Daily Brief China: China Tourism Group Duty Free Corp Ltd, Swire Pacific Ltd-Cl B, Agile Property Holdings, Central China Real Estate, Honeywell International, Yanlord Land, Mastercard, Clorox Company and more

• China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
• As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
• In this note, we talk about the deal pricing and run the deal through our ECM framework.

• Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. 
• A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. 
• The conclusions are surprising, and lead to one clear trading idea. 

• China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
• In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
• Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Pakuwon Jati
2. Softbank Group
3. Lenovo
4. China SCE
5. Kwg Property Holding

and more…

• Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
• Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
• It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.

Yanlord Land’s H1/22 results were reasonably strong in our view, considering the depressed industry environment. The company’s sales and cash collections remained robust, supporting its liquidity profile. In addition, a high proportion of its cash balance remains freely available. We note that Yanlord’s operating performance held up relatively well (vs. that of developer peers), thanks to its high asset quality. Still, we broadly agree with management’s dim assessment of the Chinese property industry’s medium-term prospects. 

• Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
• Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
• In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.

• Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
• As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
• One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.