ChinaDaily Briefs

China: WH Group, Ausnutria Dairy Corp, Biocytogen Pharmaceuticals (Beijing), Insight Lifetech, Greenland Hong Kong Holdings and more

In today’s briefing:

  • WH Group (288 HK) Now Cheapest Vs Peers in Yonks
  • Will Yili Gulp Down Ausnutria (1717 HK)?
  • Biocytogen (百奥赛图) Pre-IPO: From Animal CRO to Biotech
  • Pre-IPO Insight Lifetech – Insights on Industry, Products and Concerns
  • Morning Views Asia: Kaisa Group Holdings

WH Group (288 HK) Now Cheapest Vs Peers in Yonks

By Travis Lundy

Post WH Group Tender Offer buyback, there is a fair bit of good news. 

  • A month ago, WH Group (288 HK) was near its cheapest vs peers in years on a forward earnings basis.
  • Lean hog prices are finally making a rebound in China after a multi-month cull and NDRC intervention
  • Hog prices in the US remain strong-ish. 
  • Forward earnings estimates are up. 

But since the strength in WH Group shares immediately post-tender, when people sold the overhang, the stock has fallen sharply. HK and China-listed peers are up an average of 15% in the past month while global-listed peers are down 4%. WH Group resembles a mix of those two baskets but is down 12% in the same period vs +5% for an equal-weighted basket.

The shares are now scraping on 4-year lows despite recent 15% accretion, and on an accretion-adjusted basis have underperformed by 30% in bit over a month. 

That is probably overdone.

Will Yili Gulp Down Ausnutria (1717 HK)?

By David Blennerhassett

A little over a week ago, Bloomberg reported Inner Mongolia Yili Industrial Group (A) (600887 CH), China’s biggest dairy producer, had been running a ruler over infant-formula firm Ausnutria Dairy Corp (1717 HK).

Before the commencement of trading yesterday, Ausnutria was suspended pursuant to the Hong Kong Code on Takeovers and Mergers. Shares had gained 7.8% on Monday (the 11th) on the largest volume since November of last year. 

SOE CITIC Group is the largest shareholder with 22.05%, having being introduced as a strategic investor back in October 2018.

This insight provides some brief background on Ausnutria, plus speculates on a fair price should a firm Offer unfold. 

Biocytogen (百奥赛图) Pre-IPO: From Animal CRO to Biotech

By Ke Yan, CFA, FRM

Biocytogen, a China-based pre-clinical research and biopharmaceutical company, plans to raise up to USD 300m via a Hong Kong listing.

We looked at the company’s main business lines, including the gene-editing, pre-clinical pharmacology and efficacy evaluation, as well as the animal model selling. We note that the company has been expanding its business since its establishment in 2009, lately into the biopharmaceutical segment. Having said that, it remains a small player in respective fields of business. In addition to the pre-clinical business, we also look at its two core assets YH003 and YH001 briefly.

Its pre-IPO investors are a mixed bag of domestic and international investors. Its management’s experience is mainly related to the pre-clinical business and less for the biotech business.

Pre-IPO Insight Lifetech – Insights on Industry, Products and Concerns

By Xinyao (Criss) Wang

On August 18, 2021, Insight Lifetech (ILT HK) submitted its prospectus to the Hong Kong Stock Exchange and officially started its IPO process. Lifetech is a medtech company dedicated to developing precision solutions with the potential to transform the diagnosis and treatment of cardiovascular diseases. Founded more than five years ago, Lifetech had already gone through six rounds of financing (at least one round every year). This article mainly analyzed the industry characteristics, the business and the concerns of the Company.

Morning Views Asia: Kaisa Group Holdings

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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