China Archives | Page 30 of 153 | Smartkarma

• Irc Ltd (1029 HK) has announced a mandatory conditional offer from Nikolai Levitskii (Chairman) at HK$0.118 per share, a 32.6% premium to the undisturbed price (1 November). 
• The offer is conditional on the offeror and concert parties representing more than 50% of voting rights.  The offeror currently represents 30.61% of outstanding shares.
• The offer looks light vs long-term trading ranges. The minimum acceptance threshold implies a minority acceptance rate of 27.9% (36.8% if MIC Invest does not tender), which is not onerous.

• Wuxi plans to issue 178.4m shares at an indicative IPO price range of HK$19.9-20.6 per share and will raise net proceeds of US$479m at the midpoint of the IPO price.
• The company’s revenues have seen robust growth during the last 3-years driven by growth in ADC outsourcing market while margins have continued to decline.
• We have valued WuXi XDC Cayman (1877628D HK) using a DCF valuation which offers price per share of HK$23.44, 15.7% higher than the midpoint of the IPO price of HK$20.25.

• Two days before Huawei and Chery releasing their Luxeed S7 sedan to rival Model 3, LI unveiled the technical details of its MPV entry MEGA; 
• We see MEGA taking a meaningful market share from BYD’s Denza D9, GM’s GL8, GAC’s Trumpchi M8, all selling ~10K a month. We raise MEGA’s 2024 shipment to 57K;
• We raise LI’s TP from US$40 to US$47 and maintain BUY.

• Nikolai Levitskii, Russian iron-ore play IRC Ltd (1029 HK)‘s chairman and largest shareholder, has acquired 4.72% of shares out, lifting his stake above 30%, triggering an MGO. 
• The Offer price of HK$0.118/share, a 32.58% to last close, is the same price paid for the stake increase. 
• The Offer is conditional on Levitskii holding more than 50% of shares out. His intention is to maintain IRC’s listing. 

• Chenqi Technology Limited (CT HK) is looking to raise US$300m in its upcoming Hong Kong IPO. 
• Chenqi Technology (Chenqi) is a mobility technology and service company in China, founded by the GAC Group and Tencent. 
• Chenqi has grown its GTV fast on the back of network expansion. However, Dida’s inability to list and Chinese regulators’ scrutiny on Didi would likely dent sentiment surrounding Chenqi. 

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.

• MGM China Holdings
• Softbank Group
• Sunny Optical Technology Group

• WuXi XDC Cayman (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), has launched an HKEx IPO to raise up to US$470 million.
• We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
• Blue-Chip cornerstones will purchase US$300 million of the offer. Our base-case DCF valuation is HK$22.84 per share, 12.8% above the midpoint of the IPO price range.

• Digital Garage (4819 JP) is coming up “cheap” versus Kakaku.com Inc (2371 JP); and Melco International Development (200 HK) is trading “rich” to Melco Resorts & Entertainment (MLCO US).
• Preceding my comments on DG 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%.

• Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO.
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.6%.
• In this note, we talk about the not so positive aspects of the deal.

• With the review period complete, we forecast 9 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
• Some of the potential adds will also have passive flows from the CSI Smallcap 500 Index trackers at the same time as the ChiNext Index rebalance.
• The potential adds have slipped a lot versus the potential deletes over the last few months as the National Team has tried to stabilise the market via ETF creations.

• The read-across for Inner Mongolia Yili Industrial Group (A) (600887 CH)‘s 3Q23 results and briefing to China Mengniu Dairy Co (2319 HK) was overall positive.
• For 3Q23, Yili’s sales grew 3% yoy and net profit increased 59% yoy, mainly due to lower raw milk prices, better product mix, cost savings and low base.
• China Mengniu Dairy Co (2319 HK) continues to be a good value play, with reasonable valuation (15x 2024E PE), stable growth (above 10% net profit growth), and proactive shareholder returns.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• Post a sharp correction, stocks trade at appetizing valuations, and with results seasons around the corner, we will provide updates for all names. 

• Traditional tea companies are rarely seen in China’s secondary market. The most significant issue in the domestic tea industry is product standardization, leading to obvious bottlenecks in future revenue/profit scale. 
• Despite increasing investment in sales/marketing, financial results of Lancang haven’t shown much improvement. Sales of 1966 products would continue to be under pressure due to weak demand during economic downturn.
• Lancang’s financial performance is unsatisfactory, with declining revenue growth and profit margin. We are not optimistic about the Company’s prospects. Valuation should be lower than Nayuki Holdings (2150 HK).

