China

• Tuhu Car (9690 HK) was listed in Hong Kong on 26th Sept 2023 after raising US$151m. The IPO had been a 100% primary offering.
• Tuhu is an integrated online and offline platform for automotive services in China.
• Trading with a very small float of 1.8%, in its upcoming six-month lockup expiry, >90% of Tuhu’s pre-IPO investors, cornerstones and management combined stakes will come off six-month lockup expiry.

• Yesterday, Haidilao International Holding (6862 HK), the largest hotpot chain in China, announced that the company will introduce franchise model as a new way to support growth. 
• Haidilao’s move into franchising should directly benefit Yihai Int’L Holding (1579 HK), the affiliate company that supplies hotpot condiments to Haidilao. 
• Yihai is trading at an inexpensive 12x 2024 PE compared to a historical average of 32x since listing.

• Xunfei Healthcare Technology (XHT HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are Huatai International, GF Capital, and CCB International.
• Xunfei Healthcare Technology (Xunfei), a iFlytek (Shenzhen-listed) spin-off, primarily provides solutions covering the full healthcare service cycle, with products and services mainly catered towards major stakeholders in the healthcare industry.
• Backed by its healthcare AI solutions matrix, the firm ranked first in the healthcare AI industry in terms of revenue in China in 2022, according to Frost & Sullivan (F&S).

• Innovent’s 2023 product revenue was RMB5.7 billion. In 2024, product revenue growth would remain strong (e.g. 35% YoY).The main flashpoint for performance is after the approval of mazdutide in 2025.
• Innovent has started paving the way for mazdutide more than a year in advance and building various channels.Normally speaking, mazdutide could get the approval in 25Q2. Its CDMO is Asymchem
• Share price of Innovent was once dragged down by the CXO plunge due to the US Draft Bill, but unlike CXOs, innovative drugs do not involve supply chain security issues.

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.

• Japfa Comfeed Indonesia

• Alibaba closed four more supermarkets at the end of February.
• Alibaba is moving retailers from the discount app back to Taobao.
• Li Auto’s deliveries increased by 62% YoY in the first two months of 2024.

• NetEase reported C4Q23 top line, GAAP operating profit and GAAP net income (4.8%), (16%) and (9.0%) vs. our estimates, and (3.6%), (12%) and (6.8%) vs. consensus， mainly due to..
• The positive, however, is the acceleration of launch of <Naraka Mobile> by 1-2 quarters. Our estimate of the gross billing remains the same;
• We remain optimistic about the upcoming pipeline, and we raise our TP to US$122. Our new TP implies 15.4X PE, which is 12% above current price.

• Vinda International (3331 HK) has announced the pre-condition for Sukanto Tanoto’s HK$23.50 voluntary offer is satisfied. The composite document will be despatched on or before 11 March. 
• The offeror has received irrevocables from Essity (ESSITYB SS) and Mr Li, representing 72.62% of outstanding shares, which satisfies the 50% minimum acceptance condition.
• Including irrevocables, the offeror currently represents 80.31% of outstanding shares. The offeror intends to exercise compulsory acquisition rights. The tight 0.4% gross spread reflects a done deal. 

• Although people acknowledged BeiGene’s performance, it still makes us uneasy about a long-standing question: When will BeiGene be profitable?With current cost structure, there’s at least two years left until breakeven. 
• BeiGene’s internationalization only proves decent increase in revenue, but it doesn’t yet verify its profitability.SG&A expense ratio completely deviates from the normal state of Biotech with over US$2 billion sales.
• If BeiGene indeed has a plan to turn loss into profits, besides maintaining a high growth rate in sales, reasonable optimization in cost and expenses is the most basic “sincerity”.

• The Hang Seng Index closed the month of February up, printing a +6.63% return, after months of uninterrupted downtrend.
• The big question at this point is: has the index reached the turning point that many have been waiting for?
• In this insight we will try to analyze what the possible short-term trend could be for the index after the recent trend reversal.

