China

In today’s briefing:

ESR (1821 HK): A Shareholder Register Look-Through
CSI Liquor/ Alcoholic Drink Index Rebalance: Adds, Deletes & Capping Changes
HSI Tactical Outlook: Buy This Dip
Pre IPO Eastroc Beverage Group (H Share) – The Strength, the Concerns and the Outlook
China Northern Rare Earth (Ticker: 600111.SH): Dominant Force Riding REE Upswing
SDA: SunCar reports 1st quarter 2025 financial and operating results which showed strong revenue growth. The company continues to secure multiple partnerships and business agreements.

ESR (1821 HK): A Shareholder Register Look-Through

By David Blennerhassett

Today, I was the first analyst to gain access to ESR (1821 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under s329 of the Securities and Futures Ordinance.
This is the same register discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM and L’Occitane (973 HK): Who Owns What, And When
It is also used by proxy solicitors. My takeaway, still, is that this Offer is a done deal. But yes; there are a few shareholder activists lurking in the register.

CSI Liquor/ Alcoholic Drink Index Rebalance: Adds, Deletes & Capping Changes

There is 1 add for the CSI Liquor Index and 1 add/ 2 deletes for the CSI Alcoholic Drink Index in June.
Gansu Huangtai Wine Mktg Ind Co., (000995 CH) will be added to the CSI Liquor Index and the CSI Alcoholic Drink Index.
There will be big selling in Kweichow Moutai (600519 CH) due to the stock being capped in both indices. Smaller capping flows in the other stocks.

HSI Tactical Outlook: Buy This Dip

By Nico Rosti

After a 7-week rally the Hang Seng Index (HSI INDEX) last week gave up and close the week down (CC=-1 on our WEEKLY LONG model).
The pullback continued on Monday, reaching 22668 and in our WEEKLY LONG model this price support zone is oversold.
The pullback may continue, so in this insight we are going to offer some perspective on possible support zones where to buy. We think this setback is a buy opportunity.

Pre IPO Eastroc Beverage Group (H Share) – The Strength, the Concerns and the Outlook

2024 is a milestone year. The weighted average ROE set a new high. Due to cost dilution brought by economies of scale, net profit growth was higher than revenue growth.
The risk of relying on a single category hasn’t been eliminated. Traditional advantages of offline channels are becoming saturated. There is a gap between channel structure and new consumer forces
Eastroc’s valuation is expected to be higher than the industry average and peers due to its higher growth rate, but investors needs to consider the H/A premium

China Northern Rare Earth (Ticker: 600111.SH): Dominant Force Riding REE Upswing

By Rahul Jain

CNRE posted a 727% YoY net profit surge in Q1 2025, driven by rising PrNd prices and strong volume growth, earnings momentum could continue amid recovering demand and operational leverage.
With exclusive access to the Bayan Obo mine—holding the world’s largest REE reserves—CNRE commands a near-monopoly in China’s rare earth supply chain.
Its dominant 70% share of national separation quotas ensures structural pricing power and long-term resource security.

SDA: SunCar reports 1st quarter 2025 financial and operating results which showed strong revenue growth. The company continues to secure multiple partnerships and business agreements.

By Zacks Small Cap Research

SunCar Technology Group ((NASDAQ: SDA) is a leading Chinese cloud-based provider of digital enterprise auto services and auto eInsurance services in China.
The company offers one-stop, fully digital, on-demand automotive service systems to help enterprise clients build up their customer base and serve their end customers (auto owners).
The company has grown revenues rapidly in recent years, which we expect to continue in the near-to-midterm.

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Jun 02

Daily Brief China: Montage Technology , HealthyWay, Shanghai Rural Commercial Bank, Bestechnic Shanghai , Zhongyuan Environment A, Contemporary Amperex Technology (CATL), Zijin Mining Group , Sichuan Biokin Pharmaceutical, Water Oasis, Softcare and more

In today’s briefing:

SSE50/SSE180 Index Rebalance: Some Surprises Among the Adds; Deletes as Expected
KWEB Index Rebalance: HealthyWay In; East Buy Out
CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade
STAR50/STAR100 Index Rebalance: 10 Changes and US$1.4bn Trade
Quiddity CSI 1000 Jun25 Results: 200 Changes; US$2Bn+ One-Way
ECM Weekly (2 June 2025) -Indigo, ITC, EBOS, Isuzu, Foshan Haitian, Lens Tech, Seres, Schloss, Aegis
Zijin Mining (601899 CH / 2899 HK): Evaluating the Impact of Kakula Suspension
China Healthcare Weekly (Jun.1)-Akeso/Summit’s Disappointing Ph3 Readout,Valuation Outlook of Biokin
Water Oasis H1 FY25 Results: An Improvement In Profitability And Cash 90% of Market Capitalization
Pre-IPO Softcare – Strong Performance Growth Momentum Would Continue

SSE50/SSE180 Index Rebalance: Some Surprises Among the Adds; Deletes as Expected

There are 4 changes for the SSE50 Index (SSE50 INDEX) and 18 changes for the SSE180 Index that will be implemented at the close on 13 June.
The SSE50 Index (SSE50 INDEX) deletes were in line with forecasts, and the index committee has used some discretion while picking the index inclusions.
The SSE50 Index adds have outperformed the deletes over the last few months and there could be a further move higher in the ‘surprise’ adds to the index.

