China

In today’s briefing:

Bossini (592 HK): 10th Feb Scheme Vote
Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer
The Hongkong & Shanghai Hotels (45 HK)

Bossini (592 HK): 10th Feb Scheme Vote

On the 16th October, Li Ning-backed Viva Goods (933 HK) announced a scrip Offer, by way of a Scheme, for 62.91%-held Bossini International Holdings (592 HK), a casual apparel play.
One new Viva share for five Bossini shares backed an implied scrip price of HK$0.108/share, a 12.2% discount to undisturbed.
Bossini’s Scheme Doc is now out, with a Court Meeting on the 10th February, and expected settlement on the 24th March. The IFA says “fair and reasonable”.

Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer

On the 5th November, Get Nice Holdings (64 HK) (GNH) announced a scrip Offer, by way of a Scheme, for 72.99%-held Get Nice Financial Group Ltd (1469 HK) (GNF).
With an implied scrip price & divvy of HK$1.116/share, against a book value of HK1.736/share – and net cash of ~HK$1.00/share – this is probably being down too cheaply.
GNH’s Circular is now out, with an EGM to be held on the 22nd Jan. GNF’s Scheme Doc is expected to be dispatched one or before the 10th Feb.

The Hongkong & Shanghai Hotels (45 HK)

By Michael Fritzell

Great portfolio of assets, most notably 10 hotels under the Peninsula brand name
Capex has been excessive over the past 10 years, especially in London, but the company is now focused on execution and paying back debt. Both London and Istanbul ramping up.
NAV per share of HK$24 per share, putting at the HK$6.2 price at a 74% discount to NAV. Key is whether Philip Kadoorie will unlock value once he takes over.

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Jan 03

Daily Brief China: Sun Art Retail, Canvest Environmental Protection Group, Bloks Group, EURCNY, SGX Rubber Future TSR20, Ascentage Pharma Group Corp and more

In today’s briefing:

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction
Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist
Comment on Exchange Rate EUR/CNY – November 25, 2024
China Slaps ADD On Japanese & S Korean Nitrile Rubber
Pre-IPO Ascentage Pharma – The US Stock Listing Will Stimulate Future Growth Potential

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?

Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction

By VRS (Valuation & Research Specialists)

Grandblue Environment Co A (600323 CH) continues to make steady progress in satisfying the precondition for its HK$4.90 privatisation offer for Canvest Environmental Protection Group (1381 HK).
Two of the five preconditions are satisfied, and another will be satisfied by 20 January. The long stop date of 17 July provides ample time to satisfy the remaining two.
Although the peers have materially re-rated, the offer implies a premium compared to peer multiples. Vote risk remains low, aided by selling by a shareholder with a blocking stake.

Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued

By Andrei Zakharov

Shanghai-Based Bloks Group, a leader of assembly character toys in China, has announced the initial price range for its IPO in Hong Kong.
The offering is expected to be between HK$55.65 and HK$60.35, implying a market cap of ~HK$14B or ~$1.8B at the midpoint of the price range.
Assuming IPO offer price of HK$58.00, UBS AM Singapore, Greenwoods AM and Fullgoal Investors have agreed to invest ~HK$388M or ~$50M in the offering.

Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist

By Clarence Chu

Bloks Group (1850960D CH) is looking to raise US$188m in its Hong Kong IPO.
Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
In our previous note, we looked at the firm’s past performance. In this note, we discuss the latest PHIP updates.

Comment on Exchange Rate EUR/CNY – November 25, 2024

During the period under review, i.e. October 22nd, 2024, to November 25th, 2024, the EUR/CNY pair experienced a slight but steady downward trajectory amid fluctuations.
Initially, the pair followed an upward movement, reaching its peak at the price of 7.7654.
However, after November 6th, 2024, the currency faced a general depreciation which persisted until the end of the period, signaling a bearish momentum.

