China Archives | Page 118 of 198 | Smartkarma

• The inclusion of China Shenhua Energy Co H (1088 HK), Chow Tai Fook Jewellery (1929 HK), Hansoh Pharmaceutical (3692 HK) and Baidu (9888 HK) takes us to 73 index constituents.
• Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 5.09% and will result in a one-way trade of HK$10,562m.
• There are large shorts on Chow Tai Fook Jewellery (1929 HK) and Hansoh Pharmaceutical (3692 HK) and there could be some short covering from now to implementation.

• This research note is our first on SKYX Platforms, formerly known as Sky Technologies.
• The company is a distinguished player within the field of electrical engineering and caters mainly to the residential market.
• Most modern-day smart homes today rely on a large number of IoT (Internet of Things) gadgets coming from different companies and target high-income populations.

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. China SCE
2. Azure Power Global Ltd
3. China Jinmao Holdings
4. Guangzhou R&F Properties
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. China SCE
2. Azure Power Global Ltd
3. China Jinmao Holdings
4. Guangzhou R&F Properties
5. Sunac China Holdings

and more…

• SenseTime Group (20 HK)‘s Free-Float Adjustment Factor (FAF) increases from 3% to 40% following lock-up expiry and the stock will replace China Pacific Insurance (2601 HK) in the HSCEI INDEX. 
• Using prices from the close on 19 August, estimated one-way turnover is 3.82% and will result in a one-way trade of HK$2,751m at the close on 2 September.
• Increase in the FAF on a couple of stocks saves them from index deletion in September but is probably not enough to save them from index deletion in December.

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.

• June 27 call to sell strength in line and showing increasing downside pressure below the 185 support (now resistance).
• Dual top at 210 induced a turn well under trendline resistance. Break of bear wedge support confirmed the macro sell signal.
• Below 166 targets 140 where a stall in the decline/bounce is due (resistance near 160-66) but expected to give way for a test on the 110 low zone.

• In 2Q22, revenue decreased YoY for the first time on record.
• Unexpectedly, FinTech revenue stopped growing in 2Q22, as users are conservative in borrowing and investing money.
• However, we still believe Tencent’s stock price is overly impacted.

• Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.
• We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.
• The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) by a wide margin over the last few months.

• Many consumers bought household freezers after the lift of lockdown.
• Strict rules on physical stores drive consumers to online e-commerce platform.
• Total express parcels increased by 8% YoY in China in July.

• WEIMEIZI develops the oral care market by means of large promotion and marketing so as to attract consumers, which helps Saky become one of the top brands in China.
• However, with the layout of other long-lasting reputable brands and the entry of new brands, how to maintain the market share in fierce competition has become an important issue.
• WEIMEIZI’s leading market position is not solid, unless it could create differentiated products and keep up with industry trends closely. 

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.

• Bharti Airtel
• Country Garden Holdings Co
• Fantasia Holdings Group Co
• Meituan
• China Datang Corp Renewable Power
• Road King Infrastructure

• Reuters this afternoon carried an article that Tencent (700 HK) was seeking to divest “US$24bn” (17%) of $78bn market cap delivery company Meituan (3690 HK) by year-end to mollify domestic regulators.
• Tencent would seek to launch a share sale within 2022 “if market conditions are favourable.” Meituan shares tanked 9%, immediately.
• The article suggests disposal via block sale (faster than negotiating with a private buyer), odd given Tencent’s Q1 2022 experience with the JD.com unwind. But it leads to BIG flows.

• Past the midway mark in the review period, we see 18 potential changes to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the December rebalance.
• We estimate a one-way turnover of 3.32% at the December rebalance leading to a one-way trade of CNY 8.55bn.
• The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index over the last few months, with the outperformance widening over the last few weeks.

• Yashili International Holdings (1230 HK) independent shareholders unanimously approved the proposed transactions at the 16 August EGM, a crucial step for China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer.
• The remaining pre-condition is the completion of the 25% Yashili acquisition. The completion conditions suggest that this pre-condition is low risk and will likely be completed soon.
• The value test is only applicable to the scheme. At last close and for a November completion, the gross and annualised spread to the offer is 8.1% and 29.6%, respectively.