KWEB Index Rebalance: HealthyWay In; East Buy Out

The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 June.
HealthyWay (2587 HK) will be added to the ETF while East Buy Holding (1797 HK) will be deleted. The passive trading will offer an opportunity to exit positions.
There is a huge lock-up expiry in HealthyWay (2587 HK) on 30 June and the stock could drop ahead of that. Then it could drop some more after lock-up expiry.

CSI300/CSI500/CSI1000 Index Rebalance: Changes Lead to US$12bn Trade

There are 7 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 June.
There are 240 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$12bn.
The adds have outperformed the deletes for the CSI 300 Index and the CSI 1000 Index but underperformed for the CSI 500 Index.

STAR50/STAR100 Index Rebalance: 10 Changes and US$1.4bn Trade

There is 1 constituent change for the STAR50 INDEX and 4 changes for the STAR100 Index at the next rebalance that will be implemented at the close on 13 June.
We estimate turnover of 2.35% for the SSE STAR50 (STAR50 INDEX) and 4.9% for the STAR100 Index. The estimated round-trip trade is CNY 9.8bn (US$1.35bn).
There are multiple stocks that are adds or deletes for other indices and the passive flows will be a lot larger than just for the STAR50/STAR100 indices.

Quiddity CSI 1000 Jun25 Results: 200 Changes; US$2Bn+ One-Way

The June 2025 index review results for China’s CSI 1000 index were announced after market close on Friday 30th May 2025.
There will be 100 ADDs/DELs for CSI 1000 in the June 2025 rebalance.
The CSI 1000 index rebal event could trigger US$2.2bn in one-way flow.

ECM Weekly (2 June 2025) -Indigo, ITC, EBOS, Isuzu, Foshan Haitian, Lens Tech, Seres, Schloss, Aegis

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, Foshan Haitian Flavouring & Food (603288 CH) might launch its A/H listing this week.
On the placements front, there were a number of large deals across the region, with notable ones in ITC Ltd (ITC IN) and InterGlobe Aviation Ltd (INDIGO IN).

Zijin Mining (601899 CH / 2899 HK): Evaluating the Impact of Kakula Suspension

By Rahul Jain

A 4–6 month Kakula disruption could reduce Zijin’s 2025 copper output by 4–8%, cutting EBITDA by ~7–11%.
Ramp-Ups at Julong and Čukaru Peki can offset ~60–70% of the lost volume and partially protect margins.
Lithium is expected to grow from 8% to 20% of EBITDA by 2028, driven by 300kt LCE capacity from low-cost brine assets.

China Healthcare Weekly (Jun.1)-Akeso/Summit’s Disappointing Ph3 Readout,Valuation Outlook of Biokin

CR Sanjiu plans to transfer 49.8967% equity of Sanjiu (Anguo) and pay more attention to the quality of external M&As. China Resources+Tasly+KPC will be the core drivers of future performance.
Akeso’s first global phase 3 readout for ivonescimab was disappointing, which cast shadow on the final FDA approval. We shared our views on the outlook and valuation ahead.
The failure of HER3-DXd cast shadow over the outlook of HER3. We think Biokin is overvalued. Its valuation should be lower than Akeso and Kelun Bio.

Water Oasis H1 FY25 Results: An Improvement In Profitability And Cash 90% of Market Capitalization

By Sameer Taneja

Water Oasis (1161 HK) H1 FY25 results were encouraging and a step in the positive direction as revenue/PAT improved by -2.5%/116% YoY
The company declared a semi-annual dividend of 3.5 cents (6.7% annualized yield) for a 43% payout ratio. Net cash of 633 million HKD represents 90% of the market capitalization.
Trading at 6.0x FY25 PE with earnings stabilization, this is a great name to explore, although we would like to see an improvement in capital allocation.

Pre-IPO Softcare – Strong Performance Growth Momentum Would Continue

Softcare has established its core competitiveness of “low price + localization”, and has achieved success in Africa. Softcare hopes to replicate its business model in Africa to other markets.
Emerging Markets have seen sustained growth in market penetration of baby/feminine hygiene products. We’re optimistic about Softcare’s future performance growth due to “demographic dividend + consumption upgrade” in Emerging Markets.
Softcare has strong fundamentals and promising outlook. We think valuation of Softcare should be higher than Hengan International Group (1044 HK) due to higher profit margin and future growth potential.

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Jun 01

Daily Brief China: Suzhou Maxwell Technologies , Winner Medical, Avic Shenyang Aircraft, China Mobile, Flat Glass, Bestechnic Shanghai , Shanghai Rural Commercial Bank, Northeast Securities, Shenzhen Overseas Chinese (A), Suzhou Kematek and more

In today’s briefing:

STAR&CHINEXT 50 Index Rebalance: One Change in June Adds to Other (Larger) Index Flows
CSI Medical Service Index Rebalance: Six Changes with Decent Impact
Quiddity SSE 50/180 Jun25 Results: 44 Changes; US$1.5bn Collective One-Way Flows
China Mobile (941 HK) Poised for Pullback: A Tactical Low-Cost Options Play With High Upside
A/H Premium Tracker (To 30 May 2025): Narrow Premia Hs Worst Performers, BYD Relents
STAR Chip/ CES Chips/ All Share Semi Index Rebalance: Multiple Index Flows for Some Stocks
Quiddity CSI 300/500 Jun25 Results: 114 Changes; 88% Hit Rate; ~US$5bn One-Way
CSI All Share IB & Brokerage Index Rebalance: Northeast Replaces Harbin Hatou
CSI All Share Real Estate Sector Index Rebalance: Sector Reclassification Drives Changes
Quiddity CSI All Share Semiconductors Jun25 Results: 11 ADDs/DELs; Couple of Surprises

