China Archives | Page 116 of 199 | Smartkarma

• Bilibili reported 2Q2022 results yesterday. Revenue grew 9.2% YoY to RMB4.91bn (in-line with consensus), however, it declined 2.9% YoY sequentially driven by YoY decrease in revenue from mobile games.
• Operating losses for the quarter further widened to RMB2.2bn (vs consensus RMB2.1bn) which accounted for 44.6% of revenues compared to 33.8% in the same period a year ago.
• Bilibili Inc (BILI US)  has taken several measure to improve its deteriorating profitability including headcount reduction, S&M cost cuts and close down of unprofitable businesses.

• Shougang Fushan Resources (639 HK) is back to interesting levels after a correction in HK/China and now trades at 4.5x PE/1.3x EV-EBITDA FY22e and a dividend yield of 17%. 
• With >50% of the market capitalization in cash (accounting for the dividend liability), there is an excellent margin of safety in the name.
• A further correction of coking coal prices by 20% from these levels to 1700-1800 RMB/ton would still have the stock trading at a >10% dividend yield. 

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.

• Palo Alto Networks’ management has continued to make significant investments to transform the company and take advantage of the rapidly growing and large market opportunity in cybersecurity.
• Palo Alto Networks is looking to grab a large chunk of market share and become a leader in the firewall market.
• We provide the stock of Palo Alto Networks with a ‘Hold’ rating with a revision in the target price.

• Onewo Space-Tech (ONEWO HK) aims to raise upto US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke (2202 HK). 
• As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
• In this note, we provide our earnings estimates and thoughts on valuation.

• People’s Insurance (PICC) (1339 HK)’s 2022H1 performance outpaced the industry peers, mainly driven by the improved performance of motor vehicle insurance business and non-vehicle insurance business. 
• While non-life insurance business is the foundation/main driver of growth,life insurance business is the drag on performance, the successful transformation of which is an important factor to drive up valuation.
• PICC’s is undervalued. The major catalyst could be the upcoming 20th National Congress, expecting some rally during this period. Due to unfriendly macro, the rally may not last long.

• Binjiang Service Group (3316 HK) presents a unique opportunity for investment in the property management space trading at 11.6x/9.4x FY22/23 PE, with a dividend yield of 5.2% FY22e (60% payout).
• The company has >35% of its market capitalization in cash, and the parent so far has been a relatively safer investment option compared to the rest in the property space.
• If the company is willing to continue paying >60%, we believe it can rerate to multiples comparable with SOEs of 16-20x PE.

• Onewo Space-Tech (ONEWO HK)  is a leading property management service provider in China focused on offering basic property management services.
• Backed by China Vanke Co Ltd (H) (2202 HK) , the company has filed for an IPO on the HKEx and plans to raise proceeds of around US$2bn.
• In this insight, we discuss the company’s business model and deep dive into the largest business segment Community Space Living Consumption Services.

• YSB Inc (YSB HK) is looking to raise about US$500m in its upcoming Hong Kong IPO.  
• YSB Inc. (YSB) operates a pharmaceutical platform, digitizing the pharmaceutical transaction and service segment.
• However, gross margins have fluctuated owing to a changing sales mix. Growth has also come at the cost of profitability and YSB has consistently burned cash over its track period.

• Strong new orders in 2H22 and FY23 are the drivers for Dongfang Electric (1072 HK) after it posted a 31.6% earnings growth and new orders of Rmb36.7bn in 1H22.
• Demand outlook for its major products including coal-fired, gas turbine, renewable, pumped storage and hydrogen energy are all very encouraging. 
• We estimate order backlog will equal to 1.6x FY22F revenue by year-end. Despite solid outperformance, DEC is still cheap at 12.6x and 9.8x PERs for FY22 and FY23.

• In 2Q22, the revenue growth rate was lower than we expected, especially in the game business.
• We believe the May layoff will reduce operating expenses in following quarters.
• We set an upside of 8.3% and a price target of HK$197.

