China

• Zijin Gold (2259 HK) is up 101% on its 29th September listing. By my estimate, Zijin Mining (601899 CH)‘s average premium to NAV since Zijin Gold’s listing has been ~21%. 
• Preceding further commentary on Zijin Mining/Gold 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%.

• The revenue growth accelerated for the fourth quarter in 3Q25.
• In 3Q25, the gross margins of all business lines improved year over year.
• Tencent’s operating margin had improved year over year for thirteen quarters.

• There could be up to 7 adds and 4 deletes for the CSI All Share Real Estate Sector Index in December.
• Estimated one-way turnover is 3.8% at the rebalance leading to a round-trip trade of CNY 535m. There are a couple of stocks with over 0.5x ADV to trade.
• The forecast deletes have outperformed the forecast adds over the last 2 months and this is an attractive entry point as we near announcement date.

• Based on the Offer Price of HK$0.35, P/B is 0.69x. This valuation level is lower than the historical average and also has a certain discount compared to the industry average.
• CSM’s net profit may return to positive by 2026. After profitability returns to normal, its P/B ratio is expected to approach 0.8-1x at least. Then reasonable valuation level is HK$0.41-0.51/share.
• Since minorities representing 18.74% of CSM outstanding shares needs to tender to hit the “50% hurdle”, this brings uncertainties as the Offer Price may not be attractive to some minorities.

• EnjoyGo Technology (ENJG HK) (EGT) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by CICC and Guotai Junan.
• EGT, founded by automotive giant, SAIC Motor, is an all-scenario smart mobility platform in China, offering one-stop services covering ride-hailing, vehicle leasing, vehicle sales and Robotaxi services.
• According to Frost & Sullivan in 2024, EGT ranked fifth among ride-hailing platforms in China in gross transaction value and second among ride-hailing platforms in Shanghai in completed order volume.

• Revenue in 3Q25 was 7.8% higher than in 2Q25, in line with stronger seasonal demand. GM: 22.0% in 3Q25, compared with 20.4% in 2Q25 and 20.5% in 3Q24.
• The Company expects: Revenue Flat to up 2% quarter-over-quarter (QoQ). Gross Margin: Between 18% and 20%.
• SMIC’s stock price has risen 160.7% year-to-date in 2025, outperforming Taiwan Semiconductor (TSMC) – ADR (TSM US) at 44.2% and United Microelectron Sp Adr (UMC US) at 10.8%.

• Wasion Group is a leading Chinese provider of smart metering and energy efficiency solutions, well-positioned to benefit from domestic and global grid modernization trends.
• The company is experiencing accelerated growth, driven by China’s ‘dual carbon’ policy, strong investment in smart grids by state-owned utilities, and expansion into higher-growth areas like smart water/gas metering and international markets.
• Key risks include high customer concentration with Chinese state-owned utilities, potential for margin pressure from intense competition, and reliance on government policy direction.

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• Xuanzhu Biopharmaceutical is a clinical-stage biopharmaceutical company spun off from its controlling shareholder, Sihuan Pharmaceutical, with a pipeline focused on oncology, digestive diseases, and metabolic diseases.
• The company faces significant challenges, including intense competition for its core products, doubts about its commercialization capabilities highlighted by a previously failed IPO attempt, and a valuation considered demanding by market analysts.
• Future prospects are heavily reliant on the successful clinical development and approval of its pipeline assets, particularly in expanding indications for its commercialized products and advancing earlier-stage candidates.

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• Shanghai Biren Intelligent Technology (Biren) is a leading Chinese fabless semiconductor company, positioning itself as a key domestic alternative to global GPU leaders like Nvidia, particularly in the high-performance computing (HPC) and artificial intelligence (AI) sectors.
• The company’s flagship BR100 and BR104 GPUs showcase impressive technical specifications, designed to compete with established international offerings. However, its growth trajectory and production capabilities are severely constrained by its inclusion on the U.S. Entity List, which restricts access to advanced semiconductor manufacturing from foundries like TSMC.
• Heavily backed by state-affiliated investors, Biren is a strategic asset in China’s push for semiconductor self-sufficiency. The company is currently unprofitable and planning an Initial Public Offering (IPO) in Hong Kong to raise further capital.