STAR&CHINEXT 50 Index Rebalance: One Change in June Adds to Other (Larger) Index Flows

There is one constituent change for the STAR&CHINEXT 50 Index in June with AVIC Chengdu Aircraft Co (302132 CH) replacing Suzhou Maxwell Technologies (300751 CH).
Passive trackers will need to buy 0.15x ADV in AVIC Chengdu Aircraft Co (302132 CH) and sell 0.4x ADV in Suzhou Maxwell Technologies (300751 CH).
AVIC Chengdu Aircraft Co (302132 CH) is a CSI 500 Index to CSI 300 Index migration in June, so there will be more buying in the stock.

CSI Medical Service Index Rebalance: Six Changes with Decent Impact

CSI announced the changes for the June rebalance after market close on 30 May and the changes will be effective after the close of trading on 13 June.
There are 6 changes for the index and we estimate passive buying of 0.7-2.4x ADV in the adds and passive selling of between 1-4.7x ADV in the deletes.
There will be capping inflows for Shenzhen Mindray Bio-Medical Electronics (300760 CH) and capping outflows for WuXi AppTec (603259 CH).

Quiddity SSE 50/180 Jun25 Results: 44 Changes; US$1.5bn Collective One-Way Flows

The June 2025 index review results for China’s SSE 50 and SSE 180 indices were announced after market close on Friday 30th May 2025.
There will be 4 ADDs/DELs for SSE 50 and 18 ADDs/DELs for SSE 180.
The SSE 50 and SSE 180 index rebal events could trigger US$1.3bn and US$210mn in one-way flows, respectively.

China Mobile (941 HK) Poised for Pullback: A Tactical Low-Cost Options Play With High Upside

With a 5-week rally China Mobile (941 HK) is in overbought territory and quantitative models flag potential for a pullback.
Options may be underpricing the downside risk, creating an attractive opportunity to buy cheap options with high payoff potential.
This Insight outlines an option strategy combining quantitative signals with volatility analysis.

A/H Premium Tracker (To 30 May 2025): Narrow Premia Hs Worst Performers, BYD Relents

By Travis Lundy

AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) back down nearly 3%. CATL 10% through still.
Sharp skew on H-vs-A performance this week. Those trading AH Premium <20% saw H underperform sharply. Those in the 40-100% AH Premium range saw H outperform. Quiddity Portfolio alpha strong.
The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.

STAR Chip/ CES Chips/ All Share Semi Index Rebalance: Multiple Index Flows for Some Stocks

There are 4 changes for the STAR Chip Index, 8 changes for the CES China Semiconductor Chips Index and 11 changes for the CSI All-Share Semiconductors & Semiconductor Equipment Index.
There are multiple stocks that will have flows from passive trackers across the three indices. Multiple stocks will have passive flows from other index trackers across the China universe.
Bestechnic Shanghai (688608 CH) will have passive inflows from STAR50 INDEX, CSI 500 Index and CSI A500 Index trackers and outflows from the STAR100 Index and CSI1000 Index trackers.

Quiddity CSI 300/500 Jun25 Results: 114 Changes; 88% Hit Rate; ~US$5bn One-Way

The June 2025 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 30th May 2025.
There will be 7 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500.
The CSI 300 and CSI 500 index rebal events could trigger US$1.7bn and US$3.2bn in one-way flows, respectively.

CSI All Share IB & Brokerage Index Rebalance: Northeast Replaces Harbin Hatou

The changes to the CSI All Share Investment Banking & Brokerage Index were announced after market close on 30 May and will be implemented at the close on 13 June.
Northeast Securities (000686 CH) will be added to the index while Harbin Hatou Investment Co, Ltd. (600864 CH) will be deleted.
There is over 2.5x ADV to trade in both stocks and much smaller impact of funding/capping flows on the other index constituents.

CSI All Share Real Estate Sector Index Rebalance: Sector Reclassification Drives Changes

There are 3 adds and 4 deletes for the CSI All Share Real Estate Sector Index in June. There are changes driven by changes to the sector classification for stocks.
Passive trackers will need to buy between 0.2-0.65x ADV in the adds and sell between 0.15-1.75x ADV in the deletes.
The deletes have outperformed the adds over the last few months and some of that could dissipate over the next couple of weeks.

Quiddity CSI All Share Semiconductors Jun25 Results: 11 ADDs/DELs; Couple of Surprises

The June 2025 index review results for the CSI All Share Semiconductors Index were announced after market close on Friday 30th May 2025.
There will be 4 ADDs and 7 DELs for the CSI All Share Semiconductors Index.
We estimate one-way flows of approximately US$84mn in the June 2025 index rebal event.

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May 31

Daily Brief China: Hang Seng Index, Shanghai Zhida Technology Development Co Ltd, Contemporary Amperex Technology (CATL), CSPC Pharmaceutical Group and more

In today’s briefing:

HSI Index Options Weekly (May 26-30): Choppy Tape, One Strike Rules Them All
Shanghai Zhida Technology Development Pre-IPO – Market Leader Faces Pricing Pressures
CATL (3750.HK): Rich Vols, Strong Start, and a Tactical Hedge
CSPC Pharmaceutical (1093 HK): Finished Drugs Drag 1Q25; Out Licensing And New Launches To Be Key

HSI Index Options Weekly (May 26-30): Choppy Tape, One Strike Rules Them All

By John Ley

HSI traded sideways for a third straight week as macro headlines swirled and tariffs turned internally litigious.
Volatility drifted lower, with 1M implied vol dropping below its 1-year median for the first time in months.
Call volumes were significantly higher led by one strike in particular.

