ChinaDaily Briefs

Daily Brief China: PCCW Ltd, Hong Kong Hang Seng Index, Meituan, Miniso, Tencent, China Tourism Group Duty Free Corp Ltd, WuXi AppTec Co. Ltd., Kingsoft Cloud, Pan Brothers, Chipotle Mexican Grill and more

In today’s briefing:

  • Cayman Islands: Headcount To Be Decapitated On 31 August
  • HSI Leads Bear Move in Asia
  • Hong Kong CEO & Director Dealings – 1st August 2022
  • Miniso’s Word Against Short Seller Blue Orca’s Facts
  • Tencent/Netease: Increasing Pressure with Zero Approval in August Batch & Thoughts on Trading
  • China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation
  • WuXi AppTec (603259.CH/2359.HK) 2022H1 – The Concerns Behind and the Outlook
  • Kingsoft Cloud: Thoughts on HK Dual Primary Listing
  • Morning Views Asia: Pan Brothers, Sino-Ocean Service, Vedanta Resources
  • Chipotle Mexican Grill Inc.: Expansion of the Loyalty Program & Other Developments

Cayman Islands: Headcount To Be Decapitated On 31 August

By David Blennerhassett

  • The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current ‘headcount test’.
  • Those companies incorporated in the Cayman Islands, and subject to a members’ Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.
  • This development clarifies previous uncertainty/ambiguity which could arise, with ‘take private’ deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.

HSI Leads Bear Move in Asia

By Thomas Schroeder

  • HSI remains a top short bet from the C wave dual top at 22,500, the break below wedge support and now the bear triangulation support breach targets new lows.
  • A50 weakness is weighing on HK. HSI clear break down will lead the upcoming risk off cycle in Asia.
  • We like adding to a short on upticks with near resistance at 20,500. 19,700 is the pivot support to break below that will open the way to 18,200.

Hong Kong CEO & Director Dealings – 1st August 2022

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website. 
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
  • These insights also flag those companies where shares have been pledged, both recently and ongoing.

Miniso’s Word Against Short Seller Blue Orca’s Facts

By Oshadhi Kumarasiri

  • Blue Orca issued a damning short-seller report on Miniso (MNSO US) on the 25th of July 2022, stating that the company’s asset-light and high-margin franchise business is mostly a lie.
  • Miniso responded rather quickly but its response lacks evidence and does not do anything to contradict the facts presented by the short seller.
  • Thus, it is Miniso’s word against Blue Ocra’s facts and it is quite obvious which side investors should take.

Tencent/Netease: Increasing Pressure with Zero Approval in August Batch & Thoughts on Trading

By Ke Yan, CFA, FRM

  • China just announced game approval for August batch. More games were approved in August compared to July and June.
  • Pace of China game approval continued to pick up albeit at a much slower pace than pre-tightening.
  • Both Tencent and Netease will be under increasing pressure as the duo continue to score zero in August, making it the fourth time with no games approved since resumption . 

China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation

By Sumeet Singh

  • China Tourism Group Duty Free Corporation Limited (CDF) now aims to raise US$2-3bn 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 will talk about the recent updates from its revised filings and revisit valuations.

WuXi AppTec (603259.CH/2359.HK) 2022H1 – The Concerns Behind and the Outlook

By Xinyao (Criss) Wang

  • It seems that Mr Market was not satisfactory with WuXi AppTec’s 2022H1 performance. If excluding COVID-19 projects (which are regarded as a one-time increment), the performance growth was not high.
  • Considering that the CXO preliminary bid winning has declined largely in the US, domestic CXO would not begin to gradually reflect the slowdown of newly added orders until Q4.
  • We are concerned about WuXi AppTec’s performance in 2023. As an old generation CXO, it’s hard to achieve V-shaped rebound. So, 2022 is a good time to offload the Company.

Kingsoft Cloud: Thoughts on HK Dual Primary Listing

By Shifara Samsudeen, ACMA, CGMA

  • Kingsoft Cloud (KC US) is the largest independent cloud service provider in China in terms of revenue in 2021 and its clientele includes the likes of ByteDance and Xiaomi.
  • KC is listed in NASDAQ and has filed for a dual primary listing on HKEx and has not disclosed the amount that it plans to raise from the stock issuance.
  • We are broadly positive on the company’s growth prospects and discuss the details below.

Morning Views Asia: Pan Brothers, Sino-Ocean Service, Vedanta Resources

By Charles Macgregor

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.


Chipotle Mexican Grill Inc.: Expansion of the Loyalty Program & Other Developments

By Ishan Majumdar

  • Chipotle Mexican Grill has been in the news for an amazing rebound in its stock price after delivering a robust set of results surpassing Wall Street expectations in terms of earnings.
  • The in-restaurant sales increased while digital sales were also up and the management added 51 new restaurants in 42 locations.
  • We provide the stock of Chipotle Mexican Grill with a ‘Hold’ rating with a revision in the target price.

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