• WuXi XDC Cayman (1877628D HK) is looking to raise US$470m in its Hong Kong IPO.
• WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• In this note, we will look at the deal dynamics and share our final thoughts on valuation.

• We believe the company is well positioned in China’s rapidly growing pizza market thanks to its strong brand and superior store economics. 
• Despite stock rally post 1H23 results, market still underestimates its earnings for both near and long term. We expect RMB250 million net profit for 2024 versus break-even by consensus.  
• History suggests DPC Dash has recipe for attractive stock return driven by its highly visible growth that can shield it from macro situations, which is desperately needed by China investors.  

• WuXi XDC Cayman (1877628D HK) is a leading contract research, development and manufacturing organisation (CRDMO) focused on the global antibody-drug conjugate (“ADC”) and broader bioconjugate market.
• The company has announced the terms for its HKEx IPO and plans to raise proceeds of around US$470m through the IPO.
• Wuxi XDC’s revenues have seen robust growth during the last 3-years driven by growth in ADC market while margins have continued to decline.

• Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO. 
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.6%.
• In this note, we talk about the positive aspects of the deal.

• WuXi XDC set terms for an upcoming IPO: the fast-growing CRDMO offers 178.4M shares at the price range of HK$19.90-HK$20.60, implying a market cap of ~HK$23.9B (~$3B) at the midpoint. 
• Cornerstone investors agreed to subscribe and buy ~116M shares, assuming the IPO price of HK$20.25 at the midpoint. WuXi XDC shares will begin trading on Friday, November 17. 
• My PT of HK$25.57 implies a ~26% upside to the IPO price at the midpoint. WuXi XDC’s premium multiples reflect 100%+ top-line growth and the company’s leadership position. 

• With the review period complete, we see 9 stocks in inclusion zone and 10 in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 4.7% at the December rebalance leading to a one-way trade of CNY 3.86bn. Index arb balances could increase the impact on the stocks.
• Apart from being added to the SSE50 Index, Hygon Information Technology (688041 CH) could also be added to other local/global indices over the next few weeks and months.

• Although RemeGen’s 23Q1-Q3 sales was better-than-expected, the Company is difficult to achieve management’s performance guidance for 2023. Since RemeGen’s commercialization logic has “undeniable flaws”, net loss would be further widened.
• Cash balance of RemeGen was just RMB600 million by 23Q3, which is not enough to cover its high R&D/SG&A expenses. If RemeGen cannot secure sufficient financing timely, risks are significant.
• The current valuation and investors’ expectations for RemeGen largely rely on the potential license-out deal of RC18. However, we remain caution until RC18 has sufficient evidence to win head-to-head trial.

• The Hang Seng Index closed last week at 17664.12 (CC=+2), currently rallying this week, but there is a chance for a short-lived pullback (i.e. closing this week down).
• The current global equities bounce should continue for the entire month of November: the HSI may continue rallying for +2 weeks (if it does not close down this week).
• Price targets to watch for the end of the rally (i.e. shortable) are between 18300 and 18700.

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.

• Delta Dunia Makmur
• ENN Natural Gas
• Greentown China

• Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
• With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
• Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.

• WuXi XDC Cayman (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.
• We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at WuXi XDC’s potential valuation range.

• Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan. 
• In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg. 
• The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.

• We believe advertising revenue will grow rapidly and game revenue will accelerate.
• We also believe EPS will decrease YoY due to high “other gains” in 3Q22.
• We expect the stock price will have an upside of 58% for year end 2024.

• WuXi XDC Cayman (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
• WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• In this note, we share our updated thoughts on valuation and look at bull/bear scenarios for WXDC’s earnings.

• All major Chinese e-commerce companies set up live broadcasting channels on Bilibili at the beginning of Singles’ Day sales.
• Kuaishou chairman’s resignation will not change the business strategy, as he stepped down from CEO two years ago.
• Baidu begins to sell ChatGPT-like service for CNY49.90 per month.

• Yue Yuen has a scalable business model with high dividend yield (6.4%). Its sales and net profit are expected to increase by 9.3% YoY and 55% YoY, respectively in 2024.
• The company is likely to enjoy higher sales and profits in 2024 due to improved footwear inventory destocking cycle, higher sales and profits at its subsidiary Pou Sheng.
• Yue Yuen Industrial is one of the largest footwear and athletic shoe manufacturers in the world. Its major customers include Nike, Adidas, Puma, and Reebok.

• We believe the financial recovery from 1Q24 will continue in 2Q24.
• We expect the operating margin will improve to 15% in 2Q24 versus 12% in 2Q23.
• Alibaba has an upside of 69% and the target will be HK$143 for the year end 2024. Buy.