China Slaps ADD On Japanese & S Korean Nitrile Rubber

By Vinod Nedumudy

ADD on NBR imports from Japan, South Korea extended to five years
Chinese companies beef up domestic carbon black production
ZC Rubber unveils US$259 million and Longxing US$405 million projects

Pre-IPO Ascentage Pharma – The US Stock Listing Will Stimulate Future Growth Potential

Ascentage has filed with the SEC to raise up to US$100 million in a US IPO. We think its future market value is expected to surpass that of Hutchmed.
The outlook of olverembatinib is clear. Takeda can give more possibilities to olverembatinib. 2025 Sales of olverembatinib is expected to reach RMB500 million.Market value contribution from olverembatinib is US$1-1.5 billion.
Investors have higher expectations on APG-2575 to be out-licensed to MNCs. We think the peak sales of APG-2575 is expected to surpass that of olverembatinib in overseas markets.

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Jan 02

Daily Brief China: ZTO Express Cayman , Sun Art Retail, ESR Group , Shenzhen International, DiDi Global, S.F. Holding, JNBY Design Ltd and more

In today’s briefing:

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
Shenzhen Intl (152 HK): Realisation of Asset Values
Didi Global Q324 Results & Two Key Reasons Company May Consider A New Listing in 2025
S.F. Holding (6936 HK) – Here’s Why Post-IPO Share Price Performance Is So “Boring”
HK-Listed Apparel & Footwear Screener: Winners and Losers, Picks For 2025

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

By Brian Freitas

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the key takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 14.13% discount to undisturbed.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. But the question is: why would BABA be cashing out at this price?

(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos

For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

Shenzhen Intl (152 HK): Realisation of Asset Values

By Osbert Tang, CFA

The listing of Air China Cargo and progress on the transformation and upgrading of its South China Logistics Park again demonstrated Shenzhen International (152 HK)‘s asset value.
Its 8.8% stake in Air China Cargo is now valued at HK$10.6bn, or 61% of its market capitalisation, suggesting its other assets are almost free.
Government approval on the South China Logistics Park transformation Phase I has been obtained, implying potential land value gains to be booked.

Didi Global Q324 Results & Two Key Reasons Company May Consider A New Listing in 2025

In Q324, Didi grew slowly, but core margin improved significantly on higher “take rate”
Q324 liquidity position sound, but pace of 2024 investment difficult to sustain
Two important reasons Didi could list shares in ’25, even if cash needs aren’t urgent

S.F. Holding (6936 HK) – Here’s Why Post-IPO Share Price Performance Is So “Boring”

The Time-definite express services are actually a double-edged sword for S.F.- Although it helps S.F. establish core competitiveness, such strategy limits the Company’s market share and growth ceiling in China.
The issue here is that S.F. has encountered growth bottlenecks, but due to its heavy asset model, the only truly suitable solution is internationalization, which however is full of uncertainties.
S.F. is facing many challenges. The IPO final offer price of HK$34.3 is expensive, which might explain why S.F.’s share price has been a bit “boring” since its listing.

HK-Listed Apparel & Footwear Screener: Winners and Losers, Picks For 2025

By Sameer Taneja

Our stock screen for textile/apparel companies listed in Hong Kong for FY24 summarizes the winners and losers.
Yue Yuen Industrial Holdings (551 HK) / JNBY Design Ltd (3306 HK) and Stella International (1836 HK) were the three best performers with returns of over 80% YTD.
We continue to be bullish on JNBY Design Ltd (3306 HK) / Pacific Textiles (1382 HK) and like Nameson Holdings (1982 HK) for its rich dividend yield.

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Jan 01

Daily Brief China: iShares China Large-Cap (FXI), Hang Seng Index, KPay Group, Meituan, S.F. Holding and more

In today’s briefing:

EQD | FXI – Buy January Straddle
EQD | HSI – Buy January Straddle
KPay nets US$55M for expansion amid Asia’s fintech slowdown | e27
Meituan (3690 HK): Online Drug Sales Is the First Sweet Spot of O2O Vs. E-Commerce
Crystal Baller: Tracking Traffic’s Key 2025 Themes & Events: Containers | Express | Chinese Tourism

EQD | FXI – Buy January Straddle

The implied move for January is considerably less than what has been experienced historically.
January punches above its weight in terms of both historic volatility (most volatile month) and the amount of price movement relative to that historic volatility.
71% of the last 21 January’s have had a larger absolute return for the month than the current implied move of 5.7%. Average January move has been 8.62%.