• Cummins delivered a third consecutive all-around beat in a quarter that was marked by a number of significant developments including many ke partnerships.
• The company announced partnerships with Daimler Truck, Scania, and North America for delivering fuel cell electric powertrains for heavy-duty truck applications, with Komatsu on developing haulage equipment zero-emission which includes hydrogen fuel cell solutions for the large mining haul truck applications.
• It also achieved a significant milestone in the quarter related to two acquisitions, namely Meritor and Jacobs Vehicle Systems.

• There could be up to 6 changes to the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance, mainly driven by the deletions.
• If there are six changes to the index, estimated one-way turnover is 6.47% and will result in a one-way trade of HK$4,124m.
• There is large short interest on quite a lot of stocks and will play an important role in the rebalance.

• Pan Shiyi and Pan Zhangxin – Chairman and CEO respectively of SOHO China (410 HK) – have tendered their resignations, with immediate effect. 
• Both are resigning “to focus on supporting the arts and philanthropic pursuits“.
• That sounds like a “donation” is on the cards. And the Pans selling their stake in SOHO China would nicely fund that donation.

• CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
• In CALB 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 its small scale, low profitability and high FCF burn compared to listed peers.   

• 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, both recently and ongoing. Stocks mentioned include A8 New Media (800 HK) and China Fordoo Holdings (2399 HK).

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
• CIFI Holdings

• CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
• According to Frost & Sullivan, in terms of installed capacity in 2021, CALB ranked seventh globally among EV battery companies with a 3.2% market share.
• The key elements of the bull case rest on a large and growing market, rising market share, explosive top-line growth and ambitious capacity expansion plans.

• It was reported in August that Tencent was looking to raise its stake in Ubisoft and had reached out to Ubisoft’s founding family Guillemot who currently owns 14.0% of Ubisoft.
• Tencent has acquired a 49.9% economic stake in Guillemot Brothers for EUR300m and as part of the deal, will be allowed to up its current stake in Ubisoft.
• Ubisoft announced on Tuesday that its board of directors have authorised Tencent to increase its direct stake in Ubisoft from 4.5% to 9.99%.

• IQIYI Inc (IQ US) reported 2Q2022 earnings last week. Revenue decreased 12.5% YoY to RMB6.66bn (vs consensus RMB6.67bn) and reported an OP of RMB125.8m (vs consensus RMB30.4m).
• The company also announced a US$500m private placement of convertible notes with PAG (PAG HK)  and the transaction is expected to close in 4Q2022.
• The company also has entered into a content licensing agreement with Douyin which will likely bring in high-margin business for content distribution segment.

• The Aug China Express Development Index points to further industry recovery; and as the leader with 23% (+2pp YoY) market share, ZTO Express (2057 HK) should ride on the uptrend. 
• Sustained volume outperformance, upside on pricing and excellent cost control capability are drivers in 2H22. We are also comfortable with its solid financial position. 
• ZTO Express has above-average earnings quality and enjoys benefits from industry consolidation. Its on par valuation with the industry makes the stock appealing.

• YSB Inc (YSB HK) is looking to raise about US$500m in its upcoming Hong Kong IPO.  
• YSB Inc. (YSB) operates a pharmaceutical platform, digitizing the pharmaceutical transaction and service segment.
• Throughout its history, YSB has been evolving its business model and has been growing its user base rapidly as well, thereby leading to GMV growth and in turn, sales growth.

• The current two mainstream delivery platforms such as LNP delivery platform and GalNAc RNAi platform have been verified and recognized, with products using these platforms successfully launched on the market.
• Sirnaomics has developed its own differentiated delivery platforms, but the druggability has never been verified in trials, like a blind box. They will not be valuable until they are proven.
• Sirnaomics has cashflow pressure and is uncertain if it can survive “this winter”. It’s also difficult for Sirnaomics to find suitable valuation anchor in HKEX. Share price may fluctuate largely.

• Onewo Space-Tech (ONEWO HK) aims to raise upto US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke (2202 HK). 
• As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
• In this note, we undertake a peer comparison with some of its larger listed peers.