• WuXi XDC, a leading CRDMO focused on the global ADC and bioconjugate market, filed to go public in Hong Kong and plans to raise up to $500M.
• The company is expected to IPO in November or December at the latest. Morgan Stanley, Goldman Sachs, and J.P. Morgan are the lead underwriters. The offering may attract investor interest.
• WuXi Biologics will spin off its ADC business, and WuXi XDC will raise capital through IPO to finance the construction of new facilities in Singapore and expand capacity in China.

• China Vanke (H) (2202 HK) saw a major drop in bond and stock prices recently, due to fear of default. 
• Yesterday, the company held a conference call, with representatives from Shenzhen SASAC and Shenzhen Metro (major shareholder of Vanke and owned by Shenzhen SASAC) participating in the call.
• The strong support shown by Shenzhen SASAC/Shenzhen Metro represents a good short-term buying opportunity, for both Vanke stock and bonds. 

• Chindata Group (CD US)’s US$8.60 per ADS offer from Bain Capital is conditional on dissenting shareholders representing less than 12% of outstanding shares. 
• Oasis Management, an activist fund, recently disclosed a shareholding representing 65.9 million ordinary shares, 8.99% of outstanding shares and 1.24% of voting interest. 
• Precedent transactions where the dissent condition was exceeded suggest two possibilities – the offeror waives the condition or persuades sufficient shareholders to withdraw as dissenters.

• The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• Absolutely STONKING performance this past week – +1.62% Friday to Friday across 42 trades. Positive performance in every sector. Portfolio at new high. Southbound inflows. BigCapHighDiv SOE outflows.
• Short sales this week now need 100% in the account for hedge funds. And the MSS claims some are short-selling or talking bearishly on stocks for political reasons.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), Origin Energy (ORG AU), JSR Corp (4185 JP), Orecorp Ltd (ORR AU), Lithium Power.
• Lowest spreads – Azure Minerals (AZS AU), Pact Group Holdings (PGH AU), Chindata Group (CD US), Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), Allkem. 

• This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
• SOUTHBOUND flows the last four weeks clearly indicate a momentum move. The top net sells are all down. The top buys are all up.
• Xiaomi Corp (1810 HK) and Semiconductor Manufacturing International Corp (SMIC) (981 HK) were the top net SOUTHBOUND inflows as SOUTHBOUND bought HK$8.515bn this past week.

• The collapse in share price of Dongfang Electric (1072 HK) is too excessive. The concerns on margin and orders are overplayed and its latest financial result is solid.
• Recurring profit surged 24.8% in 3Q23 and gross margin expanded both YoY and QoQ. For 9M23, new orders rose 19.2% to reach 98% of full-year FY22 level.
• We estimate backlog at Rmb197bn, or 3x consensus FY23F revenue, and this provides excellent protection to forward earnings. Its 5.8x and 4.4x PERs are just too undervalued.

• This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are dropping.
• NORTHBOUND saw net inflow for the first time in three months. Small at RMB 557mm, but positive.

• The recovery of concentrated TCM granules business makes us optimistic about China TCM’s 2023 full-year performance growth. The resurgence of pandemic and privatization rumor always attract the attention of investors.
• Pientzehuang’s 23Q3 performance was disappointing. Consumption downgrade makes the strategy of raising prices no longer effective. There is downward pressure on valuation as performance will not turn around soon.
• The investment logic of rigid demand is more convincing than consumption upgrading. So, China TCM is more likely to outperform Pientzehuang. Our view is long China TCM, and short Pientzehuang.

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 Vanke
• Hopson Development

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, EcoPro Materials (ECO123 KS), Cello World Limited (CW IN) and Honasa Consumer were bookbuilding in the past week. 
• Given the earnings seasons, there was only an entitlement offer by Treasury Wine Estates (TWE AU), and a cleanup for Ventia (VNT AU). 

• Our trading thesis is to go long JinkoSolar Holding (JKS US) and go short JA Solar Technology (002459 CH) in the next 3-6 months.
• The three major reasons include higher momentum for JinkoSolar post 3Q 2023 results, much higher EBITDA growth for JinkoSolar from 2022 to 2024, and relative valuations. 
• Some of the factors driving lower share price of Chinese solar stocks this year include higher US tariffs, excessive manufacturing capacity, and declining prices of solar wafers and panels.

