China Archives | Page 68 of 154 | Smartkarma

• In the past couple of weeks, there have been tremendous sanctions by the US government on China’s semiconductor sector. 
• In this insight, we compare this move to the US government putting a trade embargo on oil against Japan nearly 81 years ago.
• If there are severe disruptions to the semiconductor market in China, this will likely to have negative impact on the two Korean semi giants Samsung Electronics and SK Hynix.  

• 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 Impro (1286 HK), Wealthking (1140 HK), C C Land (1224 HK), and China Bright (1859 HK).

• 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 launched its Indonesian IPO, while a few other names are said to be gearing up to launch in Hong Kong and India.
• There were a few placements this week, notable ones being Mitsubishi Estate Logistics (3481 JP) and Zee Entertainment Enterprises (Z IN).

• The share price was beaten down during COVID thanks to the lockdown and further restrictive policy. 
• The recent result has been encouraging especially with the loosening of the restrictive measures.
• Cafe De Coral Holdings (341 HK) is trading at a deep discount to its peers.

• Key areas to pay attention in 3Q22: 1) Meituan Instashopping’s growth rate, 2) Meituan Select’s unit economics, 
• 3) 4Q guidance for food delivery and in-store, hotel and travel recovery.
• Valuation is entering an attractive territory with recent stock price correction.

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. ABM Investama
2. Agile Property Holdings
3. Fosun International
4. Kawasan Industri Jababeka
5. China Jinmao Holdings

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. ABM Investama
2. Agile Property Holdings
3. Fosun International
4. Kawasan Industri Jababeka
5. China Jinmao Holdings

and more…

• 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$1.8bn, split between Shanghai (-US$1.2bn) and Shenzhen (-US$0.6bn).
• The largest inflows were into WuXi AppTec (603259 CH) and BOE Technology (000725 CH). The largest outflows were in Kweichow Moutai (600519 CH) and Inner Mongolia Yili Industrial (600887 CH).

• 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 ~US$2.7bn, split (+US$1.38bn) for Shanghai and (+US$1.36bn) for Shenzhen.
• The largest inflows were into Tencent (700 HK) and Wuxi (2269 HK). The largest outflows Tracker Fund of Hong Kong (2800 HK) and Hang Seng H Share Index (2828 HK).

• Post the massive correction in the China market, Perfect Medical Health (1830 HK) trades at 9.6x/6.9x PE FY23e/24e with a 10.4%/14.6% dividend yield assuming a 100% payout ratio.
• From interactions with the management, HK’s operations are in good health, with Q2 revenues normalizing to precovid levels. China has yet to recover as intermittent lockdowns plague its operations. 
• With cash and financial investments over 550 mn HKD ( 16% of market capitalization ), the company has the opportunity to make accretive acquisitions to grow its business.

• Back 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).
• The cancellation (and final) price is HK$2.40/share, a ~30% premium to the undisturbed price. Pre-Conditions include approvals from SAMR, SASAC, and NDRC. 
• Those pre-cons have now been satisfied. The Scheme Doc is currently expected to be dispatched on or before the 31 October. There may be some slippage. 

• CanSino Biologics Inc (688185 CH)’s business has made some positive progress recently, including the launch of COVID-19 Vaccine for Inhalation, commercialization and development progress of MCV4/PCV13i, etc. 
• CanSino’s technology platforms are very valuable and are above average level. Currently, there’re little potential domestic competitors, because CanSino’s products are newer, better and safer than domestic homogenized products.
• Even based on conservative forecast, CanSino’s valuation in HKEX is “ridiculously low”. Considering the downside risk in HKEX, CanSino A-share could be better option before valuation in HKEX becomes reasonable.

• China Energy Engineering (3996 HK) witnessed a good acceleration in quarterly new contracts in this year. We estimate current backlog equals to 6.4x its FY21 revenue.
• It is well geared towards China’s new energy development, as reflected by a 108.3% YoY surge in new energy contracts. Its pumped storage new contract value leaped 144x in 1H22.
• The spin-off of Gezhouba Explosive in the A-share market is progressing well with approval from shareholders in Sep. The stock’s 4.1x PER and 0.33x P/B look undemanding.

• Giant Biogene Holding (GBH HK) aims to raise around US$500m in its Hong Kong IPO.
• 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.

• Hong Kong Chief Executive John Lee Ka-chiu will deliver his inaugural policy address on the 19 October, where he is expected to announce a number of “ground-breaking” measures.
• One such measure is non-residents who have owned property in Hong Kong for 3+ years may get their extra stamp duty refunded – if they take up permanent residency.
• Secondary home prices have declined  8% year-to-date, and are approaching a five-year low. Goldman Sachs expects home prices to decline 30% in 2023 from last year’s levels.  

