China Archives | Page 8 of 163 | Smartkarma

• Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
• It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. 
• But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• China announced game approval for the September batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening.
• Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

• Midea debuted on HKEx on 17th September and shares last closed at HK$74.25 per share, up by about 35% compared to final HK offer price of HK$54.80 apiece.
• We previously suggested that Midea’s HK offering was attractive as HK shares were priced at a 25% discount to its A-shares, and was at a discount to Haier Smart Homes.
• The PBOC announced several measures to revive the housing market in the country which contributed to the recent rally in the China home appliance sector.

• Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
• The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
• We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

• In this insight we compare Hive Box to InPost, a smart locker specialist
• The firms play in different geographies, making apples:apples comps tough
• In the absence of better comps, comparing Hive Box to InPost still useful

• 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: Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP). 

• Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
• Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
• Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.

• The medical insurance statistics reflected that medical insurance funds are facing increasing pressure. If income/expenditure maintain average growth rates in recent years, there would be a deficit state in 2024.
• Due to increasing pressure on medical insurance fund, the entire process of innovative drug evaluation/NRDL negotiation this year will be more strictly enforced, but Hansoh (3692 HK) is an exception.
• For Henlius’ privatization, completing Pre-Conditions in 24Q4 looks tight. Considering Chinese New Year holiday, the privatization may not be completed until at least mid-to-late February 2025.The deal will get up.

• SOUTHBOUND was a net buyer this week. But who cares. They actually net sold US$2bn of everything which was not Alibaba Group Holding (9988 HK). 
• Bigger news, of course, was China’s “Bazooka” which LOOKS exciting. Stocks are up 15-20% in four days. Lots of BIG numbers are being thrown around. Not everything is “real money.”
• It takes a little sleuthing to figure out where the real money is. For that, I suggest reading China’s [Maybe] Biggish [Quasi?] Bazooka and more below.

• The Chinese drinking water and beverage maker, China Resources Beverage (CRB HK) has filed for an IPO on the HKEx to raise around US$1.0bn.
• The company’s operations are heavily concentrated towards drinking water products where the market competition is intensifying leading into a price war.
• CR Beverage’s margins are inferior compared to peer Nongfu Spring (9633 HK) who has diversified into other beverage products from drinking water to grow its financials.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Despite weak consumer spending in China, there are a few bright spots—an example is Pop Mart International Group (9992 HK)’s strong sales growth partly driven by the “red lipstick effect.”
• Miniso (MNSO US)’s stock plunged early last week but quickly recovered, reinforcing our view that its deal with Yonghui Superstores Co., (601933 CH) has some promise.

• Temu as a subsidiary of PDD becomes the second largest global e-commerce website.
• Meituan merges departments into fewer business units to cut expenses further.
• Mercedes-Benz left the joint venture with BYD, as its high end products are not as popular as Tesla models.

• China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
• Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
• While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.

• The weak business, social entertainment, become insignificant in recent quarters.
• All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
• We set an upside of 20% and a price target of US$14.80 for the end of 2025.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front,  it hasn’t been this busy for a while, with deals live in Japan and Korea, and possible launches in Hong Kong and India as well.
• On the placements front, there were a few China ADR blocks and other placements across the region.

• NWD reported HKD20bn loss attributable to shareholders.  There is no dividend declared.  However, we view this as kitchen sink.  The stock rallied 22% on Friday
• CEO Adrian Cheng stepped down and COO Eric Ma, former Secretary for Development for HK, is the new CEO.  This represents a shift from family business to professional management
• As Fed initiated new rate cut cycle, NWD will benefit most given high gearing.  With macro backdrop in U.S. and China, NWD is the Best stock to buy now

• Sun Art Retail (6808 HK) entered a trading halt under the Code on Takeovers and Mergers. Bloomberg suggests Alibaba Group Holding (BABA US)’s stake is attracting preliminary interest from PE.
• Alibaba built its 78.70% stake through two purchases in 2017 (HK$6.50) and 2021 (HK$8.10). An exit would align with the strategy to focus on the core business segments. 
• The recent Miniso-Yonghui transaction could have prompted PE to act. An offer at book value would imply HK$2.50, a 40% premium to the last close price. 

