Category

China

China: Gcl Poly Energy Holdings Limited, Taste Gourmet Group, Tianqi Lithium, Microport Scientific, China Tourism Group Duty Free Corp Ltd, Sawit Sumbermas Sarana and more

By | China, Daily Briefs

In today’s briefing:

  • FTSE All-World/​​All-Cap Index Rebalance Preview: Some Big Changes in China
  • Taste Gourmet: Terrible Q4 2022, Q1 2023 off to a Good Start
  • Weekly Deals Digest (03 Jul) – Tianqi Lithium, Thai Life, Li Auto, Link Admin, Tassal, DTAC/True
  • Microport Scientific (853.HK)-The “unique” Development Mode Leads to Lower-Than-Expected Performance
  • CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO
  • Morning Views Asia: China South City, Country Garden Holdings Co

FTSE All-World/​​All-Cap Index Rebalance Preview: Some Big Changes in China

By Brian Freitas

  • The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 19 September.
  • There are a lot of potential inclusions to the indices for China -some changes are a result of stocks being included in Northbound Stock Connect.
  • Gcl Poly Energy Holdings Limited (3800 HK) is the largest potential inclusion (in terms of passive flow) in the index following resumption of trading in November 2021.

Taste Gourmet: Terrible Q4 2022, Q1 2023 off to a Good Start

By Sameer Taneja

  • Taste Gourmet Group (8371 HK) reported worse numbers than we expected for Q4 2022 during the restrictions; Checks indicate recovery in Q1 2023 is far better than our expectations. 
  • Cash declining from 96 to 65 mn HKD QoQ resulted in the company having to declare a smaller final dividend of 1.6 HKD cents ( interim: 4 HKD cents ) 
  • Trading at 5.4x FY23 and 11.1% dividend yield (assuming a 60% payout ratio), the company represents an excellent investment opportunity with >100% upside at the very least.

Weekly Deals Digest (03 Jul) – Tianqi Lithium, Thai Life, Li Auto, Link Admin, Tassal, DTAC/True

By Arun George


Microport Scientific (853.HK)-The “unique” Development Mode Leads to Lower-Than-Expected Performance

By Xinyao (Criss) Wang

  • Due to the centralized procurement in PRC market and decreasing volume of operations in overseas markets during pandemic, Microport Scientific (853 HK)’s 2021 performance missed expectations. 
  • Even if Microport could finally digest the negative impact of centralized procurement, its “unique” development mode would still put pressure and uncertainties on future performance/outlook, leading to lower-than-expected results.
  • Our earnings estimate of Microport in 2022 could be about HK$-1.7, and revenue estimate could be about HK$7.3 billion. It’s quite possible that the Company will not end up profitable.

CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

By Osbert Tang, CFA

  • China Tourism Group Duty Free Corp Ltd (601888 CH) has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. 
  • While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.
  • We think CDFC’s H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. 

Morning Views Asia: China South City, Country Garden Holdings Co

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: Gcl Poly Energy Holdings Limited, Tencent and more

By | China, Daily Briefs

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium
  • Last Week in Event SPACE: Prosus/Naspers, Link Admin, Bank of Kyoto, Tassel, Toshiba
  • ECM Weekly (3rd Jul 2022) – Tianqi, Thai Life, Prosus/Naspers, Tencent, SEA, Soosan, SoCar, Carsales

Index Rebalance & ETF Flow Recap: FTSE JP, HSTECH, HSCEI, PCOMP, GCL Tech, Tencent, Tianqi Lithium

By Brian Freitas


Last Week in Event SPACE: Prosus/Naspers, Link Admin, Bank of Kyoto, Tassel, Toshiba

By David Blennerhassett

  • Prosus (PRX NA) selling its JD.com (9618 HK) shares was expected. The beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares was a welcome surprise.
  • Dye & Durham has reduced its Offer price for Link Administration (LNK AU) to $4.30/share, down from $5.50/share. It still may get board support.
  • A 40-45% discount is about the narrowest Bank of Kyoto (8369 JP) should get to. For that, there is probably 15-20% upside. But like all holdco trades, trade the range.

