China Archives | Page 113 of 199 | Smartkarma

• Hong Kong Chief Executive John Lee Ka-chiu will deliver his inaugural policy address on the 19 October, where he is expected to announce a number of “ground-breaking” measures.
• One such measure is non-residents who have owned property in Hong Kong for 3+ years may get their extra stamp duty refunded – if they take up permanent residency.
• Secondary home prices have declined  8% year-to-date, and are approaching a five-year low. Goldman Sachs expects home prices to decline 30% in 2023 from last year’s levels.  

• China Vast Industrial Urban Development (6166 HK) announced that all the pre-conditions were fulfilled. China Jinmao Holdings (817 HK)’s offer is HK$2.40 per share.
• The key condition is approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection). Shareholders with blocking stakes will be supportive.
• The offer is light, but the headcount test is not applicable. At last close and for a year-end payment, the gross and annualised spread is 0.8% and 4.0%, respectively.

• Nearing the end of the review period for the SZSE1000 Index, we estimate around 50 changes to the index. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• 5 of the potential adds could be added to the MSCI China Index in February and 34 of the potential adds could be added to the FTSE All-World/All-Cap in March.

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.

• CIFI Holdings
• Fosun International
• Kawasan Industri Jababeka

• Giant Biogene Holding (GBH HK)  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.
• We had looked at the company’s past performance in our previous notes. In this note, we’ll undertake a peer comparison.

• Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. 
• It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
• As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.

• 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 may flag those companies where shares have been pledged. Stocks mentioned include Lion Rock (1127 HK), VCredit (2003 HK), Zhongsheng (881 HK), and Concord New Energy (182 HK).

• Hong Kong brokerage Kingston Financial (1031 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• Chu Yuet Wah is the largest shareholder with 74.6% of shares out.
• Shares are down 98% from the January 2018 peak. A chunky premium may be on the cards if a firm Offer unfolds. 

• 20th National Congress of the Communist Party is due to kick off this week
• Will economic growth be top of the agenda and is there any scope to adjust the Covid strategy?
• With many potential growth factors, use derivatives to gain delta exposure

• Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net outflow over the past week was ~US$1.8bn, split between Shanghai (-US$2.0bn) and Shenzhen (+US$0.20bn).
• The largest inflows were into Satellite Chemical (002648 CH) and CATL (A) (300750 CH). The largest outflows were in Kweichow Moutai (600519 CH) and China Merchants Bank A (600036 CH).

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. Softbank Group
2. Alam Sutera Realty
3. CIFI Holdings
4. Indika Energy
5. Hopson Development

and more…

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net inflow over the past week was ~US$0.5bn, split (+US$0.26bn) for Shanghai and (+US$0.24bn) for Shenzhen.
• The largest inflows were into Tracker Fund of Hong Kong Ltd (2800 HK) and Tencent (700 HK). The largest outflows were in Meituan (3690 HK) and Semiconductor Manufacturing International (981 HK).

• Giant Biogene Holding (GBH HK) designs, develops and manufactures professional skin treatment products with recombinant collagen as the key bioactive ingredient in China.
• The company has filed for an IPO on the Hong Kong Stock Exchange and plans to raise proceeds of around HK$500m.
• We remain positive on Biogene’s growth prospects as it operates in a growing market which should further benefit from regulatory tailwinds.

• After one month from the September batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 12 stocks. 
• We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
• We continued to observed outperformance post the HSCI announcement but not the actual inclusion despite the fact that southbound inflows has a significant impact on the trading volume. 

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• In Giant Biogene IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
• The key elements of the bear case rest on a worrying performance of Collgene (the second flagship brand), an inexorable rise in S&M expenses and margins on a downward trajectory.

• BYD (1211 HK) has recorded a more respectable result this year compared to the peers such as Tesla, Nio, and Xpeng. 
• Overseas sales could be the next growth engine if the domestic market sales may stall. 
• The price increase early this year to the customers did not deter the company’s growth rate which indicates its pricing power. 

