China Archives | Page 131 of 199 | Smartkarma

In today’s briefing:

Bytedance Tearsheet – Doesn’t Need Much of an Introduction
Tencent (700 HK): Besieged Game Business
Pre-IPO Yunkang Group – Lack of New Growth Point
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
China Everbright Water (1857 HK): Good New Project Flow Is the Key

Bytedance Tearsheet – Doesn’t Need Much of an Introduction

By Sumeet Singh

Bytedance doesn’t need a whole lot of introduction as it runs one of the most popular global apps, TikTok, and one of the largest domestic apps in China, Douyin.
The company undertook a funding round in Dec 2020, which valued the company at around US$180bn. Its valuation has touched US$425 bn in June 2021 in private market transactions.
Rumours about listing have been doing the rounds since as far back as 2019. Although there are no confirmed listing plans.

Tencent (700 HK): Besieged Game Business

Short video has been taking time on site from game players.
Main games are shrinking, but the authorities have not been granting license to new games.
The authorities also banned Chinese players from playing with overseas game players.

Pre-IPO Yunkang Group – Lack of New Growth Point

Benefiting from the opportunities brought to the healthcare industry by the COVID-19 pandemic in 2020, Yunkang Group (YK HK) took a ride and ushered in a turning point in performance.
As the pandemic stabilizes and gets gradually under control, the revenue generated from COVID-19 tests may significantly decrease, which means Yunkang may return to net loss again in the future.
We currently haven’t seen any new growth point with high certainty. Therefore, we are conservative about Yunkang’s outlook.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets ended registered another strong day of gains on Friday with the S&P and Nasdaq ending 2.2% and 1.6% higher. All sectors ended in the green, led by Materials and Financial, up 3.2-3.5%. US 10Y Treasury yields eased 5bp on Friday. European markets also rallied sharply – DAX, CAC and FTSE were up 3.6%, 3.7% and 3.9%. Brazil’s Bovespa closed 1.4% higher. In the Middle East, UAE’s ADX was up 0.6% and Saudi TASI was up 1%. Asian markets have opened with a negative bias – Shanghai, HSI, STI and Nikkei are down 0.3%, 1.5%, 2.2% and 0.3% respectively. US IG CDS spreads tightened 2.1bp and HY spreads were 9.9bp tighter. EU Main CDS spreads were 6.5bp tighter and Crossover CDS spreads were a sharp 38bp tighter. Asia ex-Japan CDS spreads were 0.6bp wider.

China Everbright Water (1857 HK): Good New Project Flow Is the Key

Full-Year earnings growth of 17% suggested a slowdown in 2H21, but this is mostly a result of higher base. A 3pp increase in dividend payout ratio also demonstrated management’s confidence.
Focus should be on the positive new project momentum – 10 secured in 2H21, versus only 4 in 1H21. More special purpose bonds issuance should drive project pipeline.
CE Water’s valuations are cheap at 0.43x P/B and 3.8x PER for FY22F. Its prospective dividend yield of 7.9% also provides an appealing income component.

Before it’s here, it’s on Smartkarma

Feb 27

China: SenseTime Group and more

In today’s briefing:

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia

Changes to the FTSE All-World/All-Cap were announced over the previous weekend, NIFTY was announced Thursday and STAR50 on Friday. LG Energy’s inclusion to the KOSPI200 was also announced.
21 February was the review cutoff for the March rebalance of the FTSE China 50, FTSE China A50, STI, FTSE TWSE Taiwan 50 and the FTSE EPRA Nareit.
On Friday, FTSE announced that two of the previously announced inclusions would not be added, while there would be 10 new additions to the All-World/All-Cap indices.

