China Archives | Page 67 of 154 | Smartkarma

• Chinese social media giant Tencent Holdings Ltd. and state telecom operator China Unicom were cleared by the country’s antitrust regulator to set up a joint venture to develop data and cloud-related businesses.
• The new business, one of 15 investment deals that cleared antitrust review Tuesday, will focus on content delivery networks and edge computing.
• The partnership is another tie-up between Tencent and China Unicom after a 2017 investment in which the social media giant acquired a 5.18% stake in the telecom company.

• Tianqi Lithium (9696 HK) and JD Health (6618 HK) could be inclusions while XPeng (9868 HK) and Longfor Properties (960 HK) are near certain deletions.
• There are a few stocks that are close to the deletion threshold and could be deleted from the index if they continue to sell off over the next few weeks.
• Tianqi Lithium (9696 HK) is also a high probability inclusion to the FTSE All-World Index at the December rebalance. That will bring in additional inflows to the stock.

• The fake news about China reopen and the COVID-19 vaccine business are the major driving force for the rally of CanSino’s share price. However, such rally would not last long.
• CanSino didn’t perform well in Q3 and 2022 would be a difficult year for CanSino. The major turning point of CanSino performance still lies in MCV4, not COVID-19 vaccines. 
• CanSino’s H-share valuation has become more reasonable,but the downside risk in HKEX is hard to predict. Investors could consider offload and secure the gains. There’s better opportunity to long ahead.

• Giant Biogene has priced its IPO at HK$24.30 per share, at the lower end of the company’s indicative IPO price range of HK$24.3-27.7 per share and raised HK$495.8m (US$63.2m).
• The HK offering was oversubscribed by only 2.08 times while the international offering was subscribed by 4.22 times.
• Though Biogene’s IPO was priced attractively, we think lower demand for the company’s shares led to pricing at the bottom of the IPO price range.

• Apparently, China Communications Construction (1800 HK) has an uninspiring 3Q22, but this is mainly due to losses at concession projects and heavy credit and asset impairments.
• We estimate outstanding backlog at Rmb3.28trn, enough to cover 4.5x FY22F revenue. Expansion in 3Q22 gross margin, against declines in 1Q22 and 2Q22, is a positive development.
• Despite outperformance against major indexes YTD, CCCC still trades on 2.3x and 2.1x PERs for FY22-23. Its 0.16x P/B has overly discounted the value of underlying assets.

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.

• Country Garden Holdings Co
• Delta Dunia Makmur
• Greenland Holdings Corp
• Lenovo
• Melco Resorts & Entertainment
• MGM China Holdings

• After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
• Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
• After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself. 

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Giant Biogene (GB) raised around US$70m by pricing its  HK IPO at the low-end.
• GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
• We had looked at various aspects of the deal in our previous note. In this note, we will talk about the demand for the deal and other trading dynamics.

• Yashili International Holdings (1230 HK)‘s spread to China Mengniu Dairy Co (2319 HK)’s offer (HK$1.20) has widened to 10.1% due to doubts about the satisfaction of the remaining pre-condition.
• We think the delay in satisfying Dumex Key Condition is due to the glacial bureaucratic process. The pre-conditions long stop date is 31 July 2023, which provides sufficient time.
• Both Danone SA (BN FP) and Mengniu can waive conditions to satisfy the pre-condition. Both have the motivation to complete the transaction as it facilitates the unwinding of their partnership.

• On the 9 June, Urban planner China VAST Industrial Urban Development (6166 HK) received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
• On the 17 October, China Jinmao and China VAST announced that all pre-cons for the HK$2.40/share Offer had been fulfilled.
• The Scheme Doc is now out. The Court Meeting will be held on the 23 November. The IFA says fair and reasonable. This is done and trading tight to terms

• With the review period complete, we expect 18 changes to the index in December – most deletions are Financials, most inclusions are Industrials.
• The market volatility over the last couple of weeks has altered the sectoral breakup of the potential changes with Industrials gaining index spots at the expense of Consumer Staples.
• We see 5 of the potential adds being added to the MSCI China Index in February and 6 of the potential adds being added to the FTSE All-World/All-Cap in March.

