Category

China

China: Swire Pacific (A), FTSE China A50 Index, ClouDr Group, Kuaishou Technology, China South City, Asia High Yield Bond Index and more

By | China, Daily Briefs

In today’s briefing:

  • StubWorld: Cathay Pacific – Still Grounded
  • China/HK Breakout Points Need Follow Through
  • ClouDr (智云健康) Pre-IPO – Strong Growth but Has Issues that Need to Be Clarified
  • Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise
  • Morning Views Asia: China South City, Sunac China Holdings
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

StubWorld: Cathay Pacific – Still Grounded

By David Blennerhassett

  • Cathay Pacific Airways (293 HK) dangles bonuses for pilots and first officers amid Hong Kong’s stringent crew quarantine requirements. 
  • Preceding my comments on Cathay – and Swire Pacific (A) (19 HK)– are the current setup/unwind tables for Asia-Pacific Holdcos. 
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

China/HK Breakout Points Need Follow Through

By Thomas Schroeder

  • A share bull wedge stands out after meeting the 15k downside target. H shares bullish near lower wedge support.
  • The cut in key lending rates is spurring a push in HK/China, one needs to make sure this is not just another flash in the pan given a weak SPX.
  • HSI impulse out of bull flag cleared wedge resistance and needs resolution. On watch to close higher level shorts.

ClouDr (智云健康) Pre-IPO – Strong Growth but Has Issues that Need to Be Clarified

By Clarence Chu

  • ClouDr Group (16897333D CH) (CDG) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
  • The firm is a digital chronic condition management solution provider and is market leader in China in terms of the number of SaaS installations in hospitals and pharmacies in 2020.
  • In this note, we share our thoughts on the company’s business, financials, and operating metrics.

Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise

By Ming Lu

  • The stock price has risen 13% since our last note, but we still believe there is an upside of 21%.
  • The company is cutting employee benefits, from housing allowance to afternoon tea.
  • We believe the operating loss will shrink significantly in the following two years.

Morning Views Asia: China South City, Sunac China Holdings

By Charles Macgregor

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.


Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets dropped again after with the S&P and Nasdaq down 1% and 1.2%. The latter is down 10% from its November 2021 high. Most sectors were in the red with Consumer Discretionary, Financials and IT down 1.4-1.8%. US 10Y Treasury yields eased 3bp to 1.85%. European markets closed higher with the DAX, CAC and FTSE up 0.2%, 0.6% and 0.4% respectively. Brazil’s Bovespa closed 1.3% higher. In the Middle East, UAE’s ADX and Saudi TASI were up 1.6% and 0.5%. Asian markets have opened broadly higher – HSI, STI and Nikkei were up 1.9%, 0.1% and 0.5% while Shanghai was down 0.2%. US IG CDS spreads were 0.6bp wider and HY CDS spreads were 3.5bp wider, EU Main CDS spreads were 0.1bp tighter and Crossover CDS spreads were 1.7bp tighter. Asia ex-Japan CDS spreads were 4.7bp tighter.

Before it’s here, it’s on Smartkarma

China: Aquila Acquisition Corporation, Country Garden Holdings Co, Aier Eye Hospital Group, Yuzhou Group and more

By | China, Daily Briefs

In today’s briefing:

  • Aquila Acquisition Corporation: Hong Kong’s CMB-Backed SPAC
  • Country Garden (2007 HK) – Top of Mind Questions for Mgmt
  • Aier Eye Hospital Group (300015.CH) – More than Just Bribery Scandal
  • Morning Views Asia: Anton Oilfield, Delta Dunia Makmur, Yuzhou Group

Aquila Acquisition Corporation: Hong Kong’s CMB-Backed SPAC

By David Blennerhassett

  • Aquila Acquisition Corporation (AAC HK), a SPAC backed by China Merchants Bank, has applied for listing in Hong Kong.
  • Aquila is the first SPAC company to seek listing since new rules allowing such listings came into effect on the 1 January 2022. 
  • Aquila is targeting technology-enabled companies in “new economy” sectors (such as green energy, life sciences, advanced technology and manufacturing) in Asia, with a focus on China.