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Feb 26

China: Shanghai Medicilon Inc, Alibaba Group, Jinmao Property Services, Yunkang Group and more

In today’s briefing:

STAR50 Index Rebalance: Index Committees Just Wanna Have Fun
Alibaba: A Long Way Down Already and a Lot More to Go
Jinmao Property Services IPO – Premium Asking Valuation and Cornerstones Took up 80% of Deal
Yunkang IPO: Core Business Growth to Slow Down Post-Covid

STAR50 Index Rebalance: Index Committees Just Wanna Have Fun

By Shifara Samsudeen, ACMA, CGMA

In keeping with tradition, the SSE and CSI have continued to use a 6 month minimum listing history. No one remembers how or why it started, but it carries on.
There are only 10 trading days to implementation and passive funds will need to trade multiple days of ADV on the inclusions and exclusions.
The adds, deletes and the SSE STAR50 (STAR50 INDEX) have moved in lockstep since November. The CSI500 Index has outperformed over the period opening up a trading opportunity.

Alibaba: A Long Way Down Already and a Lot More to Go

By Oshadhi Kumarasiri

Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.

Jinmao Property Services IPO – Premium Asking Valuation and Cornerstones Took up 80% of Deal

By Clarence Chu

Jinmao Property Services (JM HK) is looking to raise around US$105m in its Hong Kong IPO.
At listing, it is asking for a steep premium and 82% of the deal size has already been taken up by cornerstones, not leaving a whole lot for other investors.
In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.

Yunkang IPO: Core Business Growth to Slow Down Post-Covid

Yunkang Group (YK HK) is a medical operation service provider in China and offers a full suite of diagnostic testing services.
The company’s earnings had a boost in 2020 with the pandemic which resulted in huge demand for Covid-19 diagnostic tests.
Yunkang has filed for an IPO to raise about US$200m. We expect the company’s earnings to gradually decline with pandemic conditions easing off.

Before it’s here, it’s on Smartkarma

Feb 25

China: Hang Seng China Enterprises Index, Alibaba Group, Pacific Basin Shipping, Yunkang Group, NetEase Inc, Shanghai Pulse Medical Technology, Asia High Yield Bond Index and more

In today’s briefing:

HSCEI Dividend Futures: Stay Short the 2022/23 Steepener
Alibaba (BABA): 3Q22, Transforming Missions Going Under Slow Quarter
Pacific Basin Shipping (2343 HK): Strongest Ever Year
Yunkang Group Pre-IPO – Would Need to Prove Itself Post-COVID
NetEase (NTES): 4Q21, Better than Expectation
Shanghai Pulse Medical (博动医疗) Pre-IPO: Leading Image-Based FFR Player
Zhenro Plans Asset Sale of up to $644mn
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

HSCEI Dividend Futures: Stay Short the 2022/23 Steepener

The HSCEI 2022 dividend futures are trading around our fair value. Larger than expected special dividends from oil and telecom companies could provide some upside.
The HSCEI 2022/23 div steepener has dropped from -5 to -15 since our last Insight. We see further downside here and would look to add to shorts in the spread.
With rising interest rates, higher inflation, higher oil prices, a slowdown could lead to a rapid repricing of dividends and there will be opportunities to buy back the spread lower.

Alibaba (BABA): 3Q22, Transforming Missions Going Under Slow Quarter

BABA’s app, SDTao, has been taking active users from Pinduoduo.
We believe BABA’s physical store chain, Freshippo, will go public.
We believe BABA will stop investing in unprofitable Ele.me as it underperforms Meituan.

Pacific Basin Shipping (2343 HK): Strongest Ever Year

Impressive result with underlying net profit reached US$698m in FY21, up sharply from loss of US$19.4m a year ago. Net gearing dropped to 7% with record-high ROE of 58%.
With 48-64% of Handysize and Supramax days covered at TCE slightly below FY21 level, it has well secured FY22 profitability, with upside from higher rate in rest of this year.
We expect ROE to be over 30% for FY22, making its 1.3x P/B not expensive, especially with an improved balance sheet. Dividend yield of 14% for FY22 is another attraction.

