China

• There are 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) with implementation taking place at the close on 12 December.
• Nearly all the changes are in line with forecasts. Jiangsu Zhongtian Technologies Co, Ltd. (600522 CH) is the one surprise addition.
• The adds outperformed the deletes and the CSI300 from June-September but have given back a chunk of the gains since then. Expect positioning to build over the next few days.

• There are 4 constituent changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 12 December.
• Dawning Information Industry C (603019 CH) is a surprise add given the upcoming merger with Hygon Information Technology C (688041 CH). 
• The SSE50 Index adds have underperformed the deletes over the last couple of months and there could be outperformance from here as positioning builds ahead of the implementation of the changes.

• The precondition for the consortium’s privatisation offer for ANE Cayman Inc (9956 HK) has been satisfied. The right to increase the share alternative cap was also satisfied. 
• The consortium has until 12 December to decide whether to increase the share cap. The option helps the consortium gain support from shareholders who would not accept the cash offer. 
• The scheme vote remains low risk, as the offer is attractive relative to historical ranges and peer multiples. The de-rating of peers is also helpful. 

• Back on the 28th October, ANE Cayman (9956 HK), a road freight transportation play, announced an Offer from Centurium Partners, a pre-IPO investor, Temasek, and Singapore-based asset manager True Light.
• The consortium offered HK$12.18/share (best & final) via a Scheme, a 48.54% premium to undisturbed. A scrip alternative (mix & match) was also afforded. Plus a special dividend bolted on.
• Pre-Cons included SAMR signing off. With JPM as the FA, I previously concluded, given JPM’s recent track record, the reg process should be straightforward. Those pre-cons have now been satisfied.

• Meituan (MT)’s revenue growth rate plummeted to 2% YoY in 3Q25.
• The discount campaign has not actually ended after the authorities warned twice.
• We expect that MT’s price has a downside of 30% in the next twelve months.

• Taste Gourmet (8371 HK) reported H1 FY26 results of Revenues/Pat 11.8% YoY/17.8%YoY. Profits were in line with our expectations as the company reined in costs and showed slight margin improvements. 
• Cash continues to pile on the balance sheet, with 242 mn HKD of net cash representing >30% of market capitalization. The company paid an 8-cent semi-annual dividend.
• The stock trades at a 6.8x PE for FY26e, has an 8.6% dividend yield, and plans to grow at a CAGR of at least 15%.

• JD Industrials’ business model integrates the advantageous resources of JD Group and follows “self-operated heavy asset” route.The operation model is to rely on JD Logistics network to achieve efficient performance.
• The platform’s openness of JD Industrials is relatively limited. The entry and listing thresholds for merchants are higher than that of peers, which limits the rapid expansion of product richness.
• P/S is more appropriate because net profit fluctuates greatly and is more suitable for growth-oriented supply chain companies.JD Industrials’ valuation could be higher than ZKH but lower than Ww Grainger.   

• Mandi has filed for a Hongkong IPO. The company which at present operates as a subsidiary of 3SBio Inc will be spun off and separately listed.
• Mandi intends to use the IPO proceeds for funding product expansion, enhance early-stage R&D capabilities, invest in sales and marketing initiatives and, for working capital and general corporate purposes.
• Minoxidil will be the main growth catalyst for now cashing on its leadership position while accelerating the development and commercialization of the pipeline assets will be key for future growth.

• Wuhu Conch Profiles and Science Co., Ltd. is a leading manufacturer of plastic profiles and other building materials in China, facing a challenging domestic construction market. The company has diversified its product portfolio to include energy-saving and environmentally friendly materials, which presents a potential growth avenue.
• The financial performance has been under pressure, with the company reporting net losses in recent years. This is largely attributable to the downturn in the Chinese real estate sector, which is a key end-market for its products.
• Despite the current headwinds, the company’s strong brand recognition, extensive distribution network, and focus on technological innovation provide a solid foundation for future recovery and growth as the construction market stabilizes and demand for higher-value, specialized products increases.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Hong Kong is the top global destination for IPOs in 2025, with over HK $280 billion raised so far.  Large scale A+H dual listings have surged this year.
• Technology and healthcare sectors have dominated IPOs with the materials sector also floating several large listings.  With nearly 300 listings in the pipeline, 2026 should be another banner year.
• Zijin Gold (2259 HK) , Chery Automobile (9973 HK) and Mixue Group (2097 HK) were the largest IPOs of the year while PegBio (2565 HK) has had the best return.

