Daily Brief China: Luzhou Laojiao Co Ltd A, Pacific Basin Shipping, Growatt Technology, Kwg Property Holding and more

• Baijiu, the most popular liquor in China, is perhaps one of the most addictive and profitable alcoholic beverages in this planet.
• The focus of this insight is a pair trade (go long on Luzhou Laojiao and go short on Jiangsu Yanghe Brewery).
• The major reasons for this pair trade include higher sales growth rate and ROE for Luzhou Laojiao as well as capitalize on the recent share weakness of Luzhou vs Jiangsu.

• Pacific Basin Shipping (2343 HK) had an impressive 1H22 with 204.2% YoY growth in underlying profit. Overall dividend payout ratio of 75% is also ahead of expectations.
• It covered 58% Handysize days and 64% for Supramax for 2H22, though rates are lower HoH as spot market retreated. However, low costs mean it’s still enjoying very fat margin.  
• Its 0.96x P/B for FY22 and 0.85x for FY23 look well justified by ROEs of 40.4% and 25.6%. Strong profitability and cash flow will allow for sustained high dividend yield.

• Growatt Technology (1833969D CH) is looking to raise about US$500m in its upcoming Hong Kong IPO. 
• Growatt Technology is a global distributed energy solution provider, specializing in sustainable energy generation, storage and consumption and energy digitalization. 
• The firm has seen strong revenue growth on the backdrop of global PV inverter and energy storage industry tailwinds despite the effects of COVID-19.

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.

• KWG Living Group
• Lifestyle International Holdings
• Vedanta Resources

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.

• KWG Living Group
• Lifestyle International Holdings
• Vedanta Resources