Consumer

• NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
• Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO. 
• Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies. 

• We estimate that China accounts for almost 40% of Fast Retailing’s earnings. This growth engine is stalling
• The market has yet to discount these risks, despite warnings from H&M
• The stock is down 5% YTD, but trades at an 80% premium to global peers

• Tesla managed to the hit the low end of recently and substantially reduced market estimates for Q1 deliveries at 310,048.
• That was enough to top record record Q4 results—but not enough to hit ambitious market estimates for the year.
• Revenue quality improved on higher prices and mix, but profitability is less clear until we get sales results for March from China—where Tesla generates most all its profits.

• Hotel operator Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s Composite Doc is out. The H-Class meeting on the 26 April, with expected payment on the 17 May.
• The IFA considers the Offer to be fair and reasonable. 
• This is done and trading tight at a gross/annualised spread of 1.6%/14%. 

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.

• Honghua Group
• Hopson Development
• Tata Motors ADR

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• Placements continued to flow in, at a slower pace than last week, with Malaysia and ANZ chipping in.
• While the HK IPO scene failed to produce anything noteworthy with its two listing, South Korea appears to be leading the charge, once again.

• There are two weeks to the start of the review period for the MSCI May SAIR. There are expected to be many changes to the stocks and their FIFs.
• There will be passive buying in JD.com Inc. (9618 HK) from Hang Seng trackers in June, while KT Corp (030200 KS) is a high probability MSCI inclusion in May.
• There were big inflows to the iShares MSCI Emerging Markets (EEM US) ETF and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week.

• There are 33 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal. 
• A quiet week with no new deals discussed on Smartkarma.
• Key updates took place for: Razer (1337 HK), Uniti Group (UWL AU), Toyo Construction (1890 JP), Irongate (IAP AU), Crown (CWN AU), CIMIC (CIM AU), Jin Jiang Capital (2006 HK) 

• Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s H Shareholders’ class meeting is scheduled for 26 April. The IFA considers the offer to be fair and reasonable. 
• The 10% blocking stake is 2.50% of outstanding shares (10.00% of H Shares). The two H Shareholders with blocking stakes will be supportive. There is no minimum acceptance condition.
• At last close and for a 17 May payment date, the gross and annualised spread to the total offer is 1.6% and 15.7%, respectively.

• Vipshop has underperformed, on a 12-month basis, due to a slowdown in active user growth, which has spilt over into slower revenue growth and contracting earnings.
• Material equity investments, accompanied by strategic cooperation agreements, by Tencent and JD.com in December 2017 catalysed significant user growth over the subsequent 3 years.
• The recent de-rating once again flags Vipshop as an attractive takeover target for its current strategic shareholders and broader eCommerce rivals, including nascent disruptors and live-streaming operators.

• Tabcorp Ltd (TAH AU) has registered the Demerger Booklet in relation to the proposed demerger of The Lottery Corporation.
• The demerger general meeting and Scheme Meeting will be held on the 12 May with a potential demerger date on the 1 June. 
• The independent expert estimates the lottery ops may be worth up to A$11.6bn and wagering A$2.7bn, against Tabcorp’s current market cap of A$11.6bn.

• If approved, Tabcorp Ltd (TAH AU) will spin-off the Lotteries and Keno business (The Lottery Corporation; TLC) from the Wagering & Media and Gaming Services business (new Tabcorp).
• Based on peer valuations, we see an upside of 11% from the last price. The Scheme Meeting is on 12 May and the Second Court Hearing on 20 May.
• TLC should remain in all major indices, while new Tabcorp Ltd (TAH AU) could be deleted from the S&P/ASX 50 Index and the MSCI Australia Index.

• Unsurprisingly, the independent expert (IE) considers Crown Resorts (CWN AU)‘s A$13.10 offer from Blackstone Group (BX US) to be fair and reasonable. We think that IE’s valuation approach is sound.  
• The key condition is approval from shareholders and gaming regulatory authorities. The scheme meeting is scheduled for 29 April. 
• We continue to think that offer is attractive. At the last close price and for the 12 May implementation date, the gross and annualised spread is 2.7% and 27.1%, respectively.

• Located near Hyderabad, Ahlada Engineers (AHLADA IN) manufactures and sells steel doors and windows in India. It also produces school furniture, drinking water systems and allied products across numerous industries.
• The facilities are spread across 3 manufacturing units in addition to one assembling unit and stock yard, with an area admeasuring 27,153 square yards on the outskirts of Hyderabad.
• Ahlada however suffers from some balance sheet and financial issues which are highlighted in our report.

• For the month of March, five new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$3bn.
• The average premium for the new deals announced (or first discussed) in March was ~31%.
• This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.

• V3 Brands Asia (V3 HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. It was previously listed on the SGX between 2000-2016.
• V3 Brands Asia is a lifestyle and wellness firm, it is most known for its flagship massage chairs which are sold under the OSIM brand.
• In this note, we’ll talk about the not so positive aspects of the deal.

• Has the Russia/Ukraine Conflict’s Impact On Tire Retail Distribution and Manufacturing Been Priced In?
• Have The Impact of Higher Raw Materials Costs Already Been Factored Into Margin Expectations?
• Will Gasoline Prices Negatively Impact Miles Driven and Slow Replacement Cycles?