ECM Weekly (3rd Jul 2022) – Tianqi, Thai Life, Prosus/Naspers, Tencent, SEA, Soosan, SoCar, Carsales

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.
  • There was a marked pickup in IPO activity with a number of smaller deals, along with two large deals being launched.
  • There were no major placements last week. In addition, Prosus single handedly took out two prospective large placements.

Before it’s here, it’s on Smartkarma

China: Geely Auto, Agile Property Holdings, Hongfa Technology Co Ltd A, Hong Kong Hang Seng Index, Powerlong Real Estate Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • Shanghai/​​​​​​Shenzhen Southbound Connect: Weekly Moves (30 June 2022)
  • Chinese Property Weekly – 1 July 2022 – Lucror Analytics
  • Chinese Property Weekly – 1 July 2022 – Lucror Analytics
  • Shanghai/​​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)
  • Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan
  • Weekly Wrap – 01 Jul 2022
  • Weekly Wrap – 01 Jul 2022

Shanghai/​​​​​​Shenzhen Southbound Connect: Weekly Moves (30 June 2022)

By David Blennerhassett

  • Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
  • Overall, net inflow over the past week was ~US$1.5bn, split US$0.4bn for Shanghai and US$1.2bn for Shenzhen.
  • He largest inflows were into Geely Auto (175 HK), Li Auto (2015 HK), and HKEX (388 HK). The largest outflow was in China Mobile (941 HK) and CCB (939 HK).

Chinese Property Weekly – 1 July 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.


Chinese Property Weekly – 1 July 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.


Shanghai/​​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)

By David Blennerhassett


Hang Seng, MSCI China Near Major Base Breakouts; Bottoms-Up Stock Rec’s in Hong Kong, China, & Japan

By Joe Jasper

  • Broad global MSCI equity indexes (ACWI,ACWI ex-U.S.,EAFE, and EM) remain bearish with YTD downtrends intact. Until these indexes reverse downtrends, we are bearish and view bounces as bear market rallies.
  • Major non-U.S. countries appear to be much further along in the bottoming process, a potential sign that U.S. indexes could take a back seat once global equities finally bottom.
  • Indexes that have not made a new low since March: Nikkei 225, TOPIX, TOPIX Small, Hang Seng, Europe’s EURO STOXX 50, and China’s MSCI China (MCHI-US) and China Internet (KWEB-US).

Weekly Wrap – 01 Jul 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. Sunac China Holdings
  2. Shimao Property Holdings
  3. Powerlong Real Estate Holdings
  4. JSW Steel Ltd
  5. Tata Steel Ltd

and more…


Weekly Wrap – 01 Jul 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. Sunac China Holdings
  2. Shimao Property Holdings
  3. Powerlong Real Estate Holdings
  4. JSW Steel Ltd
  5. Tata Steel Ltd

and more…


Before it’s here, it’s on Smartkarma

China: Tianqi Lithium, Tencent, Hang Seng China Enterprises Index, Alibaba Group, Xiaomi Corp, Dental Doctor Medical Holding Group, Powerlong Real Estate Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
  • Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go
  • Tencent Bear Case for New Lows
  • Tencent: End of Another Quarter with No New Game Approval and Prosus Selling
  • Tianqi Lithium H Share Listing: Valuation Insights
  • HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
  • Selling Shovels in a Gold Rush: SaaS Stocks Cashing in on Emissions Reporting Rules
  • Hang Seng Index Constituents 30th June 2022
  • Pre-IPO Dental Doctor Medical Holding Group – An Uncertain Outlook and Concerns About Profitability
  • Morning Views Asia: Powerlong Commercial Management Holdings, Sunac China Holdings

Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline

By Brian Freitas

  • Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
  • Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
  • Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.

Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go

By Sumeet Singh

  • Tianqi Lithium (TL) is looking to raise up to US$1.7bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
  • TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
  • In this note, we take about the deal pricing and run the deal through our ECM framework.

Tencent Bear Case for New Lows

By Thomas Schroeder

  • Tencent exhibits a compelling bear case in the form of triangle slated to break down to press on macro 310 support. A wave 5 new low near 280/263 is targeted.
  • MACD turning down from macro resistance stand out as a compelling direction signal that aligns with the bearish triangle a-b-c bounce count.
  • This new low would (terminal wave 5 cycle trough) represent a macro buy entry to challenge the 420 macro bull/bear line.

Tencent: End of Another Quarter with No New Game Approval and Prosus Selling

By Shifara Samsudeen, ACMA, CGMA

  • Tencent’s share price is down 6.5% over the last five days as largest shareholder Prosus sais that it would sell down Tencent shares to fund the buyback of Prosus/Naspers shares.
  • Though Chinese regulators removed the ban on new game approval in April this year, none of Tencent’s new game titles received approvals in over the last two months.
  • Tencent’s 1Q2022 earnings were weak and we expect 2Q2022E earnings to further decelerate with resurgence of Covid cases in China alongside weak macroeconomy.

Tianqi Lithium H Share Listing: Valuation Insights

By Arun George

  • Tianqi Lithium (9696 HK) has launched its H Share listing at an indicative price range of HK$69.00-82.00 per share. Pricing is on 6 July and listing on 13 July.
  • Tianqi Lithium (002466 CH)‘s AH discount range of 52.9%-44.0% is reasonable in the context of Ganfeng Lithium (1772 HK)’s average AH discount is 38.5% since its H Share listing.
  • Our relative valuation analysis suggests that Tianqi’s H Share valuation is attractive in comparison to median peers’ multiples. 

HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week

By Brian Freitas


Selling Shovels in a Gold Rush: SaaS Stocks Cashing in on Emissions Reporting Rules

By Kyle Rudden

  • Notwithstanding bright spots and positive long-term outlook, the ESG gold rush has created an acute state of chaos. Regulatory flux. Rampant greenwashing. ESG litigation. Elon and S&P.
  • The silver lining? New ESG-related investing opportunities emerging from all the chaos; stocks poised to benefit, regardless of who else wins or losses. The new shovel-sellers, as it were.
  • One large opportunity is driven by new greenhouse gas (GHG) reporting regulations, specifcally leading GHG emissions software-as-a-service (SaaS) and platform-as-a-service (PaaS) stocks.

Hang Seng Index Constituents 30th June 2022

By Untying The Gordian Knot

  • Hong Kong Stocks are more excited than the mainland about cutting the Quarantine period from 14 to 7 days.
  • The 25th Anniversary of the Hong Kong handover means more stability ahead of celebrations and trading dominated by position squaring.
  • Only Xiaomi shows signs of a breakout. It broke the downtrend from August 2021 with the inside days in the last two trading sessions. It looks like it will test the breakout and cover it next week.

Pre-IPO Dental Doctor Medical Holding Group – An Uncertain Outlook and Concerns About Profitability

By Xinyao (Criss) Wang

  • Dental Doctor has not established core competitiveness and high moat, and has to invest more on marketing and promotion to attract customers and drive growth.
  • The lack of dentists, weak talent and training system as well as high dentist turnover rate would be big concerns for the Company’s long term development, especially for nationwide expansion.
  • This industry has not yet entered the profit mode. Most of chain dental services providers are still in the stage of cash-burning expansion. So, we are conservative about the Company’s outlook.

Morning Views Asia: Powerlong Commercial Management Holdings, 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.


