China: Tongwei Co Ltd A, Sunny Optical, Cloud Village, Bloomage Biotechnology Corporation-A, Evergrande and more

• We expect PetroChina (601857 CH) and Gree Electric Appliances (000651) to be deleted following a Ground Rule change. Chongqing Zhifei Biological Products (300122 CH) should be deleted on market cap.
• Potential inclusions are Tongwei Co Ltd A (600438 CH), China Citic Bank Corp (601998 CH) and Anhui Conch Cement (600585 CH). 
• One-Way turnover at the FTSE China A50 Index (XIN9I INDEX) June rebalance is estimated at 2.91% and will result in a one-way trade of CNY 1,420m.

• We expect China Railway Group Ltd H (390 HK) and Yanzhou Coal Mining (1171 HK) to replace Smoore International (6969 HK) and Sunny Optical (2382 HK) in the FTSE China50 Index.
• There are capping changes that have a reasonable large impact on a couple of stocks. One-way turnover is estimated at 3.97% and will result in a one-way trade of HK$1,912m.
• FTSE has increased the investability weight for Li Auto (2015 HK) / Li Auto Inc. (LI US) and this leads to the stock failing the median liquidity test.

• Cloud Village Inc. (CVI), also known as NetEase Music, raised around US$420m in its Hong Kong IPO in Dec 21. The IPO was almost entirely taken up by cornerstones.
• The company had also earlier obtained investments from Baidu and Alibaba, along with other mainly PE investors. These investors will be released from their lock-up on 1st Jun 2022.
• In this note, we will talk about the lock-up dynamics and updates over the past few months.

• Botanee has outstanding performance at the current stage, but WINONA alone is not enough to establish a high moat. Its weak R&D/innovation in raw materials/products would cast doubts on outlook.
• Bloomage is more R&D oriented and characterized by integration of industrial chain. Its advanced synthetic biology will bring more possibilities for future development.The collagen would be a new growth point.
• Although with lower net profit margin, Bloomage is expected to have better outlook than Botanee. So, we think Bloomage could have higher valuation than Botanee in the future.  

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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