ChinaDaily Briefs

China: Meituan, FTSE China A50 Index, Lenovo, Remegen Co Ltd, Asia High Yield Bond Index, Kwg Property Holding and more

In today’s briefing:

  • Meituan (3690): Positive Signal from Tax Bureau After Negative News from Market Bureau
  • China’s Rebound
  • Meituan Fined RMB3.44bn; Expect Short-Term Gains with Positive Shift in Sentiment
  • Lenovo Scraps $1.8bn IPO on Shanghai’s Star Market
  • Remegen Co Ltd (9995.HK) – Insights About the First Round Enquiry by Shanghai Stock Exchange
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • Morning Views Asia: China SCE, JSW Steel Ltd, KWG Living Group, Lenovo, Lippo Karawaci

Meituan (3690): Positive Signal from Tax Bureau After Negative News from Market Bureau

By Ming Lu

  • The fine of RMB3.4 billion was based on an investigation long before.
  • Value Added Tax data shows that Meituan recovered strongly in the holiday of the National Day.
  • We are confident in Meituan’s main business lines.
  • However, we believe the company should shut its community group purchase.

China’s Rebound

By Shyam Devani

There has been a tendency to over-exaggerate bad news from China. This has been going on for a long time (years). Over the past three months there has been plenty of concerning news from crackdowns on Tech companies to changes in the education sector and developments in real estate.

Despite all this bad news, the FTSE A50 Index has not moved lower since the end of July. Instead, the A50 Index is now beginning to bounce back, taking out decent levels and posting an important weekly close on Friday. Even the more troubled Hang Seng posted a bullish reversal week. If anything, this price action is more impressive in the face of a generally strong Renminbi.

Once again it looks as though sentiment has been too stretched in China. Is the bad news already in the price? These charts suggest the answer to that, at least in the near term, is yes.


Meituan Fined RMB3.44bn; Expect Short-Term Gains with Positive Shift in Sentiment

By Shifara Samsudeen, ACMA, CGMA

The Chinese food delivery giant Meituan (3690 HK) was imposed an antitrust fine of US$534m (RMB3.44bn) on Friday (8th October) for abusing its dominant market position and also ordered to make changes to its business operations. According to the regulators, Meituan was found guilty of pushing merchants to sign exclusive agreements (known as Picking One from Two) with the company and required them to only cooperate with the company and not with any of its rivals taking advantage of its market dominant position. In early August, several news media outlets reported that the antitrust regulators were planning to impose a fine of about US$1bn on the company, and the fine of RMB3.44bn accounts for 3.0% of Meituan’s FY03/2021 revenues of RMB115bn.

This all began when China’s State Administration for Market Regulation (SAMR) launched a probe on Alibaba over its suspected monopolistic practices in December last year. The investigation on Alibaba was concluded on 10th April and the company was fined RMB18.2bn (3.6% of its consolidated FY2020 revenues) for breaching anti-monopoly rules where investigations revealed that Alibaba was abusing its market dominance to prevent other merchants from using other platforms since 2015.

In our previous insight, we highlighted that Meituan was unlikely to be fined anything more than Alibaba’s antitrust fine and mentioned that Meituan would be imposed a fine of around 3-3.5% of its FY2020 revenues (around RMB3.4-4.0bn).


Lenovo Scraps $1.8bn IPO on Shanghai’s Star Market

By BondEvalue

The world’s largest PC maker Lenovo Group has withdrawn its application to list on Shanghai’s Star Market just eight days after the company was accepted by the exchange. This is the second largest IPO withdrawal after Ant Group scrapped its $39.7bn dual listing in November last year. Lenovo, which is already listed on the New York and Hong Kong exchanges, had planned to raise up to $1.8bn via a sale of Chinese depository receipts (CDRs), making it the first Red Chip (Term of the day) to do so. The IPO withdrawal is a setback for the Star Market, which positions itself as the “centre stage for China’s technology champions” as per SCMP.

Remegen Co Ltd (9995.HK) – Insights About the First Round Enquiry by Shanghai Stock Exchange

By Xinyao (Criss) Wang

In August, 2021, after Remegen Co Ltd (9995 HK) announced that the Company and Seagen Inc. had entered into an exclusive worldwide licensing agreement to develop and commercialize disitamab vedotin (RC48), the share price of RemeGen rose to HK$145.50/share, its second-highest ever. Meanwhile, in June, RemeGen submitted a prospectus to the SSE STAR Market, which was its second IPO application after its listing on the HKEX in November 2020. In September, RemeGen completed its reply to the first round enquiry by Shanghai Stock Exchange. Although RemeGen always seems to inadvertently bring “stimulation” to the market, from this enquiry and the business analysis, we could still find some concerns that worth investors’ attention. 


Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equities ended lower on Friday with the S&P and Nasdaq down 0.2% and and 0.5%. While Energy and Financials were up 3.1% and 0.5%, all other sectors were in the red with Real Estate falling 1.1%. US 10Y Treasury yields were up 2bp to 1.61%. European stocks were mixed with the DAX and CAC falling 0.3% and 0.6% while the FTSE was up 0.3%. Brazil’s Bovespa ended 2% higher. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI was down 0.2%. Asian markets have opened slightly higher with Shanghai up 0.4%, HSI up 2.2%, STI up 0.1% and the Nikkei up 1.3%. US IG CDS spreads and HY CDX spreads widened 0.6bp and 4.2bp respectively. EU Main CDS spreads were 1bp wider and Crossover CDS spreads widened 5.5bp. Asia ex-Japan CDS spreads widened 2bp.

Morning Views Asia: China SCE, JSW Steel Ltd, KWG Living Group, Lenovo, Lippo Karawaci

By Charles Macgregor

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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