Smartkarma Daily Briefs

• Over 85% of the way through the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.4% at the December rebalance resulting in a one-way trade of CNY 7.22bn.
• With the market being stabilised through the ETF route, the index constituents have outperformed the non-index constituents over the last 6-7 weeks. That could reverse over the near term.

• This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
• We like the nifty interactive tables and charts. We welcome feedback on how to make it more useful going forward.

• Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, is set to open books for its US$300 million IPO.   
• Among independent aftermarket (IAM) stores in China, Tuhu ranked first in terms of both number of stores as of 31 December 2022 and annual automotive service revenue in 2022.
• The investment case rests on the return to growth, improving gross margin, a shift to profitability and a return to cash generation.

• With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK) 
• We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized). 
• With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.

• Weigao’s 23H1 performance was unsatisfactory. 2023 full-year performance may continue to be under pressure because Weigao needs some time to digest the negative impact of centralized procurement on orthopaedic business.
• Weigao has hired advisers to find potential buyers for Argon. if Argon is ultimately sold, then the long-term prospects of Weigao’s interventional business and internationalization need to be reassessed.
• The unsatisfactory share price performance is related to Weigao’s business model – spin-off subsidiaries and IPO separately. There could be rebounds, but it is still possible for Weigao to underperform.

• H1 results from KEX Thailand and Kerry Logistics can help us understand J&T Global Express
• Thailand likely to be a medium-term drag on J&T’s earnings, in our view
• But if KLN’s H1 results are representative, rest of SE Asia is probably OK

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.

• In Q2, Full Truck Alliance posted strong revenue growth and dramatic margin expansion
• Revenue mix continues to improve, which is driving down unit costs and lifting margins
• At just 19x forecast 2023 adjusted net earnings, the company’s shares are not expensive