Shanghai Zhida Technology Development Pre-IPO – Market Leader Faces Pricing Pressures

By Troy Wong

Shanghai Zhida Technology Development (SZTD) is looking to raise about US$128m in its upcoming Hong Kong IPO.
SZTD presents a compelling leadership position in the EV home charging market, both in China and globally, underpinned by strong industry tailwinds and a diversified product-service offering.
However, recent declines in revenue and margins driven by pricing pressures and high customer concentration raise concerns about the sustainability of its growth and profitability.

CATL (3750.HK): Rich Vols, Strong Start, and a Tactical Hedge

By John Ley

CATL’s options debut in Hong Kong has been active, with strong Call interest and rising open interest suggesting early investor enthusiasm.
Implied vols are holding firm post-listing and appear rich —potentially justifiable given the trading dynamics and catalysts.
We recommend a tactical hedge structure that skews return favourably, targeting recent highs and protecting against downside drift.

CSPC Pharmaceutical (1093 HK): Finished Drugs Drag 1Q25; Out Licensing And New Launches To Be Key

By Tina Banerjee

CSPC Pharmaceutical Group (1093 HK) 1Q25 revenue dropped 22% YoY as finished drugs witnessed decrease on VBP and NRDL inclusion. Bulk products and license fees compensated to an extent.
Operating margin (23.7%) remained stable despite 11% higher R&D expenses at RMB 1.3B.
License and collaboration in relation to the development, manufacturing, and commercialization of certain products of the company augur well in terms of future revenue visibility.

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May 30

Daily Brief China: SHEIN, Miniso, Xuanzhu Biopharmaceutical and more

In today’s briefing:

Shein IPO: Hong Kong Yes, London No
[Miniso(MNSO US, SELL, TP US$13.5) TP Change]: C1Q25 Review: Low Quality Expansion Bore Bitter Fruit
Xuanzhu Biopharm (轩竹生物科技) Pre-IPO: Reality Checks Against Claims

Shein IPO: Hong Kong Yes, London No

By Douglas Kim

Shein announced it is planning for an IPO in Hong Kong in 2025. Shein tried to go public in London, but its attempt has essentially failed.
Due to tariff war and ending de minimis for shipments from China and Hong Kong by the U.S. government, the valuation of Shein could decline to less than $50 billion.
Now, as long as the valuation is not excessive but reasonable, there could be a decent demand for this IPO of Shein in Hong Kong.

[Miniso(MNSO US, SELL, TP US$13.5) TP Change]: C1Q25 Review: Low Quality Expansion Bore Bitter Fruit

By Eric Wen

MNSO reported 1Q25 rev. in line with cons. but non-GAAP op. profit 17% below and GAAP net income 33% below cons,
We view MNSO’s store expansion as being below its bar of quality. Downside risks were not fully priced in. Our 2025 revenue/net profit forecasts are 7.0%/8.2% below consensus;
We cut the TP from US$16 to US$13.5/ADS and keep the SELL rating.

Xuanzhu Biopharm (轩竹生物科技) Pre-IPO: Reality Checks Against Claims

By Ke Yan, CFA, FRM

Xuanzhu Biopharm, the biotech arm of HK-listed Sihuan Pharma, is seeking to raise at least USD 100m via a Hong Kong listing. The sole sponsor is CICC.
In this insight, we look at the company’s core products and key products, including XBP-3571, XZP-3287 and XZP-3621.
While there are some interesting reads from its clinical data, we are of the view that its near-commercial products are still lacking the differentiating factors in respective competitive therapeutic areas.

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May 29

Daily Brief China: 52TOYS Development, Anker Innovations Technology, Lens Technology , Vigonvita Life Sciences, Xiaomi Corp and more

In today’s briefing:

52 Toys Development Co. Ltd Pre-IPO Tearsheet
STAR&CHINEXT 50 Index Rebalance Preview: One Set of Change; Maybe Two
Lens Technology A/H Listing – Diversifying but Is Tarrified for Now
Pre-IPO Vigonvita Life Sciences – The Challenges Behind the Pipeline and the Outlook
Lucror Analytics – Morning Views Asia

52 Toys Development Co. Ltd Pre-IPO Tearsheet

By Rosita Fernandes

52TOYS Development (TOY HK) is planning to raise about US$200m through its upcoming Hong Kong IPO. The lead bookrunners for the deal are Citi, Huatai International.
52Toys was established in 2015. The firm is one of the leading IP toy company in China.
According to CIC, the company was the second-largest multi-genre Chinese IP toy company in terms of China GMV in 2024.

STAR&CHINEXT 50 Index Rebalance Preview: One Set of Change; Maybe Two

There could be 1 constituent change (maybe 2) for the STAR&CHINEXT 50 Index in June. The announcement of the potential change will be made after market close on Friday.
Anker Innovations Technology could replace Suzhou Maxwell Technologies in the index. If AVIC Chengdu Aircraft is added to the index, Wuxi Lead Intelligent Equipment could be deleted.
Anker Innovations Technology could have opposite flow and Suzhou Maxwell Technologies could have same way flow from passive trackers of other indices on the same day.