Before it’s here, it’s on Smartkarma

China: MTR Corp, NIO Inc, GOME Retail Holdings, Weilong Delicious Global, Arrail Group, Rainmed Medical, Central China Real Estate and more

By | China, Daily Briefs

In today’s briefing:

  • MTR (66): Open or Closed?
  • Nio: Difficult to Refute Most of Grizzly’s Allegations
  • GOME Retail Placement: The Crisis Persists
  • Weilong Delicious IPO: In a Pickle
  • Arrail Group (6639 HK): Full-Year FY22 Results Indicate Demand Is Recovering
  • Pre-IPO Rainmed Medical – The Industry, the Business and the Concerns
  • Morning Views Asia: Central China Securities, Greenland Holdings Corp

MTR (66): Open or Closed?

By Henry Soediarko

  • HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive. 
  • The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price. 
  • Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now. 

Nio: Difficult to Refute Most of Grizzly’s Allegations

By Shifara Samsudeen, ACMA, CGMA

  • Nio Inc. was targeted by Grizzly Research and accused of likely using an unconsolidated related party to exaggerate revenue and profitability. This unconsolidated related party was named as Wuhan Weineng.
  • As per the report, Weineng had helped Nio inflate revenue and net income by approx. 10% and 95% respectively in 9M2021, and FY2021 earnings beat by at least 60%.
  • In this insight, we take a look some of the allegations and have assessed the merits of the claims by Grizzly Research.

GOME Retail Placement: The Crisis Persists

By Oshadhi Kumarasiri

  • As the mismatch between short-term assets and liabilities expands, GOME is raising HK$776.5m at HK$0.40 per-share, which is a 12.1% discount to the closing price on 27th June 2022.
  • This is clearly insufficient to pay down GOME Retail Holdings (493 HK)‘s RMB 40.0bn short term debt and accounts payable obligations falling due in the next 12 months.
  • With the omni-channel transformation taking longer than expected to turn around performance, the company might find it difficult to refinance the debt and maintain the supply chain as usual.

Weilong Delicious IPO: In a Pickle

By Arun George


Arrail Group (6639 HK): Full-Year FY22 Results Indicate Demand Is Recovering

By Tina Banerjee

  • Despite regional lockdowns caused by COVID-19 during most part of FY21, Arrail Group (6639 HK) posted 7% y/y growth in revenue, driven by 14% y/y growth in total patient visits.   
  • China dental services market is growing at an average 20% per annum. Arrail’s low debt and strong cash position should support its business expansion plans to grab the market opportunity.
  • Despite competition, the company is expected to report accelerated double-digit revenue growth in next three years, by leveraging on its market leadership positioning and favorable macro tailwind.

Pre-IPO Rainmed Medical – The Industry, the Business and the Concerns

By Xinyao (Criss) Wang

  • The combination of FFR and IMR can provide a complete functional evaluation from epicardial arteries to myocardial microcirculation,pushing the precise diagnosis and treatment of coronary disease into a new era.
  • Rainmed’s caFFR System and caIMR System have obvious technical and first-mover advantages; The CE certificate also opens up the imagination space of product commercialization (such as developing markets).
  • However, the concerns on current sales model, market acceptance, medical insurance coverage, cash flow pressure and market sentiment when IPO should also not be neglected. 

Morning Views Asia: Central China Securities, Greenland Holdings Corp

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: Sichuan Tianqi Lithium Industries, Inc, Li Auto, SenseTime Group, Miniso, HKEX, Arrail Group and more

By | China, Daily Briefs

In today’s briefing:

  • Tianqi Lithium H Share Listing: AH Discount Views
  • Li Auto’s US$2 Billion ATM Offering
  • HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
  • Miniso Dual Primary Listing: Positive on Momentum, Valuation and Acceleration of Global Expansion
  • ETFs in Stock Connect: List Announced; Effective 4 July
  • Arrail Group (6639.HK) – The Development Strategy Cannot Generate High Returns

Tianqi Lithium H Share Listing: AH Discount Views

By Arun George


Li Auto’s US$2 Billion ATM Offering

By Arun George

  • Li Auto Inc. (LI US) has announced an ATM offering to sell US$2.0 billion of ADS. The offering appears to be timed to take advantage of the share price rally.
  • Li Auto (2015 HK)‘s strong balance sheet and cash generation do not necessitate the need for the offering. The impending launch of the Li L9 underpins its prospects. 
  • However, with the recent rally, the shares are at best fully valued at the last close. We prefer remaining on the sidelines for now. 

HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows

By Brian Freitas

  • We do not expect any inclusions or exclusions for the Hang Seng Tech Index (HSTECH INDEX) at the September rebalance.
  • Float and capping changes will lead to a one-way turnover of 6.5% and that will result in a one-way trade of HK$4,913m.
  • SenseTime Group (20 HK) will have the largest buying flow due a potential increase in free float. The stock is also a potential inclusion to the HSCEI INDEX in September.

Miniso Dual Primary Listing: Positive on Momentum, Valuation and Acceleration of Global Expansion

By Oshadhi Kumarasiri

  • MINISO Group Holdings (MNSO US) rallied more than 70% this month before receiving approval for a $100m placement on the Hong Kong Stock Exchange yesterday (27th June 2022).
  • The company has no requirement for extra cash and this Hong Kong listing is mostly a precautionary measure against a potential delisting of Chinese companies from US markets.
  • Overall, we are positive about this placement on account of momentum, reasonableness of current valuation and positive reception of what we would regard as an intention to accelerate expansion.

ETFs in Stock Connect: List Announced; Effective 4 July

By Brian Freitas

  • CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
  • There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
  • Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.

Arrail Group (6639.HK) – The Development Strategy Cannot Generate High Returns

By Xinyao (Criss) Wang

  • Arrial’s positioning at high-end private dental chain indicates limited growth space. The large investment in dental professionals drags down overall margins but fails to generate good word-of-mouth and expected returns.
  • Public hospitals with NRDL reimbursement and private dental chains with high cost performance would put more pressure on Arrail. Increasing marketing/promotion expenses cannot turn things around but further reduce margins.
  • Overall, the high-end strategy cannot bring high-end returns. We are not optimistic about Arrail’s prospects and profitability. The Company may even keep losing money and hard to turn profitable.

Before it’s here, it’s on Smartkarma

China: Tencent, Alibaba Group, JD Health, Gushengtang, Agile Property Holdings, Sea Ltd and more

By | China, Daily Briefs

In today’s briefing:

  • Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
  • China Internet Weekly (27Jun22): Koolearn’ Up & Down, New Rule on Medical Apps
  • JD Health: Minimal Impact from New Policy on Digital Healthcare
  • Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
  • Gushengtang (2273.HK) – The Development Momentum Is Good, but There Are Also Challenges
  • Morning Views Asia: JSW Steel Ltd, SJM Holdings, Tata Steel Thailand
  • SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Prosus, Tencent, JD.com – Good Intentions but Questionable Timing

By Sumeet Singh

  • Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
  • Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
  • In this note, we talk about the implication and timing of today’s announcements.

China Internet Weekly (27Jun22): Koolearn’ Up & Down, New Rule on Medical Apps

By Ming Lu

  • New Medical Product Rule banned online direct sales of medical products.
  • Koolearn’s stock price plunged after surging, as Tencent reduced its shareholdings.
  • Alibaba dismissed employees in Freshippo and JD.com downsized its community group purchase.

JD Health: Minimal Impact from New Policy on Digital Healthcare

By Shifara Samsudeen, ACMA, CGMA

  • China has released a draft rule on 22nd June that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.
  • Alibaba Health as well as JD Health’s shares dropped 15% at the end of trade on 22nd June while Ping An Health’s shares lost about 5.7% of its value.
  • This is the First of a series of reports where we analyse the impact of the above draft rule on leading digital-healthcare players in China. This report discusses JD Health.

