ChinaDaily Briefs

Daily Brief China: SJM Holdings, Alibaba Group, AMTD Digital, Giant Biogene Holding, JD Health, Chongqing Hongjiu Fruit, Xiaomi Corp, Biocytogen Pharmaceuticals (Beijing), Adaro Energy, Cali Biosciences and more

In today’s briefing:

  • SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics
  • Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
  • CK Group Wants to Sell Its Stake in AMTD Group
  • Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+
  • FTSE China 50 Index Rebalance Preview: One Change in Range, Couple Others Close
  • Hongjiu Fruit IPO: A Bitter Fruit
  • Xiaomi, China Unicom, and Bank Of China
  • Biocytogen (百奥赛图) Pre-IPO: Prospectus and Valuation Updates
  • Morning Views Asia: Adaro Minerals, China Hongqiao, Gajah Tunggal, Sino-Ocean Service
  • Pre-IPO Cali Biosciences – The Industry, the Business and the Concerns

SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics

By Travis Lundy

  • SJM Holdings (880 HK) announced earnings on Monday and a HK$3bn Rights Issue last night designed to inject capital into Macau gaming licensee SJM Resorts. 
  • An increase in share capital is required to pre-qualify for then tender process where the Macau Govt would allocate a 10-year gaming concession starting 1 Jan 2023. 
  • 54.7% SJM Holder/Parent Sociedade de Turismo e Diversões de Macau (STDM) had previously extended a loan to SJM designed to allow SJM to inject capital to SJM Resorts.

Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy

By Ming Lu

  • Alibaba’s revenue stopped growing for the first time on record.
  • We still believe the revenue growth rate will recover in the December quarter.
  • We believe the stock price will have at least an upside of 29% after a significant plunge.

CK Group Wants to Sell Its Stake in AMTD Group

By Douglas Kim

  • AMTD Digital’s stock price has started to sink and now there are news that the Cheung Kong (CK) Group (HK) wants to sell its stake in AMTD Group Co.
  • The discussion of the CK Group disposing its stake in AMTD Group altogether is likely to further negatively impact AMTD Digital’s share price.
  • Li Ka-Shing and his family probably want to distance themselves from all the unnecessary media attention given to AMTD Digital (HKD US) and AMTD Idea Group (AMTD US). 

Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+

By Sumeet Singh

  • Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
  • GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
  • In this note, we talk about the not-so-positive aspects of the deal.

FTSE China 50 Index Rebalance Preview: One Change in Range, Couple Others Close

By Brian Freitas

  • Shenzhou Intl Group Holdings (2313 HK) is a high probability deletion in September, while JD Health (6618 HK) is currently the highest ranked non-constituent stock.
  • There are a couple of other stocks that are close to the inclusion/exclusion thresholds and price changes over the next few weeks will determine if there are any more changes.
  • Short interest on JD Health (6618 HK) is high in terms of days to cover and as a percentage of free float. Covering could take the stock higher.

Hongjiu Fruit IPO: A Bitter Fruit

By Arun George

  • Chongqing Hongjiu Fruit (CHF HK), a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.
  • The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.
  • Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.

Xiaomi, China Unicom, and Bank Of China

By Untying The Gordian Knot

  • The Hong Kong Indices have been much weaker than Taiwan & China due to liquidity and open capital account.
  • It is a canary for global indices and should be analyzed accordingly.
  • There is no change in views of real estate and technology sector stocks mentioned in previous updates on Hang Seng constituents.

Biocytogen (百奥赛图) Pre-IPO: Prospectus and Valuation Updates

By Ke Yan, CFA, FRM

  • Biocytogen, a China-based pre-clinical research and biopharmaceutical company, will pre-market its IPO to raise USD 25m, which is a significant downsize from the previous USD 300m fundraising target.
  • In our previous note, we covered the company’s fundamentals and compared its business with its peers.
  • We will provide an update on its latest prospectus and its peer performance in this note.

Morning Views Asia: Adaro Minerals, China Hongqiao, Gajah Tunggal, Sino-Ocean Service

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.


Pre-IPO Cali Biosciences – The Industry, the Business and the Concerns

By Xinyao (Criss) Wang

  • Both the postoperative pain management and the expansive application of anesthetics in various fields would increase the market demand for ropivacaine.
  • Cali Biosciences (CALI HK)’s core product, the ropivacaine long-acting analgesic injection drug candidate CPL-01, would have to face the challenges of fierce competition, uncertain market acceptance, and negative policy impact.
  • Together with other concerns such as slow development progress, “not rich enough” pipeline and potential liquidity risk, we are conservative about Cali’s outlook at the current stage.  

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