• Tencent (700 HK)‘s reported sale of its Meituan (3690 HK) stake led to a selloff on Meituan and on other companies that Tencent has invested in.
• There are 10 listed companies where Tencent (700 HK)‘s holding is over US$1bn. Some stakes are more likely to be sold than others. 
• A complete stake sale will benefit some companies more than others since they are part of a wider array of indices and that will bring in passive flow.

• CTG Duty Free Group has filed for a HKEx listing and plans to raise net proceeds of US$1.98bn at the midpoint of the IPO price range of HK$143.5-165.5 per share.
• The company’s indicative IPO price range is at a 27-37% discount to the company’s last close of RMB194.75 per share.
• In this insight, we discuss our key concerns on CTG’s financials and our thoughts on the company’s valuation.

• The pre-condition for Xiamen International Port H (3378 HK)’s privatisation offer from Xiamen Port Holding is satisfied. The offer is HK$2.25 per H share. 
• The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
• The offer is attractive. At last close and for a 21 October payment, the gross and annualised spread to the offer is 2.7% and 16.0%, respectively.

• Dianxiaomi, a China-based ecommerce software-as-a-service platform, has bagged US$110 million in a series D round.
• With the latest investment, Dianxiaomi has raised a total of US$210 million this year. In March, the company closed a US$100 million series C round.
• Founded by Du Jianyin in 2014, the firm specializes in developing infrastructure for cross-border ecommerce

• Over the past few years, Sinopharm’s revenue scale has continued to grow, but its gross profit margin declined due to negative policy pressure. Actually, it isn’t a highly profitable business.
• As industry leader, Sinopharm will benefit from the increasing industry concentration and further expand market share. The challenge is Sinopharm will face a situation of increasing revenues without increasing profits.
• For 2022 forecast, revenue YoY growth could be about 5%-7%. Net profit YoY growth could be below 10%., High valuation expectations cannot be supported considering the future industry trend.

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
• Country Garden Holdings Co
• Meituan

• Giordano International (709 HK)’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.
• Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.
• While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.

• After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
• Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
• Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.

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.

• Anton Oilfield
• Central China Securities
• West China Cement

• CTG Duty Free (1880 HK) is looking to sell up to 118.176m shares to raise up to US$2.5bn. Pricing at HK$143.5-165.5/share is a 38.6%-29.2% discount to CTG Duty Free (601888).
• Between 32-37% of the total offer size is being taken by 9 cornerstone investors and they are locked in for 6 months from listing date (expected 25 August).
• CTG Duty Free (1880 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in March. Southbound Stock Connect could come online on 19 September.

• On the 23 June, the Cheng family made an underwhelming voluntary conditional Offer of $1.88/share for Giordano International (709 HK). 
• The Offer is conditional on the family getting to more than 50% via tendering, and the Cheng’s (and concert parties) control 24.57%.  
• The Composite Document is now out with a first close on the 5 September.  The Offer Price has now been declared final. That’s a surprise.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• Highest spreads are 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Resapp Health (RAP AU), Infomedia Ltd (IFM AU), Lifestyle International Holdings (1212 HK).
• Lowest gross spreads are Dongzheng Automotive Finance (2718 HK), Excelpoint Technology (EXLP SP), MyDeal.com.au Ltd (MYD AU), Cocoaland Holdings (COLA MK), Giordano International (709 HK), China VAST.

• At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of China Tourism Group Duty Free Corp (601888 CH) is not attractive enough. 
• 2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.
• Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.

• Express parcels increased by 8% YoY in China in July.
• TikTok was still the top non-game app in the world in July.
• Meituan raised its prices of bike sharing on August 10.

• Huadong released encouraging 2022H1 results. After a significant decline due to the loss of VBP bid for core varieties, Huadong is out of trouble and back on track now.
• The future profit contribution would be on medical cosmetology and industrial microorganisms businesses. For 2022 forecast, revenue YoY growth is below 10%, and net profit YoY growth is above 15%.
• Due to unfriendly macro environment, Huadong’s share price could face a correction. But based on its promising outlook, we recommend that investors could take advantage of the pullback to long.

• 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, China Tourism launched its US$2.5bn IPO. 
• There were no major placements this week and it likely to remain that way in the near future owing to it being earnings season.