• CIMC Enric Holdings (3899 HK) has a steady 3Q22 with good revenue growth for the chemical & environmental and liquid food segments. Management also said margin has expanded YoY.
• Overall order backlog of Rmb13.7bn is generally sufficient to cover individual segment’s revenue over the next 6-15 months, comfortably securing the growth prospects. 
• With significant overseas revenue, it is benefiting from depreciation of Rmb against the USD. It also anticipates a pick-up in domestic clean energy segment growth in FY23.

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.

• Adaro Minerals
• Greenland Holdings Corp
• Longfor Properties
• UPL Ltd

• WuXi AppTec’s 2022Q3 results beat the market expectations. The Company’s performance showed good recovery from the prior pandemic/lockdown, but it has not yet entirely reversed the trend of slowing growth.
• Wuxi AppTec has a problem of decreasing future gross margins. Although the Q3 results could bring short-term catalyst for WuXi AppTec’s share price, such rebound may not last long.
• We further analyzed WuXi AppTec’s business, and we remain to be conservative on the Company, because the whole outlook and investment logic of CXO have changed. 

• China Vast Industrial Urban Development (6166 HK)‘s scheme document is out with the court meeting scheduled for 23 November. The IFA considers the offer to be fair and reasonable. 
• Key conditions include approval by at least 75% of independent shareholders (<10% rejection). Shareholders with blocking stakes either provided irrecovables or will likely support the offer.
• The offer is not great but headcount test is not applicable. At last close and for the 14 December payment, the gross and annualised spread is 0.8% and 6.7%, respectively.

• Metal recycler Chiho Environmental Group Limited (976 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• For more than a year, the controlling shareholder group has been implementing a potential restructuring. The ultimate controlling shareholder is Tu Jianhua, an executive director of Chiho.
• This long drawn-out reorganisation may finally result in an Offer for Chiho.

• At the end of the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
• Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. The impact on the potential deletions is higher on average.
• The potential adds have outperformed the potential deletes over the last six months, though there has been a sharp narrowing of the gap over the last few weeks.

• Vitasoy Intl Holdings (345 HK) was shunned by investors last year as its products were taken off the shelves in China, causing its revenue from China to plummet. 
• Recently announced a substantial increase in net profit vs last year.  
• Despite the recent uptick, Vitasoy’s share price is still trading at 50% PBR vs 5 years ago. 

• Hong Kong government published on Oct 31 a statement titled “Policy Statement on Development of Virtual Assets in Hong Kong” with a much friendlier stance on crypto industry
• The policy statement mainly focuses on crypto asset ETF, NFT, tokenized assets, stablecoin, and e-HKD; while utility tokens are missing from it.
• While this has been perceived positively by the industry, the biggest concern is still the regulatory uncertainty, especially considering mainland China’s outright ban on all crypto-related activity

• In 2022H1, Ping An Health’s losses narrowed and gross profit margin increased, with various financial indicators showing an improving trend. The Company also announced a new acquisition recently.
• In the process of turning from 2C business to 2B business, Ping An Health hopes to expand B-end users who can contribute higher margin, but this transformation would encounter difficulties.
• If the payment method in China is not changed (still dominated by national medical insurance payment, with small portion of commercial insurance), it’s difficult to improve the profitability qualitatively.

• Geek+ is the fastest-growing robotics startup and producer of warehouse robots powered by AI and deep learning algorithms. The company successfully integrates logistics with robots. 
• Beijing-Based Geek+ has raised a total of ~$532M in funding over 7 rounds. The last round was a $100M Series E in August 2022 that was led by Intel Capital. 
• Warehouse robots have a huge market potential driven by rising labor costs in China, lack of human labor in the warehouse segment, and huge fluctuations in production capacity. 

