China Archives | Page 107 of 199 | Smartkarma

• Several news media outlets reported that Xiaomi Corp (1810 HK) has started laying off about 10-15% of its employees across several units of its smartphone and internet services businesses.
• Xiaomi’s margins have come under pressure with entering into the premium smartphones segment which has resulted in aggressive expansion of offline stores.
• The company’s 3Q2022 revenues declined 9.7% YoY as a result of decrease in revenue from all three business segments while margins further dropped compared to 3Q2021.

• JD Health (6618 HK) is on the right track in terms of business model and investment logic. The Company has also begun to enter a virtuous circle in financial performance.
• There were some positive business updates in term of To B business in 22Q1-Q3, which would bring JD Health closer to establishing a complete “retail pharmacy + healthcare service” ecosystem.
• For trading strategy, at present, considering the complex external environment, we recommend investors to do short-term trade, rather than long-term hold.

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.

• First Pacific Co

• On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
• For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
• There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

• Sentiment driven rally is fading. Although COVID exit remains swing factor, individual company’s performance will increasingly be driven by their business models.
• Our proprietary store expansion framework suggests divergent growth outlook for major players – stretched for Haidilao, moderate for Jiumaojiu and Yum China, and ample for Xiabuxiabu.
• Xiabuxiabu is our top pick due to its strong turnaround not yet priced in depressed valuation. We also like Yum China but stay cautious on Jiumaojiu and Haidilao on valuation.     

• A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
• PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions. 
• This is done. The timing for approving the SPA was bang-on with my expectation.

• PAG completed the auction procedures for the acquisition of a 70.92% stake in Shandong Fengxiang (9977 HK). This will trigger an unconditional MGO at HK$1.5132 per H Share.
• As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
• The composite document is to be despatched on or before 28 December. At last close and for an end-of-January payment, the gross and annualised spread is 5.1% and 65.9%, respectively.

• REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. The bookrunners on the deal are Morgan Stanley, and Citic Securities.
• REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
• As per F&S, it was amongst the top ten lithium-ion battery manufacturers in China as per installations for new energy application in 2021.

• ClouDr released positive profit alert for 2022. We think ClouDr is in a virtuous circle based on its solid business model. It’s a matter of time before ClouDr achieves breakeven. 
• As the number of hospitals/pharmacies newly deploying SaaS modules increases, and the existing B-end users continue to receive new patients,ClouDr is able to absorb new C-end users at low cost.
• When more powerful competitors come in and carve up B-end market, ClouDr’s long-term prospects may be uncertain, but its valuation shouldn’t be much lower than Ping An Good Doctor. 

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.

• Zx Inc (ZX CH) is looking to raise about US$100m in its upcoming HK IPO. The deal will be run by CICC and China Securities International. 
• Zx Inc runs three different businesses, namely an interactive entertainment business (Tan Wan), an instant food brand (Zha Zha Hui) and pop toy business (Bro Kooli). 
• Its interactive entertainment business Tan Wan focuses on publishing game products while while leveraging its precision marketing, in-depth operation and brand incubation capabilities. 

• Kanzhun (BZ US) a.k.a. has been listed in the US since about the same time as DiDi Global (DIDI US), and it had similar but minor tech issues pre-listing. 
• On Friday 16 December, the company announced it would conduct a Listing by Introduction in Hong Kong under the ticker Zhipin (2076 HK), listing on 22 Dec. 
• That creates an interesting launch supply/demand dynamic, likely HS Tech inclusion in March 2023, and then Southbound much later in 2023.

• Trip.com’s revenue increased by 29% YoY and adjusted EBITDA increased 164% YoY in 3Q22.
• Kuaishou announced that the views of short play increased by 40% in 2022.
• Activision Blizzard announced that they are looking for a new agency in China.

• Beauty Farm Medical and Health Industry (BFM HK) is the largest provider of traditional beauty services and the fourth largest non-surgical aesthetic medical service provider in China.
• The company seeks to raise $300 million from an IPO in Hong Kong market. Morgan Stanley, Haitong International, and Huatai International are the joint sponsors for the proposed IPO.
• COVID-19 has hurt recent financial performance of the company and forced it to shut many of the stores in multiple locations. Further, stretched valuation make the IPO unappealing to investors.