Lens Technology A/H Listing – Diversifying but Is Tarrified for Now

Lens Technology (300433 CH), a precision manufacturing solution provider, aims to raise around US$1.5bn in its H-share listing.
Lens Technology (LT) is one of the leading players in precision structural parts and modules integrated solutions for both consumer electronics and smart vehicles interaction systems.
In this note, we look at its past performance and other deal dynamics that might impact the listing.

Pre-IPO Vigonvita Life Sciences – The Challenges Behind the Pipeline and the Outlook

Due to fierce competition/VBP, generic drug business has little value, whose valuation should be zero. So, the future valuation performance of Vigonvita would be mainly based on innovative drug pipeline.
Since future demand of COVID-19 drug would decrease sharply, it’s recommended to calculate Vigonvita’s valuation by excluding COVID-19 projects. Vigonvita has to rely on other indication/candidates to support valuation outlook.
Post-Money valuation after Series C financing reached RMB4.45 billion.Short-term valuation is about RMB3-6 billion. If LV232 can be successfully developed, there will be greater room for growth in future valuation.

Lucror Analytics – Morning Views Asia

By Trung Nguyen

US treasuries climbed yesterday, with yields declining in the long end.
This came on the back of a solid auction of 2Y notes, as well as a rally in JGBs on signs that the Japanese government may adjust debt issuance to ease market volatility.
The yield on the 2Y UST edged down 1 bp to 3.98%, while that on the 10Y UST fell 7 bps to 4.45%.

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May 28

Daily Brief China: JF Wealth Holdings, First Pacific Co, Foshan Haitian Flavouring & Food Company, Silergy Corp, PDD Holdings, Seres Group , Baidu, Kuaishou Technology, XPeng , Atour Lifestyle Holdings and more

In today’s briefing:

CSI Hong Kong Connect Internet Index Rebalance Preview: 6 Changes & US$700m Trade
StubWorld: First Pacific (142 HK) Looking Stretched
HK Strategy: Some Consumer IPO Pipelines and Their Proxies
Silergy (6415.TT): Annual Growth Could Be Lower Than Earlier Expectation Of 20-25%.
Pinduoduo: Record Ownership Decline Amid Sharp Rotation
Seres Group A/H Listing – Rapid Growth but Its Partner’s Sanctions Risk Might Keep Some Away
[Baidu (BIDU US, SELL, TP US$85) TP Change]: C1Q25: Accelerated AI Search Transition Releases Risk
Kuaishou (1024 HK): 1Q25, Just Stable, But Undervalued Stable
[XPeng Inc. (XPEV US, BUY, TP US$30) TP Change]: C1Q25 Review: Early Signs of a Chinese Tesla
[Atour Lifestyle (ATAT US,BUY,TP US$37) Review]: Peer-Beating Performance Now W/ Shareholder Returns

CSI Hong Kong Connect Internet Index Rebalance Preview: 6 Changes & US$700m Trade

There could be 3 constituent changes for the CSI Hong Kong Connect Internet Index in June. Plus there are some fairly large capping changes for some stocks.
Estimated one-way turnover is 4.9% and the round-trip trade is HK$5.4bn (US$694m). The impact on the deletes will be a lot larger than the impact on the adds.
The forecast adds have outperformed the forecast deletes over the near-term, though the trade has been quite volatile over the medium term.

StubWorld: First Pacific (142 HK) Looking Stretched

By David Blennerhassett

Via 49.9%-held MPIC, First Pacific Co (142 HK) is spinning off Maynilad, a provider of water and wastewater services in the Greater Manila Area, on the Philippine Stock Exchange
Maynilad will tentatively have a market cap of US$2.7bn. Other key investors include DMCI Holdings (DMC PM) and Marubeni Corp (8002 JP). Listing is expected in July.
I see First Pac’s discount to NAV at ~30%, around its narrowest level in a decade.

HK Strategy: Some Consumer IPO Pipelines and Their Proxies

By Osbert Tang, CFA

Hong Kong’s IPO market has gathered momentum lately, especially with the overwhelming response to CATL (3750 HK). Consumer IPOs are the next ones to gather interest.
Foshan Haitian Flavouring & Food Co (FHF HK) is the most imminent one, potentially seeking up to US$1bn. Without significant peers in Hong Kong, it should attract good attention.
The other interesting ones include Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH), Three Squirrels (TRS HK), and Eastroc Beverage Group (EBG HK).

Silergy (6415.TT): Annual Growth Could Be Lower Than Earlier Expectation Of 20-25%.

By Patrick Liao

Looking ahead to the second quarter, Silergy Corp (6415 TT) did not provide specific guidance targets but emphasized that uncertainty in customers’ decisions regarding chip production locations could impact seasonal demand.
Despite short-term challenges, Silergy Corp (6415 TT) still anticipates 2025 to be a year of growth.
In terms of profitability, Silergy Corp (6415 TT) expects that capacity at Chinese foundries will approach full utilization, leading to supply chain tightness and helping maintain stable gross margins.

Pinduoduo: Record Ownership Decline Amid Sharp Rotation

By Steven Holden

Pinduoduo sees one of the steepest ownership drops in EM funds, with 95 net sellers and 28 closures in six months.
Major closures from Aubrey, AllianceBernstein, UBS, and BNP Paribas; largest outflows from Fidelity and BlackRock.
Despite sharp declines, PDD remains in 36.5% of GEM funds and a top 10 holding in China & HK.