Country Garden (2007 HK) – Top of Mind Questions for Mgmt

By Jason Yap, CFA

  • Country Garden is widely seen as one of the few remaining large and better quality developers
  • However, its share and bond prices fell sharply following a reportedly failed USD300 billion convertible bond capital raising effort, triggering investor concerns  
  • In this Insight, we highlight the top of mind questions for Country Garden’s management

Aier Eye Hospital Group (300015.CH) – More than Just Bribery Scandal

By Xinyao (Criss) Wang

  • According to public news, the recent bribery scandal of Aier Eye Hospital Group (300015 CH) has raised widespread concern. Shenzhen stock Exchange also issued a letter of inquiry.
  • The development model based on M&A funds helps rapid expansion, but also leads to profit orientation and large goodwill balance, indicating potential risks.
  • The biggest risk is the revolutionary technology/drugs to disrupt the business value of Aier’s medical services. So, Aier could be a short-term trade, but not a long-term hold. 

Morning Views Asia: Anton Oilfield, Delta Dunia Makmur, Yuzhou Group

By Charles Macgregor

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.


Before it’s here, it’s on Smartkarma

China: HKEX, Citic Securities (H), Hongkong & Shanghai Hotels, XPeng, Yorkey Optical International Cayman, Dong E E Jiaoco Ltd A, Asia High Yield Bond Index, Agile Property Holdings, Wanda Commercial Management Group and more

By | China, Daily Briefs

In today’s briefing:

  • CCASS: Why Large Moves Still Mattered in 2021
  • The Citic Securities Rights Offering – Dilution Against Timing
  • HK&S Hotels (45 HK): Kadoories Mop Up Someone Else’s Mess
  • Xpeng: Milestone Year Ahead
  • HKEx (388.HK): Soft 4Q21 Trading Volume; Expect Muted Quarterly Earning Results
  • Yorkey Optical (2788 HK): Court Meeting On 22 Feb. IFA Says Fair
  • Dong E E Jiao (000423.CH) – Could the New Chairman Turn Things Around?
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • Morning Views Asia: Olam International
  • Wanda Commercial Management Pre-IPO – The Negatives – Parents Leverage Status Will Be an Overhang

CCASS: Why Large Moves Still Mattered in 2021

By David Blennerhassett

  • In this latest installment in a series dating back to March 2018, I’ve analysed 4,400 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks. 
  • The data continues to bear out the overall underperformance of stocks that exhibit large CCASS moves. 
  • But it also serves to illustrate that when a certain % move takes place in tandem with a certain market capitalisation, there is a tendency for outperformance. 

The Citic Securities Rights Offering – Dilution Against Timing

By Travis Lundy

  • Citic Securities has launched a Rights Offering for H Shares and A Shares. The price is basically the same, which means a very big discount for A holders.
  • The timing is different, and the H share Rights Issue process is drawn out past Chinese New Year. This may affect takeup rates and bullishness.
  • The difference in capital approach between Dual H/A-share listed SOEs like Citic Securities and like China Mobile is stark. The dichotomy may expand. 

HK&S Hotels (45 HK): Kadoories Mop Up Someone Else’s Mess

By David Blennerhassett

  • The Kadoorie family, Hongkong & Shanghai Hotels (45 HK)‘s major shareholder, is paying HK$2.63bn to increase its holding to 72.43% from 59.98%.
  • The price under the SPA is $12.80/share, a 92.5% premium to the undisturbed price. Shares promptly gained 19.5% yesterday. No Offer was triggered. 
  • What is conveniently left out of the announcement, and in media articles, is the original owner of these shares – Tai United Holdings (718 HK).

Xpeng: Milestone Year Ahead

By Victoria Li

  • Short term interruption from chips and LFP battery shortage would be eased in 2H2022.
  • Xpeng’s monthly delivery would ramp up to 30,000 cars with the launch of G9 in 3Q2022.
  • We estimate Xpeng’s net profit will turn positive at the end of 2022, which would trigger further re-rating of the stock to HK$300 (or US$77).

HKEx (388.HK): Soft 4Q21 Trading Volume; Expect Muted Quarterly Earning Results

By Roger Xie

  • 2021 full year ADT has grown 29% year-over-year compared with 2020. Trading activities in December continued to slowdown to year-end given the relative weak market sentiment and policy uncertainty.
  • We expect HKEX (388 HK) upcoming quarterly earning release (on Feb. 24) will be muted and estimate its 4Q21 revenue and profit will decline 3% and 7% year-over-year respectively. 
  • However, we remain bullish on HKEX (388 HK) with the view that China economy will likely rebound in 2022, which will drive the rebound of IPO activities and trading volume.