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• Tibet Rhodiola Pharmaceutical Holding Co. is a prominent player in China’s traditional Chinese medicine (TCM) and broader pharmaceutical market, with a focus on biological products, Tibetan and Chinese medicines, and chemical drugs. The company has demonstrated a strong growth trajectory, underscored by a significant increase in net income and dividends over the past three years.
• The company’s strategic focus on high-margin products is evident from its consistently high gross margins, which have remained above 92% in recent years. This, coupled with robust operating cash flow, positions the company well for future investments in research and development and potential market expansion.
• Operating within the rapidly growing Chinese pharmaceutical and TCM markets, the company is poised to benefit from favorable demographic trends, increasing health consciousness, and government support for the TCM industry. However, it faces risks related to regulatory changes, market competition, and the need for continuous innovation.

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• The review period ended on 31 October, the changes should be announced on 28 November and will be effective after the close of trading on 12 December.
• There could be one delete each for the CSI Liquor Index and the CSI Alcoholic Drink Index. Plus capping changes for a bunch of stocks.
• The entire sector has been under pressure over the last few years with every rally being sold into.

• Nearing the end of the review period for the December rebalance, there could be three changes for the iShares A50 China (2823 HK) / CSOP China A50 (HKD) (2822 HK). 
• Sungrow Power Supply, CMOC Group and China CSSC Holdings could replace S.F. Holding, China Everbright Bank and Bank of Jiangsu in the ETF at the close on 19 December.
• The forecast adds have outperformed the forecast deletes over the last 3 months and it is not even close as the gap has kept getting wider

• There could be one change for the CNI Semiconductor Chips Index with Verisilicon Microelectronics S (688521 CH) replacing Tianshui Huatian Technology Co, Ltd. (002185 CH). 
• Passive trackers will need to buy 0.5x ADV in Verisilicon Microelectronics S (688521 CH) and sell 0.4x ADV in Tianshui Huatian Technology Co, Ltd. (002185 CH). 
• There will be large selling in Cambricon Technologies Lt (688256 CH) due to capping while there will be smaller inflows for the other index constituents.

• Total revenue grew by 21% YoY and offline revenue grew by 50% YoY in 3Q25.
• Both ARPPU and the user base increased YoY in 3Q25.
• The margin had improved year over year for 13 quarters.

• The proposed spin-off – from 49.9%-held MPIC – and listing of Maynilad Water Services (MYNLD PH) completed on the 7th November. 
• Priced at PHP 15/share, Maynilad closed yesterday at PHP 14.82/share, down 1.2%. 
• First Pacific Co (142 HK)‘s indirect/direct holding in Maynilad is estimated at 19.1%, accounting for ~6% of NAV. 

• Viomi preannounced in August that its first-half revenues would exceed RMB 1.4 billion ($195 million), and this week, the company published its complete income statement for the first six months, which demonstrated strong performance in the company’s core market.
• We believe government policies in China drove a meaningful portion of the revenue growth in the first half.
• We are not expecting that this program renews in 2026, but we will adjust our model if that changes.

• We believe that Geely Automobile, listed in Hong Kong as 0175, is a private equity fund first and an auto company second.

• Expectations that Geely will become an international blockbuster akin to Toyota or Hyundai are misplaced.

• Geely relied in 2024 for half its profit on mark-to-market value in subsidiaries.

• Shenzhen Zhaowei Machinery & Electronics (003021 CH), aims to raise around US$700m in its H-share listing.
• Shenzhen Zhaowei Machinery & Electronic (SZME) is a provider of integrated micro transmission and drive system solutions ranking first in China and fourth globally by revenue, according to F&S.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• TCE has been highly popular for hematological malignancies and autoimmune diseases.Due to the “Fear of Missing Out” mentality, MNCs directly have purchased TCE assets or the Newco model is adopted.
• Current clinical data is good for CRC, providing EMB-01 with a solid foundation for entering phase III trials.EMB-06 may face challenges in commercialization. EMB-07 has high hopes to be out-licensed.
• Short-Term valuation could be lower than Akeso. Based on our forecast of the peak sales of EMB-01, EMB-06, EMB-07, long-term valuation could reach about US$16.5 billion.

