Tanotos’ tilt for Vinda (3331 HK); and Tender offers for Shinko Electric (6967 JP) and Outsourcing (2427 JP).
• Key updates took place on: Pact Group Holdings (PGH AU), Allkem (AKE AU), Costa Group Holdings (CGC AU), T&K Toka Co Ltd (4636 JP) and Hollysys Automation Technologies (HOLI US).

• 2023 NRDL negotiation results were released. We’re seeing the rules of NRDL renewal negotiations tilt toward innovative drugs, leading to lower price reduction, but there has been no fundamental change.
• The record-breaking US$8.4 billion deal involving BMS and Sichuan Biokin Pharmaceutical (688506 CH) (SystImmune) is not without risk, though. We still recommend to remain rational.
• The issue facing Shanghai Haoyuan Chemexpress (688131 CH) is higher revenue but lower margins. Valuation will likely experience further declines due to lock-up expiry and share reduction.

• It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
• The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
• There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.

• Beijing and Shanghai laid out long waited stimulus policies on property market, include 1) lower property down payments ratio;2) lower mortgage loan rate;
• 3) lower recognition standard for ordinary home. The key is to encourage households to add leverage.
• We treat the financial stimulus as one-off positive shock to the home transaction markets in the two cities,  especially benefiting 1Q24 sales for Beike due to…

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Las Vegas Sands (LVS US) announced it will buy  ~1% of Sands China (1928 HK). Melco International Development (200 HK) mean reverts after a roller coaster out/under-performance. 
• Preceding my comments on Las Vegas Sands and Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Vinda International (3331 HK) has announced a pre-conditional voluntary offer from Sukanto Tanoto at HK$23.50 per scheme share, a 7.8% premium to the undisturbed price (26 April). 
• The pre-condition relates to China SAMR and Japan Fair Trade Commission approval. The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.
• Irrevocables ensure the satisfaction of the minimum acceptance condition but also rule out a competing proposal. The timing of China SAMR approval is the key risk. 

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. NagaCorp Ltd
2. China Jinmao Holdings
3. Hopson Development
4. Greentown China
5. Seazen (Formerly Future Land)

and more…

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. NagaCorp Ltd
2. China Jinmao Holdings
3. Hopson Development
4. Greentown China
5. Seazen (Formerly Future Land)

and more…

• Back on the 27 April, personal hygiene play Vinda International (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership.
• That spurred, allegedly, a variety of suitors including Brazil’s Suzano, the world’s largest hardwood pulp producer, Bain Capital, CVC Capital, DCP Capital, and Indonesia’s Tanoto family.
• And the Tanoto’s have now emerged with a HK$23.50 pre-conditional Offer. The key risk is PRC regulatory approval . Elsewhere, this is a done deal. 

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
• There could be up to four index changes. Some of these are high-conviction changes and some are low-conviction changes.

• Local news reported two positive developments for Zai Lab’s FcRn inhibitor Efgartigimod: (1) Rival CSPC/HarbourBio withdrew BLA for competing drug Batoclimab (HBM9161), (2) Efgartigimod was included in 2024 NDRL;
• We raise Zai Lab’s 2024 top line by 8.8% but keep non-GAAP operating loss largely unchanged；
• We raise TP by US$2 to US$20 and maintain SELL.

• The stock of Poly Development and Holdings Group Co. Ltd. jumped 7.6% Tuesday after the leading developer unveiled an up to 2-billion-yuan ($279 million) share buyback aimed at arresting its sliding equity price.
• Shares of Poly Development closed at 10.34 yuan in Shanghai Tuesday, compared with 9.61 yuan at Monday’s closing. The stock has nearly halved from the 18.59-yuan peak in April 2022 after the persistent downturn in the property market.
• Poly Development, China’s largest developer by sales this year, said late Monday that it plans to buy back 1 billion yuan to 2 billion yuan of its own shares in the next three months.

• Cash-strapped developer Dalian Wanda Group Co. Ltd. can breathe a temporary sigh of relief having reached an agreement with investors to avoid an immediate repayment of more than 40 billion yuan ($5.6 billion) for an unfulfilled flotation of its property management unit.
• Wanda faced having to repay a group of investors their 38-billion-yuan investments plus interest under a 2021 agreement if the developer failed to list its light-asset unit, Zhuhai Wanda Commercial Management Group Co. Ltd., by the end of this year.
• As Zhuhai Wanda’s listing plan failed despite four attempts, the repayment obligation became a ticking time bomb hanging over the company, which is struggling with capital drains amid plunging sales.