• China Vast Industrial Urban Development (6166 HK) announced that all the pre-conditions were fulfilled. China Jinmao Holdings (817 HK)’s offer is HK$2.40 per share.
• The key condition is approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
• The offer is light, but the headcount test is not applicable. At last close and for a year-end payment, the gross and annualised spread is 0.8% and 4.0%, respectively.

• Nearing the end of the review period for the SZSE1000 Index, we estimate around 50 changes to the index. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• 5 of the potential adds could be added to the MSCI China Index in February and 34 of the potential adds could be added to the FTSE All-World/All-Cap in March.

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.

• CIFI Holdings
• Fosun International
• Kawasan Industri Jababeka

• Giant Biogene Holding (GBH HK)  aims to raise around US$500m in its Hong Kong IPO.
• 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 in our previous notes. In this note, we’ll undertake a peer comparison.

• Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. 
• It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
• As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.

• 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 Lion Rock (1127 HK), VCredit (2003 HK), Zhongsheng (881 HK), and Concord New Energy (182 HK).

• Hong Kong brokerage Kingston Financial (1031 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• Chu Yuet Wah is the largest shareholder with 74.6% of shares out.
• Shares are down 98% from the January 2018 peak. A chunky premium may be on the cards if a firm Offer unfolds. 

• 20th National Congress of the Communist Party is due to kick off this week
• Will economic growth be top of the agenda and is there any scope to adjust the Covid strategy?
• With many potential growth factors, use derivatives to gain delta exposure

• 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$1.8bn, split between Shanghai (-US$2.0bn) and Shenzhen (+US$0.20bn).
• The largest inflows were into Satellite Chemical (002648 CH) and CATL (A) (300750 CH). The largest outflows were in Kweichow Moutai (600519 CH) and China Merchants Bank A (600036 CH).

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. Softbank Group
2. Alam Sutera Realty
3. CIFI Holdings
4. Indika Energy
5. Hopson Development

and more…

• 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 ~US$0.5bn, split (+US$0.26bn) for Shanghai and (+US$0.24bn) for Shenzhen.
• The largest inflows were into Tracker Fund of Hong Kong Ltd (2800 HK) and Tencent (700 HK). The largest outflows were in Meituan (3690 HK) and Semiconductor Manufacturing International (981 HK).

• 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 has filed for an IPO on the Hong Kong Stock Exchange and plans to raise proceeds of around HK$500m.
• We remain positive on Biogene’s growth prospects as it operates in a growing market which should further benefit from regulatory tailwinds.

• After one month from the September batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 12 stocks. 
• We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
• We continued to observed outperformance post the HSCI announcement but not the actual inclusion despite the fact that southbound inflows has a significant impact on the trading volume. 

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• In Giant Biogene IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
• The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&M expenses and margins on a downward trajectory.

• BYD (1211 HK) has recorded a more respectable result this year compared to the peers such as Tesla, Nio, and Xpeng. 
• Overseas sales could be the next growth engine if the domestic market sales may stall. 
• The price increase early this year to the customers did not deter the company’s growth rate which indicates its pricing power. 

• The strength about Giant Biogene is that the founders have R&D background, which helps build trust. Meanwhile, the financial performance was good, with three years of consistent high margins.
• The sustainability of high-profit model will face pressure due to increasing competition. The establishment of long-term core competitiveness and second growth point is important. Complex related-party transaction is another concern.
• Giant Biogene is in an industry that has a large potential for future growth in valuation. Its valuation should be lower than that of Bloomage and Imeik.

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.

• Alam Sutera Realty
• Anton Oilfield
• CIFI Holdings
• Hopson Development
• Indika Energy
• Longfor Properties
• NagaCorp Ltd

• Several news media outlets reported that food delivery giant Meituan (3690 HK) is preparing to enter the food delivery market in Hong Kong as domestic market is slowing down.
• Slowdown in Chinese economy coupled with regulatory hurdles have made it impossible for Meituan and other domestic tech players to expand locally.
• Online food delivery market in HK is dominated by Foodpanda and Deliveroo, and we think Meituan will have to offer deep discounts to grab market share from these two dominants.

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• According to Frost & Sullivan, Biogene was China’s second-largest professional skin treatment product company by retail sales in 2021.  
• The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and high cash generation. 