• Shenzhen Edge Medical is a leading Chinese surgical robotics company, notable for being the first in China and second globally to have multi-port, single-port, and bronchoscopy surgical robots approved for market launch.
• The company is strategically positioned to capitalize on the rapidly growing but under-penetrated surgical robotics market in China, which is supported by strong government initiatives and increasing healthcare demand.
• Despite its technological advancements and strong investor backing, the company is in its pre-revenue stage, facing significant net losses due to high R&D expenditure and intense competition from both domestic and international players.

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• On the 30th October, China Modern Dairy (1117 HK) (CMD) entered into a conditional SPA to acquire a 1.28% stake in raw milk producer China Shengmu Organic Milk (1432 HK) (CSM). 
• CMD currently holds 29.99% in CSM. Should the SPA complete, CMD clears 30% and will be obligated to make an Offer for all shares not held. 
• The Offer Price will be A$0.35/share, a 14.75% premium to undisturbed. The Offer will be conditional on a 50% acceptance hurdle. 

• Alibaba (9988 HK) and JD.com (9618 HK) often see heightened volatility following Singles’ Day (11 November), though performance varies by year.
• Alibaba’s post-event returns are mixed, averaging nearly twice its normal four-day move, while JD.com has shown stronger and more consistent gains.
• Option markets imply elevated short-term volatility—especially for JD.com—with potential trading opportunities around the 14 November expiry.

• There could be 1 constituent change for the STAR Chip Index at the December rebalance. There will also be a few capping changes.
• Estimated one-way turnover is 2.3% resulting in a round-trip trade of CNY 2.5bn (US$352m). Passives need to trade between 0.3-0.4x ADV in the potential changes.
• The forecast add and delete will have same-way flows from passive trackers of other indices and that will increase the impact on the stocks.

• There could be 3 constituent changes for the iShares China Large-Cap (FXI) (FXI US) ETF in December. That could easily increase to 4.
• Two of the forecast inclusions will also have inflows from the FGlobal Index at the same time, increasing the impact. The third is a potential HSCEI INDEX add in December.
• The HA premiums for CATL (3750 HK) and Jiangsu Hengrui (1276 HK) have dropped ahead of lock-up expiry and there could be premium expansion closer to index/ETF inclusion.

• With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
• The largest flows will be in 2 stocks that are forecast adds for both indices. There are 14 stocks with over 0.5x ADV to trade from passive trackers.
• The forecast adds outperformed the forecast deletes from June to August, but there has been significant underperformance since then. Outperformance could resume as positioning kicks in prior to announcement.

• On 30 October, China Modern Dairy (1117 HK) announced a conditional share purchase agreement to acquire 1.28% of outstanding China Shengmu Organic Milk (1432 HK) shares at HK$0.35 per share. 
• The SPA is conditional on SAMR and independent CMD shareholder approval. SPA completion will trigger a mandatory conditional cash offer at HK$0.35 per share.
• Post-Completion, CMD and concert parties will hold a 31.26% stake. The offer is conditional on a 50% minimum acceptance condition, which is problematic as the offer is not particularly attractive.  

• We like GDS holdings, a high-beta play on Asia data center market, on the back of strong AI and hyperscale cloud infra growth across Asia
• GDS is a high beta play through 3 ways:  flexible capital deployment, high velocity AI growth, as well as diversification
• We think AI growth and utilization may surprise on the upside.  Also, establishment of a C-REIT platform will enable asset recycling at a high multiple

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Fosun International
• A group of moderate Senate Democrats have reportedly agreed to support a deal to re-open the US government as well as fund some departments and agencies for the next year, which could end the government shutdown.
• Under the agreement, Congress would pass full-year funding for the departments of Agriculture, Veteran Affairs and Congress, while funding other agencies until 30 January 2026.