EQD | HSI – Buy January Straddle

The implied move for January is less than what has been historically experienced. Twenty of the last 27 years have had price movement > current implied move.
January punches above its weight in terms of both historic volatility (most volatile month) and the amount of price movement relative to that historic volatility.
January is one of the most volatility months of the year, only October having a higher average historic volatility

KPay nets US$55M for expansion amid Asia’s fintech slowdown | e27

By e27

KPay Group, a Hong Kong- and Singapore-based financial management and business operations platform, has secured US$55 million in its Series A funding round.
This round was led by Apis Growth Markets Fund III and Apis Global Growth Fund III, managed by Apis Partners, a UK-based ESG and impact-native global private equity asset manager.
The investment will fuel KPay’s expansion plans across key Asian economies, including Indonesia, the Philippines, Malaysia, and Thailand.

Meituan (3690 HK): Online Drug Sales Is the First Sweet Spot of O2O Vs. E-Commerce

By Andy Fu

O2O has made a huge impact on China’s e-commerce scene in 2024. The Coupang-invented model suits mega cities with dense population and order volumes;
Online drug O2O, in particular, has gained momentum because drugs, prescription and non-prescription have robust storage and distribution needs on the ground for O2O use;
Meituan’s drug sales has grown its overall market share from 3.6% in 2022 to 7.1% in 2024. We project it to grow to 12.3% by 2030.

Crystal Baller: Tracking Traffic’s Key 2025 Themes & Events: Containers | Express | Chinese Tourism

In container shipping, ‘normalization’ means lower rates, lower margins, & lower returns
In Chinese express, a potential recovery in ground segment, more risks in X-border business
In Chinese tourism, how will investors react to inevitable slowing

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Dec 31

Daily Brief China: Greatview Aseptic Packaging, Evergrande, ICBC (H), Weimob Inc., China Shineway Pharmaceutical and more

In today’s briefing:

GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule
Scams of 2024: From Digital Frauds to Corporate Collapses
EQD | Hong Kong Single Stock Options Weekly December 23 – 27
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 26)
China Shineway Pharmaceutical (2877 HK) – The Outlook Is Deteriorating
HK CEO & Director Dealings (31st Dec 2024): Weimob Inc., Midea Real Estate, Pharmaron Beijing

GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule

In the UK, once a Bidder is named in a possible offer announcement, the Bidder has 28 days to either announce a firm Offer intention or walk away.
This is known as a ‘put up or shut up’ or ‘PUSU’ deadline. Hong Kong’s takeover rules has no such provision.
It’s ~21 weeks since co-founders Jeff Bi and Gang Hong tabled a non-binding Offer. With no firm Offer in sight, AND contesting a SAMR ruling, they should fold their tent.

Scams of 2024: From Digital Frauds to Corporate Collapses

By Nimish Maheshwari

2024 witnessed an unprecedented rise in financial crimes, including an 8x surge in Indian banking fraud, massive cryptocurrency heists, and large-scale corporate fraud like Evergrande’s $78 billion scandal.
These scams exposed vulnerabilities in technology, governance, and public awareness, underscoring the urgent need for robust regulatory frameworks, enhanced corporate accountability, and public education.
The evolving sophistication of financial crimes highlights the necessity for vigilance, technological resilience, and proactive measures by individuals, businesses, and governments to mitigate risks in an interconnected world.

EQD | Hong Kong Single Stock Options Weekly December 23 – 27

Call volumes dominate tradng across single stocks with the Put/Call ratio hitting its 3rd lowest level since the beginning of November. Volumes continue trend lower in place since early November.
Auto companies seeing big increases in option volumes with Li Auto and Great Wall Motor moving in opposite directions since the middle of the month.
We add 2 new tables showing the largest volume increases across Puts and Calls – a conveient way to view unusual changes in trading activity.

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 26)

By David Mudd

Mainland China investors continued to increase their purchases of Hong Kong shares through the southbound connect platform after Trump’s win. Mainland investors bought a record HK$800B of HK shares in 2024.
Weimob Inc. (2013 HK) announced it is connecting its Weimob mini-programs to Tencent’s (700 HK) WeChat mini-shop. This move further integrates the SaaS company into Tencent’s ecosystem.
Wuxi Biologics (2269 HK) announced a license agreement with US-based Aadi Bioscience (AADI US). Also, Wuxi was not included in the Senate version of the BioSecure legislation improving investor sentiment.