• 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 – China Tourism Group Duty Free Corp Ltd (601888 CH) has launched an H Share listing to raise US$1.9-2.2 billion.
• Event-Driven developments at EVOC Intelligent Technology Company Limited H (2308 HK), Lifestyle International Holdings (1212 HK), OZ Minerals Ltd (OZL AU), MACA Ltd (MLD AU), Excelpoint Technology (EXLP SP), MyDeal.    

• China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
• As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
• In this note, we talk about the deal pricing and run the deal through our ECM framework.

• Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn. 
• A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them. 
• The conclusions are surprising, and lead to one clear trading idea. 

• China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
• In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
• Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.

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.

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. Pakuwon Jati
2. Softbank Group
3. Lenovo
4. China SCE
5. Kwg Property Holding

and more…

• Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
• Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
• It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.

Yanlord Land’s H1/22 results were reasonably strong in our view, considering the depressed industry environment. The company’s sales and cash collections remained robust, supporting its liquidity profile. In addition, a high proportion of its cash balance remains freely available. We note that Yanlord’s operating performance held up relatively well (vs. that of developer peers), thanks to its high asset quality. Still, we broadly agree with management’s dim assessment of the Chinese property industry’s medium-term prospects. 

• Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
• Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
• In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.

• Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
• As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
• One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.

• Swire Pacific (A) (19 HK)/Swire Pacific Ltd-Cl B (87 HK) has announced a HK$4bn buyback. While that is 6.5% of shares out, it is over 15% of real float.
• Swire Pacific (A) (19 HK) was trading at a 50% discount to NAV and near the widest level over the last few years.
• There will be passive selling once the buyback is complete, but the stocks should run up prior to that.

• Today Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced earnings, and they announced a large (HK$4bn) buyback.  
• Details are somewhat thin, but there are a bunch of possibilities, and all of them should have non-negligible impact on Swire and Swire vs Peers. 
• The immediate market response was to send them up 10% on the day. That puts both at somewhere near one-year highs, but the discount to NAV is still big.

• China Tourism Group Duty Free Corporation Limited (CDF) is gearing up to launch Hong Kong’s largest listing so far this year, with a reported deal size of around US$2-3bn.
• Prior to the deal launch, we’ve had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
• Overall, most of the recent A/H listings haven’t done much over the first month.

• We believe revenue would Still Be Slow in 2Q22, but will recover in 4Q22 or 2023.
• We believe FinTech will be the only highlight, but online game and advertising will be negatively impacted.
• However, we estimate the stock price will have an upside of 55%.

• Swire Pacific (19 HK) has announced a “small” buyback at HK$4bn, but it is a material portion of ADV.  
• What remains unknown is how the buyback will be split.  The split will only be known once buyback volumes are announced. 
• Swire is trading cheap at a look-through forward P/B of 0.28x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x. 

• Kuaishou Technology Co. Ltd., the operator of China’s second-largest short video app, unveiled the new video cloud brand StreamLake and a self-developed intelligent video processing chip Wednesday in key moves to expand its business
• The launch of StreamLake, the first enterprise-facing product from Kuaishou, marks the short-video platform operator’s official entry into the cloud services market and a shift from its original consumer-focused businesses
• StreamLake will provide artificial intelligence-powered video creation and distribution solutions for corporate clients, Kuaishou said.

• Biocytogen Pharmaceuticals (Beijing) (BCP HK) is a biopharmaceutical and pre-clinical research services company with two core products (YH003 and YH001) and 10 other pipeline candidates.
• The company currently does not have any commercialised products and earns revenue through offering pre-clinical research services and antibody development.
• Biocytogen’s business model comes with inherent risks such as absence of approved drugs. Hence, we would recommend staying on the side line.

• A slow 1H22 new project momentum and a slight retreat in net profit are not expected to materially alter the positive outlook for China Everbright Water (1857 HK). 
• We estimate project pipeline equals to about 28% of its existing operating capacity. They will underpin growth prospects over the next two years.
• New project growth should accelerate in 2H22 given the increase in local governments’ special purpose bonds issue. Cost inflation is expected to moderate sequentially as well.

