Smartkarma Daily Briefs

• The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.
• In Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate, we expected some healthcare names to be added but there were no index changes in March 2023. 
• Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. 

• ZJLD Group (ZJLD HK) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
• ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
• In this note, we discuss the industry dynamics and undertake a peer comparison.

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• This week’s decline is deemed counter-trend and is in stark conflict with the bullish MT and LT triggers detailed in our bullish publication on 29 March 2023.
• Key support levels often combine a number of important moving averages.  92.00/94.50 combines the 20/50 week MA’s / 12/26 week EMA’s. High risk MT bottom at 92.00/94.50. Target 118.50.

• While we like Sinotrans (598 HK) in the long term, we are caution that 1Q23 result may be disappointing. Its 4Q22 earnings already showed 49.1% YoY and 73.3% QoQ decline.
• Indicators including China’s PMI new export orders, export growth, container shipping freight rates (SCFI) and airfreight rates all showed that the recovery trend is weak. 
• 9% of FY22 profit is from exchange gain as Rmb depreciated, and this may not happen again. Consensus forecast of just 10% decline in FY23 net profit seems overly optimistic. 

• JD Health’s 2022 results were more optimistic than expected. We think the past three-year pandemic as well as the broadening of service scenarios are main drivers for rapid performance/user growth.
• If turning losses into profits is “a phased victory”,striving for higher profit margins and healthier revenue structure is the key task in next stage,but JD Health may fail this transformation. 
• After China reopens, JD Health’s user scale could be difficult to maintain such rapid growth in 2023 and onwards. Without breakthrough in service revenue, its valuation expansion potential could be limited. 

• Lalatech Holdings Co Ltd (LALA HK) is looking to raise about US$1bn in its upcoming HK IPO. The deal will be run by BofA, JP Morgan and Goldman Sachs.
• Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services. 
• In 2022, Lalatech facilitated over 427.5m fulfilled orders with a global freight GTV of US$6.7bn, with approximately 50.4m merchants served and business brought to approximately 2.3m carriers. 

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
• Country Garden Holdings Co
• Gajah Tunggal
• NagaCorp Ltd
• Yuexiu Property