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.

• There were 6 inclusions and 6 exclusions for the Nasdaq-100 Stock Index (NDX INDEX) at the annual December reconstitution. Then another ad hoc change was added on top of that.
• Impact on the inclusions ranges from 1-8 days of ADV to buy, while the impact on the deletions varies from 0.7-2.6 days of ADV to sell.
• Apart from the constituent changes, there are expected to be inflows in Tesla Motors and Broadcom and outflows from Apple, Microsoft, Amazon.com and NVIDIA.

• China Tourism Group Duty Free Corp Ltd (601888 CH)  (CTG) share price has plunged by 63% despite solid 9M23 profits growth and cash flushed balance sheet 
• Underlying fundamentals is solid, Chinese people still buying duty free goods, albeit tilting towards value than decadence purchases 
• CTG is cheap relative to its own history on all valuation metrics (PE, P/Book, P/FCF) and many technical indicators suggest it is in OVERSOLD territory 

• CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
• In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in June 2024.
• At present, I see 10 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.

• Li Auto’s deliveries and revenues surged by three digits since 3Q23.
• The company is building new factories in Changzhou and Beijing. 
• However, we believe the stock is overvalued apart from comparing with Tesla.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

• Diseases with complex mechanisms like NASH are unlikely to be solved by drugs with a single target, but compared with THR-β and GLP-1s, our view on HTD1801’s prospects is negative.
• HTD1801 faces high R&D failure risk and challenges in obtaining the final approval for NASH indication. For T2DM indication, the current intense competitive landscape has dimmed its future commercialization prospects.
• Several original shareholders have already cashed out in advance, indicating that they are not optimistic about the prospects of HighTide. The valuation premium space after IPO could be lower-than-expected.

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.

• In what I viewed as one of the cleaner deals, CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China.
• A decent premium to undisturbed, a low tendering threshold, and a large shareholder giving an irrevocable – this looked done. 
• Now ORG Development Limited/ORG Technology Co., Ltd. A (002701 CH), holding 24.4% of shares out, is mulling a competing conditional general cash Offer. One of these Offers will get up.

• CPMC Holdings (906 HK) disclosed that ORG Technology Co., Ltd. A (002701 CH), the second-largest shareholder, is considering a competing voluntary conditional general cash offer.
• It is rare to bid against an SOE bidder. ORG likely has implicit SOE support to launch a competing offer due to the need for Chinese regulatory approvals. 
• The possible scenarios suggest Mr Zhang Wei is the winning bid’s kingmaker. Mr Wei sold down 260K shares at HK$6.35 on 8 December, indicating a willingness to exit.

• Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
• Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
• Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK). 

• China announced game approval for November batch. The number of games approved is in-line with the pace of approval in recent months.
• The Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Netease scored one approval while Tencent has been zeroed for five rounds.

• CPMC Holdings (906 HK) may potentially receive another takeover proposal from ORG Technology Co., Ltd. A (002701 CH) which has a 22% market share in the industry.
• ORG has every reason to launch such a proposal and given its operational and financial performance, it looks to have the capability to realise good synergy.
• CPMC still looks inexpensive relative to the industry based on its PER valuations. No matter what, the 4th largest player Sunrise Group (002752 CH) will now become interesting.

• REPT BATTERO, a Chinese Li-ion battery manufacturer, announced terms for its IPO in Hong Kong. The initial public offering price is expected to be between HK$18.20 and HK$20.60 per share.  
• The company plans to raise ~HK$2.1B of net proceeds at HK$19.40/share. REPT BATTERO will begin trading on the Hong Kong Stock Exchange under the stock code 0666 on December 18.
• I have a negative view of the upcoming REPT BATTERO IPO and expect the stock will underperform during the first trading day as a publicly listed company. 

• Shineway’s performance growth in 23Q1-Q3 slowed obviously. The big decrease in sales growth of injection products and TCM formula granule products would drag down the overall revenue growth in 23H2. 
• Due to TCM formula granules VBP, the 60%-75% gross profit margin level is hard to sustain. TCM formula granules business would enter an era of low profits but high sales.
• Shineway’s cash balance is RMB5.4 billion, but market value is about RMB5.39 billion. So, Shineway is undervalued. The Company’s two dividends next year could reach RMB50 cents per share.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are China HK Power (931 HK)and Meitu Inc (1357 HK)

• Li Ning (2331 HK) announced yesterday that the company has acquired a HK office project, the Harbour East, from Henderson Land, for a total consideration of HKD2.2bn. 
• The acquisition is quite unexpected given that Li Ning has had a clean corporate governance track record.
• The company now trades at 11x foward PE, assuming no growth in 2023 and 2024 earnings.  It is now a value stock, though the visibility is very low. 