• The strength about Giant Biogene is that the founders have R&D background, which helps build trust. Meanwhile, the financial performance was good, with three years of consistent high margins.
• The sustainability of high-profit model will face pressure due to increasing competition. The establishment of long-term core competitiveness and second growth point is important. Complex related-party transaction is another concern.
• Giant Biogene is in an industry that has a large potential for future growth in valuation. Its valuation should be lower than that of Bloomage and Imeik.

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.

• Alam Sutera Realty
• Anton Oilfield
• CIFI Holdings
• Hopson Development
• Indika Energy
• Longfor Properties
• NagaCorp Ltd

• Several news media outlets reported that food delivery giant Meituan (3690 HK) is preparing to enter the food delivery market in Hong Kong as domestic market is slowing down.
• Slowdown in Chinese economy coupled with regulatory hurdles have made it impossible for Meituan and other domestic tech players to expand locally.
• Online food delivery market in HK is dominated by Foodpanda and Deliveroo, and we think Meituan will have to offer deep discounts to grab market share from these two dominants.

• Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, has started pre-marketing a US$500 million HKEx IPO.  
• According to Frost & Sullivan, Biogene was China’s second-largest professional skin treatment product company by retail sales in 2021.  
• The key elements of the bull case rest on a large and growing addressable market, regulatory tailwinds, the core brand’s stellar performance and high cash generation. 

• Taste Gourmet Group (8371 HK) is a play on the HK recovery with a promising outlook in the long-term at 5.7x/4.3x FY23/24e PE (10.5%/14.1% dividend yield assuming 60% payout).
• The company recently initiated a buyback mandate on the 20th of September for (10% of outstanding shares) and has repurchased 2.2% of outstanding shares so far.
• We believe the company will report strong earnings for its quarterly release on November 11th and payout a good dividend which will be a further catalyst for rerating.

• We see improvements in the underlying drivers of Anhui Conch Cement (914 HK) over the last two months, and we believe value has emerged for long-term investors.
• There is a slight recovery in cement price in Sep, and the proceeds from local governments’ special purpose bonds issuance will make incremental stimulus to demand. 
• Net cash now amounts to 37.5% of share price, providing support to its over 9% prospective dividend yield as well as potential value-enhancing M&As. 

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.

• Powerlong Commercial Management Holdings
• Sino-Ocean Service

• Bilibili Inc (BILI US) listed in the US in April 2018. It eventually listed in Hong Kong under the ticker Bilibili (9626 HK) in March 2021 as a Secondary Listing. 
• Bilibili (9626 HK)  announced 16 March 2022 it intended to pursue a HK Primary Listing.  Application was announced on 2 May 2022, Circular a month later. Results announced 29 September.
• As of 3 October, it is a Dual Primary Listing, making it eventually eligible for Southbound Trading. But there as confusion as to when. Hint:  It’s March 2023.

• Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
• The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.

• Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest  RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
• Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
• Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.

• Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

• Several news media outlets reported last week that Tencent has changed its M&A strategy to obtain majority stakes in overseas gaming companies as opposed to buying minority stakes previously.
• Tencent’s online game revenue declined YoY for two-consecutive quarters primarily due to decline in domestic game revenue that was impacted by absence of new game titles and minority protection rules.
• Our analysis on Tencent’s game downloads and ranks reveal that both domestic and international game revenues would decline further in 3Q2022E.

• Wuxi Biologics (2269 HK) has been removed from the “Unverified List”, but the crisis is not over. CXO’s valuation center could gradually volatile to the downside,during which there would be temporary rebounds.
• Biotechnology of US and China has entered a higher level of game. As domestic CXO is deeply embedded in global supply chain, we won’t take any chances on WuXi Biologics.
• We may face a long high-interest-rate environment after the Fed hikes,but the booming of US pharmaceutical IPOs is the underlying logic of CXO. We provided suggestions on CXO trading strategy.

• Giant Biogene Holding (GBH HK) 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.
• We had looked at the company’s past performance in  our previous notes. In this note, we’ll talk about its PHIP updates.

