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Smartkarma Daily Briefs

Aug 13
0

Daily Brief Equity Bottom-Up: Rakuten: Turning a Corner and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Rakuten: Turning a Corner
  • Deepak Nitrite: Forensic Analysis
  • Rorze (6323) | Japan Small Cap Winner
  • Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
  • Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?
  • Adobe Inc.: Creative Cloud Upside & Other Drivers
  • Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth
  • Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year
  • Mastercard Inc.: New Set Of Collaborations & Other Key Drivers
  • Monster Beverages: New Product Launches & Other Drivers

Rakuten: Turning a Corner

By Oshadhi Kumarasiri

  • The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
  • However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
  • With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.

Deepak Nitrite: Forensic Analysis

By Nitin Mangal

  • Deepak Nitrite (DN IN) has emerged as one of the key players in the chemical intermediate industry over the last few years.
  • The company’s emergence saw a structural and more or less a positive change in the balance sheet health and overall scheme of operations.
  • The green flags include strong balance sheet position and surging return ratios, while the red flags include poor cash transmission and margin losses lately.

Rorze (6323) | Japan Small Cap Winner

By Mark Chadwick

  • We are Bullish on Rorze, a global leader in ultra-clean wafer substrate handling solutions.
  • We believe that Rorze is well placed to monetise the long-term growth in semiconductor demand and WFE spend
  • The stock has recently underperformed its peer group and valuations collapsed. We see almost 100% upside potential based on a 14x target multiple

Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings

By Victor Galliano

  • Softbank Group’s fintech portfolio companies – and especially those in the largely Softbank-funded Vision Fund 2 – were a meaningful part of the group’s large loss in fiscal 1Q 2022
  • However, Klarna and eToro “down rounds” – concluded in early July – do not seem to have been incorporated into June-end losses; the Vision Funds are absorbing the LatAm Fund
  • Despite the public markets rebound, Softbank faces multiples challenges, and it is hard to find positives in the Alibaba derivatives contracts

Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?

By Douglas Kim

  • On 12 August, the South Korean government finally gave a presidential pardon to Samsung’s heir Lee Jae-Yong.
  • With Lee Jae-Yong given the presidential pardon, there is an increasing likelihood that the Samsung Group could become more aggressive in making major global M&As in the next several years.
  • Three major M&As that Samsung could make in the next several years include ARM, Infineon, and NXP Semiconductor. 

Adobe Inc.: Creative Cloud Upside & Other Drivers

By Ishan Majumdar

  • Adobe has witnessed a particularly robust demand over Experience Cloud, Document Cloud, and Creative Cloud.
  • Adobe is winning in its established business and is viewing significant momentum in innovative categories.
  • During the quarter, it hiked prices for particular creative cloud subscriptions which helped the revenue growth.

Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth

By Ishan Majumdar

  • Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
  • Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
  • It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.

Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year

By Tina Banerjee

  • Progyny Inc (PGNY US) announced strong Q2 results, with both revenue and EPS surpassing consensus as well as company guidance. Revenue and adjusted EBITDA margin reached to highest ever levels.
  • The company has raised lower end of its 2022 revenue and adjusted EBITDA guidance second time in this year. Progyny is seeing continued strong employer demand for fertility solutions.
  • Despite inflation and a potential softening in the economy, Progyny is seeing strong customer demand and is upbeat about new client acquisition for its upcoming selling season.

Mastercard Inc.: New Set Of Collaborations & Other Key Drivers

By Ishan Majumdar

  • Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
  • Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
  • In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.

Monster Beverages: New Product Launches & Other Drivers

By Ishan Majumdar

  • Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
  • In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
  • Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.

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Aug 13
0

Daily Brief Event-Driven: Swire A Vs Swire B – Regulatory Nuances REALLY Matter and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Swire A Vs Swire B – Regulatory Nuances REALLY Matter
  • Posco International Merger: Deal Structure & Arbitrage Dynamics
  • WSP Global/RPS Group: More Consolidation In Engineering Consultancy
  • POSCO Holdings: Treasury Shares Cancellation Worth 3% of Outstanding Shares

Swire A Vs Swire B – Regulatory Nuances REALLY Matter

By Travis Lundy

  • Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. 
  • A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. 
  • The conclusions are surprising, and lead to one clear trading idea. 