• Outbound & domestic travel activity continued to recover nicely in August
• Initial reports suggest Mid-Autumn Festival travel activity was solid, too
• After recent surge, we’ve cut Trip.com to HOLD; check out airlines instead

• Alibaba Group Holding (9988 HK)-backed hypermarket play Sun Art Retail (6808) is currently suspended pursuant to the Takeovers Code.
• Reportedly, SASAC-backed COFCO Group may acquire Alibaba’s 78.7% stake. Sun Art’s shares are up 45% since the middle of the month.
• Alibaba exiting – if true – follows JD.com (9618 HK) (and DFI Retail Group Holdings (DFI SP)) selling their respective stakes in Yonghui Superstores Co., (601933 CH) earlier this week.

• LFX is a heritage jewelry retailer with almost 180 years of history, traded on the Shanghai Stock Exchange
• A shares trade at around 14-15x TTM earnings with a 3% yield, while B shares trade at a significant discount of 5x TTM earnings and a 7% yield
• Opportunity for investors to own stake in a growing business with strong returns on capital and conservative management at a discounted price, due to lack of attention to the B share class.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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 Hongqiao
• Continuum Green Energy

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. Biocon Ltd
2. Yankuang Energy Group
3. Wynn Macau Ltd
4. Rakuten
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. Biocon Ltd
2. Yankuang Energy Group
3. Wynn Macau Ltd
4. Rakuten
5. China Jinmao Holdings

and more…

The Asia Trade Book for September 2024 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

• I am quite sick so I will keep it short.
• I am closing Lufax (LU) here and would at least take something off the table for JD holdings (JD) 
• Honestly Lufax business is too much of a black box, and the forward PE multiple isn’t low enough anymore for my taste.

• Hong Kong is now the top-performing major world market this year.  With a large valuation disparity, both Hong Kong’s and China’s markets have more upside potential.
• Haidilao International Holding (6862 HK) and Anta Sports Products (2020 HK) are benefiting from the improvement in consumer sentiment with government stimulus targeting housing payments and consumption.
• Citic Securities (H) (6030 HK) surged in anticipation of increased market trading and IPOs.  Industry consolidation is also part of the improved sentiment.

In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in August 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan.

In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on developments in the Asian corporate USD bond market.

New World Development’s (NWD) FY 2023-24 results were weak, but in line with expectations as flagged by the company’s profit warning earlier in September. We expect the company’s revenue and EBITDA to improve in FY 2024-25, supported by new project launches in Hong Kong as well as contributions from new K11 commercial assets in Hong Kong and Mainland China.

While NWD has continued to reduce net debt, leverage weakened on account of the weaker earnings and smaller asset base (due to disposals). Cash/ST Debt is inadequate, though we believe the company’s liquidity is manageable due to its continued access to financing. In particular, we note positively NWD’s receipt of a HKD 1 bn unsecured loan, as well as its ability to tap the USD bond market in August 2024.

The resignation of Adrian Cheng as NWD’s CEO (as well as from the Boards of NWD’s sister companies) is surprising in our view, though we believe the impact is credit neutral.

We move to “Buy” from “Hold” on the NWDEVL notes, as we view the yields as attractive.

• On Tuesday, China announced fresh stimulus measures targeting the stock market and property sector.
• The PBoC reduced the main policy rate and cut the RRR, signaling that further cuts were on the cards for later this year.
• Further stimulus measures were announced today ahead of the Golden Week holiday. The discounts of Naspers and Prosus have rallied on the news, we see room for further upside.

• This is a short follow-up on HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 
• To make the list more comprehensive, we added JNBY Design Ltd (3306 HK), which trades at 8x PE, has a 9% dividend yield, and is net cash.
• We also have updates from Crystal International’s (2232 HK) interim report, which has a very positive future outlook. 