• LP-003’s indications are small if compared with big indications in autoimmune diseases.So, LP-003 needs to demonstrate excellent efficacy. Otherwise, it would face fierce competition from Xolair/biosimilars, leaving limited market space.
• The core advantage of LP-005 is that multi-target complement inhibitor has superior efficacy potential compared to single-target ones. The downside is the concerns on safety profile and slow R&D progress.
• Post-Money valuation of LongBio Pharma reached about RMB2 billion after Series C Financing. A comfortable valuation range could be RMB3-5 billion, or about 50%-150% upside from Series C Financing.

• Based on 25Q3 results, the biggest problem lies in the continuous slowdown of its core business (energy beverages), which has led to the overall performance slightly falling short of expectations.
• The upper limit of Eastroc Super Drink could be around RMB23-27 billion. Since energy beverages’ annual revenue has approached RMB16 billion, it’s becoming increasingly difficult to achieve the remaining growth.
• The future growth of Eastroc may not support the current valuation. A more comfortable valuation range could be P/E of 20-25x, which will provide investors with sufficient margin of safety.

• With the review period complete, we forecast 50 changes for the CSI Smallcap 500 Index and 100 changes for the CSI 1000 Index at the December rebalance.
• We estimate a one-way turnover of 10.15% for the CSI Smallcap 500 Index and 10.22% for the CSI1000 Index. Gross round-trip trade across both indices is CNY 73.4bn (US$10.3bn).
• The outright forecast adds have outperformed the outright forecast deletes over the last 6 months with most of the outperformance coming between June and August.

• 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 December 2025 index rebal event will be announced publicly after the close on Friday 21st November 2025.
• We continue to expect one index change for December 2025 and we estimate there to be capping flows of ~US$1.9bn one-way.

• CNGR Advanced Material (300919 CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
• CNGR is a Chinese battery-component producer and a new energy materials company. It is the global leader of nickel-based and cobalt-based pCAM (cathode) for lithium-ion batteries.
• In this note, we examine the IPO dynamics, and look at the firm’s valuation.

• As Brian Freitas recently outlined: the CSI 300 Index (SHSZ300) will undergo its semi-annual review by the end of November 2025, there could be profit-taking as we near that date.
• In our previous insight we flagged potential downside tail risk. While the index hasn’t fallen since our warning, this doesn’t mean the risk has dissipated.
• Our profit target model (the “go SHORT” model) is showing a rare pattern with very few rallies, severely limited upside (less than 1.5%) and an 80% reversal probability.Bearish.

• The review period for the December rebalance of the CSI All Share Semiconductor Index ended 31 October. The changes should be announced on 28 November and implemented on 12 December.
• We forecast 3 adds and 6 deletes for the index with a one-way turnover of 1.4% and a round-trip trade of CNY 609m (US$85m).
• The forecast adds have outperformed the forecast deletes over the last few weeks and stocks that have same-way flows from other index trackers could exhibit higher volatility near-term.

• The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
• We expect one index change in December 2025 translating to capping flows of US$530mn one-way.
• We also expect seven index changes for the next semiannual index review which will take place in March 2026.

• CNGR Advanced Material (2579 HK), a new energy materials company, has launched an H Share listing to raise US$507 million.
• I discussed the H Share listing in CNGR Advanced Material H Share Listing: The Investment Case. 
• The proposed AH discount range of 36.9% to 29.9% (based on the 7 November A Share price) is attractive, and I 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 December 2025 index rebal event will be announced publicly after the close on Friday 21st November 2025.
• We continue to expect three index changes for December 2025 and we estimate there to be capping flows of US$264mn one-way.

• Reportedly, SHEN recently shared FY25 targets of US$2 bn Net, “mid-teens” sales growth
• SHEIN faces familiar issues in France, where the company has just opened a physical store
• The release of new FY25 financial targets suggest SHEIN is progressing towards an IPO 

• Beautiful Skew still AWOL/MIA. The wider the spread, the worse the result. 
• Large SOE H vs A generally strong.  Strong net inflow into SOE Hs via SOUTHBOUND.
• The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.