• It was recently announced that US government put 36 Chinese companies including Cambricon Technologies on its trade blacklist that can restrict the semiconductor maker’s access to US technologies and products.
• The US government has determined that Cambricon Technologies and these other Chinese companies pose risk to the US national security.
• We believe that Cambricon Technologies being included in the trade blacklist by the US government is likely to have a long-term negative impact on the company.

• CIFI Holdings (884 HK) is looking to raise US$127m in a top-up placement. Proceeds from the raising are expected to refinance its existing loans and for general corporate purposes.
• While the deal represents just 2.1 days of three month ADV, total shares offered would amount to 7.5% of current mcap. 
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

• BABA ADR shows well defined range trade points as the rising wedge matures. 173 stands out as formidable sell resistance and 157 the level to crack.
• MACD trendline coincides the “0” turn level that is expected to cap the upside near term and induce fresh down leg. The May break does send a forward weak signal.
• The macro picture continues to warn of a 135 retest in 2023. Current rising wedge is corrective in nature.

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.

• China South City
• Kawasan Industri Jababeka
• Lifestyle International Holdings

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.

• China South City
• Kawasan Industri Jababeka
• Lifestyle International Holdings

• Dmall Inc (1751691D CH) is looking to raise about US$200m in its upcoming HK IPO. The deal will be run by Credit Suisse and CMB International.
• Dmall provides cloud-based, end-to-end SaaS platforms purpose-built for the local retail industry. 
• Its service offerings consist of a retail core service cloud, an e-commerce service cloud and a marketing and advertising service cloud. 

• 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 – VinFast (1905332D VN) pre-markets a US$1bn IPO and Weilong Delicious Global (9985 HK) has a poor debut.
• Event-Driven developments – Genesis Minerals (GMD AU)/St Barbara Ltd (SBM AU), Norwest Energy Nl (NWE AU), Acotec Scientific Holdings (6669 HK), Toshiba Corp (6502 JP), Toyo Construction (1890 JP), O2Micro.

• China private higher education sector is recovering with the supportive government policy
• The sector trades at single digit P/E, which is attractive
• China Education Group with its largest scale and solid trade record is a good candidate for investment

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.

• Central China Securities

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs
• On the IPO front,  things are started to cool down in to the year end with some smaller issuers still trying their luck to get listed before the year end.
• On placements front, most of the action was in India with Australia seeing a large offering after a while.

• It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.
• The coming week should be relatively quiet with the announcement of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) changes expected.
• There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to Hang Seng H Share Index ETF and outflows from Tracker Fund of Hong Kong.

• Kanzhun (BZ US) will Dual Primary list on the HKEX (388 HK) by Way of Introduction and the stock is expected to start trading on 22 December.
• Following the changes to the handling of Dual-Primary-listed companies, Kanzhun (BZ US) should be added to the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
• Kanzhun (BZ US)‘s inclusion will lead to other changes to the Hang Seng Tech Index (HSTECH INDEX) with an extra deletion to keep the number of index constituents at 30.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• The Chinese property market is undergoing a revival story initiated by the government.
• Xinyi Glass Holdings (868 HK) main product is a key component for real estate developers.
• Xinyi Glass has a much cleaner balance sheet compared to the property developers. 

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Kawasan Industri Jababeka
2. Tata Motors Ltd
3. Yuzhou Group
4. Powerlong Real Estate Holdings
5. Sunac China Holdings

and more…

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Kawasan Industri Jababeka
2. Tata Motors Ltd
3. Yuzhou Group
4. Powerlong Real Estate Holdings
5. Sunac China Holdings

and more…

• Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history.
• This was on back of the Aug 2022 agreement between PCAOB, CSRC and MOF, which was followed up with a Hong Kong visit by PCAOB officials over Sep-Nov 2022.
• We wrote about this on 14th Dec 2022 and expected the results to be out on Friday (16th Dec), they have come out a day earlier than we expected.

• Back on the 6 May, Yashili International Holdings (1230 HK) announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
• Pre-Conditions concern three sales and purchase agreements, all of which Yashili shareholders voted through on the 16 August.
• From a regulatory standpoint, various conditions attached to Dumex China remain outstanding. But the wording in the most recent monthly update suggests the process is getting to the pointy end.

• After getting ‘unprecedented access’ to inspect and investigate audit firms in the PRC, the PCAOB is vacating their 2021 determinations; there will be no ADR delistings in the near future.
• PCAOB inspectors have identified numerous potential deficiencies that are consistent with what the PCAOB has encountered in other first-time inspections around the world.
• The iShares MSCI China ETF (MCHI US), KraneShares CSI China Internet ETF (KWEB US) and NASDAQ Golden Dragon China Index (HXC INDEX) are trading lower in the U.S.

