In today’s briefing:
- FTSE China A50 Index Rebalance Preview: PetroChina, Gree Out Due to Ground Rule Change
- Binjiang 3316 HK: Most Resilient Private PMC with Good Upside Potential
- Keep Pre-IPO – Market Leader in a Growing Market, However, Has Been on a Spending Spree
- Dongfang Electric (1072 HK): From Strength to Strength
- Yunkang Group IPO – Has Improved Its Operating Metrics, but Still Reliant on COVID Boost
- Morning Views Asia: CIFI Holdings, Kawasan Industri Jababeka, KWG Living Group, Sunac China Holdings
FTSE China A50 Index Rebalance Preview: PetroChina, Gree Out Due to Ground Rule Change
- A Ground Rule change to the index universe will result in the deletion of PetroChina (601857 CH) and Gree Electric Appliances (000651 CH) from the FTSE China A50 Index (XIN9I).
- Potential inclusions at the June rebalance are Poly Real Estate Group Co., Ltd (600048 CH) and Anhui Conch Cement (600585 CH). China Citic Bank Corp (601998 CH) is close.
- Assuming three changes are implemented, one-way turnover at the rebalance is estimated at 3.05% and will result in a one-way trade of CNY 1,484m.
Binjiang 3316 HK: Most Resilient Private PMC with Good Upside Potential
- Binjiang Service Group (3316 HK) is turning out to be one of the most resilient private PMC in terms of margins and profitability with the conservative approach of the management.
- Trading at 12x/9.4x FY22e/FY23e with 25% of the market capitalization in cash, potential investors have the best of both worlds in value and growth.
- The company will continue to pay 60% of its earnings as dividends, resulting in a 5.2%/7.5% dividend yield for FY22e/FY23e. We believe the stock has the potential to re-rate.
Keep Pre-IPO – Market Leader in a Growing Market, However, Has Been on a Spending Spree
- Keep Inc (KEEP HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
- Keep is an online fitness platform, offering online fitness content, smart fitness devices and fitness products.
- The firm aims to develop a closed-loop system where its offerings are complementary, thus servicing an individual’s entire fitness life cycle.
Dongfang Electric (1072 HK): From Strength to Strength
- The 1Q22 result of Dongfang Electric (1072 HK) kick-started FY22 with an encouraging new record high quarterly profit and a good recovery in YoY new order momentum.
- We are excited to see DEC managed to control its selling, administrative and R&D costs with a slight 2.7% YoY growth, compared with a solid 29.8% revenue increase.
- Recurring pre-tax profit growth is estimated to be over 30% YoY, and its order backlog at around Rmb85.4bn, 1.8x its FY21 revenue. We consider its 7.7x FY22F PER very undemanding.
Yunkang Group IPO – Has Improved Its Operating Metrics, but Still Reliant on COVID Boost
- Yunkang Group (YK HK) is looking to raise US$139m in its Hong Kong IPO.
- Yunkang Group is a medical operation service provider in China and as per F&S, had a market share of 3.7% in China’s medical operation service market as per 2020 revenue.
- Yunkang saw its full-year FY21 performance pulled up in the later half of the year. Number of tests administered had also surged 3.45x YoY in FY21.
Morning Views Asia: CIFI Holdings, Kawasan Industri Jababeka, KWG Living Group, Sunac 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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