• Exceptional Profitability Growth Amidst Revenue Contraction: The company has demonstrated a remarkable ability to grow net income and EPS, with a 3-year CAGR exceeding 51%, despite a concurrent decline in revenues. This suggests a successful strategic shift towards higher-margin products, significant operational efficiencies, or divestiture of underperforming assets.
• Strategic Positioning for the New Energy Vehicle (NEV) Transition: Beijing WKW is actively investing in and expanding its product lines to include components for electric vehicles (EVs). This forward-looking strategy positions the company to capitalize on the rapid growth of the NEV market in China, which is the largest and fastest-growing in the world.
• Attractive Shareholder Returns and Valuation: The company exhibits strong value and dividend characteristics, underscored by high Smartkarma scores in these categories. A consistent dividend yield, which stood at 1.86% in the most recent fiscal year, combined with a reasonable valuation, presents an attractive proposition for value-oriented investors.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Leading Market Position with Diversifying Business: China Boqi is a leading independent flue gas treatment provider in China, primarily serving the coal-fired power sector. The company is strategically diversifying into adjacent environmental sectors, including water treatment, hazardous and solid waste treatment, and dual-carbon energy-saving businesses, to capture broader market opportunities driven by China’s stringent environmental policies.
• Attractive Valuation and Strong Dividend Yield: The company trades at a significant discount to the broader market, with a P/E ratio of approximately 3.75x and a P/B ratio of 0.28x. This is complemented by a consistent and growing dividend, yielding approximately 4.8%, making it an attractive proposition for value and income-oriented investors.
• Regulatory Tailwinds vs. Transitional Risks: China’s national commitment to environmental protection and carbon neutrality provides a strong, long-term tailwind for the industry. However, the company faces risks associated with its legacy dependence on the coal power industry, intense market competition, and the execution of its diversification strategy into new, competitive fields.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Dominant state-owned enterprise in Anhui province with an extensive distribution network, particularly for educational materials, which provides a stable revenue base.
• Diversification into digital education, supply chain management, and other cultural segments offers new avenues for growth beyond traditional publishing.
• The company operates within a highly regulated industry, which creates significant barriers to entry for new competitors but also exposes it to policy risks and censorship.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Hexing Electrical is a prominent China-based manufacturer of smart meters and power distribution solutions, capitalizing on the global trend of grid modernization and smart city development.
• The company has demonstrated a robust financial track record, characterized by strong revenue and net income growth, expanding margins, and significant operating and free cash flow generation over the past three years.
• Positioned to benefit from sustained global demand for Advanced Metering Infrastructure (AMI) and renewable energy integration, Hexing’s growth is propelled by government mandates for energy efficiency and investments in smart grid infrastructure worldwide.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Shenzhen Sinovatio Technology is a specialized provider of network security and data analytics solutions, primarily serving government and enterprise clients in China.
• The company has demonstrated a strong financial turnaround, with significant growth in revenue, net income, and cash flow in 2023 and 2024 following a substantial loss in 2022. However, its long-term growth record remains inconsistent.
• Valuation appears elevated with high P/E and EV/EBITDA multiples, suggesting the market has priced in high expectations for future growth, which is subject to risks from intense competition and technological shifts.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• HSI recovered from last week’s sharp drop, helped by stronger breadth and steady but slower activity ahead of the U.S. holiday.
• Implied vols were broadly lower against the back drop of quiet market action.
• Materials sector names, with high implied percentiles and recent vol declines, may offer useful starting points for short vol candidates.

• Guangdong Tianyu Semiconductor (2223725D CH) is looking to raise up to US$224m in its upcoming Hong Kong IPO.
• It was founded in 2009, and is the largest domestic PRC SiC epitaxal wafer manufacturer both in terms of revenue and sales volume, as of 2024
• In this note, we provide updates on the firm’s past performance and valuation.