• Adjusting for impact of LNY timing, January numbers still seem firm
• Headline February / LNY 2024 traffic growth also appears solid
• Our thesis remains that tourism recovery takes longer, strongest in H124

• Vipshop reported C4Q23 top-line, non-GAAP EBIT, and GAAP net profit in-line, 6.3% and 7.0% vs. our estimate, and 4.5%, 20.5%, and 23.9%, vs. consensus, respectively;
• We expect the two themes of “live for the moment” consumption and consumption downgrade to persist in 2024. The former drives apparel spending, while the latter drives consumers to Vipshop
• We maintain BUY and raise the TP to US$ 20.4, implying 7.7x CY24 non-GAAP P/E, and 4.9x CY24 EV/Earnings.

• China Travel International Investment Hong Kong (308 HK) has an impressive 2024 CNY with the volume and revenue of its tourist attractions increased by 46% to 123% YoY.
• Relative to 2019 CNY, most businesses have fully recovered. 1H23 earnings is the highest since 1H20 and the market may have underestimated 2H23, providing upside surprise potential. 
• The share price is still some 30% below the peak in late-2021 when earnings have yet to recover. Also, its net cash now equals 19% of the share price. 

• On the 15 December 2023, the Tanoto family emerged with a HK$23.50 pre-conditional Offer for Vinda (3331 HK). PRC regulatory approval to one side, this Offer was a done deal.
• Those regulatory approvals have now been satisfied. The Composite Doc will be dispatched on or before the 11th March, at which time the Offer will be open for acceptances. 
• With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto’s 7.69% direct stake), this should turn unconditional on or before the 20th March

• The large SOE bank indicates that it will list its housing rental subsidiary, although the proceeds may be inconsequential given the size of CCB.
• CCB shows lower (and very low) credit costs despite what appears to be a major weakening in its NPL distribution.
• Loss NPLs are up 2.5x from FY19 to 1H23 much more than its 1.5x rise in total NPLs, so that its declining and benign credit costs may not last.

• A share indices were up on the week. HK stock indices were down except for HS Tech. H-shares with A-share pairs were up. 
• Net SOUTHBOUND buying was HK$9.1bn in the second post-holiday week after being +HK$20bn in the first week. LOTS of SOEs on the net buying side. Still.
• SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND and NORTHBOUND flows net positive. NB 5 weeks in a row. AH premia rebounded slightly. AH Premia are still wide on average. Premia curves should still shift flatter.
• Two Sessions seems like a good place to make positive public statements but recent speeches from the very top seem more oriented towards “The People Must Endure.”

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net BUY RMB 23.5bn of A-shares on strong average activity after RMB +49bn the previous four trading weeks. More efforts by authorities to eliminate selling.
• No finance names of any kind in the top ten this week after 5/10 the week before. Slight tendencies to trade on reversion.

• In the current challenging environment, investors should prioritize pharmaceutical companies with abundant cash flow and Biotech with diversified funding sources, as their safety margin is much higher.
• After the “clamor of consumer upgrading” fades away, we will eventually realize that the so-called pricing power has never belonged to anyone or any enterprise, but always to consumers.
• Hengrui is overvalued. There’re still around RMB5 billion generic drugs yet to enter VBP scope. So, the assumption that all negative effects of VBP have cleared up is not correct.

• The iShares A50 China (2823 HK) and CSOP China A50 (HKD) (2822 HK) ETFs will rebalance their holdings at the close on 15 March.
• Shaanxi Coal Industry, Hygon Information Technology, CGN Power and China Everbright Bank will replace Aier Eye Hospital, Bank Of Ningbo, WuXi AppTec and Jiangsu Yanghe Brewery in the ETFs.
• Hygon Information Technology (688041 CH) will also be added to a global index at the same time while CGN Power (1816 HK) will be added to the FXI ETF.

• Chongho Bridge (2314866D CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC.
• Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.  
• According to F&S, CB is the largest non-traditional financial institution targeting China’s rural market in terms of total loan balance as of FY22 (31st Dec 22).