• Founded in 2016 by Richie Chen and Shengdong Xu, HAI Robotics is a pioneer in ACR systems and warehouse automation robotics unicorn.  
• HAI Robotics offers flexible automation solutions to improve efficiency while reducing costs. The company’s vision is to utilize robotics to create and deliver value to each factory and warehouse. 
• China is the hub for the production of AMRs and ACRs, easing the workforce shortage, improving operational efficiency, saving additional storage, and handling a wide range of SKUs. 

• XPeng Robotics is a bionic smart robot maker backed by Chinese EV giant XPeng and high-profile investor IDG Capital. The company focuses on AI, robot autonomy, and interaction.
• Founded in 2016 and headquartered in Shenzhen, XPeng Robotics is an affiliate of XPeng, with R&D centers in Beijing, Guangzhou, and Silicon Valley. 
• Bloomberg reported that $100M+ Series A financing was the largest single-tranche fundraising for the bionic robot sector in China in the past two years. 

• Gaussian Robotics sells a new generation of autonomous cleaning robots that can be applied in office buildings, shopping malls, indoor galleries, hotels, schools, healthcare facilities, and warehouses.  
• Shanghai-Based unicorn wants to disrupt the cleaning industry with automation, promoting the use of low-cost autonomous cleaning robots worldwide. 
• The company owns the world’s most advanced commercial cleaning robot portfolio offering cost-effective smart robotic solutions to 2,000+ customers in 40+ countries across 6 regions.

• With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
• We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
• The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US), Shandong Fengxiang (9977 HK).
• Lowest spreads – Tyro Payments (TYR AU), Tassal (TGR AU), China Vast Industrial Urban Development (6166 HK), Singapore Medical (SMG SP), PTB Group Ltd (PTB AU), Nearmap Ltd (NEA AU).

• PAG Capital has won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK). 
• The acquisition remains subject to regulatory clearance (including SAMR). Once greenlit, PAG will be required to make an unconditional Offer for the H-shares at HK$1.5132/share.
• Separately, it is PAG’s intention to delist Fengxiang which involves Scheme-like delisting resolutions. 

• Two Week summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 10 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Dongfang Electric (1072 HK) logged a 40.1% growth in reported profit and a 36.5% increase in new orders in 3Q22, both represent excellent sequential momentum.
• A 0.5pp 3Q22 gross margin expansion demonstrated order execution and cost control strengths. We also forecast end-FY22 backlog at 1.8x FY22F revenue, well securing outlook.  
• DEC is set to see accelerated growth momentum from rising power storage, particularly pumped storage, demand in the medium term. Yet, it only trades on cheap 8.1x FY23F PER.

• In 3Q22, S. F. Holdings’s revenue grew by 45% YoY and net profit increased by 89% YoY.
• Alibaba resumed its link on Kuaishou’s live streaming sales before Singles’ Day.
• Tencent denied the rumor that it would be acquired by China Mobile.

• Driven by the demand for nucleic acid testing due to COVID-19, Kingmed’s 22Q3 performance continued to grow. However, its accounts receivable also increased sharply, which would be a risk. 
• Kingmed has to switch business in time when the huge demand for nucleic acid testing fades away.The YoY growth of other businesses would be the key to decide its outlook.
• The current valuation of Kingmed isn’t attractive. After COVID-19 is under control, Kingmed’s YoY revenue growth could fall back to below 40%. Net profit margin could reduce to above 10%.

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.

• Vedanta Resources
• Yankuang Energy Group

• PAG is the successful bidder for Shandong Fengxiang (9977 HK)‘s controlling shareholder’s 70.92% stake at HK$1.5132 per H Share (RMB1.3822 per domestic share).
• As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
• The share sale transfer requires SAMR approval which will be forthcoming. Our best guess is the MGO completes end-January 2023. At the last close, the gross spread is 14.6%.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Blibli managed to upsize its IPO, while a few companies will launch their Indian IPOs in the coming week.
• There were no notable placements this week, which wasn’t surprising after Monday’s market turmoil.