• China announced game approval for the November batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to above the pre-tightening level.
• Of the companies that we are monitoring, while market leader Tencent and Netease didn’t obtained approval, Kingsoft and Bilibili obtained approval for one game each.

• On November 28th China Securities Index Co (CSI) announced the changes to the CSI 300 Index (SHSZ300 INDEX): 11 companies added and 11 deleted.
• The complete list of additions and deletions is available here (or see the attachment at the end of this insight for your convenience).
• We analyze our probabilistic models to forecast short-term market directions for the CSI 300 Index, as passive flows between here and December 12 may affect the index volatility and trend.

• Our GEM bank top picks for 1H 2026 are Banrisul, Bradesco and Ping An Bank for very attractive fundamental valuations with healthy dividends and earnings growth potential
• We also have buy recommendations on China Construction Bank (CCB) and Hana Financial, both of which are deep value plays relative to their returns, combined with sound balance sheets
• Kotak Mahindra bank is our only sell recommendation for its premium valuation, even among Indian banks, relative to its underwhelming ROE prospects

• InxMed is a clinical-stage biotechnology company with a strategic focus on overcoming cancer drug resistance and metastasis, primarily targeting the Chinese market.
• The company’s lead asset, Ifebemtinib (a FAK inhibitor), is being developed as a cornerstone of combination therapies across a range of solid tumors, a strategy that could unlock significant value where monotherapies have previously failed.
• While the pipeline holds promise, InxMed faces substantial risks typical of a clinical-stage biotech, including the inherent uncertainty of clinical trial outcomes, a competitive landscape for its targeted pathways (FAK and FAP), and the financial risks associated with drug development.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• China Yuhua Education is a prominent private education provider in China, focusing on higher education and secondary education. The company has faced significant headwinds due to regulatory changes in the Chinese education sector but has shown resilience by adapting its business model.
• The company’s financial performance has been impacted by the deconsolidation of its K-9 assets in 2021, a direct consequence of the new regulations. However, recent results indicate a recovery, with revenue and adjusted net profit showing growth.
• The future outlook for China Yuhua Education is cautiously optimistic. While regulatory risks remain a significant concern, the company’s focus on higher and vocational education, which are more supported by government policies, could provide a pathway for sustainable growth.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Didi’s China business showed solid Y/Y growth, but International worsened dramatically
• Spending on Sales & Marketing (including incentives) was up CNY 1.7 bn Y/Y, or +55%
• Should it seek an IPO soon, Didi will have to show a path to profits for International segment

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H)
• China’s industrial profits fell 5.5% y-o-y in October, reversing from the sharp double-digit growth in September and August. Industrial profits grew 1.9% in 10M/25, decelerating from 3.2% in 9M.
• Profits from the high-tech sector remained robust at 8.0% in 10M, with profits from smart unmanned aircraft and smart in-vehicle equipment registering triple-digit growth.

• Iron ore futures hit a three-week high as shipments fell by 8.3% WoW, but blast furnace shutdowns signal weak demand and limit further upside.
• Managed money participants reduced net long exposure across all futures and options expiries, reflecting a more cautious market stance.
• The DCE-SGX spread has retreated from the upper Bollinger band and slipped below the 9-day MA, indicating softening momentum. 

• In this insight, we discuss about various aspects of Chow Tai Fook Jewellery (1929 HK) ‘s H1 FY2026 financial performance. It discusses about divergent performance by region and product.
• Details in this note include why dark clouds are looming over the stock price of this counter and why the valuation multiple could decline.
• Finally, we conclude discuss on valuation and how this will impact the stock price.

• Vobile Group is a global leader in SaaS solutions for digital content asset protection and monetization, poised for growth driven by the proliferation of online video and the increasing need for intellectual property protection.
• The company is strategically focused on leveraging Artificial Intelligence (AI) to enhance its service offerings and is expanding its footprint in the rapidly growing Chinese market, which now accounts for a significant portion of its revenue.
• Recent financial performance indicates strong top-line growth and improving profitability, with a notable surge in net profit and expanding gross margins, though the company currently does not pay a dividend.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Guangzhou Xiao Noodles Catering Management (XNC HK) launched its Hongkong IPO aiming to raise up to HK$686M. The company plans to sell 97.4M shares at HK$5.64-$7.04 per share.
• Xiao Noodles are a Chinese noodle restaurants operator in China. They operate the Xiao Noodles brand in the Chinese Mainland and Hong Kong SAR.
• The growth outlook quite justifies the incremental valuation. We think Xiao Noodles issue is attractively priced and investors can surely look to have a share in this secular growth story.