Yunkang Group Pre-IPO – Would Need to Prove Itself Post-COVID

By Clarence Chu

Yunkang Group (YK HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
Yunkang Group is a medical operation service provider in China and as per F&S, had a market share of 3.7% in China’s medical operation service market as per 2020 revenue.
While it has managed to grow its on-site diagnostics centers, the firm has to prove that it can still thrive post-COVID.

NetEase (NTES): 4Q21, Better than Expectation

Revenue grew strongly due to the new game, Harry Potter.
We believe NTES has confidence in the growth of cloud music.
We believe the stock has an upside of 32% for the year end 2022.

Shanghai Pulse Medical (博动医疗) Pre-IPO: Leading Image-Based FFR Player

By Ke Yan, CFA, FRM

Shanghai Pulse is a leading player in the FFR assessment in China. The company is looking to raise up to USD 200 m via a Hong Kong listing.
We look at the company’s key products QFR, OFR and UFR. We also provide our thoughts on the investment thesis.
We think the company has a decent investor backing and meanwhile we also highlight concerns on its management.

Zhenro Plans Asset Sale of up to $644mn

Zhenro Properties plans to sell assets worth up to RMB 4bn ($632.7mn) in H2 2021 and extend maturity of other onshore and offshore debt, including debt bank loans and asset-backed securities (Term of the Day, explained below) , as per three sources. The developer is already asking holders of its $200mn 14.724% Perp callable on March 5 to waive claims against the company if it does not redeem the bond. It is also seeking to extend the maturity of five bonds due 2022 that have a total amount outstanding of $1.05bn to be exchanged for new 8% bonds due March 6, 2023. Zhenro is said to be in talks with state-owned firms to sell the assets.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets dropped again on Wednesday with the S&P and Nasdaq down 1.8% and 2.6% with sectoral losses led by Consumer Discretionary and IT down over 2.5-3.5%. The US 10Y Treasury yields are down 10bp this morning to 1.89% on the back of Russia’s “military operation” in Ukraine (scroll below for details) this morning . European markets were relatively steady yesterday – DAX was down 0.4%, CAC was down 0.1% and FTSE was up 0.1%. Brazil’s Bovespa closed 0.8% lower. In the Middle East, UAE’s ADX was flat and Saudi TASI was down 0.3%. Asian markets have dropped sharply – Shanghai, HSI, STI and Nikkei are down 0.9%, 2.8% 2.7% and 2.3% respectively. US IG CDS spreads widened 1.2bp and HY spreads were 5.7bp wider. EU Main CDS spreads were 0.7bp tighter and Crossover CDS spreads were 1.6bp wider. Asia ex-Japan CDS spreads were 2.8bp tighter.

Before it’s here, it’s on Smartkarma

Feb 23

China: Meituan, BYD, WuXi AppTec Co. Ltd., China Energy Engineering, Asia High Yield Bond Index and more

By Shifara Samsudeen, ACMA, CGMA

In today’s briefing:

Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits
Byd (1211): Better Number but Let’s Wait
WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data
Compare and Contrast: Energy China 中国能建 (3996 HK/601868 CH) And Power China 中国电建 (601669 CH)
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits

Meituan (3690 HK) share price is down more than 20.0% from Thursday’s close following announcement on new regulations for food delivery platforms.
New regulation states that food delivery platforms should further reduce the service fee charged from restaurants to lower operating costs for food and beverage businesses.
Meituan’s food delivery business makes about 88% of its revenues from commissions while the remainder comes from online marketing services.

Byd (1211): Better Number but Let’s Wait

By Henry Soediarko

Subsidy removal spooked investors but as proven, January 2022 sales number is even higher than last year.
The main concern is the expensive valuation among the other Hang Seng Index Constituents rather than anything else.
In the medium term, and upon the cessation of the Ukraine-Russia tension, BYD (1211 HK)could be an interesting name to have in the portfolio, especially at a lower valuation.

