China: Jinko Solar, Alibaba Group, Suchuang Gas Corp, Pag, ABM Investama, Betters Medical Investment Holdings, Gajah Tunggal and more

• There could be 3 or 5 changes to the STAR50 INDEX in June depending on the minimum listing history (6 months or 12 months) used by the index committee.
• Jinko Solar (688223 CH) is a high probability inclusion while Shanghai Microport Endovascular MedTech (688016 CH), ArcSoft Corp Ltd (688088 CH) and DBAPP Security Ltd (688023) are high probability deletions.
• Stocks performance over the last couple of months indicates the market is assigning a higher probability to the index committee using a 12 month minimum listing history.

• Alibaba Group (9988 HK)’s fourth-quarter results will be out soon and we predict another disappointing quarter with mid-single-digit revenue growth.
• The company’s FY23 revenue guidance could be significantly weaker than the current consensus estimate as rumoured layoffs and budget cuts are likely to affect Alibaba Group (BABA US)’s growth.
• With the share price near the upper end of the trend channel leading up to 4QFY22 earnings, we think it’s a good time to add to existing short positions.

• The scheme document is out with the Court meeting scheduled for 10 June. The IFA considers the offer to be fair and reasonable. Suchuang Gas Corp (1430 HK) remains suspended.
• Key conditions are the headcount test and approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). 
• Excluding the irrecovables, no shareholder holds a blocking stake. As the timeframe to fulfil the resumption guidance remains highly uncertain, the offer is a welcome exit opportunity. 

• PAG aims to raise around US$2bn via its Hong Kong IPO.
• PAG is an alternative investment firm focused on Asia-Pacific (APAC), it had approximately US$50bn in assets under management (AUM), as of Dec 21.
• In this note, we will talk about the not so positive aspects of the deal.

This month, we provide an update on the developments in the Oil & Gas sector following Russia’s invasion of Ukraine.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• The MWA market that Betters belongs to has showed rapid growth and large potential. Obviously, Betters would benefit from it based on its existing products and leading market position.
• However, the medical device industry in China is subject to strict policy supervision. It cannot rule out the possibility that the Company’s products would be included in the centralized procurement.
• In terms of valuation, Micro-Tech Nanjing Co Ltd (688029 CH) could be a comparable company,  but Betters’ valuation should be lower than it.

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.

• Gajah Tunggal
• Times China