Seres Group A/H Listing – Rapid Growth but Its Partner’s Sanctions Risk Might Keep Some Away

Seres Group (601127 CH), a Chinese NEV manufacturer, aims to raise around US$2bn in its H-share listing.
Seres Group (SG) is principally engaged in the research and development, manufacturing, sales and services of new energy vehicles (NEV) as well as core NEV components.
In this note, we look at its past performance and other deal dynamics that might impact the listing.

[Baidu (BIDU US, SELL, TP US$85) TP Change]: C1Q25: Accelerated AI Search Transition Releases Risk

By Ying Pan

BIDU reported C1Q25 top line, non-GAAP operating profit and GAAP net income 4.5%, 8.6% and 58% vs. our estimates. Baidu Core revenue beat our estimate by 3.4%,
We believe BIC’s outperformance stemmed from enterprise demand for AI adoption. Further, BIDU’s integrated AI offering should allow it to capture AI’s 2C revenue quicker.
We cut the TP from US$88 to US$85 and maintain SELL.

Kuaishou (1024 HK): 1Q25, Just Stable, But Undervalued Stable

By Ming Lu

KS performance was just fine in 1Q25, but KS stock is undervalued.
In 1Q25, revenue grew by 11% YoY and the operating margin was flat with 1Q24.
We believe KS just moved part of e-commerce revenue from online marketing to live streaming.

[XPeng Inc. (XPEV US, BUY, TP US$30) TP Change]: C1Q25 Review: Early Signs of a Chinese Tesla

By Eric Wen

XPeng (XPEV) reported C1Q25 top line (3.3%)/1.6% vs. our estimate/consensus, non-GAAP operating loss and GAAP net loss are 25%/50% better than our estimates,
Given XPEV will launch 5 models updates in C2Q25 and 2 new models in C3Q25 and project an operating breakeven in C4Q25,
We raise the TP from US$26 to US$30 and elevate the rating to TOP BUY

[Atour Lifestyle (ATAT US,BUY,TP US$37) Review]: Peer-Beating Performance Now W/ Shareholder Returns

By Eric Wen

Atour (ATAT) delivered a steady C1Q25 with revenue (3.9%)/1.6% vs. our est./cons., and non-GAAP operating profit (5.0%)/5.5% vs. our est./cons.;
We see catalysts from the “low-before-high” RevPAR trend, legacy hotel renewals and retail profitability improvement.
We keep the TP at US$37/ADS and reiterate as travel sector TOP BUY

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May 27

Daily Brief China: Soundwill Holdings, Meituan, Shandong Himile Mechanical Science & Technology, Cosco Shipping Development, Beijing Airport High Tech A, Foshan Haitian Flavouring & Food, PegBio, BYD, Jiangsu Hengrui Pharmaceuticals, Sands China and more

In today’s briefing:

Soundwill (878 HK): Thoughts On The Latest Scheme Fail
Meituan (3690 HK): 1Q25, Main Businesses Up by 20%
CSI A500 Index Rebalance Preview: Many Changes Expected; US$1bn Trade
A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!
CSI All Share Real Estate Sector Index Rebalance Preview: Multiple Changes in June
Foshan Haitian Flavouring H Share Listing: The Investment Case
PegBio IPO Trading Update
Connect SOUTHBOUND Flows (To 23 May 2025); Volumes OK, Telecoms & Banks Bought, Tech & Consumer Sold
Hengrui Pharma (1276 HK): Trying to Achieve Total Global Index Inclusion
Lucror Analytics – Morning Views Asia

Soundwill (878 HK): Thoughts On The Latest Scheme Fail

By David Blennerhassett

After Goldlion (533 HK)‘s spectacular Scheme fail, Soundwill (878 HK) appeared destined to be the next failure as shares dipped hard ahead of the Scheme vote. And fail it did.
Just like for Goldlion, Soundwill’s Offer was clearly light. The counter-argument was that terms were, arguably, as good as it gets. And no competing Offer would emerge. Minorities voiced otherwise.
Hong Kong has been the proverbial graveyard for arb deals of late. However, in a positive sense, minorities in Goldlion and Soundwill simply rejected opportunistic Offers.

Meituan (3690 HK): 1Q25, Main Businesses Up by 20%

By Ming Lu

In 1Q25, total revenue grew by 18% YoY, with main businesses up by 20% YoY.
The operating margin rose by 3.6 ppt YoY by cutting every cost in 1Q25.
We expect EPS will grow by 37% in 2025 and the stock has an upside of 48%.

CSI A500 Index Rebalance Preview: Many Changes Expected; US$1bn Trade

There could be 18 changes for the CSI A500 Index at the June rebalance. Turnover is estimated at 1.7% and the round-trip trade is around US$1bn.
The index was launched in September 2024, and the passive trackers have taken in a chunk of money since then. The flows to the stocks add to other index flows.
A long add/short deletes trade has been stable over the last few months. The forecast adds could outperform following announcement of the index changes on Friday.

A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!

By Travis Lundy

AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) now 5% through. CATL 10% through will help.
It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.
The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.

CSI All Share Real Estate Sector Index Rebalance Preview: Multiple Changes in June

There could be up to 8 adds and 3 deletes for the CSI All Share Real Estate Sector Index in June.
Estimated one-way turnover is 3.2% at the rebalance leading to a round-trip trade of CNY 456m. There are a few stocks with over 0.5x ADV to trade.
The forecast adds and deletes have performed in line over the last few months, and the announcement of the changes could lead to short-term outperformance.