• Following the methodology update for the HSIII Index, there could be up to 5 constituent changes in December.
• Estimated one-way turnover is 12.8% and that will result in a round-trip trade of HK$9.8bn (US$1.25bn).
• Xiaomi (1810 HK) is the biggest beneficiary of the new methodology while there will be large funding outflows for a lot of the current index constituents.

• There could be 12 changes at the December rebalance with the Information Technology sector gaining 2 index spots and a smaller number of changes in the other sectors.
• We estimate one-way turnover of 2.7% at the rebalance leading to a round-trip trade of CNY 69.8bn (US$9.8bn). There are 8 stocks with over 2x ADV to trade.
• The forecast adds have outperformed the CSI 300 Index over the last 5 months while the forecast deletes have underperformed the index.

• There could be up to 6 changes for the CSI Medical Service Index at the December rebalance with the number of changes mainly driven by the inclusions.
• Estimated one-way turnover is 6.9% and the round-trip trade is estimated at CNY 4.11bn (US$578m). There are 8 stocks with over 1x ADV to trade from passive trackers.
• The forecast adds have outperformed the forecast deletes since June but have underperformed in the short-term. With the review period complete and announcement in 3 weeks, positioning could resume.

• BYD (1211 HK) has produced an enviable growth rate for the last 2 decades in the NEV sector. 
• Berkshire Hathaway Inc Cl A (BRK/A US) has completed selling all its holding in BYD. 
• The growth rate is no longer as high as before, and therefore demands a new way to evaluate the stock as its PEG increases. 

• 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, the deal flow continues unabated, although a lot of listing in Hong Kong didn’t do to well last week.
• On the placements front, there were a number of deals, with a few right at lockup expiry.

• Softcare (2698 HK)‘s IPO price was fixed at HK$26.20, or 16.4x FY26F PER, with overwhelming positive responses in both the Hong Kong IPO and international offer. 
• We calculate its fair value at HK$26.07-29.43, based on a 50% premium to Hengan International Group (1044 HK) and a 20% discount to the US peers, leaving limited upside.
• Its tiny public shareholder ownership (15%) and the potential of being an M&A target will elevate its valuations. However, anything above the US peers (i.e. 20.5x PER) is expensive. 

• Sichuan Biokin Pharmaceutical has launched HK IPO to raise ~$430M by offering 8.6M shares at HK$389 per share. Subscriptions will close on November 12, with expected listing on November 17.
• Lead candidate, iza-bren is the world’s first and only EGFR × HER3 bispecific ADC to have entered Phase 3 trial. Biokin has co-development and co-commercialization agreement with BMS for iza-bren.
• The company is already listed on China’s A-share market in Shanghai. Biokin shares have been a strong performer since it went public and rose 77% over the last one year.

• Sichuan Biokin, a China-based commercial stage biotech company, aims to raise around USD 432 million via a Hong Kong listing.
• In our previous note, we have examined the company’s fundamentals and latest development.
• In this note, we look at the deal term. We think the company’s valuation is demanding, despite its clinical breakthrough.

• Context: Some of Hong Kong’s largest and most prominent companies will report in the coming days, representing 20% of the Hang Seng Index (HSI INDEX) 
• Highlight: This Insight quantifies option-implied swings which serve as a gauge for post-earnings reactions.
• Why Read: Prepare for a busy earnings week by understanding where single-stock and broader market volatility may be elevated.

• Softcare (2698 HK) (SC) raised around US$307m in its upcoming Hong Kong IPO.
• Softcare (SC) is an international hygiene product corporation engaged in the development, manufacturing and sales of baby and feminine hygiene products.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Lion Rock Group is a global printing services provider with a strong foothold in the international book publishing market, demonstrating consistent revenue growth and robust cash flow generation.
• The company faces headwinds from the secular decline of traditional print media but is actively pursuing growth through strategic acquisitions and operational diversification, particularly in Australia and Southeast Asia.
• Valuation appears attractive, with low earnings multiples and a high dividend yield, suggesting a value proposition for investors, balanced against the inherent risks of the evolving printing industry.

