ChinaDaily Briefs

China: Yum China Holdings, Inc, Ant Financial, Yum China Holdings Inc, China Feihe, Binjiang Service Group, MSCI Emerging Markets Index, Sino Ocean Land and more

By September 10, 2020 No Comments

In today’s briefing:

  • Yum China HK IPO Trading – Index Flows to the Rescue
  • Smartkarma Flash Webinar | Ant Group IPO: The World’s Greatest?
  • Ant Group IPO: Key Takeaways from the Response to SSE’s Queries
  • Yum China Secondary Listing: Trading Debut
  • YST (1431) VS China Feihe (6186): Time to Close
  • Binjiang Service Group Update: Solid H1 2020, Accumulate on Sectoral Weakness
  • Remain Overweight EM Relative To EAFE
  • Morning Views Asia: Sino Ocean Land

Yum China HK IPO Trading – Index Flows to the Rescue

By Sumeet Singh

In this insight, I’ll talk about the deal dynamics and updates over the past week.

Links to my previous notes on China ADRs secondary listing:

Smartkarma Flash Webinar | Ant Group IPO: The World’s Greatest?

By Smartkarma Research

In this flash Webinar, we are joined by Insight Providers Arun George and Victor Galliano to discuss the upcoming IPO of Ant Financial (1051260D CH). The Chinese fintech giant is slated for a dual listing in Shanghai and Hong Kong to raise US$30 billion, making it potentially the largest IPO ever.

The flash webinar will be hosted on Thursday, 10/September/2020, 5.00 pm SGT/HKT.

Arun George has over 13 years’ experience covering the Technology sector. During this time, he has worked with technology startups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group, and Clear Capital. 

Victor Galliano is an experienced equity banks analyst, having covered Latin America banks and non-bank financials for over 12 years, as well as more recently covering Italian banks and Fintech. He has worked in sell-side equity research for 30 years in a career spanning Barclays, HSBC, BBVA LatInvest, Barings, and NatWest.

Ant Group IPO: Key Takeaways from the Response to SSE’s Queries

By Arun George

On 30 August, the Shanghai Stock Exchange (SSE) posed 21 questions to Ant Financial (1051260D CH) in relation to its IPO filing. Ant responded to the questions in a Chinese regulatory filing on 3 September. As a reminder, Ant has submitted its IPO applications for simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. Ant is floating no less than 10% of its total share capital to raise around $30 billion, at a valuation of $200-300 billion, according to various press reports.

In this note, we highlight the key questions posed by the SSE and Ant’s response. Notably, several of the questions result in new disclosures by Ant. We examine the new disclosures and provide our take on the responses.

Yum China Secondary Listing: Trading Debut

By Arun George

Yum China Holdings Inc (9987 HK) will commence trading in Hong Kong on Thursday, 10 September. Yum China Holdings, Inc (YUMC US) priced its Hong Kong secondary listing at HK$412 per share. Yum China raised net proceeds of HK$17,002 million ($2.2 billion).

Yum China priced its H-shares at a 4.9% discount to its ADS. In comparison, Alibaba, NetEase and priced their H-shares at a 2.9%, 2.0% and 3.9% discount to its ADSs, respectively. At the last close price of $52.32 per ADS, the H-share offer price of HK$412 implies a 1.6% premium. We believe that’s H-share will likely trade to a slight premium to the ADS on average, broadly similar to the last three secondary listings.

YST (1431) VS China Feihe (6186): Time to Close

By Henry Soediarko

China Feihe (6186 HK) may have outperformed Health And Happiness (H&H) (1112 HK) but the pair trade of long Yuanshengtai Dairy Farm (1431 HK) and short China Feihe (6186 HK) have made 42% since the initiation in China Feihe (6186): Flying No More? .

The recent news that China Feihe is buying out YST has effectively collapsed the previously available valuation gap therefore it is time to also close the trade by selling YST and buy-to-cover China Feihe. 

Binjiang Service Group Update: Solid H1 2020, Accumulate on Sectoral Weakness

By Sameer Taneja

Binjiang Service Group (3316 HK) posted a solid H1 2020 with a 31% YoY revenue growth and a  112% YoY net profit growth. In addition to the 31% YoY revenue growth, the company increased its operating margins by 860 bps (including a 400 bps gross profit margin expansion and reduction in SG&A by 460 bps). The share price performance of the stock and the sector though has been lackluster owing to regulatory overhang as elaborated in insight provider Li Tang‘s piece China Tightens Domestic Bond Issuance Threshold for Property Developers. Despite this, we think that over the long term, execution will lead to the share price increasing. The stock trades at a PE of 17.4x FY20 and 14.4x FY21 and has 28% of its market capitalization in cash. The company has also committed to paying at least 50% of its earnings (70% in 2019). If the company adheres to a 70% payout ratio on the basis that there are no significant acquisitions, it implies a dividend yield of close to 4%. We think that any policy-related weakness would be an excellent time to accumulate the stock.

Remain Overweight EM Relative To EAFE

By Joe Jasper

The MSCI EM index (local currency) remains in an uptrend and is testing all-time highs set in January 2018 near 65,800; as long as the index is above 60,000 we are constructive from a price perspective.  China (CSI 300, MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while South Korea (KOSPI) and India (SENSEX) display improving price and RS trends — add exposure.

Morning Views Asia: Sino Ocean Land

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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