China Archives | Page 80 of 154 | Smartkarma

• As expected, NIO Inc (9866 HK) will be added to the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 June replacing ASM Pacific Technology (522 HK).
• We estimate passive trackers will need to buy over 9 days of ADV on NIO Inc (9866 HK) while selling 11 days of ADV on ASM Pacific Technology (522 HK). 
• NIO Inc (9866 HK)‘s inclusion in the Hang Seng Tech Index (HSTECH INDEX) could create significant arb opportunities versus NIO Inc (NIO US) on 10 June.

• As expected, Lenovo (992 HK) will replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) after the close of trading on 10 June.
• Sunac China Holdings (1918 HK) has been kept in the index for now, though suspension till 30 June will see it deleted early July.
• Changes to the stocks, number of shares, float and capping results in an estimated one-way turnover of 3.7% and will result in a one-way trade of HK$2,977m.

• Plenty of review announcements after the close on Friday – HSI, HSCEI, HSTECH, FTSE AW/AC, Sensex. Most changes were as expected.
• There are a lot of review cutoffs on Monday and announcements expected later in the week (KOSPI200, KOSDAQ150, CSI300, STAR50).
• There were inflows to Hong Kong, Taiwan, Korea and Australia focused ETFs during the week, while there were outflows from China, Japan and India focused ETFs.

• There are 41 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three news deals this week: Kintetsu World Express (9375 JP)‘s Tender Offer, Woolies tilt for MyDeal.com (MYD AU), Hwa Hong (HWAH SP)‘s MBO, & KKR’s bid for Kito (6409 JP)
• Key updates took place for: Virtus Health (VRT AU) &Irongate Group (IAP AU) 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• With LIC not delivering and Delhivery needing insurance, combined with the Korean cancellations and HK silence, it looks like its going to be a quiet few weeks for IPOs.
• On placements, both the Korean deals were a disappointment, despite being well-flagged.

• On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
• The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
• In this note, we talk about the shareholding pattern and increase in shares held in CCASS.

• Authorities encourage platform economy and restarted approving the licenses for new games.
• Fintech just met a high comparison base in 1Q21 and we believe the growth rate will rise.
• We believe the stock has an upside of 39% for the year end 2022.

• Tencent (700 HK) reported 1Q2022 results today. Revenue grew 0.1% YoY to RMB135.5bn (vs consensus RMB140.7bn) while reported OP decreased 34% YoY to RMB37.2bn (vs consensus RMB37.3bn).
• Adjusted OP was down 36% YoY to RMB22.3bn while adjusted OPM declined to 39.2% from 56.1% in the same period a year ago.
• Tencent’s 1Q2022 revenues were below our estimates of RMB144.3bn which was mainly due to significant drop in Fintech and business services revenues.

• Q1 22 operating figures are better than the smaller peers although not exactly beating Anta. 
• Launching the cafe to boost SSSG post-COVID-19 is a positive strategy. 
• Its valuation is currently trading below its historical highs . Turn positive on Li Ning (2331 HK) .

• Taste Gourmet Group (8371 HK) held a webinar with Smartkarma on the 17th of May, highlighting the sharp and swift recovery of F&B in Hong Kong. 
• Post 19th May, eight people can dine in till midnight (vs. four). With mid-May revenue tracking 109% of June 2020 (restrictions were fully relaxed), recovery should be better than expectations.
• Despite the 13% move yesterday, the stock is still cheap at 5.9x PE FY23 earnings and an 8-10% dividend yield (with a potential for further upgrades). 

• Haohai’s development is fuelled by a series of acquisitions, which help Haohai establish the existing diversified businesses, but we haven’t seen any growth point with high certainty.
• Compared with Bloomage and Imeik, Haohai has no competitive advantage in the field of medical aesthetics. It’s also difficult for Haohai to make a substantial breakthrough without obvious product advantages.
• Although Haohai’s PE/TTM is significantly lower than its peers, due to centralized procurement, Haohai’s valuation could be further lower. Considering the risks, we choose to stay cautious on Haohai.