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• The medical insurance fund has crossed certain “warning lines”. Therefore, it is inevitable that the measures to control costs at the expenditure end will be further tightened.
• We are actually not optimistic about the NewCo model, because domestic pharmaceutical companies may not necessarily be able to share much of Newco’s future development achievements in the end.
• BeiGene’s 25Q3 results beat expectations. However, there’s no next blockbuster that can drive BeiGene to a big step forward, this is why the market is reluctant to offer higher valuation.

• Back on the 30th April 2025, Hainan Meilan International Airport (357 HK) (“Meilan Airport”) announced a potential change of control, via its domestic shares.
• In principle, this situation involves the re-arrangement of Meilan Airport shares under the same ultimate beneficiary. Nevertheless, the share transfer will trigger an unconditional MGO at HK$10.62/share. 
• Yesterday, H-class shareholders approved a “Special Deal” at an EGM. And the share price closed above terms. That vote has nothing to do with the share transfer. Perhaps …

• Alebund Pharmaceuticals, a China-based clinical-stage biotech company, is looking to raise at least USD 100 million via a Hong Kong listing. Jefferies, BoA, and HTSC are the joint sponsors.
• In this note, we look at the company’s history and its core product, AP301, and AP306.
• We are of the view that the company is worth following.

• Chow Tai Fook Jewellery (1929 HK) reported strong operational performance for the quarter ended September 2025. This insight shares details about the performance.
• The recent changes in tax incentive will impact jewelry manufacturers. This insight details about this.
• Finally, we cover various points which will drive the near term performance of the company.

• Markets steadied in North America suggesting a firmer open for Hong Kong stock on Monday.
• Hong Kong market breadth improved notably, suggesting broader participation despite uneven performance across sectors.
• Option activity eased slightly, though Call demand remained steady relative to overall volume.

• We remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass), with Int’l Compass reports all echoing this sentiment
• Our bullish near-term outlook will remain in place as long as the 6-month uptrend continues on ACWI-US, which generally coincides with the 50-day MA.
• Short-Term supports to watch on ACWI-US include the 6-month uptrend (currently at $139.40), the 50-day MA (currently $137.95), and $135.70.

• Cathay Pacific Airways (293 HK) has announced plans to acquire Qatar Airways’ 9.57% stake at HK$10.8374/share, or an outlay of HK$6.96bn (~US$890mn).
• Qatar Airways acquired this stake in November 2017 at HK$13.65/share. 
• Upon approval from the SFC (mainly granting a MGO waiver), Swire Pacific (19 HK)‘s stake in Cathay increases to 47.69% (from 43.12%); and Air China’s stake to 31.78% (from 28.74%).

• With the review period complete, there are 6 non-constituents in direct inclusion zone and 4 current constituents in direct deletion zone. However, as usual, there will be discretion used.
• 4 changes result in a one-way turnover of 4%, leading to a round-trip trade of CNY 17bn (US$2.4bn). Index arb balances will increase the impact on the stocks.
• The index committee has used discretion in selecting the index adds and deletes and that could continue to be the case at this review too.

• Cathay Pacific Airways (293 HK)‘s buyback of Qatar Airways’ 9.57% stake should enhance its FY26F EPS and ROE by 4.6% and 0.36pp, respectively. 
• With passenger traffic and load factor continuing to recover, the consensus forecast of a 24.2% YoY earnings decline in 2H25 is too conservative, suggesting upside surprise. 
• Its FY25-27F ROE is a record since 2013, with potential to trade up to 1.65x P/B (30%+ upside). It is also possible to be included in the HSI again.

• Improving policy visibility on chips and geopolitics restores confidence in China’s AI infrastructure outlook.
• Explosive AI-token growth is driving sustained hyperscaler build cycles and stronger IDC order pipelines.
• GDS’s balanced China and DayOne portfolio supports double digit EBITDA CAGR; catalysts include new orders, C-REIT and DayOne IPO, implying 60-100% re-rating potential.

