China

• Back on the 4th December 204, Starwood/Warburg Pincus Consortium announced a firm pre-conditional Offer for ESR Group (1821 HK) at HK$13/share (best & final), by way of a Scheme.
• The list of pre-cons was extensive. Last night (15th May), ESR announced the satisfaction of all pre-cons. 
• The Scheme Doc is now required to be dispatched by the 22nd May, suggesting payment around mid-July. Assuming no dispatch delays.

• Back on 3rd March, dual-listed OneConnect Financial (6638 HK/OFT US), a digital retail banking/commercial banking/digital insurance play, announced a non-binding proposal from Ping An, OneConnect’s controlling shareholder with 32.12%.
• By way of a Scheme, Ping An offered HK$2.068/share, or US$7.98/ADS, a 72.33% premium to last close, and a 131.66% premium to the 30-day average. The price was final.
• SAMR has now signed off on the deal and terms are now firmed. M&G is supportive (1.98% of shares out,  ~8% of disinterested shares). Perhaps mid-September completion. 

• There are no constituent changes for the Hang Seng Internet & IT Index (HSIII) in June but there will be float and capping changes.
• Estimated one-way turnover is 5.95% and that leads to a round-trip trade of HK$3.2bn (US$410m). There are a few stocks with over 0.5x ADV to trade from passive trackers.
• The inflows to NetEase (9999 HK) and Baidu (9888 HK) and the outflows from Kuaishou Technology (1024 HK) and Bilibili (9626 HK) will add to the flows from other indices.

• Jiangsu Hengrui Medicine (600276 CH), a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing.
• JHP Has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.
• We have looked at the company’s past performance and other deal dynamics in our previous note. In this note, we talk about the IPO pricing.

• The precondition for the consortium scheme offer for ESR Group (1821 HK) has been satisfied. The scheme document will be despatched by 22 May.
• The consortium has disclosed an additional irrevocable. Total irrevocables and letters of support represent 35.01% of outstanding shares (58.24% of disinterested shares).
• This is a done deal, helped by the material derating of peers. At the last close and for an early August payment, the gross/annualised spread is 4.3%/21.3%

• Jiangsu Hengrui Pharmaceuticals (1276 HK) has launched its H Share listing at HK$41.45 to HK$44.05 per H Share. Pricing will be on 21 May.
• I discussed the H Share listing in Jiangsu Hengrui Pharma H Share Listing: The Investment Case. 
• The proposed AH discount can be argued as either light or attractive. I lean toward the latter and would participate in the H Share listing.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• The official index changes and indicative weights for the June 2025 index rebal event will be announced on Friday 16th May 2025.
• We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$396mn one-way.

• The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
• For the June 2025 index rebal, we estimate there to be US$423mn one-way flows due to capping.
• We also expect three index changes (so far) for the next semiannual index review which will take place in September 2025 (regular ADDs/DELs only take place in March and September).

• Contemporary Amperex Technology (CATL) (300750 CH) has offered118 million shares in Hong Kong, priced at HKD263 per share, a modest discount to its A share price.
• More than half of the USD4 Billion Hong Kong share offering has already been subscribed by cornerstone investors.
• Middle Eastern sovereign wealth funds are amongst CATL’s key corner stone investors while the deal excluded US onshore investors given the mounting geopolitical tensions.

• With two days left in the review period, Pop Mart International Group L (9992 HK) could replace China Railway Group Ltd H (390 HK) in the FXI ETF in June.
• The inclusion of Pop Mart International Group L (9992 HK) in the iShares China Large-Cap (FXI) (FXI US) will add to the potential inclusion of the stock in other indices.
• Short interest has been increasing in both stocks. Multiple index inclusions could result in short covering in Pop Mart while China Railway Group‘s stock price has been bouncing off its lows.

• Oneconnect Financial Technology (6638 HK) disclosed a preconditional scheme offer from Ping An Insurance (H) (2318 HK) at HK$2.068 per share (US$7.976 per ADS).
• Despite the hefty premium, the offer is opportunistic as it values OneConnect below net cash, and the FCF burn is modest (net cash can fund 8 years of FCF burn).
• Ping An has secured support from M&G to lower vote risk. The key risk remains that an activist stealthily builds a blocking stake (below the 5% HKEx disclosure threshold).

