In today’s briefing:
- China Evergrande Group – More Casualties
- CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
- AInnovation Technology IPO Initiation: Code Amber
- AKM Industrial’s Privatisation Bid
- Morning Views Asia: Ronshine China Holdings
China Evergrande Group – More Casualties
- Evergrande Is Breaking Down More Rapidly Than Banks Have Kept Up;
- Minsheng Has Significant Exposure to Evergrande and Other Problem Developers; and
- Minsheng Is Not Insolvent, But It Is Getting There Very Quickly.
CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
- Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
- There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
- The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.
AInnovation Technology IPO Initiation: Code Amber
- AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It is set to launch an HKEx IPO to raise up to US$157 million.
- The fundamentals are mixed as diverging growth profiles of key segments, low market share and cash burn are accompanied by a narrowing loss margin.
- Overall, we believe the negatives outweigh the positives and we would give the IPO a pass.
AKM Industrial’s Privatisation Bid
- Akm Industrial (1639 HK) announced a privatisation offer from Alpha Luck and AKM Meadville at HK$1.82 per scheme share, a 14.47% premium to last full trading day price of HK$1.59.
- The key pre-condition is several regulatory approvals which be forthcoming as Alpha Luck is indirectly 100% owned by the SASAC.
- The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). We think the offer price is reasonable and the scheme will pass.
Morning Views Asia: Ronshine China Holdings
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.
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