China

• Despite a softening global demand backdrop, Yue Yuen Industrial (551 HK), a global leader in the manufacture of athletic/outdoor and casual footwear, recently recorded its best 9M results since 2017.
• Yue Yuen’s shares have only just recovered from a 20-year low.
• From both a historical perspective and relative to peers, Yue Yuen is undemanding here. 

• Yue Yuen is essentially a large traditional manufacturing company, which once benefitted from China’s cheap labor and has brilliant history. But challenges seem inevitable as labor costs gradually increase.
• Despite 22Q1-Q3 solid performance, in the environment of high inventory of brand customers and downward pressure on global economy, the order visibility of Yue Yuen in 22Q4/23Q1 could be low.
• Either domestic demand or external demand, the overall situation may not be optimistic. Yue Yuen’s valuation is basically lower than its peers. However, we still recommend investors to remain vigilant.

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.

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.

• 111, inc (YI) has run up to $3.25. For a spread of only about 11%.
• Which is not all that attractive since there is no definitive agreement signed. So I am closing it with a quick 13% gain here.
• These Chinese merger situations sometimes randomly spike up, and I think it is wise to trade around them when upside isn’t as juicy anymore.

• Seazen (Formerly Future Land) (1030 HK) is looking to raise US$175m from its top-up placement.
• The deal is a relatively small one at just 9.5 days of three month ADV and 4.9% of current mcap.
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

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. China SCE
2. Hopson Development
3. Sino-Ocean Group
4. Greentown China
5. China Jinmao Holdings

and more…

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. China SCE
2. Hopson Development
3. Sino-Ocean Group
4. Greentown China
5. China Jinmao Holdings

and more…

• There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
• China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
• The round-trip turnover at the close of trading today should be in excess of US$8bn.

• Tian Tu Capital (1390587D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Tiantu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
• The fund manages capital from investors including institutional investors, multinational corporations, financial institutions, and high net-worth individuals. It also directly invests through its own capital as well.

• Gross margin is under pressure throughout 2022 but will recover in 2023
• Brands have been focusing on destocking and the inventory levels trend down
• Capacity is expected to grow by 10% to low teens y/y in 2023

• Sunshine Insurance (6963 HK) priced its IPO at HK$5.83 per share to raise net proceeds of HK$6.4 billion (US$824 million). The shares will start trading tomorrow.
• We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case, Sunshine Insurance Group IPO: The Bear Case and Sunshine Insurance Group IPO: Valuation Insights. 
• Peers have modestly re-rated and the IPO price continues to imply a premium to the median peer CY2022 P/EV and P/B multiples. Therefore, the IPO price remains unattractive.

• Growatt is a distributed energy solution provider with the #1 market share for PV inverters and energy storage inverters, allowing them strong potential to benefit from a growing market.
• In November 2022, the company received approval from the Hong Kong Stock Exchange and the IPO has a placeholder value of US$1bn, making it HKEX’s fourth largest IPO of 2022.
• In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s latest Post Hearing Information Pack (PHIP).

• Credit costs at present are only 20bps of loans, these can move to 100bps or higher
• Population data even before 2H22 shows contraction, with negative implications
• Property prices are turning down even faster, which is banks’ loan collateral

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.

• China SCE
• CIFI Holdings
• Greentown China
• Hopson Development
• Sino-Ocean Service

• Specialty Pharmacy Business is the main revenue contributor,but it’s hard for Medbanks to achieve breakeven or turn loss into profits by relying on this business due to its low margin.
• Physician Research Assistance and Health Insurance Services have higher margin, but they have to face different challenges based on our analysis. They are hard to turn things around.
• In fact, Medbanks does not control the core resources or establish high barriers in front of competition. Whether its ecological story would finally work still needs time to verify. 

• Xingda International (1899 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
• The controlling shareholders – more commonly known as the Five Parties – hold 45.6% of shares out. 
• Two years ago, Xingda sought to spin-off its key operating vehicle. Perhaps the Five Parties are privatising Xingda, then IPOing Xingda Steel Tyre Cord. Or, cashing out their positions.

• Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
• One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
• After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

• Xingda International (1899 HK) disclosed a partial offer from management to acquire a maximum of 80.0 million shares at HK$1.88 per share, a 24.50% premium to the undisturbed price.
• The pre-condition is Executive approval. The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders on the acceptance form. 
• The partial offer is an opportunistic foray to seize statutory control as it would not be sufficiently enticing to overcome FIL’s 9.99% blocking stake in a privatisation scheme.

• Xingda International (1899 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers. 
• It is likely that the management, representing 45.60% of ordinary shares (through a five parties agreement), is seeking to privatise Xingda.
• The bid is likely privatisation through a scheme. Due to FIL’s blocking stake, a decent premium is required, such as an offer approaching HK$2.00 (33% premium to the last close).  

• The growth rate of total revenue accelerated in the third quarter of 2022.
• We believe the organic growth was also strong besides the acquisition of Deppon.
• We set an upside of 29% and a price target of HK$19.90.

• OrbusNeich Medical Group (NEICHZ HK) is among the top six players in PCI balloon markets in terms of sales volume in multiple countries including China, Japan, the U.S., and Europe.
• OrbusNeich earns ~60% of revenue from Europe, Japan, and the U.S. The company’s high exposure to international markets safeguards it from the low prices commanded by China’s centralized procurement system.
• With diversified product portfolio, robust inhouse production facilities, established global sales network, rich pipeline enabling continuous launching of new products, and growing market demand, OrbusNeich is well-positioned for strong growth.

• The potential IPO of Anta Sports Products (2020 HK)‘s 52.7% owned Amer Sports is positive in unlocking the latter’s underlying value, though the impact is quite limited.
• Assuming a P/S of 1.8x (30% discount to peers) and 25% enlargement in share capital, we estimate the exercise may bring ~HK$6n of potential pre-tax deemed disposal gain.
• Although Anta Sports may not receive any cash, it can still pay out special dividends given its Rmb12bn net cash, and this will raise FY23 dividend yield to 3.1%.  

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, raised around US$850m in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• We have looked at various aspects of the deal in our previous notes. In this note, we will talk about the trading dynamics.

• The announcement of easing most Covid restrictions resulted in a new rally high, but the close was below at least the previous two-day open/closes, making it an outside day reversal pattern.
• This note highlights the reversal patterns in HSI, HSTECH, AIA, and Tencent. These have some of the cleanest reversal patterns.
• In real estate, SOEs like China Resource Land [-11.75% from 30th November intraday peak] and China Overseas Land [-9.7% from 29th intraday peak] reversed before the China Mainland Property index [6th December], a reflection of a short squeeze as a crucial driver of sector rally. Longfor peaked on 6th December and is down 17% after a 276% rally.

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.

• China Jinmao Holdings
• Greenland Holdings Corp
• Sunac China Holdings

• The SSE180, SSE380 and SZSE1000 indices rebalance at the close on Friday and that will lead to changes to the list of stocks eligible for Northbound Stock Connect.
• Deletion from the Northbound Stock Connect Buy and Sell list will result in MSCI and FTSE deleting stocks from their indices. That selling will take place at the close Friday.
• We expect 37 stocks to be deleted from the MSCI and FTSE indices at the close on 9 December – the announcements should be made later today or tomorrow.

• Country Garden Holdings Co (2007 HK)  aims to raise around US$500m via a primary placement
• This will be the third placement by the company this year and the second one within a month’s time.
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

• Sunpower has had a rough +/-18 months as input cost rises coincided with Force Majeure issues at some of its clients due to never-ending rolling Chinese lockdowns.
• Mr. Market has pushed Sunpower back below 0.27 SGD/share (-43% YTD) despite revenue- and EBITDA growth continuing at its GI division. Profits have been compressed due to rising input costs.
• As China re-opens in FY23 Sunpower should benefit from normalization and recovery in demand from its industrial base customers. However, CB conversion details are needed for re-rating to start.

• Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names. 
• Of these companies, only two are expected to be EBITDA positive in FY22. 
• They are JOYY (YY US) and Sohu.com (SOHU US). This insight looks at both names. 

• Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
• Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX). 
• The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.

• A recent rally in property management companies due to measures taken by the government has set Binjiang Service Group (3316 HK) for a big move upwards.
• The stock is cheap and trades at 10.5x/8.1x FY22/23e PE with 37% of the market cap in cash and a 5.8%/7.4% FY22e/23e dividend yield.
• Catalysts for the company are further loosening on the property by the government and a profit alert of 38-40% earnings growth for FY22.

• The revenue growth accelerated and the operating margin improved in 3Q22.
• However, management said the performance may not continue and profit is not their target.
• We believe the stock has a downside of 23% for year end 2023. 

• In the near-term, China’s relaxation of COVID-combating measures will boost consumption and demand for cross-province travel. China Tourism Group Duty Free Corp Ltd (1880 HK) is a beneficiary.
• Hotel bookings in Sanya have surged over the last two days, reflecting positive demand reaction. However, China’s full border opening likely in 2023 is a challenge to CDFC.  
• Low base in FY22 will drive 45% earnings growth for FY23. However, valuations are not cheap at 33.8x PER for FY23, a significant premium to consumption sector and international peers.

• Weilong Delicious has downsized its IPO to raise around HK$942m (US$121.3m). The company also has the flexibility to set its IPO price at a 10% discount to the bottom.
• The company’s top line growth has slowed down in 1H2022 and margins have been under pressure with increased S&M spending to further penetrate into online channels.
• Weilong’s IPO is priced at a significant premium to domestic as well as multinational peers which do not justify the growth prospects.

• Nearly 85% of the way through the review period, we see 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
• Given the significantly higher market cap of the inclusions using a 6-month minimum listing history, we expect the index committee will continue to use the shorter listing history requirement.
• With 5 changes a side, one-way turnover is estimated at 5.15% and will result in a one-way trade of CNY 3,994m. Impact on some deletions is quite high.

• On the 26 November, Macau’s government renewed the concession periods of the city’s six incumbent gambling concessionaires for another 10 years.
• Genting Malaysia (GENM MK), a last-minute interloper, failed in its bid to secure a license. It scored lowest under the government’s bidding review. MGM China (2282 HK) topped the scoresheets. 
• As with all incumbents, Melco International (200 HK) and Melco Resorts & Entertainment (MLCO US) eked out strong gains following the renewal. Melco’s current discount to NAV is currently 20%.

• Nearing the end of the review period for the March rebalance, we see China Shenhua Energy Co H (1088 HK) replacing China Feihe (6186 HK) in the HSCEI INDEX.
• Estimated one-way turnover is 1.64% resulting in a one-way trade of HK$1.02bn with passives needing to buy 1x ADV on China Shenhua Energy and selling 1.7x ADV on China Feihe.
• The change will lead to an increase in the fair value of the HSCEI 2023 dividend futures by over 3 DIPS. Could be more if China Shenhua pays a special.

• ATRenew (RERE US) operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS. 
• The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.
• The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.

• Richard Liu came back to manage JD.com after he resigned half a year ago.
• Alibaba Health revenue increased 23% YoY in 1H23, which benefited from hospitals being closed.
• Pinduoduo revenue increased by 65% YoY and operating profit increased 388% YoY in 3Q22.

• The revenue growth rate accelerated to 28% YoY in 3Q22 versus 16% YoY in 2Q22.
• Operating Loss was close to zero in 3Q22 and we believe it will turn positive in 2023.
• According to price / sales history, we believe the company has an upside of 89% for year end 2023.