• Geely announced that total revenue increased by 25% YoY in 1Q25.
• Sales volume continued to grew strongly by 53% YoY in April 2025.
• The operating margin improved YoY for the third quarter in 1Q25.

• Contemporary Amperex Technology Co. Ltd. (CATL) said its new electric vehicle (EV) battery technologies increase a car’s range, lower charging times and keep working at extremely low temperatures.
• The improvements that CATL touted in its announcement Monday aim to alleviate some of the major issues seen as hindering the uptake of EVs, such as “range anxiety” — the concern that a car’s battery might run out on longer drives.
• The highlight of the announcement was the Freevoy dual-power battery system, which divides a single battery pack into two independent energy “zones” — one to power a car for running around town and another that kicks in for longer trips that might test the vehicle’s range.

• With the review period complete, there could be 50 changes for the CSI Smallcap 500 Index and 100 changes for the CSI 1000 Index in June.
• There are a lot of migrations expected between the two indices and the impacts for those stocks are lower with much of the flow cancelling out.
• The outright adds have outperformed the outright deletes over the last few months with the profit-taking in March giving way to renewed outperformance in April.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• The official index changes and indicative weights for the June 2025 index rebal event will be announced after the close on Friday 16th May 2025.
• We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$1.85bn one-way.

• Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
• There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
• Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.

• In 1Q25, both total revenue and game revenue growth rates accelerated.
• The authorities have been turning from containing games to encouraging games.
• We expect the stock has an upside of 34% and a price target of HK$700. Buy.

• With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
• The largest flows will be in stocks that are adds/deletes for both indices – and there are a few of those. Plus there are some overlaps with other indices.
• While the forecast adds have outperformed the forecast deletes for both indices since January, near-term performance has not been great. That could change as we near the announcement date.

• CIMC Enric Holdings (3899 HK)‘s YTD decline in share price provides an opportunity to pick up this name, which sees a solid sequential earnings improvement this year. 
• 1Q25 revenue growth accelerated to 24.4%, from 2.9% in 2H25. While 1Q25 new orders have dropped, there is a sharp rebound in Apr, with a more positive 2H25 outlook.
• At 9.3x FY25 PER after going ex-dividend (27 May), it is cheap relative to 14.7% 3-year EPS CAGR. The stock is also trading at the low-bound of the 3-year range.  

• A new probe from EU on Chinese tire due to start May 19  
• Lack of clarity on the range of tires under the scope of US auto tariff  
• Lobbying to suspend or delay the implementation of auto tariff 

• Mabwell (Shanghai) Bioscience (MAB HK) has three commercialized products on the market, but their commercialization performance have been far lower-than-expected, leading to small revenue scale and continuously expanding losses. 
• Mabwell’s ADC technology is actually outdated. We’re not optimistic about the final efficacy of 9MW2821, which is hard to become a Best-In-Class. Other pipeline candidates need to face fierce competition.
• Mabwell’s pipeline actually lack competitiveness in the market. Due to weak liquidity, share price of Mabwell in HK market would be traded at a discount to A shares.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Seazen Group, Softbank Group

• In the US, the April CPI came in below expectations for the third straight month at 2.3% y-o-y (2.4% e / 2.4% p) and 0.2% m-o-m (0.3% e / -0.1% p). Core CPI (excluding food and energy) stood at 2.8% y-o-y (2.8% e / 2.8% p) and 0.2% m-o-m (0.3% e / 0.1% p).

• Treasuries were largely steady yesterday, as supply pressure from corporate issuances offset the softer than expected April CPI print.

• Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 June.
• With no constituent changes, one-way turnover will be 1.9% with 3 stocks being capped and FAF changes for a few stocks due to a methodology change for Secondary Listings. 
• We highlight 7 stocks that have a higher probability of being added to the index. Everything depends on the index committee, and we would not be surprised by zero changes.

• The 1Q25 result is quite healthy, but the shrinking minor business, social entertainment, covers the fact.
• The main businesses grew by two digits and the operating margin continued to grow by 28% YoY in 1Q25.
• We believe the stock has an upside of 83% and a price target of US$26 for the yearend 2025.