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
• CIFI Holdings
• Fosun International
• Sino-Ocean Service
• Times China

• The offeror and acceptances reached 44.98%, just short of the 50% minimum acceptance condition. The closing date has been extended to 13 September. 
• If the offer is declared unconditional on or before 8 September, Giordano International (709 HK) shareholders who accept the offer will get HK$1.88 but not the dividend of HK$0.085.
• The offeror likely remains confident that it will hit the 50% threshold. At the last close, the gross and annualised spread for 17 Sep payment is 1.1% and 37.2%, respectively.

• NetEase will start its first game studio in Europe after setting up two studios in the U.S.
• Tencent and Sony invested minor shareholding in a Japanese game developer.
• In 1H22, S.F. Holding’s revenue grew dramatically and its margins improved significantly.

• Onewo Space-Tech (OST) aims to raise upto US$2bn in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK). 
• As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
• In this note, we talk about the updates from its recently filed PHIP.

• Late last night, Giordano International (709 HK) announced the Offeror – the Cheng Family – had 44.98% in the bag after 20.41% of shares out had been tendered.
• The Offer has been extended for one week, until the 13 September. 
• Whether investors receive the Offer consideration AND the interim divided is still up for debate.

• Beneunder has large sales volume on Chinese e-commerce platforms and has a large physical store chain.
• However, outdoor brands and apparel brands compete with Beneunder and some brands’ prices are close to Beneunder.
• Beneunder has to keep physical stores and control online advertising budget.

• Over the past year, we’ve seen the stock price of Kintor fluctuate largely, which was mainly driven by its COVID-19 drug proxalutamide. However, we are not optimistic about its outlook.
• There are big concerns about the credibility of management. The suspicion caused by mistrust leads us to suggest that investors directly enter the “show me the result” mode.
• Shares plunged after the announcement of the Placing. Obviously, Kintor Pharmaceutical (9939 HK) is short of money. Considering the potential risks behind, we are bearish on Kintor. 

Sino-Ocean’s H1/22 results were mixed in our view. Contracted sales fell by 14% y-o-y, slightly better than the average industry decline of 30-40%. The company also managed to repay c. CNY 20 bn of debt in H1/22. Sino-Ocean enjoys good access to financing, raising CNY 6 bn from the capital markets amid weak market sentiment in the period. It also intends to issue state-backed guarantee bonds in the near term.

Negatively, Cash/ST Debt was inadequate, with available cash of only CNY 14 bn. Sino-Ocean plans to explore various channels to repay the existing debt, including boosting contracted sales with a faster cash collection rate, project financing and obtaining financing support from shareholders. That said, any price discount or additional financing will weaken the credit metrics further. Moreover, Sino-Ocean fell in the yellow category under the regulator’s Three Red Lines thresholds (FY 2021: green), which would limit the amount of new debt that could be taken up.

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.

• ABM Investama
• China Jinmao Holdings
• China Vanke
• Country Garden Holdings Co
• Sino-Ocean Service

• Driven by recovery of Casarte after lockdown removed and premiumisation of product and pricing, Haier Smart Home (6690 HK) should see sustained healthy earnings growth in 2H22.
• We expect room to improve gross margin sequentially as cost pressure subsides in 2H22. Meanwhile, overseas markets still present good expansion opportunities. 
• Premium valuations are justified by its brand strength, global presence and strong execution capability. Healthy 1H22 should clear market’s concerns on impact of weak property market. 

• 2018 was a watershed for Tongrentang. After the incident of using expired honey was exposed and the corruption scandal afterwards, Tongrentang’s performance declined significantly and didn’t recover until 2021.
• Angong Niuhuang Pill is the major performance driver and also Tongrentang’s core product. Due to the economic downturn, the price increase of Angong Niuhuang Pills could lead to inventory overstocking.
• The high growth in 2021 may not be sustained. We lowered our forecast for 2022. Without core competitiveness and high moat, we are conservative about Tongrentang’s long-term 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.

• KWG Living Group

• China MeiDong Auto (1268 HK) presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout). 
• China MeiDong Auto (1268 HK) ‘s integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now. 
• The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company. 