Yorkey Optical (2788 HK): Court Meeting On 22 Feb. IFA Says Fair

By David Blennerhassett

  • Yorkey Optical International Cayman (2788 HK)‘s Scheme Document is now out, with the Court Meeting to be held on the 22 February.
  • Asia Optical (3019 TT) is offering HK$0.999/share, a 75.3% premium to the undisturbed close. David Webb has given an irrevocable undertaking to vote his shares in favour of the Scheme 
  • This transaction is all stitched up. The Independent Financial Advisor considers the terms to be fair and reasonable. 

Dong E E Jiao (000423.CH) – Could the New Chairman Turn Things Around?

By Xinyao (Criss) Wang

  • The high price of EJiao discouraged consumers, leading to increasing inventory backlog in the distribution channel and reduction in payment collection, which finally resulted in Dong-E-E-Jiao’s net loss in 2019.
  • Although the performance has showed a recovery trend since 2020,concerns on raw material shortage, low inventory turnover, single product structure, high selling expense ratio and fierce market competition still remain.
  • There is still a long way to go for the Company to get back to peak, so we are conservative about Dong E E Jiaoco Ltd A (000423 CH)’s outlook.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets were closed on Monday on account of Martin Luther King Jr. Day. US 10Y Treasury yields rose 14bp to 1.85% over increased expectations of a Fed rate hike in March. European markets closed higher on Monday with the DAX, CAC and FTSE up 0.3%, 0.8% and 0.9% respectively. Brazil’s Bovespa closed 0.5% lower. In the Middle East, UAE’s ADX was 0.15% lower while Saudi TASI was up 0.46%. Asian markets have opened broadly higher – Shanghai, STI and Nikkei are up 0.9%, 0.2% and 0.4% while HSI is down 0.1%. US IG and HY CDS spreads were unchanged, EU Main CDS spreads were 0.5bp wider and Crossover CDS spreads were 1.7bp wider. Asia ex-Japan CDS spreads widened 3.9bp.

Morning Views Asia: Olam International

By Charles Macgregor

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.


Wanda Commercial Management Pre-IPO – The Negatives – Parents Leverage Status Will Be an Overhang

By Sumeet Singh

  • Wanda Commercial Management Group (WCMG) is looking to raise up to US$4bn in its upcoming Hong Kong IPO.
  • WCMG is a commercial operation service provider. As of Oct 2021, the firm managed 398 malls with total gross floor area (GFA) under management of 56.5m sqm.
  • In this note, we will talk about the not so positive aspects of the deal.

Before it’s here, it’s on Smartkarma

China: AKM Industrial, Qingdao Ainnovation Technology Group Co Ltd, Air China Ltd (H), Asia High Yield Bond Index, China South City, Wanda Commercial Management Group, Shenzhen Chipscreen Biosciences-A and more

By | China, Daily Briefs

In today’s briefing:

  • AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer
  • Qingdao AInnovation Technology Group IPO – Fairly Valued with Mediocre Cornerstones
  • AInnovation Technology IPO: Valuation Insights
  • Air China (753 HK): Down but Not Out
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • Morning Views Asia: China South City, Times China
  • Wanda Commercial Management Group Pre-IPO – The Positives – Aiming for One of HK’s Largest 2022 IPOs
  • Shenzhen Chipscreen Biosciences (688321.CH) – Risks Outweigh Opportunities

AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer

By David Blennerhassett

  • Flexible printed board player Akm Industrial (1639 HK) has announced a pre-conditional Scheme from Alpha Luck and AKM Meadville at HK$1.82/share. The Offer price will NOT be increased.
  • Alpha Luck is ultimately held by SASAC and AKM Meadville by the government of Haicang District, Xiamen. The two intend to hold 40:60 respectively in the unlisted vehicle. 
  • Various PRC regulatory approvals are required. This appears a transaction geared to complete. Timing is the key risk to the deal.

Qingdao AInnovation Technology Group IPO – Fairly Valued with Mediocre Cornerstones

By Clarence Chu

  • Qingdao Ainnovation Technology Group Co Ltd (1853807D CH) is looking to raise up to US$157m in its Hong Kong IPO.
  • Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions. 
  • While we don’t have a fundamental issue with the listing, at asking valuations, the firm appears to be fairly valued with limited upside on its FY23 numbers. 