• With the review period complete, there are 2 non-constituents in direct inclusion zone and 4 current constituents in direct deletion zone.
• 4 changes result in a one-way turnover of 5.7%, leading to a round-trip trade of CNY 21.8bn (US$3bn). Index arb balances will increase the impact on the stocks.
• After drifting in a range, the forecast adds have outperformed the forecast deletes over the last month. There could be further outperformance as we near the announcement date.

• Tencent has rallied 17.29% off the April low—against this backdrop, we analyze implied vol, the earnings-implied jump, and post-earnings price patterns.
• Relative to past earnings cycles, current implied vol screens lower across multiple timeframes and spread metrics.
• Post-Earnings price behavior reveals some non-intuitive dynamics worthy of consideration.

• Unisound AI Technology (1053075D CH) is looking to raise at least US$300m in its upcoming HK IPO.
• The firm specializes primarily in speech recognition and text-to-speech capabilities
• In this note, we look at the firm’s past performance.

• China Hongqiao has delivered steady ~6 Mt volumes, ~25% EBITDA CAGR, and 15–27% ROCE over the last three years, supported by integration and energy transition gains.
• China Hongqiao is relocating 4 Mt of capacity to Yunnan to tap low-carbon hydropower, advancing its green aluminium transition.
• China Hongqiao offers strong earnings visibility backed by low-cost operations, while trading at attractive valuations relative to peers.

• Busy Ming Group Co., Ltd. (BMG) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by GS, Huatai, and DB.
• BMG is a leading F&B retailer in China, offering value-for-money products which are priced c.25% lower than the average for similar products available in the supermarket channel.
• It mainly operates under a franchised model and focuses mostly on third-tier cities and below.

• Boxihe Outdoor Sports Group (BOS HK)  is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by CICC and CITIC.
• BOS aspires to become a renowned leading outdoor brand globally, committed to providing high-performance outdoor garments and equipment.
• The firm began operations in 2012, with its core brand, Pelliot. Through Pelliot, BOS offered a wide range of products.

• ESR, Tokyu Land, and Hulic have begun construction on a new shed in Singapore, helping to boost the real estate market in the region.
• Analysts predict that the drop in the Hong Kong interbank rate will have a positive impact on the market, leading to increased activity.
• China has cut housing loan rates to a record low in an effort to stimulate growth in the market, demonstrating proactive measures to support the economy.

• In order to maintain revenue growth, it’s necessary to continuously increase advertising investment. However, due to fierce market competition, the ROI from advertising is declining, leading to weak profitability.
• The big concern here is once Jihong’s e-commerce business loses its growth momentum, future performance will inevitably enter a downward trend. Jihong lacks a sustainable growth logic for the future.
• Jihong’s valuation could be about RMB3.2-4.3 billion, based on the valuation of cross-border social e-commerce business (P/E of 15-20x) + the valuation of traditional paper packaging business (P/E of 10-12x).  

• Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
• There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
• CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.

• Contemporary Amperex Technology (CATL) (300750 CH) , one of the world’s largest battery solutions providers, aims to raise around US$4bn in its H-share listing.
• CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
• We have looked at the company’s past performance in our earlier notes. In this note, we talk about the IPO pricing.

• Contemporary Amperex Technology (CATL) (300750 CH) has launched its H Share listing at a maximum price of HK$263. Pricing will be on 19 May, and the listing on 20 May.
• I discussed the H Share listing in CATL H Share Listing: The Investment Case, CATL H Share Listing: AH Discount Views, CATL H Share Listing: PHIP Reinforces the Investment Case.
• Our valuation analysis suggests that the low AH discount can be justified. We would participate in the listing.

• With the review period complete, we forecast 1 change for the SSE STAR50 (STAR50 INDEX) and 4 changes for the STAR100 Index in June.
• We estimate turnover of 2.26% for the SSE STAR50 (STAR50 INDEX) and 5.05% for the STAR100 Index. The estimated round-trip trade is CNY 8.1bn (US$1.11bn).
• There are multiple stocks that are forecast adds or deletes for other indices and the passive flows will be a lot larger than just for the STAR50/STAR100 indices.

• Contemporary Amperex Technology (CATL) (300750 CH)  , one of the world’s largest battery solutions providers, aims to raise around US$4bn in its H-share listing.
• CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
• In this note, we talk about the IPO pricing and how it compares to some of the past listings.