• New Oriental Education & Technology Group reported its first-quarter fiscal 2026 financial results, highlighting both strengths and challenges for its future trajectory.
• The company showcased a moderate 6.1% year-over-year increase in total net revenue, which indicates stable growth following a period of strategic adjustments.
• This growth is credited to enhancing capabilities, operational resilience, and a focus on sustainable profitability.

• Distinct Healthcare Holdings is a prominent private healthcare provider in China, targeting the high-end market with a network of clinics and hospitals across major cities. The company is focused on expanding its service offerings and geographic footprint, supported by strategic investors like Tencent.
• The company’s growth strategy is centered on both organic expansion through the opening of new facilities and potential acquisitions, alongside the development of an integrated online and offline healthcare service model to enhance patient engagement and operational efficiency.
• Key challenges for the company include navigating the evolving regulatory landscape of the Chinese healthcare industry, managing the high operational costs associated with premium healthcare services, and facing increasing competition from other private healthcare providers.

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• Dominant Domestic Leader Poised for Growth: NAURA is the largest semiconductor equipment manufacturer in China, uniquely positioned to benefit from the country’s strategic push for semiconductor self-sufficiency. This policy-driven demand provides a significant and sustained growth catalyst.
• Exceptional Financial Performance: The company has demonstrated a remarkable growth trajectory, with a 3-year revenue CAGR of 45.5% and a net income CAGR of 73.4%. This robust performance is fueled by strong order intake and expanding market share in key equipment segments like etching and deposition.
• Geopolitical Risks and Intense Competition Remain Key Concerns: Despite its domestic strength, NAURA faces significant risks from geopolitical tensions, particularly U.S. export controls which could limit access to key technologies and components. Furthermore, it competes against global giants with larger R&D budgets and more advanced technology portfolios.

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• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke
• UST yields rose 5-8 bps across the curve yesterday. This came as the market dialled back Fed rate-cut expectations following the release of strong ADP employment and ISM manufacturing data, as well as after the US Treasury Department said it may raise treasury issuances in future.
• The yield on the 2Y UST was up 5 bps at 3.63%, while the yield on the 10Y jumped 7 bps to 4.16%. Equities partially recovered from Tuesday’s slump, with the S&P 500 and Nasdaq increasing 0.4% and 0.6%, respectively.

• Pony.ai has finalized the Hong Kong public offering price at HK$139 per share and it expects to raise HK$6.71 billion (US$860 million) from its planned secondary listing in Hong Kong. 
• Our base case valuation of Pony.Ai is HK$178.2 per share over the next 6-12 months, which represents 28% higher than the Hong Kong public offering price. 
• Given the solid upside, we have a Positive View of Pony.ai. Despite our Positive view, there have been increasing concerns about the overstretched valuations of major AI/tech related companies globally.

• Pony AI (PONY US) raised around US$860m and WeRide (WRD US) raised around US$310m in their HK Secondary offering.
• We have looked at the deal dynamics in our previous note.
• In this note, we talk about the trading dynamics for the two deals.

• All Winner Technology (300458 CH) could replace StarPower Semiconductor (603290 CH) in the CES China Semiconductor Chips Index at the close of trading on 12 December.
• Cambricon Technologies Lt (688256 CH)‘s index weight is currently higher than 10% and the stock will be capped to limit its index weight.   
• The forecast add has outperformed the forecast delete over the last year and recent market volatility (and valuations) has narrowed the gap.

• BYD (1211 HK) does not seem ready yet to reverse its downtrend, sentiment is still negative (not too negative), Q3 revenues decreased (no surprise, as recently noted by Ming Lu).
• BYD is short-term OVERSOLD, this is a tactical WEEKLY view presenting an actionable opportunity with a 1-3 week trade horizon (probably a 2 weeks rebound, maximum).
• Our quantitative models say the stock will not correct for more than 3 weeks when this pattern is encountered (the stock is currently in its second consecutive week down).