• Leapmotor (LM) aims to raise around US$1bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
• It focuses on the mid- to high-end segment in China’s NEV market with a price range of RMB150,000-300,000. As of end FY21, it had delivered a total of 52,832 cars.
• In this note, we talk about the not so positive aspects of the deal.

• Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
• The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH’s business in 4M22 while it will also reap benefits from Rmb depreciation.
• The government’s support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. 

• Yunkang Group (2325 HK) raised around US$139m in its Hong Kong IPO.
• On its bookbuild, subscription rates were lackluster and market sentiment hasn’t been the greatest.
• Similar recent deals with weak subscription rates had seen subdued listing performances by the end of their respective first weeks.

• JD will continue to close its unprofitable minor businesses in following quarters.
• The growth rate of total revenue slowed down in 1Q21 due to weak demand of home appliance.
• We believe JD has a significant upside despite that the revenue growth will continue to slow down.

• SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.
• The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.
• The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect. 

• Tencent Music (TME US) reported 1Q2022 results today. Revenue declined 15% YoY to RMB6.64bn (vs consensus RMB6.69n) while reported OP dropped 35.7% YoY to RMB749m (vs consensus RMB817m).
• Revenue from Online music services declined YoY for the first time since 2017 while revenue from Social Entertainment services further declined during the quarter.
• We expect TME’s earnings to remain under pressure with increased competition and regulatory restrictions on livestreaming sector.

• Aier’s private placement was approved by the Shenzhen Stock Exchange, but we don’t think it signals a complete policy shift that private medical institutions are welcomed by capital markets.
• The high goodwill impairment risk and medical disputes are great concerns. However, if Aier changes its development mode, its performance growth would probably slow down or becomes uncertain.
• Aier’s Q2 performance could be affected by pandemic/lockdown. Even after continuous corrections, Aier is still overvalued based on current valuation, which has not priced in all the concerns and risks.

• A50 faces key trendline sell/pivot resistance that will cap the rise with HSI nudging back to sell territory with fresh chart lows expected.
• A50 trendline resistance is the bull/bear inflection point. We look for a sell or rejection near 13,700 if not just under this level for  a test on the 12,400.
• HSI 21k sell barrier while watching for HK tech rise to run out of steam near 4,500 resistance.

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.

• AAC Technologies Holdings
• Greenko Energy Holdings
• Yuzhou Group

• We estimate that the revenue growth will rise to 11.5% YoY in 4Q22 from 9.7% YoY in 3Q22.
• Freshippo is the store chain closest to the operation before the lockdown among all large retailers.
• We believe the stock has an upside of 27% for March 2023.

• The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.
• Recently, China Resources is rumored to be in talks to privatize Sihuan Pharmaceutical Hldgs (460 HK), but Sihuan denied it.
• Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.

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
• SJM Holdings

• The 1Q22 revenue/GM/OPM was US$215mn/55%/36% respectively, with revenue growing 50% YoY and -2.6% QoQ. Silergy considers its own business will grow quarter by quarter in 2022.
• Silergy expects to see ~3% revenue contribution for Automotive in 2022, which means it should grow over 3% by the end of 2022.
• Silergy’s order visibility is extended from 3 quarters to over 6~8 quarters now. Meanwhile, Silergy aims to split the share to let more retail investors to hold their shares.    

• 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 IPOs front, LIC’s lists tomorrow, while Delhivery’s bookbuild wasn’t great.
• There were no major placements this week, with even Air New Zealand failing to hold its deal price.

• There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
• The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
• Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.

• Sihuan Pharmaceutical (460 HK) has shot down rumours that it is under negotiation with potential investors in respect of privatisation.
• Reportedly SOE China Resources is in talks with Sihuan Pharma’s chairman in a deal valuing the company at US$3bn or a 114% premium to the current price. 
• The logic of a privatisation makes sense. I would not be so quick to dismiss the denial. Plus Sihuan Pharma is very cash-rich.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

• Polen Capital is a high-conviction growth investment manager.
• Over the first quarter of 2022, the Polen Global Emerging Markets Growth Composite Portfolio returned -14.68% gross and – 14.96% net of fees.
• The top relative and absolute detractors over the quarter included Yandex N.V.