• Our previous insight indicated a potential buy opportunity immediately followed by higher prices, but China Mobile (941 HK) hasn’t really rallied much since our signal was released, 2 weeks ago.
• Monday, news about a US-China tariffs deal sent global stocks sharply higher. However, the stock closed the day at 84.25, our model’s Q2 profit target (i.e. not a strong rally…).
• Our time model also indicates an overbought state (74% probability of reversal): we’re not bearish on the stock, but in this insight we will discuss a few tactical scenarios.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Melco Resorts, Tata Steel, Tata Motors
• US President Donald Trump wrote in a Truth Social post on Sunday hat the US had “a very good meeting with China in Switzerland”, with “great progress made”. Meanwhile, US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer described “substantial progress”, adding that further details would be announced today.
• Chinese Vice-Premier He Lifeng highlighted that the talks were “candid, in-depth and constructive” on issues of concern to both countries, adding that the meeting “achieved substantial progress” and “reached important consensus”.

• Initial bearish outlook on Asian effects due to President Trump’s tariff storm
• Unexpected multi sigma moves in Asian currencies, sparking speculation of currency accord
• Uncertainty surrounding flow types, behavior of Asian exporters, and Asian central banks, with key questions hanging over China’s influence on Asian FX appreciation

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• The whole sector has been derated as the oil prices collapsed
• The capital cycle story is still intact and gets stronger as time passes
• There is a margin of safety in the current valuations

• Goldlion Holdings (533 HK) shareholders have voted against Mr Tsang’s HK$1.5232 per share offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
• The Goldlion deal break was unexpected, and the HKEx merger arb rulebook will be rewritten. This deal break offers several lessons.
• Goldlion had the highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$0.953, 36.0% below last close.

• The review period for the June rebalance of the HSTECH INDEX ended on 31 March, the changes will be announced on 16 May and implemented on 6 June.
• Following the launch of the God’s Eye ADAS, BYD (1211 HK) could become eligible for index inclusion after meeting the Autonomous theme and Innovation screening.
• The inclusion of BYD (1211 HK) in the index could result in China Literature (772 HK) being deleted from the index in June.

• 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 through the bubble in Chinese tea company listings, the recent entertainment provided by Japanese M&A situations and the varied ways analysts look at TSMC on Smartkarma
• Want to dig deeper? Comment or message with the themes you think should be highlighted next time

• The review period for the June rebalance of the HSCEI ended on 31 March, the results will be announced on 16 May and will be implemented on 6 June.
• Pop Mart International Group L (9992 HK) could be added to the index while Sunny Optical Technology Group (2382 HK) could be deleted from the index.
• There are other stocks with big flows due to a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the rebalance in June.

• 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: Contemporary Amperex Technology (CATL) (300750 CH) and Jiangsu Hengrui Medicine (600276 CH) are set to launch H Share listings.
• Event-Driven developments: Imagica Robot Holdings (6879 JP), Mitsubishi Shokuhin (7451 JP), NTT Data Corp (9613 JP), Shibaura Electronics (6957 JP), Torii Pharmaceutical (4551 JP), ZEEKR (ZK US). 

• 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: Imagica Robot Holdings (6879 JP), ENN Energy (2688 HK), Oneconnect Financial Technology (6638 HK),  Insignia Financial (IFL AU), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP). 
• Lowest spreads: Bright Smart Securities And (1428 HK), Abacus Storage King (ASK AU), AEON Mall (8905 JP), Dada Nexus (DADA US), SLB Development (SLB SP). 

• 5-Year Growth: EBITDA doubled to RMB 72.6 bn; production scaled across copper, gold, and lithium through global M&A and low-cost execution.
• Capex Plans: USD 10.4 bn over 5 years across copper, lithium, and gold; includes Zijin Gold International spin-off by late 2025.
• Zijin is projected to deliver 19–27% CAGR in EBITDA and net profit through 2026, yet trades at just 6.3x 2025E EV/EBITDA — a notable discount to peers trading at 7–8x

• 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 Medicine (600276 CH) are gearing up for an IPO launch soon.
• On the placements front, there were two primary placements in Hong Kong, along with a number of lockup expiries coming up.