• There were a bunch of rebalance announcements last week from FTSE and Nifty, and implementation of changes to the MSCI, JPXNK400 and Hang Seng indexes.
• The changes to the Nikkei 225 (NKY INDEX) should be announced early in the coming week and the changes to the SSE STAR50 (STAR50 INDEX) will be implemented on Friday.
• There were large inflows to China and Hong Kong focused ETFs during the week.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Leapmotor (2007699D HK) and Onewo Space-Tech (ONEWO HK) are pre-marketing a US$1.5 billion and US$2.0 billion HKEx IPO, respectively.
• Event-Driven developments – BYD (1211 HK), Giordano International (709 HK), MACA Ltd (MLD AU), Nitro Software Ltd (NTO AU), Link Net (LINK IJ).

• Lichen China, niche provider of financial and taxation services, filed for an IPO in the United States, and plans to raise ~$25M. Investment bank Univest Securities is leading the offering. 
• The company applied to list Class A shares on the Nasdaq Capital Market under the symbol Lichen China (LICN US) and will have Class A shares and Class B shares. 
• We have a favorable view of the upcoming IPO, and consider an IPO valuation of ~$119M as attractive at ~2x EV/FY22E revenue and a forward P/E of ~14x.  

• Onewo Space-Tech (ONEWO HK), China Vanke Co Ltd (H) (2202 HK)’s property management unit, has begun pre-marketing a US$2.0 billion HKEx IPO.
• In Onewo 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 the organic growth rates half of the reported rates, slow revenue diversification, lacklustre gross margin and declining contract liabilities ratio.

• 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 starting to move with Leapmotor and Onewo, while CALB continues to have second thoughts.
• The biggest placement this week was Doosan, but there was news of Tencent setting its sights on sizeable future placements via divestments.

• There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deal was discussed this week: Potentia’s rejected proposal for Nitro Software Ltd (NTO AU).
• Key updates took place for MACA Ltd (MLD AU), Giordano International (709 HK), and Link Net (LINK IJ).

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.

• 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 inflow over the past week was ~US$0.7bn, split between Shanghai (US$0.3bn) and Shenzhen (US$0.4bn).
• The largest inflows were into Gree Electric Appliances (000651 CH) and CATL (300750 CH). The largest outflows were in Industrial Bank (601166 CH) and China Merchants Bank (600036 CH).

• Leapmotor (2007699D HK), a Chinese EV manufacturer, is pre-marketing a US$1.5 billion HKEx IPO, according to press reports.
• We previously discussed the IPO in Leapmotor IPO: The Bull Case, Leapmotor IPO: The Bear Case and Leapmotor IPO: Look Before You Leap. 
• In this note, we present our forecasts and take the first look at Leapmotor’s potential valuation range. 

• 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 outflow over the past week was ~US$0.1bn, split (-US$0.4bn) for Shanghai and (+US$0.3bn) for Shenzhen.
• The largest inflows were into CNOOC Ltd (883 HK) and Yankuang Energy Group (1171 HK). The largest outflows were in Meituan (3690 HK) and Kuaishou Technology (1024 HK).

• Chongqing Hongjiu Fruit (6689 HK) raised around US$71m in its Hong Kong IPO.
• CHJF’s subscription rates were lackluster with weak coverage on the institutional tranche and the retail portion being undersubscribed.
• However, after applying a discount to the local peer average, we think there still remains some upside for investors given its higher revenue and profitability growth.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

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. ABM Investama
2. China Jinmao Holdings
3. Lifestyle International Holdings
4. Geely Auto
5. First Pacific Co

and more…

In our view, First Pacific’s H1/22 results were robust. All investee companies performed well, with the two key assets (Indofood and Philippine Long Distance Telephony) delivering record high revenue and earnings. Indofood’s guidance for H2 is positive, with a significant increase in margins as higher raw material costs are passed through. While leverage increased slightly due to lower share prices of investee companies, we believe it is still at an acceptable level due to the general market volatility. Liquidity at the holdco is adequate, given the good debt maturity profile. The financial risk profile remains stable, with no real improvement as excess cash flows are mainly returned to shareholders. That said, if the situation deteriorates, such distributions can be delayed/postponed to repair the balance sheet.