WuXi AppTec (2359.HK/603259.CH)- Interesting Points to Ponder Behind 2021 Preliminary Financial Data

WuXi AppTec Co. Ltd. (2359 HK) released the preliminary financial data for 2021. It is not surprising that the Company could maintain its outstanding performance.
We listed some interesting points to ponder, such as projected declining performance of WuXi DDSU and related chain reaction, the change in fair value of financial assets, overseas anticipation, etc..
It’s understandable if investors choose to start making layout at this point due to attractive valuation and longer “reflection arc”,but need to be patient for WuXi AppTec to achieve reversal.

Compare and Contrast: Energy China 中国能建 (3996 HK/601868 CH) And Power China 中国电建 (601669 CH)

China Energy Engineering (3996 HK) and Power Construction Corporation Of China (601669 CH) are the two giants in power construction industry in China; but there are significant differences between them.
Power China has better business and generation mix while Energy China won in terms of margin and profitability, leverage and financial position, new order momentum and hydrogen energy expansion.
We like Energy China “H” for cheap valuation, secured earnings and deep discount to Energy China “A”. For just the A-shares, we prefer Power China “A” to Energy China “A”.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets were closed due to President’s Day holidays. The US 10Y Treasury yield dropped 6bp to 1.93%. Risk-off Russia-Ukraine sentiment however continues to weigh on markets with the European markets closing lower – DAX, CAC and FTSE were down 2.1%, 2% and 0.4% each. Brazil’s Bovespa closed 1% lower. In the Middle East, UAE’s ADX was down 1.2% while Saudi TASI closed 0.8% higher. Asian markets have opened lower again today with Shanghai, HSI, STI and Nikkei down 1.2%, 3%, 0.8% and 2.2% respectively. US IG CDS spreads were 0.9bp wider and HY CDS spreads were 4bp wider. EU Main CDS spreads were 2.4bp wider and Crossover CDS spreads were 6.7bp wider. Asia ex-Japan CDS spreads were 0.7bp wider.

Before it’s here, it’s on Smartkarma

Feb 21

China: Tencent, Evergrande, Huitongda, Modern Dental Group, Cosco Shipping Energy Transportation Co. Ltd. (H) and more

In today’s briefing:

Tencent Holdings – Bad News On The Doorstep
China Evergrande Group – Be A Hero, Take It To Zero
Huitongda IPO – First Day Trading
Modern Dental Group (3600.HK) – More Suitable for Short Term Trading than Long Term Holding
COSCO Shipping Energy (1138 HK): US Crude Export and China Import the Wild Cards?

Tencent Holdings – Bad News On The Doorstep

By Thomas J. Monaco

The US Trade Representative (“USTR”) office added Tencent and Alibaba Group to the US government’s latest “notorious markets” list;
Similar to being implicated in running afoul of regulators in mainland China, Tencent “strongly disagrees” with the USTR label; and
*We look forward to Tencent’s 4Q21 results announcement on March 23, 2021 where management will continue to refuse to discuss anything meaningful.

China Evergrande Group – Be A Hero, Take It To Zero

By Thomas J. Monaco

The shares of Evergrande aren’t worth the paper their printed on;
Shanghai Construction receives a positive court outcome at expense of Evergrande; and
The likelihood that Evergrande has enough liquidity and will not have a fire sale of assets is nil – we can add Evergrande to the list of the walking dead.

Huitongda IPO – First Day Trading

By Oshadhi Kumarasiri

Huitongda (9878 HK) had a subdued stock market debut with shares opening marginally above the IPO price.
Its subdued first-day performance suggests that investors are no longer misled by artificially low valuation multiples of “1P” EC players.
Based on EV/ (GMV + Retail Revenue), there’s a 38% downside to Huitongda’s valuation. However, it may be best to wait for signs of weakness before arranging a short position.

