China: Huitongda, Alibaba Group, SenseTime Group, Ping An Healthcare and Technology Company Limited, Logan Property Holdings and more

• We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
• There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
• Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.

• After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
• We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
• We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.

• SenseTime Group (STG) raised US$741m in its Hong Kong IPO in Dec 21. The IPO barely made it through and was priced at the bottom of its IPO price range.
• STG is a leading AI software company. STG was the largest AI software company in Asia in terms of 2020 revenue, as per Frost & Sullivan (F&S).
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Just as we analyzed before, things get worse for PAGD. The loss expanded and gross margin declined. The gap between PAGD and its peers (JD Health, Alibaba Health) is widening. 
• PAGD’s Achilles’ heel is its business model/profit model is untenable. The new HMO services system would not help turn things around because China’s national condition is different from the US.
• Being on the wrong track, PAGD’s financial performance is expected to further weaken. We are conservative about PAGD’s outlook. Any brief upwards movement is just dead cat bounce.

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.

• Jingrui Holdings