Daily Brief China: Lifestyle International Holdings, Tencent, Lygend Resources & Technology, JD Health, JD.com Inc., Ant Financial Services Group, Ascentage Pharma Group Corp and more

• Independent shareholders of Lifestyle International Holdings (1212 HK) comfortably voted through the Scheme resolution.
• 94.93% of stakeholders present (and via proxy) voted FOR, with 5.07% voting AGAINST. 
• The last day of trading is the 6 December with payment expected on or before the 30 December. 

• The authorization contracts between Activision Blizzard and NetEase will terminate in January 2023.
• Tencent plans to distribute 91% of its Meituan share as dividend.
• JD Logistics revenue increased by 39% YoY and Net loss decreased to one tenth.

• Lygend Resources & Technology (LR HK) is looking to raise up to US$595m in its Hong Kong IPO.
• Lygend Resources & Technology (Lygend) is a nickel trading and production firm with a portfolio covering multiple areas across the nickel industry value chain.
• In this note, we will revisit our earnings assumptions and share our thoughts on valuation.

• At the end of the review period for the December rebalance, we see JD Health (6618 HK) replacing XPeng (9868 HK) in the FTSE China 50 Index.
• There is a very slim possibility of Longfor Properties (960) being deleted; it could be replaced with either Yum China Holdings Inc (9987) or PICC Property & Casualty H (2328).
• Short interest has stayed rangebound on JD Health (6618 HK) this year, while shorts have gone parabolic on XPeng (9868 HK) over the last few months.

• Lifestyle International Holdings (1212 HK)’s scheme resolution was approved at today’s court meeting – 94.93% of independent share votes cast FOR (2.31% of all independent shareholders AGAINST).
• This is in line with our expectations – in Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote that despite the wide spread, the offer would succeed.
• At the last close and for the 30 December payment date, the gross and annualised spread to the offer is 2.0% and 20.6%, respectively.

• The revenue growth rate bounced back to 11% YoY in 3Q22.
• The operating margin improved to a historical high at 3.1%.
• We believe the stock price has an upside of 27% for year end 2023.

• Earlier this year, an RMB 22.0bn fundraising was likely blocked by Beijing with the state-backed asset manager, China Cinda pulling out of the deal at the last moment.
• Several media outlets reported last week that Ant Group is pushing ahead yet again with an RMB 10.5bn fundraising effort for its Consumer Finance business.
• This fundraising could yet again face obstacles as Beijing might want Ant Financial Services Group (6688 HK) to surrender a controlling stake in the Consumer Finance business to state-backed firms.

• Lygend Resources & Technology (2245 HK), a nickel play, has launched its IPO to raise up to US$595 million. 
• We previously discussed the IPO in Lygend Resources & Technology IPO: Riding the Wave. 
• In this note, we present our forecasts and look at valuation. Lygend is attractively valued at the IPO price range. We would participate.

• The  R&D direction and field of Ascentage Pharma Group Corp (6855 HK) distinguish it from other domestic biotech companies. The Company has proved its R&D capability after the successful launch of olverembatinib.
• The uncertainties of commercialization performance and R&D risks would make it difficult for Ascentage to achieve break-even. Due to increasing cash flow pressure, Ascentage must first solve the survival problem.
• Considering the Risk return trade-off, we think Ascentage has short-term investment value only when it’s “extremely undervalued”.We suggest that it could be sold in a timely manner to secure gains.

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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