Daily Brief China: Binjiang Service Group, Pony AI, Anxin Trust Co Ltd A, Zuoli Kechuang Micro Finance and more

• Binjiang Service is a high-growth property management firm with a strong brand in the premium segment of the Yangtze River Delta, benefiting from the stable pipeline of its reputable parent developer, Binjiang Real Estate.
• The company is strategically shifting its focus towards high-margin ‘5S’ value-added services (VAS), particularly in soft decoration and community living, to offset declining revenues and margins in its non-owner VAS segment.
• While demonstrating robust top-line growth and a generous dividend policy, the company faces significant risks from the broader downturn in China’s property market, intense industry competition, and rising operational costs.

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• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Pony AI (PONY US), Seres Group (9927 HK) and WeRide (WRD US) H Share listings.
• Event-Driven developments: ANE Cayman Inc (9956 HK), Brainpad Inc (3655 JP), Sumitomo Densetsu (1949 JP), Sumitomo Riko Company (5191 JP), Mayne Pharma (MYX AU), AUB Group Limited (AUB AU).

• Anxin Trust is in a precarious recovery phase following a state-backed bailout in 2021, which was necessitated by a severe debt crisis stemming from mismanagement and misappropriation of funds.
• The company has returned to profitability in the last two years after significant losses, but its financial performance remains volatile, and it faces extremely high valuation multiples, suggesting the market has priced in a full, but uncertain, recovery.
• The outlook is heavily dependent on the successful execution of its new strategy under a revamped, state-influenced management team and navigating China’s increasingly stringent regulatory environment for the trust industry.

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• Zuoli Kechuang Micro Finance is a licensed microfinance company based in Zhejiang Province, China, facing significant headwinds as evidenced by a consistent decline in revenue and net income over the past several years.
• The company’s stock trades at a deeply discounted valuation, with a Price-to-Book ratio significantly below 1.0x, which may attract value-oriented investors. This is supported by a high Smartscore for Value (5/5).
• Despite a historically attractive dividend, the payout has been decreasing steadily, reflecting the underlying pressure on earnings and cash flow. The 3-year CAGR for dividends is sharply negative at -38.10%.

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