Foshan Haitian Flavouring H Share Listing: The Investment Case

By Arun George

Foshan Haitian Flavouring & Food (603288 CH), a leading Chinese pharmaceutical company, has filed its PHIP for an H Share listing to raise US$1 billion.
Foshan Haitian Flavouring & Food Company (FHF HK) has been China’s leading condiments company in terms of sales volume for 28 consecutive years.
The investment case rests on its market positioning, return to growth, industry-leading profitability, cash generation and strong balance sheet. However, the valuation of the A Shares is full.

PegBio IPO Trading Update

By Ke Yan, CFA, FRM

PegBio raised HKD 300.8m (USD 38m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, May 27th.
In our previous note, we looked at the company’s GLP-1 product and its valuation.
In this note, we provide an update for the IPO before trading debut. The free float shares are mostly at the hands of retail investors.

Connect SOUTHBOUND Flows (To 23 May 2025); Volumes OK, Telecoms & Banks Bought, Tech & Consumer Sold

By Travis Lundy

Gross SOUTHBOUND volumes back below HK$100bn a day this past week, but net buying was nearly HK$19bn, which is decent.
Among the top buys as a percentage of volume, FINANCIALS and TELECOMS stand out, dramatically. Among top sells, it is CONSUMER and INFO TECH dominating the top 20.
The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.

Hengrui Pharma (1276 HK): Trying to Achieve Total Global Index Inclusion

By Dimitris Ioannidis

Jiangsu Hengrui Pharmaceuticals (1276 HK) debuted on the HKEX on 23 May, closing the first day 25% above its offer price, resulting in a market cap of ~$47bn.
The security is expected to be assigned to Global-M Standard. Uncertainty for inclusion arises due to relatively low float cap even after the lock-up expiry.
The security is forecasted to be added to Global-F All-World in December 2025 and receive an upweight in March 2025 following the lock-up expiry.

Lucror Analytics – Morning Views Asia

By Leonard Law, CFA

In today’s Morning Views publication we comment on developments of the following high yield issuers: Sands China, UPL Limited
US treasury yields ended slightly lower in a holiday-shortened session on Friday. The decline in yields was supported by Treasury Secretary Scott Bessent’s remarks that regulators may be “very close” to easing the supplementary leverage ratio, which could support banks’ trading of treasuries.
That said, larger yield declines earlier in the day were pared after President Donald Trump issued new tariff threats against the EU and Apple Inc. The yield on the 2Y UST was unchanged at 3.99% (after dropping as much as 9 bps in the day), while the yield on the 10Y UST ended 2 bps lower at 4.51% (after declining up to 8 bps).

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May 26

Daily Brief China: Horizon Robotics, Contemporary Amperex Technology (CATL), Bestechnic Shanghai , Tongcheng Travel Holdings , Alibaba Group Holding , Guangdong Investment, Foshan Haitian Flavouring & Food Company and more

In today’s briefing:

Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows
Curator’s Cut: Korea’s Value, CATL’s Charge and Copper’s Surge
STAR Chip/ CES Chips/ CNI Chips Index Rebalance Preview: Multiple Stocks with Overlapping Flow
Tongcheng Travel (780 HK): Regaining Momentum, Better Choice than Trip.com
Alibaba (9988 HK): Unpacking the Week’s Savvy Top Options Trades
Alibaba (9988 HK): Navigating Post-Earnings Volatility
ECM Weekly (26 May 2025) – CATL, Hengrui, Eastroc, Haitian, Schloss, Aegis, Hyundai Marine, Pony
Guangdong Investment (270): Stable Diversifier and USD 1.3 Bn FCF
Pre-IPO Foshan Haitian Flavouring & Food Company (PHIP Updates) – Some Points Worth the Attention

Horizon Robotics (9660 HK): Southbound Stock Connect Inclusion Today & Upcoming Index Flows

Horizon Robotics (9660 HK) will be added to Southbound Stock Connect from the start of trading today. Then there will be passive buying at the close on 20 June.
The lock up expiry in April will result in large buying from trackers of the Hang Seng TECH Index (HSTECH INDEX) and HSIII Index in September.
The stock will also be added to another large global index, though the timing on inclusion is not certain at the moment.

Curator’s Cut: Korea’s Value, CATL’s Charge and Copper’s Surge

By Pranav Rao

Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,200+ insights published over the past two weeks on Smartkarma
In this cut, we look at Korea’s compelling valuation versus AxJ equities, CATL’s blockbuster Hong Kong listing and its market implications, and explore copper’s price surge amidst Chinese demand
Want to dig deeper? Comment or message with the themes you think should be highlighted next

STAR Chip/ CES Chips/ CNI Chips Index Rebalance Preview: Multiple Stocks with Overlapping Flow

There could be 1 change each for the STAR Chip Index and CNI Semiconductor Chips Index, and 3 changes for the CES China Semiconductor Chips Index in June.
There are a few stocks that will have same-way flow from passive trackers of the STAR50 INDEX, STAR 100 Index, CSI 500 Index, CSI 1000 Index and CSI A500 Index.
The round-trip trade across the indices is CNY 2.9bn (US$400m) and will add to the impact across the other China indices that rebalance on the same day.