• Taste Gourmet Group (8371 HK) is a play on the HK recovery with a promising outlook in the long-term at 5.7x/4.3x FY23/24e PE (10.5%/14.1% dividend yield assuming 60% payout).
• The company recently initiated a buyback mandate on the 20th of September for (10% of outstanding shares) and has repurchased 2.2% of outstanding shares so far.
• We believe the company will report strong earnings for its quarterly release on November 11th and payout a good dividend which will be a further catalyst for rerating.

• We see improvements in the underlying drivers of Anhui Conch Cement (914 HK) over the last two months, and we believe value has emerged for long-term investors.
• There is a slight recovery in cement price in Sep, and the proceeds from local governments’ special purpose bonds issuance will make incremental stimulus to demand. 
• Net cash now amounts to 37.5% of share price, providing support to its over 9% prospective dividend yield as well as potential value-enhancing M&As. 

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.

• Powerlong Commercial Management Holdings
• Sino-Ocean Service

• Bilibili Inc (BILI US) listed in the US in April 2018. It eventually listed in Hong Kong under the ticker Bilibili (9626 HK) in March 2021 as a Secondary Listing. 
• Bilibili (9626 HK)  announced 16 March 2022 it intended to pursue a HK Primary Listing.  Application was announced on 2 May 2022, Circular a month later. Results announced 29 September.
• As of 3 October, it is a Dual Primary Listing, making it eventually eligible for Southbound Trading. But there as confusion as to when. Hint:  It’s March 2023.

• Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
• The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.

• Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest  RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
• Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
• Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.

• Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

• Several news media outlets reported last week that Tencent has changed its M&A strategy to obtain majority stakes in overseas gaming companies as opposed to buying minority stakes previously.
• Tencent’s online game revenue declined YoY for two-consecutive quarters primarily due to decline in domestic game revenue that was impacted by absence of new game titles and minority protection rules.
• Our analysis on Tencent’s game downloads and ranks reveal that both domestic and international game revenues would decline further in 3Q2022E.

• Wuxi Biologics (2269 HK) has been removed from the “Unverified List”, but the crisis is not over. CXO’s valuation center could gradually volatile to the downside,during which there would be temporary rebounds.
• Biotechnology of US and China has entered a higher level of game. As domestic CXO is deeply embedded in global supply chain, we won’t take any chances on WuXi Biologics.
• We may face a long high-interest-rate environment after the Fed hikes,but the booming of US pharmaceutical IPOs is the underlying logic of CXO. We provided suggestions on CXO trading strategy.

• Giant Biogene Holding (GBH HK) aims to raise around US$500m in its Hong Kong IPO.
• 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 in  our previous notes. In this note, we’ll talk about its PHIP updates.

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.

• Central China Securities
• Sunac China Holdings

• 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

• 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), Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US).
• Lowest spreads – Tyro Payments (TYR AU), OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), MACA Ltd (MLD AU), Singapore Medical (SMG SP), Jinke Smart Services (9666 HK).

• With share price of Jiangsu Expressway (H) (177 HK) now back to the 2013-2014 level, the stock is very attractive on secured yield of 8.6% based on its dividend record. 
• Fundamentally, we expect sequential recovery in earnings in 2H22. Its diversification into clean energy will provide a quality earnings stream. Longer-term, new projects will add to earnings. 
• It has a healthy gearing level and the Rmb denominated borrowings means it will benefit from lower interest rate and lack of exposure to Rmb depreciation.  

• On May 13, Antengene (6996 HK) launched first drug, Xpovio in China as fourth-line treatment of relapsed/refractory multiple myeloma. Xpovio has also been launched in South Korea, Australia, and Singapore.
• Xpovio reported revenue of RMB54 million in H1 2022. Antengene has guided for 2022 revenue of RMB180–200 million from Xpovio.
• Late-Line MM therapy market is small and dominated by blockbuster drugs and low-cost generic versions of erstwhile blockbuster drugs, indicating muted growth potential for Xpovio in its current approval status.

• Dingdang has formed a system integrating front-end consultation, self-built pharmacies and back-end distribution. The “heavy asset model” leads to large liabilities, negative equity balance, cash flow pressure and poor profitability.
• Dingdang lacks core competitiveness in introducing customer flow or rapidly expanding user base. Together with fierce competition, the gap between the Company and JD Health/Alibaba Health will become bigger.
• It’s difficult to achieve high profits based on the business model when break-even is barely achieved. Dingdang has it hard to successfully run through its ecosystem.We’re bearish on the outlook.

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
• China Vanke
• Country Garden Holdings Co
• Tata Motors ADR