Modern Dental Group (3600.HK) – More Suitable for Short Term Trading than Long Term Holding

The impact of dental implants centralized procurement on Modern Dental Group (3600 HK) (MDG) could be limited, and the strategic partnership with Meitu Inc (1357 HK) on “QJ Smile” also brings more possibilities.
The concerns include doubts on R&D/innovation capability, complex international relations, foreign policy disturbances, unsettling macro environment and immature invisible orthodontic business, bringing uncertainties in terms of future development outlook.
Although the 2021 full-year performance is worth looking forward to, which could be the short-term catalyst, MDG is more suitable for short term trading than long term holding.

COSCO Shipping Energy (1138 HK): US Crude Export and China Import the Wild Cards?

US crude export growth is the positive driver while China import contraction is the negative for tanker ton-mile demand in last year which contraction 5.3% YoY.
Significant room exists for a rebound in US oil export as oil majors announced plans to increase output. China’s import growth will recover in the next 12-18 months as well.
US oil export to China needs 2x more VLCC than from Arabian Gulf. This bodes well for tanker rate, benefiting Cosco Shipping Energy (1138 HK) in the medium term.

Before it’s here, it’s on Smartkarma

Feb 17

China: Alibaba Group, JD Logistics, Bilibili Inc, Asia High Yield Bond Index and more

In today’s briefing:

BABA Triple Low or More to Go?
JD Logistics (2618 HK) – Asset Light Model Yet to Yield Higher Returns?
Bilibili (BILI): Upgrade to Buy for First Time Before 4Q21 Result
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

BABA Triple Low or More to Go?

By Thomas Schroeder

BABA’s slide has been in line. Two key directional break points stand out that will drive the intermediate cycle. The current technical reading remains weak.
MACD has drifted higher into the neutral zone while price has traded in a bearish flat range setting up a sell. MACD will be coiled for a fresh down leg.
Well defined directional break points lies at 135 (trendline and price pivot) and 100 (triple low support).

JD Logistics (2618 HK) – Asset Light Model Yet to Yield Higher Returns?

By Jason Yap, CFA

JD Logistics is a logistics distribution service platform that provides logistics solutions in China through its nationwide warehouse and distribution logistics network
Unlike its peers, it does not directly invest in warehouse assets but instead leases them from its parent company JD.com, which theoretically confers advantages of an “asset light” strategy
JD Logistics has yet to yield such benefits to date, but its upcoming full year 2021 results could help investors determine potential ROA and margin improvement trends

Bilibili (BILI): Upgrade to Buy for First Time Before 4Q21 Result

BILI’s stock price has plunged significantly over the past year.
We believe the revenue growth will be stable in 4Q21.
We believe all business lines remains promising except for advertising.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

S&P and Nasdaq saw a risk-on move, up 1.6% and 2.5%. Sectoral gains were led by IT and Consumer Discretionary, up 2.7% and 2.1% each. The US 10Y Treasury yield rose by 5bp to go back above the 2% mark to 2.03%. European markets were also higher with the DAX, CAC and FTSE up 2%, 1.9% and 1.1% each. Brazil’s Bovespa closed 0.8% higher. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI closed 1.2% higher. Asian markets have opened broadly higher with Shanghai, HSI, STI and Nikkei up 0.7%, 1.3%, 0.1% and 2.1% respectively. US IG CDS spreads were 1.9bp tighter and HY CDS spreads were 9.5bp tighter. EU Main CDS spreads were 1.8bp tighter and Crossover CDS spreads were 8.8bp tighter. Asia ex-Japan CDS spreads were 2.3bp wider.