• Pc Partner reported a strong set of 1H22 results last week and held a conf call with investors this week. Importantly, management sees no impact by US/China Nvidia AI situation.
• 3Q22 results will be weak as old inventory is being discounted in front of the launch of RTX 40 by NVIDIA Corp (NVDA US) in early 4Q22.
• Stock is unlikely to rally before more clarity on inventory situation improvement, but well supported by net cash (5.4 HKD) and high interim dividend (11.4%). 

• Hang Lung (10 HK) recently announced it had acquired 1.3% in Hang Lung Properties (101 HK) over a one-year period, increasing its holding to 59.5%.
• HLG currently trades at a 62% discount to NAV, a level last seen around the Covid lows in May 2020.
• HLG is the most basic of Holdco structures – there is almost a 100% overlap in the stub ops with HLP’s property investments. 

• Leapmotor (LM) aims to raise around US$1.5bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
• As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
• In our previous note, we spoke about the company’s past performance,  PHIP updates and undertook a peer comparison. In this note, we will talk about valuations.

• Two big headlines drove the short squeeze, helped by the record level of short selling as a percentage of total volume in recent months.
• The recovery remains a low volume rally and short turnover as share continues to be high.
• Most of the short selling remains in Index ETF and very large-cap stocks.

• In 2Q22, we believe revenue will grow fast, especially for value added service and advertising.
• We believe operating loss will shrink, but far from making profit.
• We believe the stock has an upside of 18% for the end of 2023.

• Onewo Space-Tech (ONEWO HK), China Vanke (000002 CH)’s property management unit, has begun pre-marketing a US$2.0 billion HKEx IPO.
• Onewo ranked first in China’s property management services market as measured by revenue from basic property management services, with a market share of 4.28% in 2021.
• The key elements of the bull case rest on the solid financial health of the parent, strong growth, growth runway from undelivered GFA, share gains, renewal rates and cash generation.

• China Communications Construction (1800 HK) should see positive new contract momentum in 2H22. We also expect softening in cost pressure to bring about better margin. 
• It is actively looking to recycle and realise the value of its assets and good progress are expected in 2H22. Such moves will narrow the currently deeply discounted 0.18x P/B. 
• With order backlog amounting to 4.6x of annualised 1H22 revenue, earnings prospects are well secured, making its FY22F PER of 2.6x and FY23F of 2.3x very cheap.

• Burning Rock Biotech (BNR US) has announced Q2 results. Despite the negative impact from COVID-related restrictions in China, revenue increased 3% y/y to RMB130.8 million, driven by pharma R&D service.
• Gross margin deteriorated due to unfavorable revenue mix and inventory write down. Even upon this, operating expenses grew 19%, thereby widening net loss to RMB262.1 million.
• Encouraged by ongoing business volume recovery, management has reiterated full-year 2022 revenue guidance of approximately RMB620 million, indicating H2 2022 revenue of RMB354 million, which represents 29% y/y growth.    

Fosun International’s H1/22 results appear to be reasonable, with higher revenue but lower earnings. The reported credit metrics are not very representative of the credit profile in our view, given the company’s investment holding nature. Thus, it is difficult to assess Fosun’s credit health. However, we take some comfort from the rate of divestments, which is outpacing the rate of investments. Reported liquidity on a consolidated basis seems adequate. That said, we have no visibility on liquidity at the holdco.

Still, we highlight that Fosun has major assets to be sold, especially those without ample synergies. The company has accelerated its asset sale process since 2021. However, it cannot name the assets currently, as details of the transactions are still confidential. Moreover, Fosun does not wish to affect the morale of employees at these assets. The asset disposals are focused on non-core assets, which are typically not listed.

• With favorable policies and improved intellectual property protection, investors’ attitude towards rare diseases in China has changed significantly and become more interested in this field.
• Since no new candidates would be commercialized until 2024, Beijing Continent Pharmaceuticals (CPH HK) could face increasing competition and financial pressure. The breakthrough point is to develop overseas markets.
• In terms of valuation, Continent is better than CANbridge Pharmaceuticals (1228 HK), so it is expected to have higher valuation than CANbridge after listing.

