Daily Brief China: HKBN Ltd, Yuexiu Property, Haier Smart Home Co Ltd, Microport Cardioflow Medtech and more

In today’s briefing:

Merger Arb Mondays (22 May) – HKBN, Newcrest, InvoCare, United Malt, Golden Energy, Penguin, Shinsei
Weekly Deals Digest (21 May) – Yuexiu, Horizon Construction, Newcrest, InvoCare, Golden Energy
Haier Smart Home (6690 HK): Value Emerging
CardioFlow (2160.HK) Vs Venus MedTech (2500.HK) Vs Peijia Medical (9996.HK) – Dark Horse Is Emerging

Merger Arb Mondays (22 May) – HKBN, Newcrest, InvoCare, United Malt, Golden Energy, Penguin, Shinsei

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), Estia Health (EHE AU), HKBN Ltd (1310 HK), United Malt Group Ltd (UMG AU), Hailan Holdings (2278 HK), Aag Energy Holdings (2686 HK).
Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), SBI Shinsei Bank (8303 JP), Allkem Ltd (AKE AU), Penguin International (PBS SP).

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 – Tata Technologies (TATATECH IN), Horizon Construction Development (1887128D HK), Growatt Technology (1833969D CH) IPOs; Yuexiu Property (123 HK) rights trading.
Event-Driven developments – Invocare Ltd (IVC AU), Newcrest Mining (NCM AU), United Malt Group Ltd (UMG AU), Golden Energy & Resources (GER SP), Penguin International (PBS SP).

The weak share price performance of Haier Smart Home Co Ltd (6690 HK) is unwarranted given the healthy earnings trend, solid net cash position and undemanding valuations.
The 15.9% 1Q23 recurring earnings growth showed its low correlation with the property market while demonstrated the achievement in cost control and rising premium product contribution.
It is set to benefit from government’s push for higher penetration of household appliances in rural areas. Meanwhile, recent Rmb depreciation may bring exchange gain for 1H23.

TAVR was once envisioned with infinite optimism as a “hundred billion yuan market”, attracting massive amounts of capital/companies to enter. However, the commercialization status of TAVR companies is much bleak.
High cost of TAVR surgery without medical insurance reimbursement and limited number of qualified hospitals to carry out such complicated surgery are the major reasons for the unsatisfactory sales growth.
Venus Medtech’s market share would continue to be challenged. MicroPort CardioFlow’s low gross margin and slow product iteration are the problems. Peijia could be “dark horse” if positive momentum continues.

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