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
• Sunac China Holdings

• 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

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US).
• Lowest spreads – Tyro Payments (TYR AU), OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), MACA Ltd (MLD AU), Singapore Medical (SMG SP), Jinke Smart Services (9666 HK).

• With share price of Jiangsu Expressway (H) (177 HK) now back to the 2013-2014 level, the stock is very attractive on secured yield of 8.6% based on its dividend record. 
• Fundamentally, we expect sequential recovery in earnings in 2H22. Its diversification into clean energy will provide a quality earnings stream. Longer-term, new projects will add to earnings. 
• It has a healthy gearing level and the Rmb denominated borrowings means it will benefit from lower interest rate and lack of exposure to Rmb depreciation.  

• On May 13, Antengene (6996 HK) launched first drug, Xpovio in China as fourth-line treatment of relapsed/refractory multiple myeloma. Xpovio has also been launched in South Korea, Australia, and Singapore.
• Xpovio reported revenue of RMB54 million in H1 2022. Antengene has guided for 2022 revenue of RMB180–200 million from Xpovio.
• Late-Line MM therapy market is small and dominated by blockbuster drugs and low-cost generic versions of erstwhile blockbuster drugs, indicating muted growth potential for Xpovio in its current approval status.

• Dingdang has formed a system integrating front-end consultation, self-built pharmacies and back-end distribution. The “heavy asset model” leads to large liabilities, negative equity balance, cash flow pressure and poor profitability.
• Dingdang lacks core competitiveness in introducing customer flow or rapidly expanding user base. Together with fierce competition, the gap between the Company and JD Health/Alibaba Health will become bigger.
• It’s difficult to achieve high profits based on the business model when break-even is barely achieved. Dingdang has it hard to successfully run through its ecosystem.We’re bearish on the outlook.

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 SCE
• China Vanke
• Country Garden Holdings Co
• Tata Motors ADR

• Country Style Cooking Restaurant Chain (1985552D HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Country Style Cooking Restaurant Chain (CSCRC) is a Chinese quick service restaurant (QSR) chain situated in China. It operates two brands, namely: CSC and Rice Space, which are all self-operated. 
• In this note, we talk about the not-so-positive aspects of the deal.

• There’s an “insurmountable obstacle” to license-in business model. Antengene (6996 HK) has to go all the way to the end. Otherwise, Antengene won’t end up well.
• Considering the pipeline quality/speed of clinical advancement/high cost of license-in/fierce competition/just APAC rights/limited cash balance, the biggest problem Antengene has to face is how to “survive this winter” .
• Theoretically, Antengene is undervalued, so if willing to, investors could do short-term trade. However, due to the concerns, we are still bearish on Antengene’s outlook overall. 

• 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 may also flag those companies where shares have been pledged. Stocks mentioned include Luk Fook Holdings Intl (590 HK), Zhongsheng Group (881 HK), and Kowloon Development (34 HK).

• 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, HK IPOs continued to struggle with CALB (3931 HK) joining Leapmotor (9863 HK) and Onewo (2602 HK) with its tepid performance.
• Given the mid-week HK holiday and the ongoing golden week, there weren’t any large placements this week.

• Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net outflow over the past week was ~US$0.15bn, split between Shanghai (+US$0.05bn) and Shenzhen (-US$0.20bn).
• The largest inflows were into Kweichow Moutai (600519 CH) and Zhejiang Huayou Cobalt (603799 CH). The largest outflows were in LONGi Green Energy Technology (601012 CH) and CATL (300750 CH).

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net inflow over the past week was ~US$0.75bn, split (+US$0.35bn) for Shanghai and (+US$0.40bn) for Shenzhen.
• The largest inflows were into Hang Seng H Share Index (2828 HK) and Wuxi Biologics (2269 HK). The largest outflows were in Geely (175 HK) and AIA Group (1299 HK).

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

• Country Style Cooking Restaurant Chain (1985552D HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Country Style Cooking Restaurant Chain (CSCRC) is a Chinese quick service restaurant (QSR) chain situated in China. It operates two brands, namely: CSC and Rice Space, which are all self-operated. 
• In this note, we talk about the positive aspects of the deal. 