Before it’s here, it’s on Smartkarma

Feb 16

China: Alibaba Group, Zhuzhou CRRC Times Electric Co., Ltd., Linmon Media, China Travel International Investment Hong Kong, Biocytogen Pharmaceuticals (Beijing) and more

In today’s briefing:

Alibaba (BABA): Overly Impacted, Accumulate Before 3Q22 Result
ZZ CRRC Times Electric (3898): Electrification
Linmon Media (柠萌影业) Pre-IPO – Consistently Putting up a Good Show
China Travel Intl Inv (308 HK): The Fruit Has Ripened?
Pre-IPO Biocytogen Pharmaceuticals – The Novel Development Model Offset the Pipeline’s Shortcomings

Alibaba (BABA): Overly Impacted, Accumulate Before 3Q22 Result

The stock price declined to a very low level before the market fell.
The Chinese e-commerce market is still promising despite of the high comparison base last year.
We believe the stock has an upside of 68% for March 2023.

ZZ CRRC Times Electric (3898): Electrification

By Henry Soediarko

The new product in IGBT for NEV will be the main driver going ahead riding on the growing EV ecosystem in China.
The recent sell-off provides a good entry point for new investors. For those who are already invested, it provides an opportunity to add at a better price.
It is a lesser-known NEV name in China that is still trading at a lower valuation compared to the mega-cap names such as CATL and BYD.

Linmon Media (柠萌影业) Pre-IPO – Consistently Putting up a Good Show

By Clarence Chu

Linmon Media (LM HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
Linmon Media (LM) is a content production firm that operates the full value chain of investment, production, distribution, promotion and derivatives licensing of drama series.
In this note, we take a look at LM’s business, financials, and share our thoughts on the IPO.

China Travel Intl Inv (308 HK): The Fruit Has Ripened?

Share price of China Travel International Investment Hong Kong (308 HK) (CTII) rallied 23% in last 3 months and 81% from its trough, which has well reflected the FY21 turnaround.
Risk-Return profile looks less attractive as its P/B multiple of 0.56x only provides 14% upside to the historical average of 0.63x. In other words, safety margin has diminished.
Macro picture turned against CTII – weaker-than-expected CNY visitors in Shenzhen, escalating Omicron cases in Hong Kong and caution on domestic tourism outlook all point to a more challenging FY22.

Pre-IPO Biocytogen Pharmaceuticals – The Novel Development Model Offset the Pipeline’s Shortcomings

The candidates in Biocytogen’s pipeline do not have advantages in development progress and also have to face fierce competition, so continuous large R&D investment in the future would be inevitable.
However, the development model of Biocytogen is very novel and special, which could make it a rare target in the market if it is successfully listed.
Therefore, the certainty of Biocytogen’s future growth is expected to improve gradually, and the mid- and long-term investment value would continue to increase due to the high moat.

Before it’s here, it’s on Smartkarma

Feb 09

China: Alibaba Group, China Unicom Hong Kong, GoGoX Holdings, Lepu Biopharma, China Three Gorges Renewables, Asia High Yield Bond Index and more

In today’s briefing:

Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
StubWorld: Unicom’s “Hs” Are Cheap
GOGOX IPO Initiation: A Less than Perfect Delivery
Lepu Biopharma IPO: PHIP Updates
China Three Gorges Renewables (600905 CH): Good, and Better Is Coming
Allianz’s 3.875% Perp Drops 5 Points After Skipped Call
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact

By Shifara Samsudeen, ACMA, CGMA

Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.

StubWorld: Unicom’s “Hs” Are Cheap

By David Blennerhassett

Despite the recent share price gain, China Unicom (762 HK) is inexpensive with respect to parent China United Network (600050 CH) – its pseudo domestic A-share twin – and to peers.
Preceding my comments on Unicom, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

GOGOX IPO Initiation: A Less than Perfect Delivery

By Arun George

GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It is pre-marketing an HKEx IPO to raise US$200 million, according to press reports.
The fundamentals are unattractive as intensifying competition is pressuring growth, increasing losses and spurring cash burn.
As the losses and cash burn is expected to persist over the next three years, we would give the IPO a pass.