• 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 include: Dongyue Group (189 HK), C&D International Investment (1908 HK), and China Aoyuan Property (3883 HK).

• China’s securities industry is under a wave of consolidation. China International Capital Corporation (3908 HK) is interesting given its leadership in the investment banking business.
• A combination with China Galaxy Securities (H) (6881 HK) may bring synergy, given their different focuses. This will create the 3rd largest securities house in China. 
• Even without a merger, CICC also looks attractive with the US interest rate trending down. It is best set to gain upon the revival of the Hong Kong IPO market. 

• Evidently the influence of a younger hip third-generation tycoon-scion was not the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
• As widely expected, Adrian Cheng is stepping down as NWD’s CEO, to be replaced by Eric Ma,  Hong Kong’s former secretary for development.
• NWD will also sell the rights to provide property management services under the K11 brand to Adrian; and potentially sell its stake in Kai Tak Sports Park to its parent.

• Taste Gourmet (8371 HK) will report its H1 FY25 earnings in early November. The company isn’t reporting quarterly earnings because GEM board stocks are no longer required to do so. 
• We expect revenue and profit growth of 22% %/20% YoY, as the average number of HK restaurants has increased from 45 to 54, and most have ramped up. 
• Trading at 4.5x PE with a 12% dividend yield, 27% of the market cap in cash and a mainboard listing on the horizon there abundant catalysts for the future. 

• The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.
• The situation and prospects of China’s perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.
• Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China’s domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.

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.

• New World Development

• Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
• The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
• Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.

• Xingda International (1899 HK) has disclosed a voluntary conditional offer from Mr Liu Jinlan (Chairman) at HK$1.30 per share, which aligns with the last close price. 
• The offer is conditional on the offeror and concert parties representing more than 50% of voting rights. The offeror and concert parties represent 37.03% of voting rights.  
• The offer is a reaction to Mr Zhao Yue’s “hostile” emergence as a substantial shareholder. It is unattractive and will require a bump to satisfy the minimum acceptance condition.   

• After tyre component manufacturer Xingda International (1899 HK) was suspended recently pursuant to the Takeovers Code, an Offer seemed more likely, not another Partial Offer. 
• On cue, Liu Jinlan, chairman and executive director, plus concert parties (collectively holding 37.03%), have tabled a voluntary conditional Offer (50% acceptance hurdle). But the price? A surprising zero-premium HK$1.30/share
• However, this Offer is a pre-emptive strike against former employee Yue Zhao, who holds 9.24%; and was recently appointed ED and vice-chairman of Shougang Concord (103 HK), Xingda’s major competitor.

• ADD slapped on the US, the EU, the UK, and Singapore imports
• ADD probe initiated against Canada, Japan and India
• Russia to be a major beneficiary of the measures

• MINISO‘s  acquisition of a 29.4% stake in the loss-making supermarket chain Yonghui  for USD 890 million has been viewed negatively by investors, leading to a sharp decline in Miniso’s stock.
• The deal’s size, combined with Yonghui Superstores (601933 CH) unprofitable track record and   MINISO(9896 HK) ‘s unexpected move into the low-margin, highly competitive supermarket space, has likely fueled investor concerns.
• However, we believe the acquisition provides Miniso with a strategic opportunity for growth and diversification to a sector that remains vital in the offline retail landscape at undemanding valuations.  

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.

• Samvardhana Motherson International Ltd
• Wynn Macau Ltd
• Yankuang Energy Group

• The imagination brought to the market by Kelun’s traditional businesses (infusion business, antibiotics and bulk pharmaceutical chemicals, generic drugs) is not high. So, the only highlight is Kelun-bio’s ADC pipeline.
• Considering that Kelun has lost pricing power due to VBP, and both Chuanning and Kelun bio have been spun off and listed independently, Kelun’s valuation will not be too high.
• Our forecast is net profit attributable to shareholders in 2024-2026 is in the range of RMB3-5 billion. Reasonable market value is RMB30-50 billion. Subsidiary Kelun Bio is a better bet.