• Technology platform play Ingdan (400 HK) is moving ahead, again, with the spin-off and listing of 72.42%-held Shenzhen Comtech in the PRC. 
• The listing – should it go ahead, as the previous attempt was abandoned – is expected to involve the issuance of new shares. Ingdan will maintain a stake in Comtech. 
• Comtech accounted for 95% of Ingdan’s revs in the 1H25. Expect the market to heavily discount Ingdan’s stub ops, and Ingdan’s NAV post spin-off. 

• Solid Q3 and 9M FY25 Financial Delivery: Despite challenging market conditions in China, Haier Smart Home (6690 HK) delivered solid third-quarter results reinforcing company’s strategic positioning and operational execution.
• Operational Efficiency and Mix Upgrade: The company continued to benefit from digitalised manufacturing, supply-chain optimisation, and higher contribution from high-end segments, supporting EBITDA and net profit resilience despite macro softness
• Strategic Focus Driving Sustainable Growth:Emphasis on Smart Home ecosystem expansion, global penetration, and disciplined capital allocation reinforce its competitive positioning and sets the foundation for sustained earnings momentum into FY26.

• Busy Ming Group, a founder-led food and beverage chain retailer in China with strong presence in third- and lower-tier cities, filed the updated Application Proof in October.
• In the six months ended Jun-25, the company’s revenue was ~RMB28,124m, representing a year-over-year growth of ~87%. LTM net profit was ~RMB2,025m.
• Busy Ming Group enjoys superior growth profile coupled with improving gross profit margins. The company ended Aug-25 with RMB3,393m net cash on the balance sheet.  

• Suzhou Novosense Microelectron (688052 CH), an analog chips producer, aims to raise around US$500m in its H-share listing.
• According to Frost & Sullivan, in terms of revenue from analog chips in 2024, SNM ranked fifth among Chinese analog chip companies in the Chinese analog chip market.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• JD Industrial Technology is now looking to raise about US$500m in its upcoming HK IPO.
• JDI is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
• We have looked at the company background and refiling updates in our previous notes. In this note, we will talk about the refiling updates.

• Artificial Intelligent Interconnection Technology (AII HK)  (AIIT) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CITIC and CCB International.
• Artificial Intelligent Interconnection Technology (AIIT) is a provider of AI technology, products, and spatial intelligence solutions in China, with a particular strength in high-precision AI-based urban traffic management.
• Its solutions combine hardware, software, and scenario-derived datasets to deliver full-stack AI systems that improve traffic efficiency, safety, and the management of public spaces.

• Vanke Property Overseas serves as the international asset management and property development arm for its parent, China Vanke, focusing on prime global cities but facing significant headwinds from the broader Chinese real estate crisis.
• The company’s financial performance shows a concerning trend, with a sharp decline into a net loss in the latest reported year despite revenue growth, alongside collapsing margins and a reduced dividend, reflecting severe market pressures.
• Valuation appears distressed, with a very low price-to-book ratio; however, high uncertainty in the Chinese and Hong Kong property markets, coupled with negative profitability and growth trends, suggests significant risks for investors.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• FAK inhibitors’ R&D is not smooth.The breakthrough in FAK clinical protocol lies in the possibility of finding new application scenarios, such as the potential for combination with various anticancer drugs.
• If ifebemtinib can be successfully approved for 2-3 core indications (e.g. PROC, NSCLC) and enter medical insurance smoothly, its sales peak in the China market may reach RMB2-3 billion.
• Post-Money valuation after Series C Financing was USD306 million. The issuance valuation of InxMed may be given a certain premium on top of Series C valuation, such as US$350-500 million.

• In F2Q26, pro forma revenue increased by 18% YoY excluding two disposals.
• It was successful that the company rebranded its food delivery business.
• However, the rebranding brought significant sales and marketing expenses in F2Q26.