• REPT BATTERO Energy (1998104D CH), a leading EV battery manufacturer, has launched an HKEx IPO to raise up to US$306 million. Pricing is on 14 December.
• We previously discussed the IPO in Rept Battero IPO: The Bull Case and Rept Battero IPO: The Bear Case. 
• There are no cornerstone investors. Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would pass on the IPO.

We believe China South City’s (CSC) proposed bond extension is overall acceptable to bondholders. The company plans to continue paying coupons in cash, albeit at a reduced coupon rate. In addition, the absence of a haircut would preserve bondholders’ claims.

We note negatively that the amortisation payments would only begin in 2026. This reflects the company’s very tight liquidity, considering its failure to pay the coupon in November 2023 and the dismal H1/23-24 results. Moreover, CSC is not proposing to add new credit enhancement measures, even though the latest extension has demonstrated the failure of the existing keepwell deed and asset pledge to ensure offshore debt repayment.

CSC has ceased disclosure of quarterly contracted sales since 2022, and we believe it has now fully shifted business focus to commercial properties. However, the company’s commercial properties were affected by a depressed macro market and lower demand for leasing, and we do not foresee a related turnaround in the near future. Liquidity was extremely weak, with Cash/ST Debt of only 9% as of end-September.

• Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
• The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
• Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.

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.

• China South City
• NagaCorp Ltd

• IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
• 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.
• We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

• Recently, Yunda Holding has lost volume share to rival STO Express 
• One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
• For Yunda, this dynamic adds to intense near-term pressure on margins

• SOUTHBOUND flows showing reversion tendencies continues for a second or third week after weeks of momentum. 
• SOUTHBOUND saw HK$11.2bn of INFLOWS on the week, a chunk of which was net buys on HK-listed ETFs, but Hs underperformed their A counterparts in the H/A pairs once again. 
• High-Div SOEs again saw action. This time with both CNOOC Ltd (883 HK)andChina Mobile (941 HK) seeing strong net buying as a percentage of volume. Tech was sold.  

• The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• Hs with H/A pairs under-perform their As on average by 70+bp. Liquid HK H/A Pairs saw H/As -66bp. H/A Pair intracorrelation is down but it feels like liquidation.
• SOUTHBOUND and NORTHBOUND flows were buys, and sells, respectively, but Hs have had two bad weeks in a row, and high premia A/H pairs have seen premia rise significantly.

• REPT BATTERO Energy (1998104D CH) is looking to raise up to HK$2.39bn (US$306m) in its IPO by selling 116.07m shares at HK$20.6/share, valuing the company at HK$46.9bn (US$6bn).
• The H-share market cap is a lot lower at HK$6.33bn (US$811m) since most of the pre-IPO shares will remain as Domestic Unlisted Shares.
• The stock will be eligible for HSCI inclusion in March but will need to trade higher than the upper end of the IPO range to be added to the index.

• Travelers increased by 75% YoY and traveling spending increased by 144% YoY in China in 9M2023.
• TCOM’s total revenue rose by 31% in 3Q23 over 3Q19 before COVID.
• We conclude an upside of 33% and a price target of US$43.70.

• We set out to compare prices & the “retail experience” at AMZN, SHEIN
• Selecting comparable items, we looked at landed costs, transit times, returns
• SHEIN’s value proposition is obvious; will consumers accept its drawbacks, too?

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.
• Last week saw NORTHBOUND net sell RMB 5.8bn of A-sharesin higher-than-normal activity.
• Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start).

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• BYD offers a reward up to RMB5 million for reporting defamation.
• NIO denied further layoff after releasing the 3Q23 results with both revenue and loss increasing significantly.
• Meituan’s GMV of live broadcasting food delivery reached RMB2 billion.

• The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
• We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings. 
• These assets only accounted for 8% and 5% of SZI’s total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.

• Now that the pandemic has passed, Yiling’s performance has to face a sharp decline due to the high base before, but in our view, the situation is not so bad.  
• According to the management,sales of cardiovascular and cerebrovascular products would gradually increase to make up for the sales decline of Lianhua Qingwen, which would still be higher than pre-pandemic level.
• About 15-20% performance growth is still reachable in the future. PE of 20-30 is a reasonable range for Yiling. Being included in CSI 300 Index helps to improve the liquidity.