Tencent (700 HK): Impact of Prosus Selling & Passive Inflows

By Brian Freitas

  • Prosus (PRX NA)/ Naspers (NPN SJ) hold 28.78% of Tencent (700 HK) and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.
  • At 3-5% of Tencent (700 HK)‘s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers’ discount to NAV shrinks considerably.
  • Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on Tencent (700 HK) in the near future.

Gushengtang (2273.HK) – The Development Momentum Is Good, but There Are Also Challenges

By Xinyao (Criss) Wang

  • Through perfect partnership system, Gushengtang locks in the scarce TCM physicians, and then quickly establishes/merges offline medical institutions to occupy the market. Such development mode works well so far.
  • The challenges are the risks of losing talents to competitors and the weak sales of healthcare products leading to lower profitability. 
  • Gushengtang is in an industry that receives government encouragement/preferential policies. The 2022 revenue growth forecast could fall back to about 25% considering the pandemic/lockdown. The EPS could narrowly turn positive.

Morning Views Asia: JSW Steel Ltd, SJM Holdings, Tata Steel Thailand

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.


SEA Lock-Up – Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

By Sumeet Singh

  • Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.
  • The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.
  • In this note, we will talk about the lock-up dynamics and recent updates.

Before it’s here, it’s on Smartkarma

China: Gcl Poly Energy Holdings Limited, Meituan, JD Health, Lepu Biopharma, China Gas Holdings, Bosideng International Holdings, China South City and more

By | China, Daily Briefs

In today’s briefing:

  • GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
  • Meituan Push into Sell Resistance
  • JD Health (6618.HK) – Logic Change Due to the New Policy?
  • Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing
  • China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt
  • Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic
  • Morning Views Asia: China South City, HPCL-Mittal Energy Ltd

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

By Brian Freitas

  • After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
  • We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
  • Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Meituan Push into Sell Resistance

By Thomas Schroeder

  • Meituan is starting to show waning upside momentum as it near key resistance at 220/230 (sell or short zone) ahead of a harder pullback cycle that will be choppy initially.
  • Meituan has outperformed its peer group but due for a pullback. Price and RSI rising wedges are maturing and nearing a bearish inflection point to short (watch poor buy volume).
  • Tactical rally window in mid July with a better rally cycle slated for August head of a negative September.

JD Health (6618.HK) – Logic Change Due to the New Policy?

By Xinyao (Criss) Wang

  • The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.
  • Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.
  • As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.

Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing

By Tina Banerjee

  • Lepu Biopharma (2157 HK) has filed NDA for its lead drug candidate pucotenlimab (HX008) for two indications in China, having a combined estimated market opportunity of RMB8 billion by 2030.
  • Overcrowded PD-1 mAb drugs market in China, with 10 marketed drugs, may limit the growth potential of pucotenlimab. However, pucotenlimab has better efficacy than existing drugs.
  • Lepu’s other core assets are also progressing and the company has sufficient cash to fund its R&D and commercialization initiatives.

China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt

By Osbert Tang, CFA

  • We continued to be cautious on China Gas Holdings (384 HK) given the challenges faced. It guided for a flat dollar margin in FY23 but we think this is optimistic.
  • Connection fees are likely to stay under pressure after a 42.1% decline in FY22. It only projects 2.6-2.9m new residential connections for FY23, compared with 2.9m in FY22.
  • Although China Gas is now the cheapest Hong Kong-listed China gas utilities company, it takes time to regain market confidence. At similar valuation, Kunlun Energy (135 HK) looks more interesting. 

Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

By Osbert Tang, CFA

  • The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion. 
  • Management expects double-digit profit growth for FY23 as it pursues targeted “2+13” expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
  • Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. 