• JD Industrial Technology (2231713D CH), a leading industrial supply chain technology and service provider in China, is seeking to raise US$500 million.
• JDI is the largest industrial supply chain technology and service provider in China in terms of GMV, customer coverage and SKU offerings in 2024, according to CIC.
• The investment case is bearish due to weak market share gains, declining product revenue growth, margin pressures, declining cash generation and factoring of receivables. 

• CICC (3908 HK)‘s announced merger with Dongxing Securities (601198 CH) and Cinda Securities (601059 CH) will elevate it to the 3rd largest HK-listed Chinese securities company.
• Based on our assumptions, its EPS will be diluted by 7.1%, BPS enhanced by 12.2%, and ROE lowered by 1pp for FY26, before accounting for synergy.
• Its presence in Fujian (+616.7%), Liaoning (+500%), and Beijing (+100%) will be significantly enlarged. Additionally, it will open up potential benefits from optimisation.

• Vertically integrated Inner Mongolia smelter with second-quartile cost positioning, expanding renewables and alumina self-sufficiency, and entering overseas low-carbon production via its Saudi project.
• FY24 margins inflected sharply; mid-cycle valuation implies material upside with strong sensitivity to aluminium pricing and structural demand drivers including AI datacentres, EVs, and grid expansion.
• Base-Case Target Price HK$18.6 (24% upside); bull-case HK$22.1; bear-case HK$16.9, supported by integrated operations and medium-term EBITDA expansion potential.

• Yum China Holdings Inc., a licensee of Yum!
• Brands in China, presented mixed results in the third quarter of 2025.
• On a positive note, Yum China reported a record $400 million in adjusted operating profit, marking an 8% increase year-over-year.

• Lemo can replicate on a large scale through offline outlets to reduce operating costs.But this model is characterized by heavy assets, with a single profit model of limited risk resistance.
• Insufficient rigid demand is a major challenge for the industry.The declining revenue growth reflects the ineffective business expansion of Lemo, and the Company may have already encountered a growth ceiling. 
• Valuation of Lemo would be lower than peers due to the concerns of business expansion and slowing revenue. For example, 12-15x P/E may provide more safety margin for investors.

• Zhihu is a leading online content community in China, evolving from a Q&A-inspired platform to a comprehensive content ecosystem. Its primary revenue streams include paid memberships, marketing services, and vocational training.
• The company is increasingly focusing on leveraging artificial intelligence to enhance content creation, distribution, and monetization. Recent developments include the launch of an AI-powered search feature called ‘Zhida’ to provide direct answers by synthesizing existing content.
• While facing challenges in achieving consistent profitability and navigating a competitive and regulated market, Zhihu has demonstrated progress in narrowing its non-GAAP operating losses and is aiming for full-year non-GAAP breakeven.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Alibaba will announce Q2 earnings on after the market close (HK time) November 25.
• Earnings implied jump pricing is similar to the last release, but recent downside skew in past Q2 moves highlights why traders may focus more on potential weakness.
• Recent market patterns, including muted reactions to beats and sharp responses to misses, add weight to risks around Baba’s earnings day move.

• Meitu’s business model is not threatened by new AI image generation models. Long-term positioning remains intact. Last-mile workflows, a seventeen-year aesthetic dataset, and stable founder-led execution sustainable clear Moats.
• Overseas markets offer materially higher pay-ratios and ARPU. Productivity and e-commerce tools drive the mix shift toward high-margin growth. Both support multi-year revenue compounding independent of AI capex cycles.
• Recent Correction due to AI substitution fears drove the multiple to ~27x, placing PEG below 1x on 30% CAGR. Long-term buy with 100% upside and potential for strong re-rating.

• The company’s decision to de-emphasize Freight Brokerage Services undermined Q3 results
• The rest of the company’s reporting segments performed well in all respects
• Look for opportunity to buy YMM shares at US$9/ADS or better

• CSPC Pharmaceutical Group (1093 HK) 9M25 revenue dropped 12% YoY as finished drugs witnessed decrease on VBP and NRDL inclusion. Bulk products and license fees compensated to an extent.
• Pressure on revenue will continue to be felt. Newly launched products, pipeline strength and out licensing opportunities would help ward off the effects of lower revenues from finished drugs.
• CSPC Pharmaceutical aims to expand into the high-end market to achieve competitive differentiation and thereby command higher prices. Pivotal data read outs awaited.