China Shineway Pharmaceutical (2877 HK) – The Outlook Is Deteriorating

Shineway’s 24Q1-Q3 performance is disappointing. So, we adjusted our forecast- 2024 Revenue could be about RMB3.7-4 billion, down 11-18% YoY. Net profit could reach about RMB1.05-1.1 billion, up 8-13% YoY.
VBP is the biggest headwinds – Injection products/TCM formula granules/OTC medications all face VBP, which brings uncertainties to future performance. It’s uncertain whether the 2025 performance will rebound as expected.
Shineway seems to have lost growth momentum after COVID-19.Considering large cash balance, it doesn’t make much sense to hold the Company long term if it doesn’t significantly raise its dividend.

HK CEO & Director Dealings (31st Dec 2024): Weimob Inc., Midea Real Estate, Pharmaron Beijing

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. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight include: Weimob Inc. (2013 HK), Midea Real Estate Holding (3990 HK), and Pharmaron Beijing (3759 HK).

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Dec 30

Daily Brief China: Shandong Hi-Speed New Energy G, Vesync, InnoScience Suzhou Technology, Shanghai Henlius Biotech , ESR Group , Hang Seng Index, Bloks Group and more

In today’s briefing:

Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable
EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 23-27
Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention

Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO

Shandong Hi-Speed Holdings Gro (412 HK) completed the acquisition of CITIC Securities 13.52% stake in Shandong Hi-Speed New Energy G (1250 HK) at HK$1.78 per share.
SPA completion triggers a mandatory unconditional offer at HK$1.78 per share. The composite document will be sent, and the offer will open by 28 January.
At the last close and for an early February payment, the gross and annualised spread of the offer is 2.9% and 30.2%, respectively.

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

By Brian Freitas

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Malaysia Airports Holdings (MAHB MK).

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

We 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: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).

Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.

Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable

By Osbert Tang, CFA

Vesync (2148 HK)‘s major shareholders proposed to privatise at HK$5.60, a 33.3% premium to the pre-suspension price. This is the same as we calculated using the 3-year average P/B.
At such a price, it will sit at 7.6x PER for FY25F, a level that it only touched briefly 3 times in the last two years.
This PER is at a 25-30% discount to the sector and justified by its smaller size and lesser diversification. All in all, the proposed price looks fair and reasonable.

EQD | Hong Kong Index Options Weekly – HSI and HSCEI December 23-27

For both HSI and HSCEI, average daily volumes were on par with prior week despite holidays.
Historic vols are still trending downward and are consistently uder implied vols.
Option volumes in both indices are being dominated by short expiries.

Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention

The assembly character toy segment market size is not big and Bloks is already China’s largest player. So, there will be a day when the growth ceiling is reached.
Bloks’ business model is more similar to Pop Mart, rather than LEGO, but Bloks’ profitability is lagging behind both of them. The current high revenue growth may not be sustainable.
Pre-IPO valuation of Bloks reached RMB7.2 billion. Valuation of Bloks should be lower than Pop Mart. If Bloks’ valuation could reach the industry average after IPO, it is already good.

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Dec 29

Daily Brief China: Vesync, Qingdao Haier Biomedical Lt, China Southern Airlines and more

In today’s briefing:

Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done
China Healthcare Weekly (Dec.29) – Haier Biomedical Plans to Merge with and Absorb Shanghai RAAS
Monthly Chinese Tourism Tracker | Outbound, Domestic Both Solid | TCOM: 2024’s Best (December 2024)

Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done

Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60, a 33.3% premium to the last close price of HK$4.20. The offer is final.
While the offer is marginally above the IPO price, it is light compared to sell-side price targets, peer multiples and historical trading ranges.
Nevertheless, the scrip option, irrevocables and no disinterested shareholder holding a blocking stake facilitate the scheme vote. The offer could be completed by May.