• Jenscare raised HKD 154.8m (USD 28m) from its global offering and will list on the Hong Kong Stock Exchange on Monday, October 10th.
• In the previous note, we looked at the company’s business lines of medical devices for structural heart disease. We are of the view that the company’s valuation is unjustifiably rich.
• In this note, we provide an update for the IPO before trading debut.

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. Times China
2. China Jinmao Holdings
3. Guangzhou R&F Properties
4. Sunac China Holdings
5. Evergrande

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. Times China
2. China Jinmao Holdings
3. Guangzhou R&F Properties
4. Sunac China Holdings
5. Evergrande

and more…

• CALB (3931 HK) priced its H Share at HK$38.00 per share to raise net proceeds of HK$9.9 billion (US$1.3 billion). The H Share will start trading tomorrow.
• Grey market prices across various platforms show the shares last traded at HK$37.30-38.00 per share i.e., -2% down to unchanged compared to the IPO price.
• Despite peer multiple derating, the IPO price continues to imply a discount to the median peer CY2023 EV/EBITDA multiple. CALB should be, at least, valued in line with peer multiples.

• PICC Property & Casualty H (2328 HK) is a potential replacement for XPeng (9868 HK) at the December rebalance of the FTSE China 50 Index.
• There are a couple of index constituents that are close to the deletion threshold rank and that could drive two more changes. The review cutoff date is 21 November.
• Tianqi Lithium (9696 HK) will be eligible for index inclusion if it is added to the FTSE All-World Index in December – we have that as a high probability event.

• Greatpower Nickel & Cobalt Materials (1919613D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by Haitong and China Securities International. 
• Greatpower Nickel and Cobalt Materials (GNCM) is a supplier of new energy battery materials in China, with a dual focus on nickel and cobalt for the production of cathode materials. 
• The company is principally engaged in the processing and sales of refined cobalt products as well as the trading of nickel and cobalt-related products. 

• Among domestic enterprises, MicroPort NeuroTech (2172 HK)’s product richness takes the lead. With the support of Microport Scientific (853 HK), the production quality system and capacity are relatively more guaranteed. 
• Fierce competition and centralized procurement are the major challenges, but the rich domestic distribution network and promising internationalization prospects would help NeuroTech find way out.
• By reducing the size of the IPO to maintain a good share price, at the expense of stock liquidity, it doesn’t really solve the problem.There’s risk of overvaluation for NeuroTech.

We view China Oil and Gas (COG) as “Medium Risk” on the LARA scale. This takes into account: [1] regulatory risk, with the company having experienced delays of over three years in cost pass-throughs for tariffs in Qinghai (since resolved); [2] exposure to oil price volatility in the small upstream oil and gas (O&G) segment; and [3] any aggressive debt-funded acquisitions, which we remain cautious about following the company’s acquisition of a 22% stake in Shandong Shengli in 2021. COG’s main asset is its 51% interest in downstream gas provider China City Natural Gas (CCNG), with the remaining 49% held by Kunlun Energy, a subsidiary of SOE PetroChina. Hence, cash leakage from dividends is significant. We believe the relationship with Kunlun helps secure COG’s gas supply and improves the company’s ability to obtain gas distribution concessions. In addition, PetroChina’s parent, China National Petroleum Corporation, had previously provided financing to CCNG at competitive rates.

Our Credit Bias on COG is “Stable”, given COG’s solid revenue growth from natural gas sales and distribution. Additionally, the upstream O&G business has benefited from strong oil prices. It has also expanded into production and sales of coal gasification, further diversifying the businesses. COG has a sound liquidity profile and reasonable access to funding. That said, we remain cautious about the financial performance of Shandong Shengli as COG has provided guarantees for its banking facilities, which could impact COG’s credit profile.  

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”.

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.

• CIFI Holdings
• NagaCorp Ltd
• Yuexiu Property

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.

• CIFI Holdings
• NagaCorp Ltd
• Yuexiu Property