China: LG Energy Solution, China Huarong Asset Management, Razer Inc, Tencent, Shenzhen International, Ping An Healthcare and Technology Company Limited, Asia High Yield Bond Index, Guangzhou R&F Properties and more

• We take a look at the Asia Pacific IPO pipeline for 2022. This list has been compiled on a best effort basis from tracking company filings and other sources.
• For readers who aren’t familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex A-shares), including China ADRs. 
• The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

• China Huarong Asset Management (2799 HK) has resumed trading after a 9 month suspension. Core Tier-1 capital was replenished and the plan is for the business to be downsized.
• The stock was deleted from the MSCI and FTSE indices in June 2021 and passive trackers that were long the stock will be selling today to flatten their exposure.
• The stock should be included in the MSCI Standard, FTSE All-World and HSCI later this year. Once included in the HSCI, the stock will become a part of Stock Connect.

• The gross spread to the HK$2.82 per share offer has retouched the high of 23%. The headcount test is a key challenge as some minorities voice displeasure over the price.  
• Based on the unaffected price of HK$1.81 and at the last close of HK$2.30, the deal probability retouched lows of 48.5%. A 65% deal probability would imply HK$2.47 per share. 
• In the event of a failed deal, Razer Inc (1337 HK)’s strong fundamentals provide solid valuation support. Our SoTP valuation is HK$2.96 per share, 5% higher than the privatisation price.

• Sea Sale: Tencent sold 14.5 mn shares in Sea, raising approximately USD 3 bn in cash – reducing Tencent’s position in Sea from 21.3% to 18.7%;   
• Not A Surprise: Given mainland China’s crackdown on the country’s largest internet companies, Tencent’s disposal of Sea shares is not a surprise; and  
• Other Stake Sales To Follow: Further divestitures of major stakes are likely if Tencent wishes to remain on the right side of mainland China’s Communist Party.    

• By deconsolidating Shenzhen Expressway (548 HK) (SZX) from Shenzhen International (152 HK) (SZI), SZI’s net book value reached HK$16.4bn. Its current market cap of HK$18.9bn implies SZX is almost free. 
• SZI’s high gearing is primarily due to SZX. Excluding SZX, SZI’s gearing is just 32.3%. As Shenzhen’s flagship SOE, there is consistent monitoring and huge support from the local government.   
• SZI’s 0.47x P/B is more than 2SD below historical average; but it has proven capability to realise value of underlying assets. Excluding SZX, SZI is on even cheaper 0.32x P/B. 

• Ping An Healthcare and Technology Company (SEHK:1833) operates an Internet healthcare platform in China (Ping An Good Doctor), which delivers on-demand healthcare. Its mobile platform was launched in April 2015.     
• It is one of the leading online healthcare providers in China and has reported strong growth in revenues and gross profit since inception.
• The company has been positively impacted by the spread of COVID-19 with more people switching to online healthcare rather than visiting hospitals.

• 2021 marked our sixth year covering Equity Capital Markets (ECM) in Asia Pacific. 
• Most markets were in top gear on the ECM front and we ended the year covering the highest number of IPOs and the second highest number of placements since inception.
• For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

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.

• Guangzhou R&F Properties
• Yuzhou Group