• We think Sa Sa International Hldgs (178 HK)‘s risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  
• Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.
• Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. 

• After the sharp rally comes the pause; almost all constituents and leading indices are forming an inside week or a weekly Doji (small or long body with very little difference in open and close levels) [based on mid-day Thursday].
• These two formations are a typical indication of market indecision.
• However, it is unlikely to be quiet for the rest of December. 

• This is our first report on Chinese internet giant, Pinduoduo.
• In the past few months, various product categories of Pinduoduo, such as beauty and cosmetics, consumer electronics, and agriculture, have performed particularly well.
• During the harvest festival, Pinduoduo worked with CCTV as well as assembled professors from China Agricultural University and the Chinese Academy for Agricultural Sciences to promote agricultural products.

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.

• Kawasan Industri Jababeka

• Back on the 12 December, Acotec Scientific Holdings (6669 HK) announced a Partial Offer from Boston Scientific (BSX US)
• The Offer Price of $20/share is for up to 65% of shares out. Irrevocables total up to 60.14% of shares out, sufficient to clear the minimum tendering condition.
• My initial read was that the proration was simply 65%. That was wrong. It is higher. Plus there are some interesting quirks to avoid breaching the public float post-Offer.

• Yashili International Holdings (1230 HK)‘s latest monthly update suggests that the remaining pre-condition, the 25% Yashili acquisition, is entering the final stages towards being satisfied. 
• The wording “in the course of processing the relevant application” suggests that the government authorities will grant the new registration certificate, which should be received shortly.
• The gross spread is 6.2%. The downside is low as both Danone SA (BN FP) and China Mengniu Dairy Co (2319 HK) can waive conditions to satisfy the pre-condition.

• The China Securities Index (CSI) will launch the CSI REITs Index today. The index currently has 14 constituents, and the REITs will be capped at 15% of the index weight.
• We expect another 6 REITs to be added to the index at the March rebalance. And then at least another 3 more in June.
• The launch of the index should result in ETFs and other passive investment products being floated which should further enhance market liquidity and bring long-term benefits to the market.

• Meituan food delivery order growth slowed down in Oct and Nov due to covid restrictions.
• Meituan Instashopping continued to grow fast in terms of its daily orders.
• TikTok food delivery service so far hasn’t posed big threats to Meituan. 

• DPC Dash (1405 HK) is the exclusive master franchisee of Domino’s Pizza in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
• With Domino’s trailing Pizza Hut in the Chinese market, we think DPC Dash doesn’t deserve to trade on par with other leading Domino’s Master Franchisees around the world.
• Therefore, we see an opportunity to make money on the short side, once the IPO is completed.

• Weilong Delicious Global (9985 HK) has priced its IPO at HK$10.56 per share, slightly above the bottom of the IPO price range of HK$10.4-11.4 per share.
• The company’s HK offering was oversubscribed by 10.53x while the international offering was oversubscribed by 2.6x.
• Even at the above price, Weilong’s IPO is still at a significant premium to domestic as well as international peers.

• This is our first report on Chinese internet behemoth, Baidu.
• The company’s operating loss and margin year over year and quarter over quarter for AI Cloud improved.
• Their new AI businesses, like AI Cloud and Intelligent Driving, are in line with China’s national ambitions and digital innovation.

• Although Alibaba Health turned loss into profit in FY23H1, it was mainly benefited from the obvious effect of expenses control,which isn’t a long-term solution to achieve the goal of profit. 
• Alibaba Health has a more difficult problem. The logic of relying on multiple entrances to obtain customers to drive online drug sales has failed to bring higher revenue growth.
• In other to keep sustainable growth, it’s important for Alibaba Health to further improve user conversion rate. It is also urgent to actively expand new business growth points.

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.

• Country Garden Holdings Co

• On 11 July, Haidilao (6862 HK) announced it would propose to spin off its international restaurant business (13-15% of revenue) to shareholders and employees. Shareholders approved in August.
• There were interim announcements and indeed interim reports with some information, but not a lot. But Super Hi International Holding was headed for separate listing in HK. 
• Last week, Haidilao said it was going ahead with a Listing by Introduction pending listing approval by HKEX. Haidilao shares go ex- 16 December. Index providers have announced treatment.

• PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
• The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
• In this note, we’ll talk about the latest developments, possible outcomes and implications.

• In November we published on the upside potential in Alibaba 
• Stock has rallied and the call ratio we recommended has performed very well
• We evaluate the trade and look at potential trade options

• 4Q22 retail sales was negatively affected by the covid restrictions
• Sales growth is expected to recover in 1Q23 with China’s nationwide loosening policy.
• Long term growth is intact with continued upgrades of brands, products and channels

• Boston Scientific angles for majority stake with US$523 million for Acotec Scientific Holdings (6669HK), which is the largest acquisition of a Chinese medical device company by a MNC since 2014.
• Completion of the Partial Offer would further strengthen Boston Scientific’s presence in China and create the potential for commercialization of Acotec products globally. It’s a win-win deal for both sides.
• Companies listed in HKEX don’t have to seek valuation within HKEX system. If they can find “new anchor points”, they’ll have higher valuation.Chapter 18A companies’ future stock prices would diverge.

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.

• Yuexiu Property

• Weilong Delicious Global (WDG), a spicy snack food company in China, raised around US$130m in its Hong Kong IPO.
• According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
• We have covered various aspects of the deal in our previous notes. In this note we will talk about the demand and trading dynamics.

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.

• Yuexiu Property

• Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
• The changes could lead to an increase in the index weighting for Li Auto (2015 HK) and the inclusion of XPeng (9868 HK) at the March rebalance.
• The improved rankings for the Secondary and Dual Primary listings will lead to other changes to the index in March.

• Acotec Scientific Holdings (6669 HK), a Chinese medical technology company, has announced a Partial Offer from Boston Scientific (BSX US).
• The Offer Price for up to 65% of shares out is HK20/share, a 31.6% premium to last close, but below last year’s IPO price of HK$23.80/share. 
• Irrevocables who intend to tender a total of up to 60.14% of shares out. This includes the CEO and the key pre-IPO investor. 

• Acotec Scientific Holdings (6669 HK) disclosed a partial offer from Boston Scientific (BSX US) to acquire a maximum of 203.7 million shares at HK$20 per share.
• The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders. Irrevocables represent a minimum of 55.14% of outstanding shares.
• Despite the recent share price pop on the back of FDA approval for Vericor, the partial offer represents an all-time share price high. Therefore, the offer will be declared unconditional.  

• BILIBILI shares have rallied more than 200% since early November on prospects of China exiting zero-COVID, short covering, and accelerated breakeven timeline.
• Yet simply achieving breakeven doesn’t justify its US$10 billion valuation. It has to be accompanied by decent profitable growth – an unlikely scenario given the aggressive downsizing needed for breakeven.
• BILI’s businesses also entail structurally low margin. Stock could easily de-rate by 30% or more when growth euphoria recedes and disappointed profitability checks in during 2023.

• Hang Seng Indexes has changed the index handling treatment for Secondary Listings and Dual Primary Listings from the next rebalance in March.
• The change could result in Tencent Music Entertainment Group (1698 HK) replacing Ming Yuan Cloud Group (909 HK) in the index.
• There could be passive buying on Li Auto (2015 HK) and XPeng (9868 HK) due to an increase in the index shares with outflows on other index constituents.

• Bilibili is dismissing employees in live streaming, cartoon, and main station.
• The Chinese mobile game market began to expand, but the global market is shrinking.
• JD.com chairman reorganized its company, reducing the departments from eight to three.

• Akeso Biopharma Inc (9926 HK) and Summit Therapeutics entered into a collaborative and licensing agreement for AK112, which has set a new record for China’s innovative drug license-out cooperation. 
• While the market remained positive about the transaction, there are also doubts. We deep dive the potential logic of the deal. 
• We recommended investors not to neglect “the nature of the deal” and “the real motivation” behind. It’s also important to see whether the subsequent operations can make some achievements overseas.

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.

• China Vanke
• Greenko Energy Holdings
• Powerlong Commercial Management Holdings
• Tata Motors ADR
• Yuzhou Group

• This is our first report on online gaming giant, NetEase.
• In the quarter, the new expansion packs unveiled for the summer holidays, the legacy PC side of the company, which includes New Westward Journey Online 2 and Fantasy Westward Journey Online, continues to attract players.
• Among other updates, NetEase has recently announced that the company’s game division, NetEase Games, acquired Quantic Dream, one of the world’s major independent video game developers.