• Onshore Chinese investors’ purchases of HK equity through the Southbound Connect accelerated rapidly after China’s September stimulus. Despite net selling in early May, the onshore bullishness seems sustainable for now.
• Onshore investors prefer internet platforms (Tencent, Alibaba), technology and consumer discretionaries (Xiaomi, SMIC, China Mobile), and lately EVs (Li Auto, XPeng). High dividend SOE banks were bought earlier, not recently.
• Our “China Twelve” stocks and focus themes closely align with onshore investors’ preferences. 6 out of 12 figure in the “top bought” Southbound list – reaffirming our bullishness on them.

• The privatization failed due to the inability to balance the interests of public shareholders. There is a gap between the current Offer and the expectations of small and medium-sized investors.
• Some shareholders may think Goldlion still has the potential for strategic adjustments/value reassessment, and are inclined to continue holding this stock. A cash reserve of HK$1.05 has given imagination space.
• We are not sure what strategies Goldlion will adopt to address the current negative situation. The outlook is vague. 9-14x P/E could be reasonable valuation due to the short-term headwinds.

• Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous 2021Q1 record by >HK$100bn. Five weeks into Q2 we are at HK$175bn.
• 3 weeks ago saw SOEs sold quite heavily in somewhat weaker volume. last week it was tech. This week it was again tech sold (ETFs bought) suggesting risk-off.
• 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.

• AH spreads are basically flat on the shortened week. AH premia rose in Pharma and Tech, fell in Industrials, Finance, and Banks. 
• All eyes will be on what happens in Geneva. I personally don’t expect much. 
• 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.

• Trump announced actions to reduce regulatory barriers to domestic pharmaceutical manufacturing, with the core intention to open regulatory “green light” for manufacturing in US, which will change the industry pattern.
• With the promotion of VBP and the implementation of medical insurance price comparison system, there’s a trend of accelerated pharmacies closures. The entire pharmacy industry will face performance headwinds.
• BeiGene’s BRUKINSA recorded negative QoQ growth in 25Q1, which seems below expectations. However, this is temporary headwinds, since the 2025 full-year revenue guidance remains unchanged. Bottom-line valuation  is US$24.5-26.5 billion.

• Recently we revisited the SHEIN vs Amazon shopping comparison we first tried in Dec 2023
• For the items we purchased 17 months ago, total cost at AMZN was largely unchanged
• But at SHEIN, those items almost tripled in cost, still feature slow transits, difficult returns

• Geely Auto (175 HK)‘s discount to NAV is less than half its 12-month average. And Geely is generally trading tighter to listed PRC auto peers. 
• Preceding my comments on Geely – and NTT Data Corp (9613 JP) – are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Green Tea Group (GTG) is looking to raise US$157m (HKD 1.2bn) in its upcoming Hong Kong IPO.
• GTG is the fourth largest Casual Chinese Cuisine player in Mainland China, it has been gaining market share historically and is likely to continue.
• GTG plans to accelerate its expansion of the restaurant network, focusing on expansion into tier two cities and below, with small restaurants rather than large ones.

• Wanda Hotel Development plans to sell hotel management operations to Tongcheng Travel for HK$2.4bn, exceeding its market cap.
• WHD intends to return most sale proceeds to shareholders, retaining some for working capital and future investments.
• WHD retains valuable real estate assets, including Chicago condos and a Guilin shopping mall, with potential additional sales.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Medco Energi
• The US has unveiled a trade agreement with the UK. The US will maintain a 10% blanket tariff on UK imports, while UK duties on US goods will be reduced to 1.8% from 5.1%. It is unclear how the figures are tabulated.
• In addition, tariffs on UK autos will be adjusted such that a 10% tariff will apply to the first 100 k vehicle imports, with any additional vehicles facing a 25% rate.

• 1H25 strong revenue growth continues as capacity increase, “production shifting back domestically”, but weakening ASP and clearly demand pull-in in 1H due to US tariffs and China domestic consumer subsidies.
• “2H not clear, especially after late 3Q”. Management mentions the usual macro / US tariffs unknowns. 2025 Capex similar to 2024 (US$7.7bn, 80% revenue), D&A increasing, ASP down, margins muted.
• The stock is as expensive as always. 49x 2025 EPS, 41x 2026. Consensus is not expecting a negative tariffs shock or weaker China domestic demand.