AInnovation Technology IPO: Valuation Insights

By Arun George

  • AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It has launched an HKEx IPO to raise up to US$157 million. 
  • In AInnovation Technology IPO Initiation: Code Amber, we stated that the negatives outweigh the positives and we would give the IPO a pass.
  • Our valuation analysis suggests that the IPO price is fair. Due to our concerns about the fundamentals, we remain on the sidelines. Pricing is 20 January, listing on 27 January.

Air China (753 HK): Down but Not Out

By Osbert Tang, CFA

  • Passenger traffic momentum of Air China Ltd (H) (753 HK) has picked up in Dec and it also narrowed down it gap against China Southern Airlines (1055 HK)
  • The resurgence of international traffic over the next two years with more border openings will provide significant benefits to Air China, helping it to recover its depressed load factors.
  • Air China outperformed HSCEI by 3.6pp YTD, but we still consider its P/B of 1.0x, or around historical average, not stretched. Strength of Rmb is also a potential positive factor.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets ended slightly higher on Friday with the S&P and Nasdaq up 0.1% and 0.6% respectively. Sectoral gains were led by Energy and IT, up 2.5% and 0.9% while losses were led  by Real Estate and Financials, down 1.2% and 1%. US 10Y Treasury yields were up 9bp to 1.79%. European markets were lower on Friday with the DAX, CAC and FTSE down 0.9%, 0.8% and 0.3% respectively. Brazil’s Bovespa was up 1.3%. In the Middle East, UAE’s ADX was flat and Saudi TASI was up 0.3% on Sunday. Asian markets have opened broadly higher following – Shanghai, STI and Nikkei were up 0.6%, 0.1% and 0.8% while HSI was down 0.6%. US IG CDS spreads were 0.3bp wider and HY CDS spreads tighter 0.4bp. EU Main CDS spreads were 1.3bp wider and Crossover CDS spreads were 4.1bp wider. Asia ex-Japan CDS spreads widened 3.5bp.

Morning Views Asia: China South City, Times China

By Charles Macgregor

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.


Wanda Commercial Management Group Pre-IPO – The Positives – Aiming for One of HK’s Largest 2022 IPOs

By Sumeet Singh

  • Wanda Commercial Management Group (WCMG) is looking to raise up to US$4bn in its upcoming Hong Kong IPO.
  • WCMG is a commercial operation service provider. As of Oct 2021, the firm managed 398 malls with total gross floor area (GFA) under management of 56.5m sqm.
  • In this note, we will talk about the positive aspects of the deal.

Shenzhen Chipscreen Biosciences (688321.CH) – Risks Outweigh Opportunities

By Xinyao (Criss) Wang

  • The small market space of peripheral T-cell lymphoma indication and the fierce market competition of other indications, products and candidates make the Company’s future commercialization performance uncertain. 
  • The continuous large investment in R&D, high selling expenses, and declining R&D expending capitalization would further drag down profitability.
  • So, our view is that we are conservative about Chipscreen Biosciences’s outlook at the current stage.

Before it’s here, it’s on Smartkarma

China: Evergrande, Tbea Co Ltd A, Qingdao Ainnovation Technology Group Co Ltd, Akm Industrial, Greenland Hong Kong Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • China Evergrande Group – More Casualties
  • CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
  • AInnovation Technology IPO Initiation: Code Amber
  • AKM Industrial’s Privatisation Bid
  • Morning Views Asia: Ronshine China Holdings

China Evergrande Group – More Casualties

By Thomas J. Monaco

  • Evergrande Is Breaking Down More Rapidly Than Banks Have Kept Up;
  • Minsheng Has Significant Exposure to Evergrande and Other Problem Developers; and
  • Minsheng Is Not Insolvent, But It Is Getting There Very Quickly.

CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark

By Brian Freitas

  • Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
  • There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
  • The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.

AInnovation Technology IPO Initiation: Code Amber

By Arun George

  • AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It is set to launch an HKEx IPO to raise up to US$157 million.  
  • The fundamentals are mixed as diverging growth profiles of key segments, low market share and cash burn are accompanied by a narrowing loss margin. 
  • Overall, we believe the negatives outweigh the positives and we would give the IPO a pass. 