• 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. However, such disclosures are by no means an absolute. 
• These insights may flag those companies where shares have been pledged. Stocks mentioned include Haichang Ocean Park Holdings (2255 HK), C C Land (1224 HK), and GBA Holdings (261 HK).

• Lygend Resources & Technology (LR HK) is looking to raise about US$800m in its Hong Kong IPO.
• Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
• With the Obi Project expanding the firm’s capacity into the higher margin production segment, Lygend expects sales and profitability to pick up. 

• Atour Lifestyle Holdings (ATAT US) is a leading upper midscale hotel chain group in China is getting ready for an IPO in the US.
• We believe that a valuation range of RMB12.8 billion ($1.8 billion) to RMB16.9 billion ($2.3 billion) is appropriate for Atour Lifestyle Holdings. 
• Unless the IPO is priced sufficiently lower than the intrinsic value of the company, many institutional investors will likely pass on the IPO given the Bearish market sentiment.

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net inflow over the past week was ~HK$3.65bn, split (+HK$1.78bn) for Shanghai and (+HK$1.87bn) for Shenzhen.
• The largest inflows were in Tencent (700 HK) and Meituan (3690 HK). The largest outflows were in China Shenhua Energy (1088 HK) and China Overseas Land & Investment (688 HK).

• Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net outflow over the past week was ~US$2.7bn, split between Shanghai (-US$1.8bn) and Shenzhen (-US$0.9bn).
• The largest inflows were into Tianqi Lithium (002466 CH) and Shenzhen Mindray Bio-Medical (300760 CH). The largest outflows were in Kweichow Moutai (600519 CH) and Ping An Insurance (601318 CH).

• With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
• This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
• Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

• Near the end of the review period, we see 16 potential changes to the CSI 300 Index at the December rebalance. There are other stocks very close to the cutoffs.
• We estimate a one-way turnover of 3.04% at the December rebalance leading to a one-way trade of CNY 8.4bn.
• The potential adds have outperformed the potential deletes, though the gap has narrowed in the last few weeks. We’d position for outperformance post the end of the review period.

• The selloff in the broader market has led to the A/H premium on PingAn blowing out to levels not seen in the last few years and outpacing the HSASP Index.
• At a 24% premium, the risk/reward for a long Ping An Insurance (H) (2318 HK) / short Ping An Insurance Group (601318 CH) trade has never been better.
• The shift from A-shares to H-shares is already taking place – Southbound Stock Connect holdings have been increasing while the Northbound Stock Connect holdings have been decreasing.

• Giant Biogene (GB) is now looking to raise around US$80m in its Hong Kong IPO, down from its earlier target of US$500m raising.
• GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
• We had looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we’ll talk about valuations and other deal dynamics.

• Bear impulse in China/HK sets up a sell on a squeeze. Sell volumes ignited on the A50 12,400 support break. HSI has been our top short in Asia and rewarded.
• We did trim our HSI short at the 15k target but still represents 10% of our book. RSI is oversold with short squeeze risk (then re cycle short).
• Hong Kong likes to bottom on big impulsive downside moves so will be interesting how our price and timing models converge.

• Giant Biogene Holding (GBH HK) designs, develops and manufactures professional skin treatment products with recombinant collagen as the key bioactive ingredient in China.
• The company’s IPO offering has been downsized and now plans to raise approx. US$80m through issuing 22.6m shares at an indicative IPO price range of HK$24.3-27.7 per share.
• Our analysis shows that Giant Biogene’s IPO is attractively priced compared to domestic and international peers, however, we expect the upside to be limited given the current market volatility.

• In 3Q22, the game market size shrank in China and globally.
• The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.
• We believe the key impact for 2023 is the predictable license approval.

• Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
• We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
• The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. 

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• In this note, we talk about the not-so-positive aspects of the deal.

