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Review and Prospect of Refinancing Market: Opportunities in 2023

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Strategy｜The development of China"s refinancing market can be divided into four stages: initial, growing, tightening and loosening. Since the revision of the refinancing rules in 2020, the refinancing market has been in a new round of policy loosening and resumed growth. Considering factors such as issuance conditions and financing effects, private placements and convertible bonds have gradually become the mainstream refinancing methods. In terms of market performance, small/mid-cap companies are the main issuers of private offerings, whose performance is close to that of CSI 500 (also a small/mid-cap index). Convertible bonds have obvious "downside protection" characteristics, and their fluctuations are smaller than those of underlying stocks. Looking ahead to the refinancing market in 2023, companies seeking financing will continue to benefit from the revised refinancing rules, and loose policies are favorable for the refinancing of growth companies. For investors, under the expectations of upside of the A-share market in 2023 and the high discount rate, the gains from private placements and convertible bonds will likely improve, and high-quality growth enterprises present more investment value.

Fixed Income Daily Insights

FICC｜According to indicators such as the change in the scale of savings deposits and the difference in the growth rate of residents" income and expenditure, there was a relatively obvious phenomenon of "excess saving" in 2022, mainly caused by weak expectations of residents, lack of consumption scenarios, decline in real estate sales and conversion of off-balance wealth management products (WMPs). The recovery of fundamentals in 2023 is likely to divert part of the precautionary saving to consumption, etc. However, the recovery of consumption and real estate still needs support from other aspects, so currently investors should not overestimate the boost effect of excess savings on household consumption and real estate sales.

Quantamental Series: Factor Mining Thematic Report

Data Technology｜The number of institutional research events in the A-share market in 2020-2022 increased by 97.9% compared with that during 2017-2019, and the integrity of information disclosure continued to improve. We take the Top30 stocks selected from the research heat index each month as an example, and review the data from 2014 to 2022. Looking back at the index of the rate of change of the number of institutional survey research by public funds on A-share companies for 30 days each month, the absolute annualized rate of return will increase from 16.28% to 24.79% after the screening strategy is added, and the annualized excess return will increase from 8.48% to 16.99% compared to CSI All Share Index, while the maximum withdrawal will decrease from 45.45% to 34.78% during the nine-year period. Selection based on the research heat index can generate stable excess returns, but data noise directly reduces the effectiveness of investment.

Anta Sports (02020.HK) In-depth Tracking Report: “BUY” (Reiterate)

Textile & Apparel｜The Descente brand revenue in China has been growing at a CAGR of 100%+ since its entry in 2016, with revenue of Rmb2.7bn in 2021 and sales per store of Rmb1.1mn per month, making China the largest market for the brand. The success of the brand did not happen overnight, but via three stages of continuous tuning of product/brand/marketing/channel. Anta Group, with its firm investment and input, once again successfully cultivated brand growth via multi-brand management and retail experience. It reflected Anta"s mature brand incubation methodology and multi-brand operation capability. At present, there are less than 200 Descente stores. We expect that the future store efficiency improvement and store expansion in first and second-tier cities will help the brand reach the revenue target of Rmb5bn in the next 1~3 years. And the path towards Rmb10bn revenue is clear in the long run, which may bring Rmb960mn of incremental attributable net profit (ANP) by then. The core competitiveness of Anta Group and the long-term path of multi-brand evolution will not change, and the incubated brand represented by Descente may become the third growth pole of Anta after FILA. We maintain the "BUY" rating.

CTG Duty Free (601888.SH/01880.HK) Commentary: “BUY” (Reiterate)

Social Services｜Shanghai Int’l Airport announced its intention to set up a joint venture company and acquire duty free assets. The underlying assets include 12.48% of the shares of CDF Sunrise Internet Technology and 15.68% of the shares of Sunrise Duty Free (Shanghai), Sunrise Duty Free (China), China Duty Free Group (CDFG) Beijing Capital Airport Duty Free, and CDFG Beijing Daxing Int’l Airport Duty Free, involving a variety of duty-free businesses online and offline in the airport and downtown. The equity cooperation between Shanghai Int’l Airport and the CDF airport stores is conducive to the long-term development of both parties through the deep integration of business. We continue to be optimistic about the recovery trend of the Company. The recent rebound of both Hainan"s passenger flow and consumption in duty free stores indicates that the Hainan market during the Chinese New Year (CNY) holiday may become one of the structural highlights of consumption recovery in China. We believe Hainan’s annual duty free sales target of Rmb80bn in 2023 heralds the annual recovery trend, and we highly recommend the Company.

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