•  In Q1 2025, Cambodia exports 59,754 tons of rubber, down 13.8% YoY  
• Overall rubber production in Q1 2025, 64,080 tons, down 7.9% YoY  
• Trump tariff, EUDR pose challenge to Cambodian rubber and tire  

• Operating loss in 1Q25 will persist in 2Q25 – I expect throughout 2025. Hua Hong rapid capacity increase is supposedly sold out but D&A is increasing much faster than revenue. 
• Consensus is not expecting an end-demand slowdown resulting from US import tariffs, or sluggish China domestic consumption. Consensus expects Hua Hong to sell its capacity increase fully. 
• Given losses in 1H25, Consensus EPS forecast is too high for 2025, probably for 2026 as well. Stock is expensive at 43x 2025 EPS, EPS forecasts looks too high.

• GLP aims to bounce back from a $1.8B loss by selling its international funds business.
• BlackRock, Centurion, Coliwoo, and Arch are exploring residential opportunities at the Singapore Forum.
• The goal is to create a mutually beneficial situation for investors and occupiers through these discussions.

• Laopu Gold (6181 HK)  targets to raise approximately USD350 mn from a primary placement of 4.31 million new shares at HKD630 per share.
• Laopu Gold has delivered both superior margins and rapid growth by marrying cultural resonance, premium pricing, artisanal excellence, and outstanding store economics.
• Laopu’s growth track record coincides with period of rising gold prices. Investors should weigh its impressive margins and brand strength against the risk of a less supportive gold price environment.

• Swire Pacific (A) (19 HK) is proposing the spin-off and separate listing on the SET of non-wholly-owned ThaiNamthip Corporation Limited, a Coca-Cola franchise operator in Thailand, Cambodia and Laos.
• On the 30th September, Swire completed the 55.7% acquisition for THB42,615.7mn (HK$9,470.1mn). ThaiNamthip concurrently sought to acquire a 30% stake in Swire Coca-Cola’s operations in Vietnam and Cambodia for HK$2,114.6mn.
• At the time of the acquisition, ThaiNamthip had an extrapolative price tag of ~HK$17bn. Should the proposed spin-off complete, ThaiNamthip will remain a non-wholly owned subsidiary of Swire.

• East Buy Holding (1797 HK) was deleted from the Hang Seng TECH Index in March and could be deleted from the KraneShares CSI China Internet ETF (KWEB US) in June.
• There are other ETFs that track the same index (and similar indices), and those trackers will be selling East Buy Holding (1797 HK) too.
• There has been some short covering in the stock recently, but short interest is pretty high as a percentage of float. Watch out for short covering that offsets passive selling.

• Semiconductor Manufacturing International Corp (SMIC) (981 HK)‘s 1Q25 results were in line, while the 2Q25 guidance appears somewhat cautious.  
• The Americas continued to contribute a low-teens percentage to revenue, accounting for 12.6%, while China and Eurasia made up the remaining majority.  
• Semiconductor Manufacturing International Corp (SMIC) (981 HK)’s top priority remains its strategic focus on core business and near-term execution.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Wynn Macau
• In the US, the FOMC has unanimously voted to maintain the Fed funds target rate at 4.25-4.50%, in line with market expectations. In its statement, the FOMC noted that “uncertainty about the economic outlook has increased further”, adding that “risks of higher unemployment and higher inflation have risen”.
• Still, officials noted that although swings in net exports have affected the data, recent indicators suggest that economic activity has continued expanding at a solid pace and labour market conditions have remained strong. Meanwhile, inflation is “somewhat elevated”.

• Strategic planning and collaboration can create a win-win situation for both investors and occupants in real estate ventures.
• Scape has secured a significant commitment of $3.8 billion from CBRE IM for their student housing fund.
• Companies like Greystar, Warburg, Local, and Kio are sharing Australian living insights at a forum in Singapore.

• Full circulation implementation at the beginning of April derailed Laopu Gold (6181 HK)‘s chances of global index inclusion in May. 
• The company has now launched a US$300m primary placement that will significantly improve chances of inclusion in the same global index in August.
• Laopu Gold (6181 HK) will also be added to another global index in September, so there are a few index inclusions likely for the stock this year. 