• This is our first report on global tech giant, Alibaba.
• The company is currently trading close to its 52-week low with its results just around the corner.
• Tmall GMV and Taobao experienced a percentage decline in the mid-single-digit in the last quarter.

• Chinese online game market size decreased by 19.1% YoY and 12.6% QoQ in 3Q22.
• Tmall, Alibaba’s direct sales app, started a mini-program in Tencent’s WeChat.
• State Post Bureau announced that it would revise the express delivery rules, especially for green packaging.

In 1992, a TV series aired in Hong Kong on TVB called The Greed of Man. The series told the three-plus-decade story of Ting Hai, an “uneducated and pathologically self-righteous brute” (played by Canto pop singer and actor Adam Cheng (born 1947)) and Fong Chun-sun, “an honest, cultured and refined leader of the Asian Stock Exchange” (played by Damian Lau) who were childhood friends, split, and saw Ting kill Fong over a girl.

Ting Hai fled to Taiwan, was brutish again, spent a decade-plus in prison there. One of Ting Hai’s sons pursues a Fong daughter, is rebuffed, the son turns violent. Eventually the three Fong daughters are killed, and Fong’s only son (played by Sean Lau) flees to Taiwan and makes it rich through indirect gambling on stocks. In Hong Kong, the Tings have made it rich by being short in the 1987 crash. Ting has come back to Hong Kong, is charged with murder, then buys himself out of a sentence. Fong comes back to Hong Kong, and they duke it out in the stock market in true good guys vs bad guys epic knock-down drag-out drama. Ting and his sons are backed by the triads. Fong is backed by a few HK tycoons. Eventually, Ting is wiped out.

He responds by throwing his four sons off the top of the stock exchange building and following himself. Only Ting survives, now billions in debt, and spends the rest of his life in prison. 

The first episode of the show actually started with that final scene of Ting hurling his sons off the building. TVB got so many calls from disturbed viewers they altered the show, and moved its time slot. Apparently, the re-issues and re-airings of the show all show edited versions. The edited version was re-released on TV in 2015 and was well-received in HK by a younger generation. 

Most importantly to this insight however, is that when the series started in 1992, the Hang Seng Index fell 1200 points in one month – that was almost 20% at the time. It started falling part way through the series, then the index fell 1,000 points (16+%) in four days after the gruesome ending.

There were so many complaints about the ending that TVB revised the video release and subsequent re-releases.

Two years later, another TVB drama series starring Adam Cheng called ‘Instinct‘ was aired starting in November 1994. The index started falling a day or two before, after what had been an ugly year-to-date, and fell 20% in 7 weeks while the series aired.

1996 saw two series starring Adam Cheng air on TVB.

Cold Blood Warm Heart – a romantic crime thriller series of 65 episodes aired its first episode on 5 February and ended its run on 3 May. The market fell 700+ points or 6% in the period. 

In early September 1996, Adam Cheng starred in another TVB series called Once Upon A Time In Shanghai (a remake of a 1980s series called The Bund), which ran from 2 September through 25 October 1996. The Hang Seng Index fell sharply the next day, and this was blamed on the Ting Hai Effect, but the market did pretty well in the 7-week-long series.

In late 1997 he starred in a historical drama called Legend of Yung Ching for a Taiwanese production company, covering a period in the mid 18th century of the Kangxi Emperor, the Yongzheng Emperor (Adam Cheng’s role), and the Qianlong Emperor in the Qing Dynasty. Apparently, the market dropped the day it aired. 

In June 1999, he starred in a four-part series called Lord of Imprisonment (may have been a Taiwanese series) which started apparently late in the month. That apparently started a fall of 6+% in the Hang Seng Index.

In 2000, a series called Divine Retribution aired on ATV. It was a sequel to Greed of Man, and was originally called Greed of Man 2000 and actually took place in the near future, not the recent past as had been the case for the original series. It ran from 11 September through 3 November 2000. The Hang Seng Index fell 10% in 6 weeks before rallying in the last two days of the series.

