Smartkarma Daily Briefs

• AAG Energy Holdings (2686 HK) is one of those periodic (and rare) takeover situations that will likely be remembered for what went wrong rather than what went right.  
• A low-balled Offer (proxy advisors agree); perfunctory IFA analysis; a large, and silent, shareholder; and the postponement of the Scheme vote due to voting instructions not being “duly processed”.
• A new Court Meeting has been confirmed for the 2 June. And now we have some odd CCASS movements which raise further questions.

• The review period for the June rebalance ends on 31 May. Announcement of the changes will be made on 9 June with implementation at the close on 16 June.
• There could be 4 or 5 A-share additions due to their inclusion in Northbound Stock Connect. That in turn expands the universe and could result in up to 3 deletions.
• If all changes go through as expected, estimated one-way turnover at the rebalance will be 15.1% resulting in a one-way trade of US$99m.

• As of 8 May, we see three potential changes to the iShares China Large-Cap (FXI) (FXI US) at the June rebalance. This is mainly driven by the inclusions.
• There is over 1 day of ADV to trade on all stocks with the largest impact on BeiGene Ltd (6160 HK) at nearly 4 days of ADV.
• Short interest has been increasing on the potential adds as they have run up a lot in the last few months.

• Hailan Holdings (2278 HK) disclosed a voluntary conditional offer from its controlling shareholder at HK$3.36 per share, a 5.0% premium to the undisturbed price.
• The offer is conditional on a 90% minimum acceptance condition which requires a minority acceptance rate of 60.0%. The offeror/concert parties own 75.0% of shares.
• The offeror aims to exercise compulsory acquisition rights (requires 90% minority acceptance rate) which suggests a bump is possible. The offer price has not been declared final. 

• There’s an obvious declining trend in net profit YoY growth.Considering unsatisfactory growth of MI and IVD in 22H2,if it weren’t for the strong growth of PMLS,Mindray’s overall growth could have been “surprising”.
• The current question is whether IVD and MI segments would have high enough growth to offset the potential performance decline of PMLS segment in post-pandemic era. Problems may emerge afterwards.
• There are still some unresolved technical challenges that constrain the development of Mindray. Without good performance in internationalization, there is no incremental market. Thus no reason to maintain high valuation.

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.

• Anton Oilfield
• China Vanke
• Sunac China Holdings
• Times China
• UPL Ltd