• 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, we took an early look at the possible summer 2024 listing of Tokyo Metro.
• For placements, there was another large selldown in Renesas Electronics (6723 JP), while ITC Ltd (ITC IN) could see one as well soon from British American Tobacco (BATS LN). 

• In the past few years, a big problem of Taiji is weak performance/low valuation. The main purpose of mixed-ownership reform with CNPGC is to improve operational efficiency and enhance profitability.
• CNPGC made a clear commitment to solve the horizontal competition issue. So, after the privatization of China TCM is completed, it’s worth noting whether it will be merged into Taiji.
• 2024 is expected to see Taiji launch new M&A deals, which would bring a qualitative leap for Taiji. Market value of Taiji is expected to at least double. 

• CIMC Vehicles Group (301039 CH) (CIMCV) is a leading global manufacturer of semi-trailers and various truck bodies that is the mainstay of heavy ground goods transport  
• 9M23 earnings surged by 216% and beat consensus, scope for further earnings upgrade as the business and management outlook statement is very positive   
• Our target price of CNY12.50 (+31% UPSIDE) is based on 2024 PE 15x – a 10% discount against the industry leader Caterpillar 

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

• Adaro Energy
• China Jinmao Holdings

• The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
• The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
• Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!

• Hong Kong-based MediConCen, a startup automating insurance claims using AI and blockchain, has raised US$6.85 million in its latest Series A round.
• HSBC Asset Management led this round, with support from existing investors G&M Capital and ParticleX and new investor Wings Capital Ventures.
• Also Read: Wealthtech, insurtech, SaaS fintech are the new hot verticals in Indonesia: AC Ventures report This brings MediConCen’s total raise to US$12.7 million.

• Xinyi Glass Holdings (868 HK) reported FY23 results, with net profit up 5% yoy and sales up 4% yoy. 
• The company announced a final dividend of HKD0.37 per share, resulting in a full year dividend of HKD0.63 per share, which is a yield of 8%. 
• Overall the results look resilient, with auto glass segment a bit weaker than expected and float glass segment stronger than expected. 

• Baidu (BIDU) reported C4Q23 top line, non-GAAP operating profit and GAAP net income inline, 9.4% and (43%) vs. our estimates, and inline, 8.2% and (46%) vs. consensus. 
• We believe LLM is fundamentally an upgrade of search; further, BIDU is a 2B/general AI play in China, a country filled with 2C/specialized AI players;
• We cut our TP for BIDU from US$157 to US$116 and maintain BUY.

• We expect PDD to report CY4Q23 top-line and non-GAAP net income 14.3% and 21.2% vs. consensus. Main model changes are increased Temu revenue per order and PDD take-rate;
• Temu continued increasing prices despite the holiday shopping season, and merchants reported that Temu began charging service fees. PDD upgraded its ads tools, which we expect boosted China take rate.
• We maintain our BUY rating and raise our TP to US$ 178.

• Yankuang Energy, CGN Power and China Coal Energy are buys, China Resources Beer, China Vanke and Wuxi Biologics are sells for the iShares China Large-Cap (FXI) (FXI US) in March.
• Shorts have been spiking in China Vanke (2202 HK) while there has been covering in Yankuang Energy (1171 HK), China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK). 
• There has been an increase in cumulative excess volume on all the adds and deletes over the last few months. There could be more over the next week.

• Vietnam now accounts for more than 50% of production replacing China
• China production is less than 25% of overall capacity in 2023
• Reshoring and production of higher end “Athleisure” shoes is increasing margins for Stella International (1836 HK)
  

• Plover Bay Technologies (1523 HK) reported an 8.5%/ 24YoY increase in revenue/profits (%). Profits increased due to a net margin expansion of 370 bps to 29.8%. 
• The company had positive news in January when Peplink announced that it had agreed with SpaceX’s Starlink to become an authorized technology provider using Peplink SD-WAN routers.
• Trading at 11x/10x PE FY23/FY24e, with an 8.2% trailing dividend yield and ~60% ROE, this is another growth/dividend gem worth exploring.