• Xiao Noodles’ advantage doesn’t come from a single product, but from a set of replicable systematic capabilities.However, investors are concerned growth is driven by capital rather than endogenous healthy growth.
• Valuation would be lower than those mature brands that have proven profitability in the short term, but would be higher than the companies that are still exploring profit paths.
• Comfortable valuation could be P/E of 15-20x, which indicates arbitrage space. But in long term, business model will be difficult to sustain if there’s no breakthrough in profit margin performance.  

• HK$100bn a day of gross SOUTHBOUND activity with US$600mm+ of net buying on average. Net flows continue to be impressive. SOEs/Energy/Financials dominate.
• Watch for news on the Dual Counter (RMB) Trading eligibility for SOUTHBOUND near-term. That could up the pace of things.
• The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.

• China Hongqiao, Innovent Biologics and Yum China replace ENN Energy, Haidilao International and New Oriental Education in the Hang Seng China Enterprises Index (HSCEI INDEX) in December. All changes are in line.
• Estimated one-way turnover at the rebalance is 4.6% resulting in a round-trip trade of HK$6.3bn (US$811m). The final capping will use the close of trading on 2 December.
• Innovent Biologics is also an add to the Hang Seng Index (HSI INDEX). The passive buying will absorb some stock from the recent placement in China Hongqiao. 

• Following two periods of profitability, Innovent Biologics Inc (1801 HK) will be added to the Hang Seng Index (HSI INDEX) at the close on 5 December.
• Innovent Biologics Inc (1801 HK) is also an add to the Hang Seng China Enterprises Index (HSCEI INDEX) in December, so this inclusion increases the flow and impact.
• Estimated one-way turnover is 2.3% and the estimated round-trip trade is HK$9.2bn (US$1.2bn). Big capping outflows for Alibaba (9988 HK) at the December rebalance.

• I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Smart Share Global (EM US), Dongfeng Motor (489 HK), AUB Group Limited (AUB AU), ENN Energy (2688 HK), Digital Holdings Inc (2389 JP), Jinke Smart Services (9666 HK). 
• Lowest spreads: Bright Smart Securities (1428 HK), Mandom Corp (4917 JP), Pacific Industrial (7250 JP), Toyota Industries (6201 JP), Seven West Media (SWM AU), Star Micronics (7718 JP). 

• Context: Over the past five trading days, Xiaomi (1810 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
• Highlights: 55% of strategies exhibit a bullish bias, with diagonal spreads accounting for 25% of all trades.
• Why read: This breakdown of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies,

• We think Wharf REIC, which owns luxury malls in Hong Kong, is undergoing a structural de-rating, on the back of macro headwinds, currency impact and company fundamentals
• Southbound consumption into Hong Kong has weakened deeply, catalyzed by a punitive USD-pegged Hong Kong Dollar (HKD) and a collapsing Japanese Yen (JPY)
• In latest interim results, Wharf REIC reported HK$5.1 billion revaluation deficit and a HK$2.4 billion net loss, representing negative rental reversions crystallizing into lower asset values.

• Hs underperformed As on average by 1.88% within the liquid AH pair universe. Defensive Hs outperform As. Others not.
• Nine new recos last week. The one labelled saw H underperform A by 2%. Ouch. 15+ new trades this week.
• The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.

• A tactical snapshot of the Asian indices and stocks we cover.
• Many Asian stocks we track are flashing very oversold signals—creating tactical long setups worth considering.
• We find no overbought stocks or indices in Asia at present. US equities are aligned with this view, this is a global market pullback, probably about to end.