AKM Industrial’s Privatisation Bid

By Arun George

  • Akm Industrial (1639 HK) announced a privatisation offer from Alpha Luck and AKM Meadville at HK$1.82 per scheme share, a 14.47% premium to last full trading day price of HK$1.59. 
  • The key pre-condition is several regulatory approvals which be forthcoming as Alpha Luck is indirectly 100% owned by the SASAC. 
  • The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). We think the offer price is reasonable and the scheme will pass. 

Morning Views Asia: Ronshine China Holdings

By Charles Macgregor

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.


Before it’s here, it’s on Smartkarma

China: LG Energy Solution and more

By | China, Daily Briefs

In today’s briefing:

  • ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • LG Energy Solution (373220 KS) saw very strong demand for its mega US$10bn+ IPO.
  • While other IPO markets were in torpor, a number of placements continued to flow in.

Before it’s here, it’s on Smartkarma

China: Kweichow Moutai, Asia High Yield Bond Index, Kwg Property Holding and more

By | China, Daily Briefs

In today’s briefing:

  • FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • Weekly Wrap – 14 Jan 2022

FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

By Brian Freitas


Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets ended lower with the S&P and Nasdaq down 1.4% and 2.5% respectively. Most sectors were in the red led by IT and Consumer Discretionary down 2.7% and 2.1%. US 10Y Treasury yields were up 1bp to 1.75%. European markets were mixed with the DAX and FTSE up 0.1% and 0.2% while CAC was down 0.5% respectively. Brazil’s Bovespa was down 0.2%. In the Middle East, UAE’s ADX was up 0.7% and Saudi TASI was up 1%. Asian markets have opened broadly lower following losses on Wall Street – Shanghai, HSI and Nikkei were down 0.7%, 0.9% and 1.9% while STI was up 0.4%. US IG CDS spreads were 1.2bp wider and HY CDS spreads also tightened 1.5bp. EU Main CDS spreads were 0.1bp wider and Crossover CDS spreads were 1.9bp tighter. Asia ex-Japan CDS spreads widened 2.2bp.

Weekly Wrap – 14 Jan 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. Shui On Land
  2. Logan Property Holdings
  3. Sino Ocean Land
  4. Tata Motors Ltd
  5. Yuzhou Group

and more…


Before it’s here, it’s on Smartkarma

China: 51 Job Inc Adr, JL Mag Rare-Earth Co Ltd, Hang Seng Tech Index, CIMB Group Holdings, Hangzhou Bioer Technology, Kwg Property Holding and more

By | China, Daily Briefs

In today’s briefing:

  • 51job (JOB US): 27.6% Reduction In Terms
  • JL Mag Rare Earth A/H Trading – Set for a Tepid Debut
  • A Share Fizzle – HK Tech Bullish Base
  • 51job’s Lowered Privatisation Bid
  • 6 New $ Deals incl. CIMB, IRFC, CCB; Macro; Rating Changes; New Issues; Talking Heads; Top Gainer…
  • Bioer IPO: Currently Holding Strong but Would Growth Rates Sustain Post-COVID?
  • Morning Views Asia: KWG Living Group, Shui On Land, Sino-Ocean Service

51job (JOB US): 27.6% Reduction In Terms

By David Blennerhassett

  • Not an overreaction after all. After shares closed down 19.2% on the 8 November, 20% adrift of indicative terms, that appeared overdone.
  • Now 51 Job Inc (JOBS US) has announced the Offeror has proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
  • Shares closed up, but still at a 14.5% gross spread to terms. The new construct, and the reasons for doing so, are decidedly baffling.

JL Mag Rare Earth A/H Trading – Set for a Tepid Debut

By Sumeet Singh

  • JL Mag Rare-earth Co. Ltd (JLM) raised around US$544m via its H-shares listing. 
  • JLM is a producer of high-performance REPMs. It ranked first in the world by high-performance REPM production volume in 2020 with a market share of approximately 14.5%.
  • In this note, we look at the allocation results and trading dynamics.

A Share Fizzle – HK Tech Bullish Base

By Thomas Schroeder

  • A share pop a flash in the pan and still shows heavy price action as the bull wedge matures into late January.
  • HSI is meeting the fresh short target zone near 24,700 with a minor new low in store for late January.
  • HK tech is making strides to bottom as RSI divergence matures but still needs some final strokes for a higher conviction base.