China Healthcare Weekly (Dec.29) – Haier Biomedical Plans to Merge with and Absorb Shanghai RAAS

Haier Biomedical plans to merge with and absorb Shanghai RAAS through the issuance of shares, and both parties have signed a letter of intent for the potential merger.
Haier’s acquisition of RAAS helps connect the software and hardware of the blood industry and strengthen the company’s dominant position in the entire industry chain in the blood products industry.
The market value/financial performance of these two are far apart. If the acquisition is completed, it will help Haier improve financial performance, which is obviously more beneficial for Haier.

Monthly Chinese Tourism Tracker | Outbound, Domestic Both Solid | TCOM: 2024’s Best (December 2024)

Almost two years into China’s travel recovery, November outbound activity grew strongly
Domestic air travel demand also showed solid growth, has accelerated since Spring ’24
Trip.com best performing stock in this group in ’24, but it no longer offers much value

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Dec 28

Daily Brief China: JD Logistics , ZTO Express Cayman , Xiaomi Corp and more

In today’s briefing:

China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express
China Logistics (Part 1): ZTO Has a Unit Economics Problem
Xiaomi’s Smartphone Share Gain in Japan Is a Harbinger of Good Things to Come

China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express

By Robert McKay

Despite being breakeven just quarters ago, JD Logistics (2618 HK) has achieved profitability on par with global peers nearly 3x its size. Margin still has upside with further subsidiary integration;
JDL is still positioned to accelerate revenue by taking share from S.F. Holding (6936 HK) in untapped opportunities, including domestic B2C (Taobao/Tmall), cross-border B2C (Kuayue acquisition), and B2B;
JDL’s stock price rose 60%+ while it was our top pick for 2024. We reiterate the company as our TOP buy idea in the China logistics space for 2025;

China Logistics (Part 1): ZTO Has a Unit Economics Problem

By Robert McKay

ZTO’s market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;
ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss.
We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act.

Xiaomi’s Smartphone Share Gain in Japan Is a Harbinger of Good Things to Come

By Robert McKay

Xiaomi’s Japan market share rose to ~7% in C2Q24 from the year prior, driven by carrier partnerships and brand recognition from SU7 media coverage and a product partnership with LEICA;
Upon examination, we found Xiaomi filled a product gap left by the smartphone exits of Kyocera and Fujitsu, for the carriers, which account for 90% of handset sales in Japan;
In our view, Xiaomi’s success in Japan marks a turning point in its global brand perception, signaling potential for further growth in other developed and high end developing markets.

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Dec 27

Daily Brief China: CPMC Holdings, NetEase , SHEIN, InnoScience Suzhou Technology and more

In today’s briefing:

CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional
Tencent/Netease: Game Approval Trending up but Only One Approval for Netease
2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals
InnoScience Technology (2577 HK): Low IPO Free Float Delays Global Index Inclusion

CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional

CPMC Holdings (906 HK)’s offer from ORG Technology Co., Ltd. A (002701 CH) is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.
CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.
The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.

Tencent/Netease: Game Approval Trending up but Only One Approval for Netease

By Ke Yan, CFA, FRM

China announced game approval for the December batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening. There have been 47% more games approved in 2024 compared to 2023.
Of the companies that we are monitoring, Netease got one approval.

2024 Greater China Logistics & Transport ECM Review & A Look at Potential 2025 Deals

2024 ECM offerings in the Greater China logistics & transport segment included TS Lines (in Hong Kong), SF Holding(Hong Kong), and BingEx (US)
Generally, recent share offerings in the segment have not performed well at all
Looking to 2025, we see several deals, including SHEIN and a possible Didi return

InnoScience Technology (2577 HK): Low IPO Free Float Delays Global Index Inclusion

By Dimitris Ioannidis

InnoScience Suzhou Technology (2577 HK) is anticipated to debut at the HKEX on 30 December 2024 with a valuation between $3.5bn – $3.9bn.
InnoScience Suzhou Technology (2577 HK) is forecasted to fail the fcap threshold in the first place for both global indices due to small size offering and lock-ups.
The security is expected to be added in China all-world or small-cap at the September 2025 review following the 6-month lock-up expiry.

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Dec 26

Daily Brief China: Duality Biotherapeutics and more

In today’s briefing:

Pre-IPO Duality Biotherapeutics – Has the Potential to Surpass RemeGen

Pre-IPO Duality Biotherapeutics – Has the Potential to Surpass RemeGen