• Transition to AI-Driven Subscriptions Fueling Growth: Meitu is successfully transitioning its business model from advertising to a high-margin, AI-driven subscription service for its photo, video, and design products. This strategic shift is the primary driver behind significant revenue and profit growth, with paying subscribers reaching 15.4 million.
• Strategic Divestment from Cryptocurrency: The company has fully divested its cryptocurrency holdings, realizing a substantial net gain of nearly US$80 million. This move de-risks the balance sheet from the volatility of digital assets and allows management to refocus capital and attention on its core AI imaging business.
• Expanding Global Footprint and Enterprise Solutions: Meitu is aggressively expanding its international user base, which now accounts for 35% of total Monthly Active Users (MAUs). Concurrently, it is leveraging its core AI technology to launch productivity-focused tools for e-commerce and advertising, opening new avenues for enterprise revenue.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Context: Over the past five trading days, Tencent (700 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
• Highlights: Market sentiment is evenly balanced between bullish and bearish strategies, with diagonal spreads accounting for 25% of all trades.
• Why read: This breakdown of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies,

• Broad declines set a cautious tone as only a handful of single stocks avoided losses last week amid rising option volumes.
• Market breadth deteriorated sharply, marking the weakest showing of the past year and highlighting the pressure across Hong Kong equities.
• We highlight companies reporting next week in what shapes up as a busy week ahead with Baba and Meituan both reporting.

• As expected, Zhejiang Leapmotor Technologie (9863 HK) will replace ASM Pacific Technology (522 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the December rebalance.
• Estimated one-way turnover is 4.7% and that results in a round-trip trade of HK$27.5bn (US$3.5bn). There is between 8.7-9.8 days of ADV to trade in the two stocks.
• Capping and float changes results in chunky flows to some other stocks and there could be big price moves over the next week.

• In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
• The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
• By Quiddity calculations based on the 21 November close, there is one-way flow across these six indices of HK$26.14bn (approximately), to trade on 5 December at the close.

• 3SBio plans to spin-off and list Mandi on Hong Kong Stock Exchange. The spin-off will allow Mandi to operate independently, with 3SBio ceasing to hold any interest in it post-listing. 
• Minoxidil is the main performance driver for Mandi. Our forecast is its revenue growth in 2025 would be 15%-20% YoY, with projected revenue range for 2025 of RMB1.538-1.604 billion.
• Considering Mandi ®’s market leadership position and a growth rate higher than the industry average, we estimate its forward P/S at 20-25x. Then, valuation range for Mandi is RMB31-40 billion.

• Given the size of Mandi – relative to 3SBio Inc (1530 HK) – higher market multiples for its in-specie spin-off may have a limited impact on the overall valuation.
• CATL (3750 HK)  raised around US$5.2bn in its H-share listing in May 2025. The last day for their lockup was the 19th November 2025.
• While Grindr (GRND US) Special Committee considers the MBO proposal, chairman James Lu has unusually opted to step down. And sell shares below the NBIO price. 

• Pharma-Play 3SBio Inc (1530 HK) has announced the spin-off and listing of 87.16%-held Mandi (MANDI HK)  on the HKEx. 
• 3SBio will distribute its stake in-specie. There will be a concurrent global offering, the details of which are still to be fleshed out. 
• Mandi (MANDI HK), a ” hair loss and weight management treatments” solutions provider, accounted for 17% of 3SBio’s revs in the 1H25, and 12.5% of profit.

• We initiate our coverage on Health and Happiness International Holding Limited (H&H)’s BTSDF 9.125% 24Jul2028.
• H&H has refinanced USD320m of 2026 notes with the new USD300m of 2028 notes at a 9.125% coupon. The new bonds help extend its debt maturity and lower financing cost.
• The bonds offer diversification and a chance to invest back in China after the fallout in the property sector. We assign an OVERWEIGHT recommendation.

• Simandou’s planned 120 Mt annual output could supply about 6% of global seaborne ore by 2030, pressuring Australia and Brazil and shifting premium-grade pricing.
• Despite Guinea’s push to diversify buyers, roughly three-quarters of Simandou’s ownership ties back to China, making most tonnage effectively committed to Chinese mills.
• Weak Chinese steel margins and a 12% YoY drop in October output limit near-term uptake, but long-term decarbonisation trends support stronger demand for high-grade feedstock.

• UST yields fell meaningfully yesterday, with the curve bull steepening as market expectations for Fed rate cuts climbed.
• This followed an uptick in the September unemployment rate, despite payrolls data coming in above estimates.
• The yield on the 2Y UST decreased 6 bps to 3.53%, while that on the 10Y UST declined 5 bps to 4.09%.