Morning Views Asia: China South City, HPCL-Mittal Energy Ltd

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: SenseTime Group, Thai Beverage and more

By | China, Daily Briefs

In today’s briefing:

  • Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp
  • ECM Weekly (26th June 2022) – Tianqi, Thai Life, Thai Bev, ClouDr, ACommerce, SenseTime, SonaComstar

Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp

By David Blennerhassett

  • There is a risk that the ¥7,000/share bid for Toshiba Corp (6502 JP) gets pulled/lowered in Round 2 because of due diligence, conditionality, market environment, etc.
  • Hutchison Telecommunications Hong Kong Holdings (215 HK)‘s share price was up 33% month to date, on triple the average daily volume. Then promptly sheds 23% on an even larger volume. 
  • Even if one assumes that Softbank, Baba, and Cornerstones won’t sell, there is still 45% of SenseTime Group (20 HK) of shares out, worth US$11bn, unlocking next week.

ECM Weekly (26th June 2022) – Tianqi, Thai Life, Thai Bev, ClouDr, ACommerce, SenseTime, SonaComstar

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.
  • A few IPOs are lined up in Thailand and South Korea, in addition a number of deals are gearing up for launch.
  • There were no major placements last week. Although there are a few large lockup releases soon.

Before it’s here, it’s on Smartkarma

China: Baozun, Agile Property Holdings, Fosun International, XPeng, NARI Technology Co Ltd A, Indika Energy and more

By | China, Daily Briefs

In today’s briefing:

  • China E-Commerce Pair Trade: Long Bozun Short Huitongda
  • Chinese Property Weekly – 24 June 2022 – Lucror Analytics
  • Chinese Property Weekly – 24 June 2022 – Lucror Analytics
  • Fosun International – Event Flash – Tender Offer – Lucror Analytics
  • Shanghai/​​​​​Shenzhen Southbound Connect: Weekly Moves (24 June 2022)
  • Shanghai/​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)
  • Weekly Wrap – 24 Jun 2022

China E-Commerce Pair Trade: Long Bozun Short Huitongda

By Oshadhi Kumarasiri

  • Chinese e-commerce is having a solid month with most names up 30% in June. Yet this seems more a dead-cat-bounce than a change in direction of the share price momentum.
  • While there’s plenty of additional downside to big e-commerce players in e-commerce, smaller ones such as Baozun Inc. (BZUN US) has limited down side with shares trading near 1.0x P/B multiple.   
  • Meanwhile Huitongda (9878 HK) is yet to experience the post IPO sell-off and trading at expensive multiples. This raises an opportunity for a Long Bozun Short Huitongda trade.

Chinese Property Weekly – 24 June 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.


Chinese Property Weekly – 24 June 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.


Fosun International – Event Flash – Tender Offer – Lucror Analytics

By Trung Nguyen

Fosun International’s revised tender offer is credit positive in our view, signalling the company’s strong willingness to pay and management’s confidence of addressing maturities. We also note positively that the company did not take advantage of the situation by offering to buy back the notes at a discount. We believe the situation is not as bad as the longer-dated FOSUNI ​offshore notes would suggest, with the domestic notes all trading at 99+.

We recommend to accept the tender offer. 


Shanghai/​​​​​Shenzhen Southbound Connect: Weekly Moves (24 June 2022)

By David Blennerhassett

  • Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
  • Overall, net inflow over the past week was ~US$1.3bn, split US$0.4bn for Shanghai and US$0.9bn for Shenzhen.
  • The largest inflows were into XPeng (9868 HK) and HKEX (388 HK). The largest outflow was in Meituan (3690 HK) and Koolearn (1797 HK).

Shanghai/​​​​​Shenzhen Northbound Connect: Weekly Moves (24 June 2022)

By David Blennerhassett


Weekly Wrap – 24 Jun 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. Fosun International
  2. Country Garden Holdings Co
  3. Logan Property Holdings
  4. China Jinmao Holdings
  5. Lifestyle International Holdings

and more…


Before it’s here, it’s on Smartkarma