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. Evergrande
2. Logan Property Holdings
3. Japfa Comfeed Indonesia
4. Medco Energi
5. Zhenro Properties Group

and more…

• Chinese-founded fast-fashion retailer Shein acquired British online fashion brand Missguided from Frasers Group Plc, as the Singapore-based fashion giant continues to expand overseas.
• Under the deal, Shein and Missguided’s founder Nitin Passi have formed a joint venture to manage the brand and access its intellectual property under a licensing agreement.
• Shein will also manufacture Missguided’s products through its on-demand production model, and sell on both companies’ websites, Shein said in a statement.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• The index changes and the indicative component weights for the December 2023 index review will be published in a couple of weeks.
• In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.

• Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, has filed for a H Share listing to raise US$1 billion, according to press reports.   
• Midea is the world’s largest home appliance company in sales volume and revenue in 2022. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
• The investment case rests on return to growth, margin on an upward trajectory, cash generation, strong balance sheet and undemanding valuation. 

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” Securities listed in Hong Kong.
• In a couple of weeks, the official index changes and the indicative weights for the final index members for the December 2023 rebalance will be announced.
• In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.

• Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by China Securities International, ABC International, ICBC and Maxa Capital.
• Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions. 
• According to F&S, it is the largest independent digitalized corporate credit confirming platform in China. Its user base had grown at a CAGR of 75.1% from 2020 to 2022. 

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.

• Azure Power Global Ltd
• Evergrande
• Japfa Comfeed Indonesia
• Medco Energi
• Zhenro Properties Group

• 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.

• 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.   
• WuXi XDC ranked No. 2 globally and No. 1 in China among CRDMO for antibody-drug conjugates and other bioconjugates in terms of revenue in 2022, according to Frost & Sullivan.
• The bull case rests on large addressable markets, market share gains, fast-paced revenue growth, strong revenue visibility, a solid balance sheet and ambitious capacity expansion plans.

• WuXi XDC Cayman Inc (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
• WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
• In our previous notes we looked at the company’s past performance, peer comparison, and shared our thoughts on valuations. In this note, we discuss WXDC’s PHIP updates.

• After a spike higher in fund ownership in 2021, active Asia Ex-Japan funds are beginning to close out positions.
• Funds including T.Rowe Price, LO Funds and Nikko AM have closed out exposure this year.
• JD.com remains a very well owned stock among institutional investors, at a time when performance is anything but stellar so far this year.

• We believe Mr. Su’s resignation as chairman is not a concern, because Mr. Cheng, the CEO, has been operating the company for two years.
• We believe the 3Q23 YoY growth will be lower, as 2Q23 had a lower comparison base.
• We believe the operating margin can be negative in 3Q23 as Q3 is always a weak season, but operating profit will break even for 2023.

• For the month of October 2023, 7 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
• The average premium for the new deals announced (or first discussed) in October was 65%. The average YTD is 37% (85 deals).
• This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

• The A-share subsidiaries of AviChina Industry & Technology (2357 HK) have mostly posted solid 3Q23 results – aggregate earnings growth has accelerated to 50.2%, from 26.8% in 1Q23.
• Their 9M23 result reached 64% of FY23 consensus forecast earnings for AviChina, vs. just 61% a year ago. This indicates the market is too conservative and suggests room for upgrade.
• Valuations are cheap at 8.7x and 7.0x PERs for FY23 and FY24. Its market capitalisation equals just 46% of the total attributable market capitalisation of these subsidiaries.

• We’ve seen increasing global cooperation for ADC pipelines. However, licensing deals alone cannot be used as the only basis for judgment. We still need to wait for solid clinical evidence.
• ADCs are far less “general and popularized” than PD-1. If compare ADC with GLP-1s, the difference is more obvious.How big the real market is for ADC is a question mark.
• WuXi XDC’s share price could perform well after IPO due to positive sentiments towards ADC, but whether its long-term valuation would be higher than peers remains to be seen.  

• Midea Group Co Ltd A (000333 CH) has officially filed for Hong Kong listing last week. 
• A common pushback against owning the stock is the perception of strong correlation to China property, which is not true in terms of business fundamentals.
• The stock is currently trading at 10x 2024E PE compared to an average of 13x over the last 10 years. 

• Midea Group Co Ltd A (000333 CH), one of the world’s largest home appliance producers, aims to raise up to US$3bn in its H-share listing.
• Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
• We have covered the company and deal background in our previous note. In this note, we talk about the updates from the recent filing.

• For certain companies now seeking IPOs, X-border volumes may serve as demand proxy
• In 2023, Chinese X-border volume growth has accelerated, up +55% Y/Y through September
• In developing X-border express market, lower ASPs are actually a good thing, in our view