Posco International Merger: Deal Structure & Arbitrage Dynamics

By Sanghyun Park

  • We still have the chance to become eligible. We will still receive the rights if we buy Posco International next Tuesday. But we will exercise them at ₩20,590, NOT ₩27,801.
  • Given that there is little cancellation risk, we can capitalize on the price falling below the appraisal price by opening both Long and Short at the same price.
  • We close Short if the price goes under ₩20,590 and fix the arb spread by exercising the rights with Long.

WSP Global/RPS Group: More Consolidation In Engineering Consultancy

By Jesus Rodriguez Aguilar

  • WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.
  • The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.
  • The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.

POSCO Holdings: Treasury Shares Cancellation Worth 3% of Outstanding Shares

By Douglas Kim

  • On 12 August, POSCO Holdings announced that it will cancel treasury shares worth 3% of outstanding shares involving 2.6 million shares worth 672 billion won.
  • The cancellation of treasury shares is a shareholder friendly policy that will improve the company’s ROE and P/E ratios. The treasury shares cancellation will be completed on 22 August 2022. 
  • The combination of treasury shares cancellation and high dividend yield is likely to lead to higher probability of POSCO Holdings outperforming KOSPI on a total returns basis this year.

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  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
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Aug 13
0

Daily Brief Macro: UK: Holidays Reduce Output in Jun-22 and more

By | Daily Briefs, Macro

In today’s briefing:

  • UK: Holidays Reduce Output in Jun-22

UK: Holidays Reduce Output in Jun-22

By Phil Rush

  • UK GDP contracted by 0.6% m-o-m in June after a downwardly revised 0.4% growth in May, which appears to confirm the distortions from the Diamond Jubilee holidays.
  • Some positive payback should occur in July as the output level normalises with the number of working days. However, GDP looks to be trending barely better than flat.
  • Aggressively increased interest rates will compound inflation’s squeeze on the cycle, raising the risk of a needless recession when pressures are burning out anyway.

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Aug 13
0

Daily Brief TMT/Internet: Rorze Corp, Samsung Electronics, Softbank Group, Adobe Systems, Mastercard and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Rorze (6323) | Japan Small Cap Winner
  • Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?
  • Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
  • Adobe Inc.: Creative Cloud Upside & Other Drivers
  • Mastercard Inc.: New Set Of Collaborations & Other Key Drivers

Rorze (6323) | Japan Small Cap Winner

By Mark Chadwick

  • We are Bullish on Rorze, a global leader in ultra-clean wafer substrate handling solutions.
  • We believe that Rorze is well placed to monetise the long-term growth in semiconductor demand and WFE spend
  • The stock has recently underperformed its peer group and valuations collapsed. We see almost 100% upside potential based on a 14x target multiple

Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?

By Douglas Kim

  • On 12 August, the South Korean government finally gave a presidential pardon to Samsung’s heir Lee Jae-Yong.
  • With Lee Jae-Yong given the presidential pardon, there is an increasing likelihood that the Samsung Group could become more aggressive in making major global M&As in the next several years.
  • Three major M&As that Samsung could make in the next several years include ARM, Infineon, and NXP Semiconductor. 

Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings

By Victor Galliano

  • Softbank Group’s fintech portfolio companies – and especially those in the largely Softbank-funded Vision Fund 2 – were a meaningful part of the group’s large loss in fiscal 1Q 2022
  • However, Klarna and eToro “down rounds” – concluded in early July – do not seem to have been incorporated into June-end losses; the Vision Funds are absorbing the LatAm Fund
  • Despite the public markets rebound, Softbank faces multiples challenges, and it is hard to find positives in the Alibaba derivatives contracts

Adobe Inc.: Creative Cloud Upside & Other Drivers

By Ishan Majumdar

  • Adobe has witnessed a particularly robust demand over Experience Cloud, Document Cloud, and Creative Cloud.
  • Adobe is winning in its established business and is viewing significant momentum in innovative categories.
  • During the quarter, it hiked prices for particular creative cloud subscriptions which helped the revenue growth.