In March 2004 – from 8 March through 24 April 2004 – a historical drama of 37 episodes (more for the international version) starring Adam Cheng called Blade Heart aired on TVB. The opening theme song was performed by Adam Cheng.

You guessed it. The Hang Seng was down more than 10% in 7 weeks.

Later that year, he was in The Conqueror’s Story from 25 October through 4 December – also on TVB. The market fell nearly 200 points the day the series started. 

Adam Cheng also starred in a period costume drama called The Prince’s Shadow from 14 March through 18 April 2005. The market fell on the first day, regained most of its loss, but that was the high price of the series. The market fell over the period of the series.

In 2007, Adam Cheng played a real estate CEO in a TV drama set in contemporary China. The series, named Return Home ran for 33 episodes starting 15 July 2007.

In 2009 he did a TVB series on Hong Kong TV, titled The King of Snooker. It was 20 episodes airing on TVB from 30 March 2009 through 24 April 2009. On the first day, the market fell 600+ points or 4.7% on the day. He had also filmed a series in 2008 called The Book and The Sword – a 40-episode period drama aired in China starting 20 March 2009. The HK market fell 2.3% that day.

On 21 May 2012, a 30-episode psychological thriller titled Master of Play starred Adam Cheng. It ran on TVB for 30 episodes through 29 June 2012. The market fell 10% in the 10 days running up to the launch of the new series.

A year later, the period drama movie Saving General Yang was released in Beijing on 4 April 2013 and the next day, the Hang Seng was down 610 points (-2.7%).

In April 2015, the original 1992 drama The Greed of Man which made the Ting Hai Effect was rerun. The first day of the re-run (20 April) the market fell 2% or 558 points. 

He was interviewed in the South China Morning Post 9 days later and the next morning the article came out (30 April). He said he wasn’t to blame for the stock market’s falls when his shows aired. 

The market fell five days straight. 

In classic fashion, there was a new series out in 2018 called Ever Night. It saw advertising the two weeks before and the Hang Seng fell about 1,000 points in the two weeks before the release. People joked days before that the market fall was due to the new show.

The show was popular in China, so the 60-episode Season 1 started in October 2018 was followed by a 43-episode Season 2 staring 13 January 2020 and running for 3 months and a week. The market fell 25% from the start of Season 2 before rebounding. 

Which brings us to the present day…

Earlier this month, the sequel to The Greed Of Man was released for streaming on Disney+. The market, which had rebounded that day, fell for the next 6 days. 

And today, 25 October, TVB starts re-runs of the 1988 series Behind Silk Curtains starring Adam Cheng, where he plays the role of the chairman of a bank, and drives a businessman’s company to bankruptcy so he can take it over.

Notes:

• This is a fun thing. But it appears to be taken somewhat seriously. It ALWAYS comes up. 
• Not EVERY movie or tv series appearance causes bad results. Bar Bender aired starting on 3 April 2006 on TVB Jade, and the market was up that day, fell back a little in the following days, but not seriously, and then rose 8% by 26 April. 
• However, enough do that it retains its name decades later. 

Sources:

• CLSA put out a Hong Kong Market Outlook piece in April 2004 about The Adam Cheng Effect. That is probably the first I heard of it. 
• The Ting Hai Effect wikipedia page is a place to start. 
• There was an article in Chinese on www.chinanews.com (original source: http://big5.chinanews.com.cn:89/gate/big5/www.chinanews.com/yl/ypkb/news/2009/04-02/1629867.shtml) in April 2009 just after the King of Snooker series started which talked about the Tin Hai Effect. It is likely the source of some of the later articles in English because one of the dates is wrong and most later English sources copy that date.
• Wikipedia has a list of most of the TVB series by year of production. 
• IMDB has a list of most of his appearances. Wikipedia does too.