• We reiterate our BUY rating for M with a target price of Bt61.0 based on 25xPE’22E, Asia ex-Japan consumer staple sector.
• We expect M to report net profit of Bt393m in 1Q22 (+343%YoY, -2%QoQ) driven by a positive same-store-sales-growth (SSSG) in three main brands (MK, Yayoi, and Laem Charoen Seafood) 
• We forecast earnings to bounce back to Bt2.2bn in 2022 and continue to grow at 14%CAGR(2023-24) supported by 1) solid recovery in SSSG after resuming dine-in services together with restoring 

• Maintain BUY call with lower TP of MYR1.36 (-7%)
• Earnings and dividends in-line with our expectations
• Adex surged QoQ but home shopping slumped QoQ
• Cautiously optimistic of its future

• On 23rd Dec 2021, Tencent declared a special interim dividend in the form of a distribution in specie of 457.326m Class A ordinary shares of JD.com.
• While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is happened on 25th Mar 2022.
• In this note, we talk about the updates since our last note and the actual number of shares in CCASS.

• With the BOJ being forced to step in to hold 10 year rates under 0.25% today the yen is under increasing pressure. 
• There are naturally a variety of stocks which are likely to benefit from this multi-decade breakout of the yen dollar. 
• Mazda is one of the best plays here in our view and we lay out the rather simple case below.

• JD.com Inc. (9618 HK) shares from the Tencent (700 HK) in-specie dividend settled on 25 March. That has increased the number of CCASS shares and the Hong Kong free float.
• Given the large trading volumes in JD.com Inc. (9618 HK) on 25 March and 28 March, we expect most of the forced selling from the ADR allotment is done.
• There will be selling in JD.com Inc. (9618 HK) from active investors and the overhang from the Prosus (PRX NA) holding. Buying from HSI/HSCEI trackers in June could help a bit.

• Share price sell-off is overdone as the prospect of the war worsening is less likely.
• Channel checks have shown that EV sales remain upbeat despite the war.
• The long-term prospect to participate in the growing EV industry through battery housing and body parts remain intact. 

• Shanghai Jin Jiang Capital Company Limited (2006 HK)’s privatisation offer from Jin Jiang International Holding is HK$3.10 per H share. The pre-condition was fulfilled on 28 March.  
• The key conditions for the delisting will be approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.  
• At last close and for a May end effective date (composite document despatched on 1 April), the gross and annualised spread to the offer is 4.7% and 32.1%, respectively.

• Yum China Holdings, Inc (YUMC US) board has expanded share repurchase program by $1bn to total $2.4bn amid the tougher operating environment due to Omicron outbreak.
• Omicron outbreak spread widely in March across China, Yum China saw its March first 2-week SSSG is down 20% year-over-year and 1Q22 operating profit will likely be down 40-50% year-over-year. 
• We continue to think Yum China is the best-run restaurant chain in China. It has resilient business model to navigate through pandemic. Risk/reward is more compelling to own Yum China.

• With over 80% of the averaging in the review period complete, we see 15 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
• 11 of the 15 changes are high/medium probability and it will take large moves over the rest of the review period for these stocks to drop out of the list.
• Four potential inclusions have more than 3 days of ADV to buy from passives, while nine potential deletions have more than 3 days of ADV to sell from passives.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only). 
• This week, the highest gross spreads are Yashili International Holdings (1230 HK), Razer Inc (1337 HK), 51 Job Inc Adr (JOBS US), Sezzle Inc (SZL AU)
• Lowest gross spreads CIMIC Group Ltd (CIM AU), Z Energy Ltd (ZEL NZ), China Logistics Property Holdings (1589 HK), Virtus Health (VRT AU), Mapletree North Asia Commercial Trust (MAGIC SP)     

• There is a strong recovery in Shangri-La Asia (69 HK) in 2H21 as its losses narrowed 36.4% HoH and by 57.5% YoY – hotels and investment properties are primary drivers.
• 1Q22 momentum is solid with occupancy outside of Hong Kong and mainland China saw good YoY rebound. In FY21, room rates in France, Australia and UK have surpassed 2018 levels.
• Refinancing for FY22 has almost completed, implying minimal liquidity risks. Trading at 76% discount to adjusted NAV of HK$25.44, the stock is way too cheap.

• JD.com (9618) HK denotes formidable resistance  at 260 that will induce a downside re test toward the low zone. 
• High sell volumes on the decline followed by weak buy volumes on the recent rise makes for a vulnerable rise with risk of a hard giveback.
• Low re test/new low sets up a buy for a rally to 310/350 in Q3/Q4. Bullish macro A-B-C pullback sequence stands out.

• The Perth commission report found Crown Resorts (CWN AU) not suitable to operate Crown Perth but did not call for the gaming licence to be revoked.
• The key conditions precedent for the Blackstone deal are shareholder, gaming regulatory and FIRB approval. The scheme meeting is targeted to be held before the end of June 2022.
• At the last close price of A$12.58, the gross and annualised spread for a 30 June implementation is 4.1% and 16.94%, respectively. 

• The coming week has the implementation of the NIFTY indices at the close on 30 March and the Nikkei 225 (NKY INDEX) implementation at the close on 1 April.
• 31 March is the review cut-off date for the June rebalance of the Hang Seng indices. We expect one change to the HSCEI/HSTECH and few adds to the HSI.
• There were large inflows to the Ishares Core Msci Emerging (IEMG US), iShares MSCI Emerging Markets (EEM US) and KraneShares CSI China Internet ETF (KWEB US) ETFs during the week.

• There are 40 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal. 
• One new deal this week: INFRONEER Holdings (5076 JP) taking over the rest of a boring, old construction company Toyo Construction (1890 JP).
• Key updates took place for: Link (LNK AU), Uniti  (UWL AU), Mapletree Commercial (MCT SP) /Mapletree North (MAGIC SP), Singapore Press (SPH SP),  DTAC TB / TRUE TB

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• Placements were back with a bang this week with multiple blocks across the region. All eyes will be on JD.com Inc. (9618 HK) in the coming week.
• Farm Fresh Berhad (FF MY)‘s IPO got off to a good start, while Hong Kong IPOs continue to be lackluster.