• Pacific Basin Shipping (2343 HK) has a weaker-than-expected 2H23, but we are glad that its unit cost has come down. Also, FY24F and FY25F should be years of recovery.
• Current spot rates as indicated by BDI are significantly higher than 1H23 and YTD average, suggesting an upside for realised rates in the rest of this year. 
• Supply pressure will be alleviated by the issues at Panama and Suez Canals, while China may be a factor in YoY demand improvement. Net gearing of 2% is light. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Agile Group’s ESG as “Adequate”. The company’s Environmental and Social scores are “Adequate”, while Governance is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.

• Industry ASP declined -15.5% Y/Y in January to just 8.36 CNY, a record low
• Despite strong volume (+85% Y/Y) some firms have likely turned unprofitable
• International parcel growth strong; SF still avoiding worst of domestic price wars

• Among core/key products, TY-302 and TY-2136b have to face fierce competition, with R&D progress lagging behind competing products.TY-9591 for brain metastases from NSCLC could be a breakthrough point for TYK.
• There would be a long time for the first product to generate revenue, but TYK is cash shortage.So, the survival risk is high. Such companies are less attractive to investors.
• Valuation of TYK after six rounds of financing was RMB3.08 billion. However, considering the weak sentiment and concerns on pipeline, valuation of TYK after IPO could fall below this level.

• RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
• That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
• This should cause people to get excited short-term about property developers.

• Hong Kong residential property prices declined 7% in 2023 and are down >20% from the 2021 peak in 2021. The average price of offices also declined ~7% in 2023.
• Scrapping property cooling measures, such as the special stamp duty applied to homes resold within 24 months, have been rumoured, to push up housing prices. 
• In today’s annual budget, we got those. And then some. 

• Recent newsflow and company results suggest China outbound travel is on track to recover to pre-pandemic level by the end of this year.
• China airports have different exposures to outbound travel, which largely determines the scale of their duty-free shopping business and earnings upside amidst this recovery cycle.
• Beijing Capital Airport offers best risk/return profile among listed China airports in our view as current valuation does not fully capture even a conservative scenario of recovery in outbound travel.

• China announced game approval for the Feb batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to be accelerating, to the same level as pre-tightening.
• Netease gets one game approved but we don’t see that the acceleration of game approval benefits big names proportionally.

• LI Auto reported C4Q23 top line, non-GAAP operating profit and GAAP net income (6.2%), 13% and 81% vs. our estimates and 4.9%, 52% and 102% vs. consensus.
• We believe LI can beat our delivery estimate on exports, but can also miss the consensus on gross margins if its 2024 volume target is met by sedans;
• We raise our TP by US$5 to US$52 and reiterate BUY.

• Despite average weights falling from over 6% in 2020 to under 2% today, 73% of EM funds remain invested in Alibaba.
• The make up of the investor base has changed, with a rotation between high growth investors (out) and Value investors (in).
• Of the 73% of current holders, the core portfolio weight range sits between 1.5% and 3%, with the most bullish topping out at 5%+

• A Profit-Oriented State Owned Enterprise that is walking the walk.
• Management incentives are aligned with shareholders, a rarity in China.
• Plenty of upside remains despite the market outperformance to date

• Jiuyuan is not a typical innovative pharmaceutical enterprise with cutting-edge technology. The current seemingly good revenue/profit performance is actually based on some old products from over a decade ago.
• The risk of VBP could lead to a significant decrease in profit margins at any time. The cyclical changes in heparin industry would put more pressure on Jiuyuan’s performance.
• As Jiuyuan has not yet demonstrated superior clinical data in Jikeqin for overweight/obesity indication, together with fierce competition, we are cautious about the performance in GLP-1s pipeline at this stage.