• With growth fading in the domestic market, the Chinese e-commerce company, Pinduoduo (PDD US) has made its first overseas push with the launch of Temu.com in the US.
• However, the launch was less than impressive, especially considering that the company created a lot of excitement about its US expansion in the previous earnings call.
• Selling $10.00 earbuds at $3.70, Temu could eat a significant chunk off of Pinduoduo’s profitability in the next couple of quarters.

• Kingston Financial (1031 HK) announced a privatisation offer from Mrs Chu, the controlling shareholder, at HK$0.30 per share, a 47.8% premium to the undisturbed price. The offer price is final.
• Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection) and the headcount test. No shareholder holds a blocking stake.
• The offer is light and the offeror is betting that the grim market conditions will sway the headcount test in its favour. Scheme document despatched by 21 December. 

• Jinke Smart Services (9666 HK)’s VGO from Boyu Capital is now open at HK$12.00 per share. The first closing date is 14 November. The IFA says it’s fair and reasonable. 
• The offer is conditional on 7.71% valid acceptances and anti-trust approval. The conditions can be waived. The offeror has not received irrevocables.
• The offer is unattractive, but the low threshold and peer multiple derating suggest a high probability of success. At the current price, the spread to the offer is 3.4%. 

• Tencent (700 HK) shares dropped 11.43% during yesterday’s trade over concerns on the country’s political environment with Chinese president Xi Jinping securing an unprecedented third term.
• Gamma Data reported that mobile game sales in China dropped 25% YoY during third-quarter 2022 despite 3Q being a peak period for gaming due to 2-month long school holidays.
• Tencent’s shares dropped With renewed geopolitical challenges and further weakening of Tencent’s earnings, we expect share price to drop further.

• With the review period nearly complete, there could be 4 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
• The market cap of potential adds using a 6-month minimum listing history is higher and there is a higher probability of a 6-month minimum listing history being used.
• The potential adds have outperformed the potential deletes and the index. Similar to the last few rebalances, we could see the adds outperform post the end of the review period.

• Chu Yuet Wah is Offering to take Kingston Financial (1031 HK) private by way of a Scheme at HK$0.30/share.
• The Cancellation price is a 47.78% premium to last close. It will not be increased. 
• Disinterested shareholders  comprise 25.073% of shares out, therefore a blocking stake at the Scheme meeting is 2.5073%. The headcount test also applies. 

• Innovent Biologics Inc (1801 HK)’s share price had some rebounds last week, which could be related to some positive progress on business and the picking-up market sentiment in healthcare sector. 
• We increased overall sales forecast for Innovent by including the two new products from Sanofi. But it’s still far from the management’s target of RMB20 billion sales in 5 years.
• Innovent’s current commercialization capability is like a “semi-finished product”, and has long way to go. It lacks the second big product except PD-1 to “pave the way” for next-stage development.

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• In this note, we talk about the positive aspects of the deal.

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, is set to launch a US$500 million HKEx IPO.  
• We previously discussed the IPO in Giant Biogene IPO: The Bull Case and Giant Biogene IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at Giant Biogene’s potential valuation range. 

• On the 27th of September, PRC-incorporated property management play Jinke Smart Services (9666 HK) announced a voluntary cash offer at HK$12/share, a 33.04% premium to last close.
• Boyu, the Offeror, together with concert parties, hold more than 60%. The Offer is contingent on regulatory approvals and 7.71% of shares out tendering. The tendering condition can be waived.
• The Composite Document has now been despatched. The first closing date is the 14 November.

• Given Shenzhen Airlines is already in negative equity, Shenzhen International (152 HK) will not record any of its losses in 2H22, making a big HoH swing in its impact.
• The injections of Hangzhou and Hefei logistics projects will be completed by end-FY22, bringing in one-off gains. Jul-Aug toll revenue of Shenzhen Expressway (548 HK) has also recovered vs. 1H22.
• While there will not be profit at logistics parks transformation business in 2H22, Qianhai Phase II has completed pre-sale in Sep, bring in potentially Rmb3bn to be booked in FY23.

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 SCE
• JSW Steel Ltd
• Reliance Industries
• UPL Ltd