• The carnage in China and some Hong Kong real estate and property management companies and financials went largely unnoticed.
• The five-day decline in Longfor was 18%, Country Garden by 15.50%, Hang Seng Mainland Properties Index fell 6.75%, and HSI Properties Index fell 2.75%.
• It has had zero impact on the rest of the world (ROW) markets.

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
• Pakuwon Jati

• China Tourism Group Duty Free Corp Ltd (601888 CH)/CTGDF, the largest travel retail operator in the world, aims to launch an H Share listing to raise US$2-3 billion on Friday.
• CTGDF is a play on the normalization of domestic travel. However, the H Share listing timing is not ideal as a vital summer travel market, Sanya, is under renewed lockdown. 
• The recovery timing has again shifted, with expectations of a 4Q recovery, but 2022 consensus expectations look slightly optimistic. We prefer to remain on the sidelines.

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

We view Zoomlion as “High Risk” on the LARA scale, mainly due to its moderate financial profile. The company has concentrated exposure to China’s construction machinery segment, which is in turn reliant on infrastructure and construction spending in the country. Furthermore, a downturn in the property sector has had an indirect impact on Zoomlion. Globally, the industry is dominated by a few MNCs.

Zoomlion has a strong domestic market position, and is the world’s seventh-largest heavy machinery manufacturer. The company enjoys a close affiliation with the Chinese government, with its largest shareholder being a SOE. This improves Zoomlion’s access to refinancing capital. We expect the construction machinery industry to benefit from rising replacement demand and infrastructure development.

Our Credit Bias on Zoomlion is “Stable”, reflecting the company’s stable revenue. That said, we remain cautious about the likelihood of overdue risks resulting from the tough economic conditions. Additionally, capex has increased significantly and is expected to remain high, given the need to construct relocated plants and upgrade the company’s products. Overall investor sentiment is supported by Zoomlion’s operating track record and its largest shareholder, Hunan Xing Xiang Investment (a SOE). This may facilitate continued access to domestic debt markets.

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.

• Greenland Holdings Corp
• Lenovo
• Longfor Properties
• Softbank Group
• Times China

• S&P DJI commenced a market consultation for the S&P Global Water Index on 29 July and that could lead to quite a few changes to the index in October.
• We currently see 14 deletions and 10 inclusions for the index in October. Most of the changes will have a high impact from passive fund trading.
• There could be more changes in April 2023 once stocks listed in Emerging Markets are included in the index.

• Tencent short from 390 is rewarding and reaching for new chart lows now that the 310 pivot support has given way and leading the likes of BABA.
• MACD target support is the key input to align with a terminal wave 5 low to set up the macro long entry in September.
• Undershoot risk to lower channel support with a low due in September and rally hurdles toward year end at 370/390. 420 remains the forward macro barrier to challenge/clear.

• Just days after AMTD Digital (HKD US) was ramped 30,000% to a ridiculous valuation only weeks after its IPO, Magic Empire Global (MEGL US) IPOed and rose 2000+ on Day1.
• MEGL is a corporate advisory, helping smallcaps IPO then helping them comply with listing rules. 2 principals, 2 professionals, 5 staff with no moat had US$2.16mm in revenue in 2021.
• And it is worth US$2.3bn – 1000 x revenues and 10,000x earnings?  This is not OK. And it smacks of something unsavoury. 

• Reuters and several other news media outlets reported that Tencent (700 HK) is looking to raise its stake in French game publisher Ubisoft as it seeks to expand overseas.
• Tencent owns approx. 5.0% of Ubisoft which was acquired in 2018 and is said to have reached out to the founding family Guillemot to buy a stake from their ownership.
• As we mentioned in our previous insight, Tencent has been excluded for the fourth time from new game approvals which had impacted its online games biz.

• Due to the lockdown/pandemic, Pientzehuang Pharmaceutical’s 2022H1 performance slowed down. Considering the economic downturn and people’s cutting back spending on non-rigid consumption, the full-year revenue growth could be around 10%-20%.
• The Company’s key challenge lies in revenue growth. However, it is not easy to increase sales largely due to the scarcity of raw materials, which limits the expansion of production.
• Pien Tze Huang is overvalued. Share price could continue to fall,but it will bounce back due to its high moat. 2022 is a good time for bottom fishing this stock.

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
• KWG Living Group
• Longfor Properties
• Sino-Ocean Service