• The Cheng-family Offer for Giordano International (709 HK) became open to tendering after the Composite Doc was issued on the 15 August.
• With the first close less than a week away, acceptances are minimal – ~3.6%.
• Separately, David Webb, who definitely will not be tendering, has increased his stake to 5.79%.

• BYD (1211 HK)’s shares declined by -8% on disclosure that Berkshire Hathaway Inc Cl B (BRK/B US) trimmed its stake from 20.04% to 19.92% of outstanding H Shares. 
• Berkshire will likely follow its PetroChina (857 HK) playbook and materially sell down over the next few months. Buffet stated that the PetroChina exit was “a decision based on valuation.”
• Berkshire will apply the same investment discipline to the BYD stake. While the shares are trading at a discount to historical multiples, the Berkshire stake is an overhang.

• EVE Energy (300014 CH), PetroChina (601857 CH) and Shaanxi Coal (601225 CH) replace Anhui Conch (600585 CH), CPIC (601601 CH) and Zhangzhou Pientzehuang (600436 CH) at the close 16 September.
• Estimated one-way index turnover at the rebalance is 3.1% and will result in a one-way trade of CNY 1,678m.
• PetroChina (601857 CH) is also an inclusion to the FTSE All-World Index while China Pacific Insurance (2601 HK) is a delete from the Hang Seng China Enterprises Index (HSCEI INDEX). 

• Yankuang Energy Group (1171 HK) will replace Shenzhou Intl Group Holdings (2313 HK) in the FTSE China 50 Index at the close on 16 September.
• Passive trackers will need to buy over 1 day of ADV on Yankuang Energy Group (1171 HK) while selling over 1 days ADV on Shenzhou Intl Group Holdings (2313 HK).
• Short interest on Yankuang Energy Group (1171 HK) is over 10 days of ADV to cover and around 10% of float. That could help the stock move higher.

• Biocytogen raised HKD 471m (USD 60.77m) from its global offering and will list on the Hong Kong Stock Exchange on Thursday, September 1st.
• In the previous note, we looked at the company’s business lines including biotech and animal model businesses.
• In this note, we provide an update for the IPO before trading debut.

• CanSino’s performance declined in 22H1 due to decreased demand of COVID-19 vaccine. Since we have analyzed our concerns on performance in prior insight, there should be psychological expectations for the decline.
• The COVID-19 vaccine business brings CanSino rich cash flow and helps it establish commercial team. Together with MCV2/MCV4/mRNA/PCV13i, it’s too early to be completely bearish on CanSino.
• The market has exaggerated the impact of performance decline of COVID-19 vaccine on CanSino. Although 2022 is a difficult year, it is a good time to bottom fish this stock.

Country Garden’s H1/22 results were in line with our expectations. Contracted sales plunged 40% y-o-y, in line with the industry average of 30-40%. Positively, the company managed to maintain the cash collection rate at above 90%, and the leverage metrics remained broadly stable. That said, the H1/22 gross margin came under pressure at 11% (lower than most peers). Additionally, the average sell-through rate stood at only 50%, which could result in cash being trapped in developments with low demand.

• We visited a Leapmotor store in Shanghai China last weekend.
• Model C11 instead of T03 was popular despite the fact that T03 shows a large sales volume on prospectus.
• We believe pure electricity vehicle is promising in cities, especially in large cities.

• First Solar’s second quarter results were positive and it delivered an all-around beat.
• During the quarter, the management kept up their booking pace, strengthening their backlog of anticipated future deliveries, which now totals a record 44.3 gigawatts.
• The management is working on setting up the necessary supply chain to support the eventual launch of a bifacial CadTel module.

In our view, Anton Oilfield’s H1/22 results were robust and in line with expectations. In FY 2021, the company shifted its focus to profitability and an asset-light strategy. This shift in focus explains the softness in new orders, while the backlog continued to grow. All four business segments grew steadily, as the company benefited from the supportive operating environment with high and rising oil prices. Earnings still failed to catch up with revenue growth, and Anton will need to work through the old backlog before new orders with higher profitability kick in. Cash flows were good, while the company’s credit metrics improved and were modest. Liquidity is adequate.