• The Hang Seng Index, HSCEI, and HS Tech rebals were announced on 16 Feb. Janaghan Jeyakumar, CFA had expected GDS out, Tongcheng Travel in on HSTECH, along with the…
• …deletion of Zhongsheng Group (881 HK) in HSCEI, with a low conviction replacement of Zijin Mining, which turned out to be an add of China Unicom Hong Kong (762 HK). 
• No changes to the main HSI Index, which means evolution is further delayed. Today was the day to recap the caps. Mar1 Flow estimates are included below for all three.

• The March rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
• Tencent (700 HK), Meituan (3690 HK) and Tongcheng Travel (780 HK) are the biggest buys while Alibaba (9988 HK), Li Auto (2015 HK),  HSBC (5 HK) are the biggest sells.
• The round-trip trade across all stocks across the four indices is estimated at HK$16.16bn (US$2.06bn).

• We expect Baidu to report C4Q23 revenue, GAAP op. profit and GAAP net income inline, (2.3%) and (4.5%) vs. consensus.
• The slight bottom-line miss was mainly attribute to the increased marketing costs related to user acquisition. Baidu cloud revenue is robust due to AI product stimulating demand. 
• We cut our target price to US$146 for the spendings related to the construction of future e-commerce business but maintain BUY for its cheap valuation.

• We publish a deep dive on historical margin management at Cathay Pacific following Bloomberg reports that Air China is considering raising its 29.99% stake.
• We see Cathay’s consistent underperformance of the global industry as due to structural disadvantages competing against lower cost competitors without the benefit of attractive joint ventures or M&A.
• Our deep dive comparing margin generation to ten major global peers highlights weak pricing power without sufficient offset from staff cost/other cost efficiencies as the key problem.

• Luckin Coffee reported 4Q23 revenue/non-GAAP NI in-line/(39.8%) vs. our estimate due to (1) extra winter subsidies; (2) rental cost from new stores; (3) more operating expenditures.
• We view the non-GAAP NPM decline to 5.1% in 4Q23 as temporary and outlook for sequential improvements in 1H24 from (1)ASP rebound from easing competition, (2)efficiency improvement in rental cost
• We think Luckin’s profitability outlook is intact and maintain BUY rating, but lower TP by US$2 to US$41 to factor in the rising cost.

• Speculations on Air China Ltd (753 HK) seeking control of Cathay Pacific (293 HK) reappeared recently. We think a change in CX’s ownership is just a matter of time.
• CX has been a more important profit contributor to Air China after the pandemic, and depends on pricing, Air China is expected to benefit from such acquisition.
• Both are trading on 0.5SD below their 5-year P/B average and we prefer CX in the short term, but Air China looks to be a better long-term choice. 

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 Vanke

• In healthcare AI industry, the commercialization process is complex and burdened with challenges. Related products mainly plays an auxiliary role in medical scenarios, rather than a core support or rigid-demand. 
• The idea of creating corresponding solutions for C-end and B-end customers by FUNFEI is not inappropriate. However, both B-end and C-end businesses of FUNFEI have encountered varying degrees of problems.
• We’re not optimistic about XUNFEI’s profitability. The sluggish stock price performance after Airdoc’s listing indicates that the market/investors have not fully recognized healthcare AI enterprises, leading to low valuation.

• It is well-known that Alibaba (ADR) (BABA US) is cheap (9x FY24 PE, fiscal year ending March; 8x FY23 free cash flow; net cash 25% of market cap).
• Taking into account all of the major moving parts, I believe Alibaba can now be categorized as a good value stock. 
• Shareholder returns through buyback and dividend, minus stock-based compensation in 2023 calendar year equal to around 5% yield.

• In 4Q23, revenue grew by 136% and operating profit was significantly higher than the market consensus.
• Li Auto grew the most rapidly among the top-ten Chinese NEV sellers.
• We believe Li Auto will be one of the winners after the market gets more concentrated. Upgrade to Hold.

• Alibaba plans to provide operational services to third-party sales broadcasters.
• Xpeng will hire 4,000 employees and raise research budget by 40%.
• Tuhu Car expected that its net profit will turn positive in 2023.