Mastercard Inc.: New Set Of Collaborations & Other Key Drivers

By Ishan Majumdar

  • Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
  • Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
  • In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.

💡 Before it’s here, it’s on Smartkarma

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
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Aug 13
0

Daily Brief Energy/Materials: Deepak Nitrite, POSCO Holdings and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Deepak Nitrite: Forensic Analysis
  • POSCO Holdings: Treasury Shares Cancellation Worth 3% of Outstanding Shares

Deepak Nitrite: Forensic Analysis

By Nitin Mangal

  • Deepak Nitrite (DN IN) has emerged as one of the key players in the chemical intermediate industry over the last few years.
  • The company’s emergence saw a structural and more or less a positive change in the balance sheet health and overall scheme of operations.
  • The green flags include strong balance sheet position and surging return ratios, while the red flags include poor cash transmission and margin losses lately.

POSCO Holdings: Treasury Shares Cancellation Worth 3% of Outstanding Shares

By Douglas Kim

  • On 12 August, POSCO Holdings announced that it will cancel treasury shares worth 3% of outstanding shares involving 2.6 million shares worth 672 billion won.
  • The cancellation of treasury shares is a shareholder friendly policy that will improve the company’s ROE and P/E ratios. The treasury shares cancellation will be completed on 22 August 2022. 
  • The combination of treasury shares cancellation and high dividend yield is likely to lead to higher probability of POSCO Holdings outperforming KOSPI on a total returns basis this year.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
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Aug 13
0

Daily Brief Industrials: Posco International Corporation, RPS Group PLC, Honeywell International and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Posco International Merger: Deal Structure & Arbitrage Dynamics
  • WSP Global/RPS Group: More Consolidation In Engineering Consultancy
  • Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth

Posco International Merger: Deal Structure & Arbitrage Dynamics

By Sanghyun Park

  • We still have the chance to become eligible. We will still receive the rights if we buy Posco International next Tuesday. But we will exercise them at ₩20,590, NOT ₩27,801.
  • Given that there is little cancellation risk, we can capitalize on the price falling below the appraisal price by opening both Long and Short at the same price.
  • We close Short if the price goes under ₩20,590 and fix the arb spread by exercising the rights with Long.

WSP Global/RPS Group: More Consolidation In Engineering Consultancy

By Jesus Rodriguez Aguilar

  • WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.
  • The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.
  • The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.

Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth

By Ishan Majumdar

  • Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
  • Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
  • It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Aug 13
0

Daily Brief Industrials: Posco International Corporation, RPS Group PLC, Honeywell International and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Posco International Merger: Deal Structure & Arbitrage Dynamics
  • WSP Global/RPS Group: More Consolidation In Engineering Consultancy
  • Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth

Posco International Merger: Deal Structure & Arbitrage Dynamics

By Sanghyun Park

  • We still have the chance to become eligible. We will still receive the rights if we buy Posco International next Tuesday. But we will exercise them at ₩20,590, NOT ₩27,801.
  • Given that there is little cancellation risk, we can capitalize on the price falling below the appraisal price by opening both Long and Short at the same price.
  • We close Short if the price goes under ₩20,590 and fix the arb spread by exercising the rights with Long.

WSP Global/RPS Group: More Consolidation In Engineering Consultancy

By Jesus Rodriguez Aguilar

  • WSP agreed to acquire RPS Group at a (generous) 206/share (+0.45p interim), in a well-timed transaction at 76% premium, 17.2x EV/Fwd EBIT and 24x Fwd P/E. Irrevocable undertakings are 18%.
  • The offer represents a 43% premium to mean consensus TP. My fair value estimate DCF (WACC 9%, 1.6% terminal growth) is 190.5p/share, 1.5% below the offer price.
  • The shares trade just below the offer. This seems a low risk/low return deal. Gross spread is 0.7% and the estimated annual return is 2.2% assuming settlement by 8 December.

Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth

By Ishan Majumdar

  • Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
  • Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
  • It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.

💡 Before it’s here, it’s on Smartkarma

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
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Aug 13
0

Daily Brief Consumer: China Tourism Group Duty Free Corp Ltd, Rakuten Inc, Dollar Index, Keurig Dr Pepper Inc, Monster Beverage, Clorox Company and more

By | Consumer, Daily Briefs

In today’s briefing:

  • China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
  • CTG Duty Free H Share Listing: Valuation Insights
  • Rakuten: Turning a Corner
  • U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials
  • Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments
  • Monster Beverages: New Product Launches & Other Drivers
  • Clorox Co.: Innovation-Led Growth & Other Drivers

China Tourism Group A/H Listing – Discount Is Enticing at the Low-End

By Sumeet Singh

  • China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
  • As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
  • In this note, we talk about the deal pricing and run the deal through our ECM framework.

CTG Duty Free H Share Listing: Valuation Insights

By Arun George

Rakuten: Turning a Corner

By Oshadhi Kumarasiri

  • The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
  • However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
  • With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.

U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

By Joe Jasper

  • This is now the third Int’l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
  • Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
  • Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.

Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments

By Ishan Majumdar

  • Keurig Dr Pepper continues to battle inflationary challenges with price actions but its brand strength has been its biggest asset in the current environment.
  • With the higher prices, the company was able to surpass Wall Street expectations in terms of both, revenues as well as earnings.
  • Keurig Dr Pepper is on track to achieve 1 million linked households in the coming years thanks to its ongoing smart technology development, which is opening up new platforms like smart car delivery for pods.

Monster Beverages: New Product Launches & Other Drivers

By Ishan Majumdar

  • Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
  • In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
  • Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.

Clorox Co.: Innovation-Led Growth & Other Drivers

By Ishan Majumdar

  • Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
  • As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
  • One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.

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Aug 13
0

Daily Brief Health Care: Progyny Inc and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year

Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year

By Tina Banerjee

  • Progyny Inc (PGNY US) announced strong Q2 results, with both revenue and EPS surpassing consensus as well as company guidance. Revenue and adjusted EBITDA margin reached to highest ever levels.
  • The company has raised lower end of its 2022 revenue and adjusted EBITDA guidance second time in this year. Progyny is seeing continued strong employer demand for fertility solutions.
  • Despite inflation and a potential softening in the economy, Progyny is seeing strong customer demand and is upbeat about new client acquisition for its upcoming selling season.

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Aug 13
0

Daily Brief Financials: Swire Pacific Ltd-Cl B, Agile Property Holdings, Central China Real Estate, Yanlord Land and more

By | Daily Briefs, Financials

In today’s briefing:

  • Swire A Vs Swire B – Regulatory Nuances REALLY Matter
  • Chinese Property Weekly – 12 August 2022 – Lucror Analytics
  • Weekly Wrap – 12 Aug 2022
  • Yanlord Land – Earnings Flash – H1 FY 2022 Results – Lucror Analytics

Swire A Vs Swire B – Regulatory Nuances REALLY Matter

By Travis Lundy

  • Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. 
  • A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. 
  • The conclusions are surprising, and lead to one clear trading idea. 

Chinese Property Weekly – 12 August 2022 – Lucror Analytics

By Charles Macgregor

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.

Weekly Wrap – 12 Aug 2022

By Charles Macgregor

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. Pakuwon Jati
  2. Softbank Group
  3. Lenovo
  4. China SCE
  5. Kwg Property Holding

and more…

Yanlord Land – Earnings Flash – H1 FY 2022 Results – Lucror Analytics

By Leonard Law, CFA

Yanlord Land’s H1/22 results were reasonably strong in our view, considering the depressed industry environment. The company’s sales and cash collections remained robust, supporting its liquidity profile. In addition, a high proportion of its cash balance remains freely available. We note that Yanlord’s operating performance held up relatively well (vs. that of developer peers), thanks to its high asset quality. Still, we broadly agree with management’s dim assessment of the Chinese property industry’s medium-term prospects. 

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