• Reports continue to indicate a US$5bn raise for CATL H-shares with a discount of up to 10% to CATL (300750 CH) and with cornerstone investors taking up half the deal.
• The company is currently gauging investor demand. The IPO could open next week and the H-shares could list later this month.
• Index Fast Entry largely depends on the cornerstone investor allocation. Float higher than 50%/60% is required for Fast Entry to global indices.

• Contemporary Amperex Technology (CATL) (300750 CH), the world’s largest supplier of EV and ESS batteries, has filed its PHIP for an H-Share listing to raise US$5 billion.     
• I previously discussed the H Share listing in CATL H Share Listing: The Investment Case and CATL H Share Listing: AH Discount Views. 
• In this note, I examine the latest results and developments outlined in the PHIP. Overall, the PHIP reinforces my positive view. 

• Ant Group is considering on listing its overseas unit Ant International in Hong Kong. Ant International contributes approximately 20% to Ant Group’s total revenue.
• Ant International operates four core business lines: Alipay+ (cross-border payment platform), Antom (global merchant acquiring network), WorldFirst (remittance service), and Bettr (digital payment solution).
• Given the growing political to delist Chinese stocks from the US exchanges, there could be a greater political pressure on the Chinese government to approve Chinese IPOs in Hong Kong.

• Auntea Jenny (Shanghai) Industrial (2589 HK)‘s IPO price is set at HK$113.12, which is aggressive based on its financial and operational metrics. 
• At 29.3x FY25F PER, Auntea Jenny’s multiple is close to Mixue Group (2097 HK) and Guming Holdings (1364 HK), but it is significantly smaller in scale and lower in profitability. 
• Our fair value of 25x PER and 5.3x P/B for FY25 means a share price of HK$94.70-96.68. Initial euphoria may inflate its debut, but we will exit on the rally.

• Hainan Drinda Automotive Trim (002865 CH) (HDNET) raised around US$180m via its A/H listing.
• HDNET is a specialized manufacturer of PV cells which are used in making PV modules.
• We have looked at the company’s past performance and other deal dynamics, in our earlier notes. In this note, we talk about the trading dynamics.

• Hengrui’s high growth in 2024/25Q1 mainly relies on the realization of BD cooperation. The short-term performance improvement cannot conceal the long-term pressure. The turning point of endogenous growth hasn’t arrived.
• Hengrui would continue to be affected by VBP. The generic drug business is “outdated”, whose valuation contribution is negligible. The BD model will lead to significant fluctuations in performance.
• Our forecast is net profit YoY growth in 2025-2027 would fall back to 15-20%. Hengrui’s valuation should be lower than that of BeiGene and Hansoh in Hong Kong stock market.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Fosun International, Pakuwon Jati, Adani Green Energy, ReNew Energy
• The US and China are set to commence trade talks in Switzerland this weekend. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will travel to Switzerland later this week to meet with Swiss President Karin Keller-Sutter, and also meet Chinese officials to discuss economic and trade matters, according to separate announcements by the Treasury Department and Office of the Trade Representative.
• Meanwhile, Chinese Vice-Premier He Lifeng will visit Switzerland during May 9-12th, according to China’s Ministry of Foreign Affairs.

• Frasers REIT plans to sell a Melbourne office tower for $129M to an Australian tycoon, indicating a significant transaction in the real estate market.
• Industry leaders from Hilton, KKR, CREAL, and Pegasus are convening in Singapore to discuss strategies for the hospitality sector at a forum.
• Norges has appointed Alexander Knapp as the new Global Real Estate Head and Jason Leong as the new leader of Asia Fund following van den Berg’s departure.

• CATL reported a 6.2% YoY increase in revenue in 1Q 2025. EV battery sales rose 14.0% YoY driven by healthy demand offset by lower ESS battery sales. 
• CATL provided discussions about ongoing tariff disputes. It mentioned that the overall impact and outcome remain uncertain. The U.S. market accounts for about 7% of CATL’s total EV battery business.
• We maintain a Positive View of CATL. Our base case valuation of CATL is implied market cap of 1.3 trillion CNY which is 32% higher than current market cap.