Tongcheng Travel (780 HK): Regaining Momentum, Better Choice than Trip.com

By Osbert Tang, CFA

Tongcheng Travel Holdings (780 HK)‘s 1Q25 adjusted net profit surged 41.1%, suggesting an accelerating momentum. It should continue to outperform Trip.com Group (9961 HK).
Good cost management, even as revenue rose 13.2%, has enhanced adjusted EBITDA margin by 5.3pp YoY – this trend will sustain.
More visa convenience will boost inbound and outbound travel. At end-1Q25, net cash equals 14% of market capitalisation, and it can still generate ROE of 12-15%.

Alibaba (9988 HK): Unpacking the Week’s Savvy Top Options Trades

Over the past five trading days, Alibaba Group Holding (9988 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Popular Strategies: Over 35% of all strategies are Calendar or Diagonal Spreads. Bullish and bearish views prevail at equal rates, with very few market-neutral views expressed.
Top Trades: Some market participants were betting on a short term re-bound after the post-earnings drop. Others take a bearish view with finely calibrated medium-term hedges. Trade-examples are presented.

Alibaba (9988 HK): Navigating Post-Earnings Volatility

Implied Volatility Trends:Alibaba Group Holding’s (9988 HK) one-month implied volatility has significantly receded to the 37th percentile after its 15 May earnings, reflecting a substantial implied vola crush.
Skew and Term Structure Dynamics: The implied volatility term structure is now slightly upward-sloping with longer-dated options commanding a small premium. Skew dynamics indicate cheaper puts.
Open Interest Distribution: Liquidity is greatest in the June and September expiries. Short term strikes are concentrated near or at the money.

ECM Weekly (26 May 2025) – CATL, Hengrui, Eastroc, Haitian, Schloss, Aegis, Hyundai Marine, Pony

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, Contemporary Amperex Technology (CATL) (300750 CH) and Jiangsu Hengrui Pharmaceuticals (1276 HK) performance has paved the way for a slew of A/H listings to follow.
On the placements front, there was a large selldown in HD Hyundai Marine Solution (443060 KS) and a lockup release for Pony AI (PONY US) is coming up.

Guangdong Investment (270): Stable Diversifier and USD 1.3 Bn FCF

By Henry Soediarko

Guangdong Investment (270 HK) exposure in water distribution provides the much-needed stability (low volatility). While its Real Estate exposure could provide some growth.
With low valuation and healthy dividend yield, owning GDI during the tumultuous period will provide healthy diversification for your portfolio and a hedge during Trump’ tariff period.
The water sector is undervalued, mainly due to the characteristically low growth, but free cash flow is generally quite strong yet undervalued. GDI generated USD 1.3 bn Free cash flow.

Pre-IPO Foshan Haitian Flavouring & Food Company (PHIP Updates) – Some Points Worth the Attention

Despite returning to positive growth, Haitian still failed to achieve its 2024 revenue target, mainly due to underperformance of Soy sauce products, consumption downgrades, slow online layout/distributors recovery.
Haitian would face dual challenges of “cost increase + structural transformation” in the next three years due to inflation and the negative impact of “new standard”. We shared our performance forecast.
High valuation is unsustainable if based on current growth rate.Reasonable valuation is about 20-30x P/E. However, due to the strong sentiment for AH listing, share price may still perform well.

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May 25

Daily Brief China: Alibaba Group Holding , Soundwill Holdings, Tencent, Remegen , ZIM Integrated Shipping Services and more

In today’s briefing:

Why Is Michael Burry So Bearish on Alibaba (And Other Major Chinese Tech Stocks)?
Soundwill Holdings (878 HK): Hard Lessons from Another HK Arbageddon
Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure
China Healthcare Weekly (May 25) – Pfizer-3SBio’s Record-Breaking Deal, RemeGen’s HK$796Mn Placing
Monthly Container Shipping Tracker | Pricing Still Weak | No Signs of a Recovery | SHORT (May 2025)

Why Is Michael Burry So Bearish on Alibaba (And Other Major Chinese Tech Stocks)?

By Douglas Kim

It recently became publicly available that Michael Burry (CEO of Scion Asset Management) started buying put options on numerous Chinese stocks including Alibaba Group Holding (BABA US).
We highlight four major reasons why Burry may have turned bearish on Chinese tech names (tariffs, delisting threats, increasing hostile political pressure on China, and China’s 30 year bond yield).
Although we do not know exactly know how Burry has changed his position in 2Q25, he is likely to have reduced put options on major Chinese tech stocks in April/May.

Soundwill Holdings (878 HK): Hard Lessons from Another HK Arbageddon

By Arun George

Soundwill Holdings (878 HK) shareholders have voted against the Foo family’s HK$8.50 per share offer. The minority participation rate was high, and the NO vote comfortably failed the value test.
Unlike the Goldlion Holdings (533 HK) deal break, the price action over the last three days pointed to a deal break. Like previous deal breaks, this one offers hard lessons.
Soundwill has the fourth-highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$5.63, 13.2% below the last close.

Tencent (700 HK): Strategies to Navigate Low Volatility and A Flat Term Structure

Implied Volatility Trends: One-month implied volatility is currently cheap, trading in its 14th percentile, while Tencent (700 HK) approaches its twelve-months high.
Skew and Term Structure Dynamics: A pronounced skew smile and a relatively flat term structure make spreads and calendar / diagonal spreads attractive strategies.
Open Interest Distribution: Liquidity can be found in the monthly May expiry and the Quarterly expiries. The historically low implied volatility facilitates longer term positions.

China Healthcare Weekly (May 25) – Pfizer-3SBio’s Record-Breaking Deal, RemeGen’s HK$796Mn Placing