51job’s Lowered Privatisation Bid

By Arun George

  • The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).
  • The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.
  • Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. 

6 New $ Deals incl. CIMB, IRFC, CCB; Macro; Rating Changes; New Issues; Talking Heads; Top Gainer…

By BondEvalue

US equity markets ended higher with the S&P and Nasdaq up 0.3% and 0.2% respectively. Most sectors were in the green led by Materials, up 1% and Consumer Discretionary up 0.6%. US 10Y Treasury yields were up 1bp to 1.75%. European markets were also higher with the DAX, CAC and FTSE up 0.4%, 0.8% and 0.8% respectively. Brazil’s Bovespa was up 1.8%. In the Middle East, UAE’s ADX was up 0.1% while Saudi TASI was up 1%. Asian markets have opened broadly lower – Shanghai, STI and Nikkei were down 0.2%, 0.1% and 0.9% while HSI was up 0.3% respectively. US IG CDS spreads were 0.4bp tighter and HY CDS spreads also tightened 1.5bp. EU Main CDS spreads were 0.6bp tighter and Crossover CDS spreads were 1.9bp tighter. Asia ex-Japan CDS spreads tightened 0.6bp.

Bioer IPO: Currently Holding Strong but Would Growth Rates Sustain Post-COVID?

By Shifara Samsudeen, ACMA, CGMA

  • Bioer designs, manufactures and sells three categories of PCR products: instruments, reagents and consumables. With the spread of COVID-19, the company experienced strong growth in revenue and margin improvements. 
  • The company has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to raise proceeds of around US$200m
  • Strong growth in Bioer’s revenue over the last two years was predominantly driven by the spread of COVID-19. We are concerned on the company’s ability to maintain its revenues post-COVID.

Morning Views Asia: KWG Living Group, Shui On Land, Sino-Ocean Service

By Charles Macgregor

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.


Before it’s here, it’s on Smartkarma

China: Sunac China Holdings, Water Oasis, Huitongda, ABM Investama, Bilibili Inc, Sinopharm Group Co Ltd H, Qingdao Ainnovation Technology Group Co Ltd, Betta Pharmaceuticals, West China Cement and more

By | China, Daily Briefs

In today’s briefing:

  • Sunac China Placement – Previous Deal Didn’t Do Much, This Won’t Move the Needle Either
  • Water Oasis, Execution Makes It More Compelling
  • Huitongda IPO: Testing Times
  • Asia HY Monthly – 2021 In Review And 2022 Outlook – Lucror Analytics
  • Bilibili Makes a Late Entry into Livestreaming E-Commerce; Timing Is Not Just Right
  • Huitongda Network IPO Initiation: Clicks to Bricks
  • Sinopharm Group (1099 HK): Stable Pharma Distribution Business Despite Weak Demand for Vaccine
  • Qingdao AInnovation Technology Group Pre-IPO – Has Grown Fast, but Holds an Unproven Track Record
  • Pre-IPO Betta Pharmaceuticals – Lack of Staying Power
  • Morning Views Asia: Powerlong Commercial Management Holdings, Tata Motors ADR, West China Cement

Sunac China Placement – Previous Deal Didn’t Do Much, This Won’t Move the Needle Either

By Sumeet Singh

  • Sunac is looking to raise around US$500m via a top-up placement.
  • The company last raised cash in Nov 21 when it undertook a top-up placement worth US$500m and raised another US$270m via  selldown in Sunac Services.
  • That deal didn’t end up doing well and this deal as well won’t move the needle much, in terms of bringing down debt.

Water Oasis, Execution Makes It More Compelling

By Sameer Taneja

  • Water Oasis (1161 HK) trades at a 6x FY22 ( Sept end ) PE with 31% of its market capitalization in cash ( implying ex-cash 4x PE ). 
  • For FY21, Water Oasis (1161 HK) paid a 22 cent dividend implying a 12.43% dividend yield. We forecast a forward yield of 14%.
  • The company will continue to execute as it opens newer stores and beds down its M&A for a 15% CAGR revenue growth.