Lepu Biopharma IPO: PHIP Updates

Lepu Biopharma (LBP HK) is a biopharmaceutical company focusing on oncology therapeutics. The company has filed for an IPO to list on the Hong Kong Stock Exchange.
Lepu has the leading ADC candidate pipeline in China, in terms of number of clinical-stage ADC drug candidates. In our previous insight, we discussed the company’s business, products and outlook.
In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s Post Hearing Information Pack (PHIP).

China Three Gorges Renewables (600905 CH): Good, and Better Is Coming

China Three Gorges Renewables (600905 CH) (CTGR) has an splendid FY21 as it pre-announced result with a range of 46.5-53.1% growth in recurring profit, fuelled by generation and disposal gains.
The first full-year contribution of many projects commissioned in 4Q21, which boosted a 28.4% QoQ surge in power generation, should underpin FY22 earnings – consensus forecast is expecting 41% growth.
YTD, CTGR’s share price performed in line with Shanghai Composite Index (-6.1%), but its strong EPS CAGR of 22% for FY21-23 provides room for it to outperformed in medium term.

Allianz’s 3.875% Perp Drops 5 Points After Skipped Call

German insurer Allianz saw its dollar-denominated 3.875% perpetuals fall about 5 points late on Monday after the 30-day call announcement window closed, indicating that the issuer will not be redeeming the bonds on the first call date of March 7. The fixed-for-life perpetuals (Term of the Day, explained below) fell 4.7 points this week thus far to currently trade at 93.85 cents on the dollar, yielding 4.13%. A senior syndicate banker told IFR, “There is a long, long track record of issuers making a call based on economics in the US dollar fixed-for-life market. This is not the first time this has happened. I’m quite amused, I can only infer from the price move that some people investing in the bond thought it was going to get called at the first call date, but I’m not sure why.” The bonds are now callable at any time and bankers expect the bond to move close to par once the dust settles, IFR reported.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets fell with the S&P and Nasdaq ending 0.4% and 0.6% lower. Sectoral gains were led by Energy, up 1.3% while losses were led by Communication Services, down 2.2%. US 10Y Treasury yields rose 3bp to 1.94%. European markets were higher with the DAX, CAC and FT SE up 0.7%, 0.8% and 0.8%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.4% higher. Asian markets have opened mixed with HSI and Shanghai down 1.54% and 0.90% while STI and Nikkei are up 0.57% and 0.24% respectively. US IG CDS spreads were 0.4bp wider and HY CDS spreads were 3.1bp wider. EU Main CDS spreads were 1bp wider and Crossover CDS spreads were 7bp wider. Asia ex-Japan CDS spreads were 3.9bp wider also.

Before it’s here, it’s on Smartkarma

Feb 07

China: Ping An Insurance Group Co Of China, Shanghai Medicilon Inc and more

In today’s briefing:

Ping An A/H: At Parity Now; Position for Premium Expansion
STAR50 Index Rebalance Preview (March 2022): Falling Knives

Ping An A/H: At Parity Now; Position for Premium Expansion

After trading at a 12% premium as recently as a month ago, Ping An Insurance Group Of China (601318 CH) is trading at parity to Ping An Insurance (2318 HK).
There is still some room left to reach the lower target on the A-share buyback. Once done, there could be more buying to reach the upper end of the target.
Northbound Stock Connect holdings on the A-shares have been increasing over the last few months, though there will be outflows from FTSE China A50 Index (XIN9I INDEX) trackers in March.

STAR50 Index Rebalance Preview (March 2022): Falling Knives

The review period ended last week. There will either be 4 or 5 changes to the SSE STAR50 (STAR50 INDEX) depending on the minimum listing history period used.
Shanghai Medicilon Inc (688202 CH) is a high probability inclusion while there are 4 high probability deletions, irrespective of the minimum listing history period used.
The potential inclusions have continued to drop and have underperformed the potential deletions. The next couple of weeks could see a reversal in that trend.

Before it’s here, it’s on Smartkarma