• Bilibili Inc (BILI US) reported 3Q2022 results Tuesday. 3Q revenue increased 11.3% YoY to RMB5.8bn (vs consensus RMB5.7bn) while operating losses for the quarter dropped to RMB1.8bn vs consensus RMB2.1bn.
• Recovery in mobile games biz alongside aggressive cost cutting measures supported improvement in Bilibili’s profitability during the quarter.
• Pandaily reported that Bilibili is exploring expanding into the SEA region and increased R&D spending could be an indication that plans are underway.  

• DPC Dash (DPC HK) is the exclusive master franchisee of Domino’s Pizza (DPZ US) in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
• The company has refiled for an IPO on the Hong Kong Stock Exchange after failing the first time to raise around US $100m in March 2022.
• Discounted pricing has failed to propel the Dominos brand to the top in many Asian markets where pizza is considered a luxury meal. DPC-Dash is experiencing the same in China.

• ATRenew (RERE US) is one of the stocks in China that is starting to look very attractive after a sharp decline in its share price since its IPO.
• ATRenew has achieved noticeable improvements in operations and profitability in the recent quarter.
• Our base case valuation analysis suggests an implied market cap of US$720 million, representing an implied price of US$3.15 per share, representing an upside of 43% from current price.

• Weilong Delicious Global (WDG HK)  a spicy snack food company in China, aims to raise around US$140m in its Hong Kong IPO.
• According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
• We have covered various aspects of the deal in our previous notes, in this note, we will talk about  the final valuations.

• Weilong Delicious Global (WDG HK), a leading spicy snack food company in China, has launched its IPO to raise up to US$141 million. 
• We previously discussed the IPO in Weilong Delicious IPO: Remains in a Pickle, Weilong Delicious IPO: In a Pickle, Weilong Delicious IPO: Mixed Update, Weilong Delicious IPO Initiation: Tasty Bite. 
• In this note, we present our forecasts and look at valuation. Weilong is unattractively valued at the IPO price range. We would pass on the IPO.

• Despite the plunge in share price after FY22 result, we think Hope Education Group Co Ltd (1765 HK) has not yet reached its bottom given the challenging outlook faced.
• We are concerned about stretched financial position with gearing surged 32.5pp in last year. Heavy capex and need to repay outstanding convertible bonds will strain its cash flow.  
• Market earnings expectations are still overly optimistic. New schools looks to drag on near-term margins while surge in staffing, primarily teacher, costs is an added pressure.

• As investors we are faced with a deluge of noisy breaking news, business media talking heads, and what has felt like non-stop Fed speakers offering their differing views on the economy and the path of rate hikes going in 2023.
• This week was no different. Fed Chair Jay Powell was front and center suggesting that interest rate hikes will likely be stepped down to 50bps in the upcoming December Fed meeting in a few weeks.
• This was already discounted and expected by the market and effectively didn’t offer much of anything Wall St. didn’t already know.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Anton Oilfield
• China Datang Corp Renewable Power
• Shui On Land

• In this post I tracked my performance on stock mentioned in my blog, and I would like to officially close some ideas here.
• I will start doing that from now on. Something I did privately but not on the blog publicly.
• Either because they have worked out and upside is no more attractive, or because the facts have changed.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, the two Japanese IPO set the ball rolling for the year end rush, with a few more lined up in Hong Kong along with Sunshine.
• There were a few largish selldowns in Japan and India and given Hong Kong’s recent performace, it will see some deals soon as well.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Stock has recovered from an October low but may be running out of steam 
• Realised vol has been high and implied vols have not fallen as much as other equity assets
• We suggest three trade ideas into year-end to take advantage of the vol surface and spot level

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
• These insights may flag those companies where shares have been pledged. Stocks mentioned include: Perfect Medical Health (1830 HK), Hong Kong Aerospace Technology (1725 HK), and ESR Group (1821 HK).