• Some global investors are urging Chinese private education giant XJ International Holdings Co. Ltd. to redeem half of its $350 million in bonds before maturity, as the creditors fear the Hong Kong-listed firm may intentionally default on repayments.
• The bonds are due in 2026, but the creditors asked for the early redemption to be completed by March 2 in a letter sent to the Chinese company last month by their legal adviser, Chicago-headquartered global law firm Kirkland & Ellis LLP.
• The creditors are a group of large international investors who collectively hold no less than $154 million, or about 50%, of the bonds’ outstanding principal amount, according to the letter seen by Caixin.

• In the search for good value stocks to invest in for the long run, a good long-term ROIC is essential. It ascertains the moat or execution quality of the company. 
• Unfortunately, with a 5 Yr/10 Yr average ROIC of 4%/8%, the company did not satisfy all our criteria, yet the value seems appealing (66% of market cap cash, 8.8% yield).
• The persistent structural challenges in H1 FY24 in the industry (resulting in the subpar ROIC) convince us that the stock is only a good trade, but long-term a value trap.

• 160 Health collaborates with medical institutions and then get access to high-caliber medical professionals, which helps to attract patients/other business parties. So, its business model is B2B2C, similar to ClouDr.
• However, ClouDr has much better performance than 160 Health, because ClouDr has established moat/barriers to more effectively monetize medical resources, while 160 Health is clearly lagging behind in this regard.
• 160 Health’s revenue mainly comes from sales of pharmaceutical and healthcare products, whose gross margin is very low. As the competition intensifies, the C-end customer acquisition cost would also increase.  

• Mixue Group  is looking to raise about US$1bn in its Hong Kong IPO, while Sichuan Baicha (ChaPanda) and Guming Holdings (Good me) are said to be looking to raise US$300m each.
• All three are primarily focussed on providing freshly-made drinks, including freshly-made fruit drinks, and tea, with some selling ice cream, coffee, baked goods and ready to drink beverages as well.
• In this note, we will undertake a peer comparison, including the Hong Kong listed peer, Nayuki Holdings (2150 HK).

• QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
• QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
• In this note, we will talk about the not so positive aspects of the deal.

• On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
• The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. 
• The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. 

• There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
• Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
• The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

• Trip.com reported a strong set of Q4 and FY23 earnings results last week
• Company has held the line on SG&A expenses; look for strong H124 growth
• We believe shares are cheap and recommend investors buy below US$43/ADS

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  Probiotec Ltd (PBP AU), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), CSR Ltd (CSR AU), China Traditional Chinese Medicine (570 HK), Lithium Power International (LPI AU). 
• Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), T&K Toka Co Ltd (4636 JP), Snow Peak.    

• 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, we looked at Trial Holdings (5882 JP) refiling and Xiaocaiyuan International Holding .
• For placements, it was an action packed week in India, again, with Australia joining in as well.

• Luckin Coffee (LKNCY US) concluded FY23 with a 203.3% surge in non-GAAP net profit to Rmb3.2bn, benefiting from higher store count and monthly transacting customers.
• Luckin plans to lift store count by at least 23%, with total to reach over 20,000 in FY24. Product innovation, promotional discount reduction, and better store efficiency are profit drivers. 
• Net cash reached Rmb3.8bn, or 7% of market cap. With a consensus EPS forecast of 28% CAGR in the next two years, its 15.1x and 11.7x PERs are not stretched.

• Fang Weihao’s departure means PAGD’s strategic transformation failed. The business model of being a “vassal” of Ping An Group seems hard to bring high valuation due to “discounted” growth potential.
• PAGD is at a crossroads. The question is which development path will the new CEO choose – Follow Fang Weihao’s strategy or return to the traditional Internet healthcare business model?
• Both directions have painful costs that investors will not be happy with. Therefore, we recommend that investors remain sober and rational in the face of the bullish view on PAGD.

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.

• Powerlong Commercial Management Holdings

• QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
• QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
• In this note, we will talk about the positive aspects of the deal.