Huitongda IPO: Testing Times

By Oshadhi Kumarasiri

  • Alibaba backed B2B e-commerce business, Huitongda (1566215D CH) is looking to test the HK IPO market with its $500m IPO while Beijing is on the attack on Chinese new economy stocks.
  • The company’s focus on rural and lower tier markets sounds a promising prospect amidst the Chinese’s government’s push for common prosperity.
  • Nevertheless, we think that investors are more likely to focus on the barrage of regulatory assaults and the fragilities of Huitongda’s business model.

Asia HY Monthly – 2021 In Review And 2022 Outlook – Lucror Analytics

By Charles Macgregor

This month, we review the developments of 2021, and give our outlook for the year ahead. 

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.


Bilibili Makes a Late Entry into Livestreaming E-Commerce; Timing Is Not Just Right

By Shifara Samsudeen, ACMA, CGMA

  • Bilibili launched a shopping cart feature (Xiaohuangche) recently on its livestreaming platform which enables users to purchase goods while watching a live-stream.
  • This comes at a time; China’s common prosperity crackdown has set its eyes on livestreaming e-commerce.
  • Bilibili has been looking at ways to improve its monetisation to reduce losses, but we think the new initiative will likely add further pressure on deteriorating margins.

Huitongda Network IPO Initiation: Clicks to Bricks

By Arun George

  • Huitongda (1566215D CH) is a fast-growing commerce and service platform focused on China’s lower-tier retail market. It is pre-marketing an HKEx IPO to raise US$400-500 million.
  • The positives are a large addressable market, solid top-line growth and profitability. The key negative is the low margin profile which reflects a fragmented and competitive market. 
  • Overall, we think that the positives outweigh the negatives and this IPO is worth a closer look.   

Sinopharm Group (1099 HK): Stable Pharma Distribution Business Despite Weak Demand for Vaccine

By Tina Banerjee

  • With its nationwide distribution and delivery network, Sinopharm Group Co Ltd H (1099 HK) remains a beneficiary of increasing adoption of China’s VBP scheme for drug procurement.
  • Despite decreasing demand for Sinopharm’s COVID-19 vaccine, its pharmaceutical distribution business is expected to remain stable, driven by the steady recovery in China’s healthcare industry.
  • The company is successfully promoting fast-growing oncology products. Its strategic partnership with I-Mab (IMAB US) further strengthens competitive edge, as I-Mab has a robust pipeline for China market.

Qingdao AInnovation Technology Group Pre-IPO – Has Grown Fast, but Holds an Unproven Track Record

By Clarence Chu

  • Qingdao Ainnovation Technology Group Co Ltd (1853807D CH) is looking to raise up to US$200m in its Hong Kong IPO.
  • Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions. 
  • While revenue has grown since inception, margin improvement can’t be attributed solely to better cost controls. It also has an unproven track record and operates in a highly fragmented market. 

Pre-IPO Betta Pharmaceuticals – Lack of Staying Power

By Xinyao (Criss) Wang

  • If the R&D pipeline projects are not recognized by international capital,the main reason could be either the product development progress is lagging behind or the projects are not good enough.
  • The real innovative drugs would not be affected by generics that easily, and are to overturn the size of the old drug market.
  • The real risk of Betta would be revealed in the next few years as VBP promotes. So, we are conservative about the Company’s outlook at the current stage.

Morning Views Asia: Powerlong Commercial Management Holdings, Tata Motors ADR, West China Cement

By Charles Macgregor

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.


Before it’s here, it’s on Smartkarma

China: Ausnutria Dairy Corp, China Infrastructure & Logistics Group , China Merchants Bank H, China Longyuan Power Group Corp, Mitsubishi UFJ Financial (MUFG), Huitongda, Beijing Chunlizhengda Medical Instruments, Shimao Property Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • Ausnutria (1717 HK): MGO Imminent As NDRC Approval Obtained
  • China Infrastructure & Logistics Group (1719 HK): Potential Unconditional MGO
  • China Merchants Bank – Accelerating Risk
  • China Longyuan (916 HK): The Trend Is Your Friend
  • 8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a…
  • Huitongda (汇通达) Pre-IPO – PHIP Updates and Competitive Landscape
  • Chunlizhengda Medical Instruments (1858.HK) – Conservative About the Outlook
  • Morning Views Asia: Guangzhou R&F Properties, Lippo Karawaci, Sawit Sumbermas Sarana

Ausnutria (1717 HK): MGO Imminent As NDRC Approval Obtained

By David Blennerhassett

  • China’s NDRC approval, a key condition to the Share Purchase Agreement, has been obtained.  SAMR clearance had previously been fulfilled, leaving MoC and SAFE approvals yet to be secured.
  • The turnout at Ausnutria Dairy Corp (1717 HK)‘s recent EGM would suggest there is a sufficient number of shares for the MGO to turn unconditional. 
  • Provided the Offer becomes unconditional, trading at a gross/annualised spread of 4.4%/22.1%, assuming late 1Q22 completion.