• The renewal results of coronary stent centralized procurement reflected that the government’s attitude towards the price reduction in VBP has changed, who tend to correct the excessively low price.
• Investors’d better not to have such a misconception that they only attach importance to R&D rather than commercialization. Only if sales ability is verified can enterprises have better valuation premium.
• Investors are advised to find the targets that are in “sector resonance” but also has “difference in expectations”. Ecology of innovative drug has changed, such as Remegen (688331 CH).

• Yili is the largest dairy company in China with established entry barriers of brand and products.
• Yili aims to join the world’s top three dairy enterprises by 2025 and strives to seize first place by 2030.
• Management announced the plan of a revenue CAGR of ~10% y/y between 2021 and 2025 and margin improvement of 50bps each year.

• Perfect Medical Health (1830 HK) showed a resilient set of numbers for H1 2023, with profits down only 30% despite losing a month in HK and more in China.
• With over 700 mn HKD in cash (18% of market capitalization), PE of 12.4x FY23e/8.5x FY24e, and dividend yields of 8.5%FY23e/12.4%FY24e it trades on an exciting yield/valuation.
• Catalysts for the company include the reopening of China (>20% of revenue), the recovery of HK(70% of revenue), and expansion into newer business lines and geographies.

• PDD’s spectacular 3Q results will prove unsustainable based on our assessments of its core markets and deep-dive benchmark analysis of growth trajectory of PDD and Alibaba, using GMV as scale.
• We see earnings risk going into 2023 due to well-penetrated wallet share of core user base, deflating growth drivers and ramp-up of investments.
• In the long term, inevitable multiple compression also renders the risk-return payoff of this US$100bn company mediocre, even under blue-sky growth forecasts. Prefer Alibaba over PDD.

• The NRDL negotiation has completely changed the pricing method and valuation logic of innovative drugs. Based on the 3D Alphamab Simcere Agreements, 3D Medicines would have limited profits from envafolimab.
• The majority candidates are based on license-in model. The intention to “pile up” a nice pipeline based on license-in model before IPO is obvious. 3D Medicines’s R&D capability is questionable.
• The overall quality and core competitiveness of 3D Medicines are not high. Mr. Market is not friendly to the valuation of companies based on license-in model. 

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.

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.

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. Medco Energi
2. China Jinmao Holdings
3. Guangzhou R&F Properties
4. Sunac China Holdings
5. Evergrande

and more…

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. Medco Energi
2. China Jinmao Holdings
3. Guangzhou R&F Properties
4. Sunac China Holdings
5. Evergrande

and more…

• The December rebalance of the HSI INDEX, HSCEI INDEX and HSTECH INDEX takes place at the close today. One-way flow is estimated at HK$8.4bn.
• There are 3 adds for the HSI INDEX and 4 adds/ 4 deletes for the HSCEI INDEX. There are float changes for a few stocks as well as capping changes. 
• There is excess volume on most adds/deletes post announcement and short interest has also picked up significantly.

• Mandi, OTC alopecia drug of 3SBio Inc (1530 HK), reported revenue growth of 42% y/y in 1H22 and gained 70bps market share over the last six months.
• With the resurgence of COVID-19 in China interrupting the regular operations of outpatient services at medical institutions, 3SBio’s performance is expected to be affected in near-term.
• 3SBio is preparing to launch its new drug nalfuraphine hydrochloride orally disintegrating tablets for liver and kidney disease pruritus in China.

• The operator of Chinese recruitment app Boss Zhipin reported drops in third-quarter revenue and profit after restarting new user registrations following a nearly one-year suspension as part of a national security probe. 
• During the three months through September, Nasdaq-listed Kanzhun Ltd.logged a net profit of 211.7 million yuan ($29.8 million), representing a year-on-year drop of 26%
• The firm generated about 99% of its revenue, or 1.16 billion yuan, from sales of recruitment services to corporate clients — a 2.7% year-on-year decrease.

• Volume picked up on Tuesday, 29th November, just slightly below the 15th November volume, the previous buying climax.
• Wednesday’s Volume fell 10% with new price highs.
• The erratic rather than trending Volume without capitulation volume on the 31st October price lows are hallmarks of a bear market rally.