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 conglomerate sector continues to show momentum in Hong Kong while the materials and energy sectors lag
• Weibo (9898 HK)Weibo Corp (WB US) was rated a BUY as valuations and potential catalysts from parent Alibaba Group Holding (9988 HK) could support a higher stock price.
• China East Education (667 HK) was upgraded to BUY with higher higher price target due to profit increase. Dongfang Electric (1072 HK) was initiated with a BUY with strong upside.

• The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
• Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn’t require too much capital, which means the Company would have greater motivation to distribute dividends.
• The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.

• August parcel volume growth moderated, but easing price pressure matters more
• In July & August, Chinese X-border parcel volume growth re-accelerated
• We believe easing price pressure should lead to express margin expansion

• Adverse weather impacts Chinese prices   
• Arbitrage buying spurs prices up  
• TSR inventory drops in September 

• In 2Q24, KE’s revenue grew by 20% YoY despite the weak property market.
• We believe property developers and personal landlords need KE more than the prosperous time.
• We believe the stock has an upside of 148% for the end of 2025. Buy.

• Hong Kong tech sector leads the market higher with increased momentum and lower volatility.  Short selling has abated with unwind of HKD carry trade.
• Sands China (1928 HK) had a breakout from a Falling Wedge pattern. The share price broke above its short-term averages with increasing momentum.
• China Feihe (6186 HK) broke out from its downtrend with a Reversal from its U-Shaped Bottom.  Techtronic Industries (669 HK) broke out to a new YTD high.

• 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: Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP). 

• 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
• We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
• The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

• CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
• We expect up to five ADDs and five DELs for the CSI Medical Service index during this index review event based on the latest available data.

• SMIC’s revenue might be looking at around US$2bn in 4Q24 and it’s a bit reduction of GM from 3Q24 because of the seasonality at the year end.
• Since around 2019, US was putting an sanction on China, no matter how the argument is true.
• SMIC continued delivering 7nm chips, and even the 5nm chips could be further delivered using a similar method, although the yield rate may be a concern.

• Declining customer retention rate indicates that a slowdown in future revenue growth seems inevitable. If revenue growth stagnates, it means Taimei’s business model hasn’t been fully validated by the market.
• Taimei’s IPO on SSE STAR Market was rejected. This means regulatory authorities don’t recognize Taimei’s core technology/performance prospects. Taimei has to take a step back and list on the HKEX.
• Post-Investment valuation reached RMB8.1 billion after Series F financing. However, considering the continuous decline in valuation of its peers, we are concerned about Taimei’s future stock price performance after IPO.

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 Energy
• Medco Energi
• Meituan

• I tally 42  – 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: scrip mergers forAuswide Bank (ABA AU), Latin Resources (LRS AU) & Platinum Asset Management (PTM AU); and the Tender Offer for Trancom Co Ltd (9058 JP).
• Key updates took place on: Pacific Smiles (PSQ AU), China TCM (570 HK), Greatview Aseptic Packaging (468 HK), Shin Kong Financial Holding (2888 TT), and Seven & I Holdings (3382 JP).

• 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 have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.

• Price momentum in August eased slightly vs July, the first M/M dip since March
• In the next two months, seasonality will moderate and Y/Y comps will get tougher
• If Q4 momentum wanes, we feel continued strong share performance less likely

• 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.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the December 2024 index rebal event.

• Anhui’s new VBP included OTC TCM for the first time, which poses a big challenge to the pricing autonomy of CR Sanjiu. This makes Sanjiu’s acquisition of Tasly more important/urgent. 
• Novo Nordisk’s performance has raised concerns. The capacity bottleneck for weight-loss drugs seems resolved. Could this signal that the market for weight-loss drugs is reaching its peak?
• Keymed Biosciences (2162 HK)’s CM310 will miss this year’s NRDL negotiations, putting the company at a disadvantage. Considering the competitive landscape, we are concerned about Keymed’s performance.