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. China Jinmao Holdings
2. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

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. China Jinmao Holdings
2. Guangzhou R&F Properties
3. Sunac China Holdings
4. Greenland Hong Kong Holdings
5. Evergrande

and more…

• JD is facing a severe logistics problem due to the lockdowns in many cities of China.
• We believe JD is trying to secure its revenue no matter how large the fulfillment expense is.
• We believe the stock has a downside of 22% for the year end 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.

• Greenland Holdings Corp
• Softbank Group

• China’s Sinosteel Corp. has struck a deal with the Cameroonian government to begin production of iron ore at a mine, becoming the latest Chinese firm to tap the valuable resource in West Africa.
• According to a company statement, Sinosteel obtained a permit to exploit the Lobé mine after signing a contract with Gabriel Dodo Ndoke, Cameroon’s minister of mines, industry and technological development
• The state-owned mining giant will invest about $700 million to develop the Lobé mine, which is estimated to have about 600 million tons of iron ore reserves

• Beijing Enterprises Water Group (371 HK) (BEW) has effectively increased its stake in Beijing Enterprises Urban Resources (3718 HK) (BEURG) after entering into Acting In Concert agreements (AIC). 
• Parties to the AICs “irrevocably and unconditionally” undertake to vote in the same manner as BEW in BEURG shareholder meetings. 
• There was no update on the timing of the MGO, which is expected to open for tendering on the 20 May. 

• China Longyuan Power (916 HK) will see accelerating earnings momentum in the rest of the year – after a weak start due to high base for YoY comparison.
• We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.
• Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.

• We think SMIC is likely to reach the high-end of 1Q22 guidance, which was US$6,259~6,368mn/36~38% respectively.
• We thick SMIC is likely to reach ~US$6,680mn/39% for revenue/GM respectively in 2Q22.
• SMIC cannot have the EUV machine because of the Wassenaar Arrangement. Therefore, SMIC has to optimize its operation and to expand 28nm and above technologies.

• Aikya Investment Management is an independent, employee-owned, investment management company that specialises in managing Emerging Markets equity portfolios.
• The strategy has returned 14.6% returns in USD terms since its inception in March 2020.
• We remain highly optimistic on the long-term prospects of Emerging Markets.

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.

• Sunac China Holdings
• Wynn Macau Ltd
• Yuexiu Property

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.

• Sunac China Holdings
• Wynn Macau Ltd
• Yuexiu Property

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.

• Adani Transmission
• Hopson Development
• Reliance Industries
• Sino-Ocean Service

• Following listing of China Conch Environment (587 HK), China Conch Venture (586 HK) is seeking a spin-off of CV Green Energy in A-share market and we view this move positively.
• Limited details are currently available, but we think CV Green Energy, which operates WTE businesses, will trade at significantly higher multiples than its Hong Kong peers. 
• Assuming CV Green Energy to hold all Conch Venture’s WTE businesses, we estimate the IPO will boost the latter’s sum-of-the-parts value by 8% or HK$2.14 per share.

• I think most (value) investors go through four stages: Stage 0: Buy stuff that goes up. Especially when a lot of people around you get rich from doing it.
• Stage 1: Invest in the future! Buy into some fancy exciting new technology that will become big some day! The Cathie Wood stage. Usually stage 1 and stage 0 go hand in hand.
• Stage 2: Buy at low PE multiples. Some are smart and skip the first two. This stage is not bad, it should lead to slight outperformance. Can be dangerous without wide diversification as a lot of them are value traps.

• The aortic product line would bring strong growth in 1-2 years. From 3 years or longer term, Endovascular’s peripheral vascular interventional devices would be the main driver for high growth.
• We don’t think the centralized procurement would be a concern for the time being. As many products are or will apply for CE Mark, the progress of internationalization is promising.
• The current valuation is very attractive. Due to the pandemic/lockdown in China and many external uncertainties, share price could go lower, but it’s still a good company to invest in.

• For Q1 2022, Aristotle Capital’s International Equity ADR Composite posted a total USD return of -9.75% gross of fees.
• The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management for institutional and advisory clients worldwide.

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.

• Japfa Comfeed Indonesia
• Melco Resorts & Entertainment
• Powerlong Commercial Management Holdings
• Road King Infrastructure