• The large physician network is actually the cornerstone for MedSci Healthcare (MHH HK)’s precision omni-channel marketing solutions and RWS solutions, and also the key to support the overall investment logic.
• In fierce competition, how to retain physician network for a long time, convert them into business value continuously and achieve the high growth trend expected by the market is challenging.
• In terms of valuation, MedSci’s valuation could be higher than Medlive due to its stronger physician platform solutions business and medical professional network, but could be lower than HUAYIWANG. 

• JD Health (6618 HK) and Yum China Holdings Inc (9987 HK) will replace Longfor Properties (960 HK) and XPeng (9868 HK) in the FTSE China 50 Index on 16 December.
• The largest flow and impact of passive trading will be on Yum China Holdings Inc (9987 HK). There could be buying on Yum China Holdings, Inc (YUMC US) overnight.
• Short interest on the deletes is over 7% of float and there could be short covering against the passive selling at the close on 16 December.

• There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 December.
• Empyrean Technology, GalaxyCore, Shanghai Fudan Microelectronics and Shanghai Awinic Technology will replace Grinm Advanced Materials, Chengdu Corpro Technology, Shanghai Sinyang Smcndctr Mtls and Espressif Systems Shanghai in the index.
• Shanghai Fudan Microelectronics Group (688385 CH) will be added to the MSCI China Index at the close today and will also be added to the CSI 500 Index in December.

• Lygend Resources & Technology (2245 HK) priced its IPO at HK$15.80 per share to raise net proceeds of HK$3.5 billion (US$450 million). The shares will start trading tomorrow.
• We previously discussed the IPO in Lygend Resources & Technology IPO: Riding the Wave and Lygend Resources & Technology IPO: Valuation Insights.
• Peers have re-rated and the IPO price continues to imply a discount to the median peer CY2023 P/E multiple. Therefore, the IPO price remains attractive.

• Chinese equities have been on a volatile path but are finally gaining some upside momentum
• Dollar seems to have peaked and USDCNH is retreating with renewed optimism for the Chinese economy reopening. 
• We revisit the trade and look at potential restructuring options

The Asia HY Trade Book for November 2022 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia (ex-Japan) HY and crossover credits.

• Alibaba Health reported 1HFY03/2023 results on Monday. Revenue increased 22.9% YoY to RMB11.5bn and reported an adjusted net profit of RMB350m vs net loss of RMB283m reported in 1HFY03/2022.
• Adjusted operating loss for the quarter decreased to RMB30m compared to RMB586m reported in the same quarter last year.
• Ali Health’s fulfilment and S&M costs were the highest among peers and cutting down these costs has helped the company reduce its operating losses.

• Sunshine Insurance (6963 HK) has launched its HKEx listing at HK$5.83-6.45 per share to raise up to US$951 million. Books are open from 30 November to 5 December.
• We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case and Sunshine Insurance Group IPO: The Bear Case. 
• At the IPO price range, Sunshine trades at a significant premium to median peer multiples. Therefore, we would avoid the IPO. 

• Lygend Resources & Technology (2245 HK) raised US$470m in its Hong Kong IPO.
• Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
• In this note we will talk about the trading dynamics.

• Weilong Delicious Global (WDG HK), a spicy snack food company in China, aims to raise around US$200m in its Hong Kong IPO.
• According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
• In this note, we provide an update to our earlier peer comparison and valuations.

• WuXi AppTec announced its proposed disposal of A Shares again. Investors’re worried about the signal behind – Performance growth has reached certain limit. There’s the possibility of a turning point.
• Such proposed disposal (regardless of share price) could continue to weigh on the valuation performance of the whole CXO sector – There is still “bubble” in share price.
• In fact, Li Ge (Founder of WuXi AppTec) knows CXO industry much better than anyone, when he decides to resolutely reduce his shareholding, it is very telling.