China Infrastructure & Logistics Group (1719 HK): Potential Unconditional MGO

By David Blennerhassett

  • After shares were halted midday on the 30 December pursuant to the Takeovers Code, China Infrastructure & Logistics Group (1719 HK) (“CILG”) has announced a possible MGO from Hubei Ports.
  • Hubei Ports has entered into a SPA with co-chairman Yan Zhi to acquire his 74.81% stake in CILG. Upon completion, this will trigger an unconditional MGO. The price is HK$1.15/share.
  • A key condition to the SPA is approval from SASAC of Wuhan, which is turn controls 82.8571% of Hubei Ports. This transaction is done.

China Merchants Bank – Accelerating Risk

By Thomas J. Monaco

  • Competitor Call Reveals Numerous Additional Risks Which Will Weigh On Results. 
  • No Clarity On Go Forward Core Bottom-Line, Especially Gains and Loss Provisions.
  • Reserve to NPLs Looks Overstated, as WMP and Securities Are Included In Loan Reserves.

China Longyuan (916 HK): The Trend Is Your Friend

By Osbert Tang, CFA

  • Nov and Dec wind generation continue to accelerate on a YoY basis, and it is also noteworthy that other renewable energy generation surged 346% MoM and 992% YoY in Dec.
  • SASAC’s latest guidance for the centrally-owned SOEs on installed renewable capacity target of over 50% of total by 2025 is another signal of strong government support on wind power.
  • Acceptance by Shenzhen Stock Exchange of Inner Mongolia PingZhuang Energy Resources (000780 CH) listing withdrawal application marks another step towards China Longyuan Power Group Corp (916 HK) return to A-share.

8 New $ Deals incl. MUFG, AgBank; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers a…

By BondEvalue

US equity markets mixed with the S&P down 0.1% and the Nasdaq flat. Healthcare led the gainers, up 1% while Industrials led the losers, down 1.2%. US 10Y Treasury yields were down 1bp to 1.76%. European markets were lower with the DAX, CAC and FTSE down 1.1%, 1.4% and 0.5% respectively. Brazil’s Bovespa was down 0.8%. In the Middle East, UAE’s ADX was down 1% while Saudi TASI was up 0.9%. Asian markets have opened mixed – Shanghai and Nikkei were down 0.1% and 0.9% while HSI and STI were up 0.1% and 0.3%. US IG CDS spreads were 0.1bp tighter and HY CDS spreads widened 4.6bp. EU Main CDS spreads were 0.6bp wider and Crossover CDS spreads were 1.3bp wider. Asia ex-Japan CDS spreads widened 1.1bp.

Huitongda (汇通达) Pre-IPO – PHIP Updates and Competitive Landscape

By Clarence Chu

  • Huitongda (1566215D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
  • While the numbers from the growth of member stores look promising, it did not translate to stronger revenue from member stores and HTD did not give a clear explanation.
  • In this note, we look at PHIP updates and competitive landscape.

Chunlizhengda Medical Instruments (1858.HK) – Conservative About the Outlook

By Xinyao (Criss) Wang

  • Last year end, Beijing Chunlizhengda Medical Instruments (1858 HK) was listed on the SSE STAR Market, but fell on debut. 
  • The major concerns include performance slowdown, loss of bidding in centralized procurement, problematic sales model, poor gross profit margin, single products risk and weak innovation capability and international business.
  • Our view is that there is no immediate prospect of significant improvement. With too many uncertainties and concerns, we are conservative about Chunlizhengda’s outlook despite the large A/H premium.

Morning Views Asia: Guangzhou R&F Properties, Lippo Karawaci, Sawit Sumbermas Sarana

By Charles Macgregor

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.


Before it’s here, it’s on Smartkarma