• The company’s founder Mr. Lam Kong serves as Chairman, Chief Executive and President.
• The other key management personnel are Ms. Chen Yanling who is the Executive Director and CFO.
• The company’s six -member board comprises two executives, one non -executive, and three independent non -executive directors. Committees cover Audit, Remuneration, Nomination, and ESG, with INEDs forming the majority on committees.

• Ningbo Joyson Electronic (600699 CH) is looking to raise up to US$471m in its upcoming Hong Kong IPO.
• NBJ, is an intelligent automotive technology solution provider, offering advanced products and solutions across the auto part industry’s key areas including automotive electronics and automotive safety.
• In this note, we examine the IPO dynamics, and look at the firm’s valuation.

• Milian Technology files for Hong Kong IPO and seeks fresh capital for further expanding its global presence and accelerating overseas market penetration.  
• Xiaomi backed online social networking platform company is one of the fastest growing marriage and dating platforms in China, reaching RMB2,373m revenue in 2024, up ~129% YoY.
• I expect Milian Technology may seek unicorn valuation in upcoming HK IPO as growth is exceptionally high and profitability improved.

• Diversified End-Market Exposure Mitigates Cyclicality: Impro serves a wide range of industries, including automotive, high-horsepower engines, aerospace, medical, and construction. This diversification helps to cushion the impact of downturns in any single sector. Recent strength in the aerospace and high-horsepower engine (driven by AI data center demand) segments has offset weakness in others.
• Strong Financial Performance and Shareholder Returns: The company has demonstrated a solid growth track record, particularly over the last three years, with an 18.95% CAGR in net income and a 40.46% CAGR in free cash flow. This financial strength supports a consistent and attractive dividend yield, which stood at 8.2% in the most recent fiscal year.
• Strategic Global Footprint and ‘One-Stop Shop’ Capabilities: With manufacturing facilities in China, Mexico, Turkey, and Europe, Impro is well-positioned to serve its global customer base and mitigate geopolitical risks. Its comprehensive service offering, from design and casting to precision machining and surface treatment, provides a key competitive advantage and deepens customer relationships.

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• VNET Group is a leading carrier- and cloud-neutral data center services provider in China, poised to benefit from the country’s growing digital economy, particularly the demand for cloud computing and artificial intelligence (AI) infrastructure.
• The company’s ‘dual-core’ strategy, catering to both wholesale hyperscale clients and retail enterprise customers, provides a diversified revenue stream and positions it to capture growth across different market segments.
• While experiencing strong revenue growth, particularly in its wholesale segment driven by AI demand, VNET faces challenges related to profitability, high capital expenditures, and a significant debt load in a competitive market.

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• Privatization and Delisting: Car Inc. was privatized by private equity firm MBK Partners and delisted from the Hong Kong Stock Exchange on July 8, 2021, following a period of significant financial distress and corporate governance concerns. This report analyzes the company’s performance and position leading up to this event.
• Market Leadership Under Pressure: Historically one of China’s largest car rental companies, Car Inc.’s market position was eroded by intense competition, the negative impact of the COVID-19 pandemic, and its association with the Luckin Coffee accounting scandal through its founder, Charles Lu Zhengyao.
• Challenging Financial Trajectory: The company exhibited a significant deterioration in financial performance, with declining revenue, negative margins, and substantial net losses in the period leading up to its privatization. This was a stark reversal from its previously profitable operations.

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• CSI 1000 represents the next 1000 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges after CSI 800. 
• In this insight, we have presented our final expectations for ADDs and DELs for the upcoming semiannual index rebal event in December 2025.
• We expect 100 ADDs/DELs for the CSI 1000 index during this index review based on the latest available data. 

• With the review period complete, we forecast 2 changes for the SSE STAR50 (STAR50 INDEX) and 7 changes for the STAR100 Index in December.
• We estimate turnover of 4.3% for the SSE STAR50 (STAR50 INDEX) and 6.7% for the STAR100 Index. The estimated round-trip trade is CNY 17.9bn (US$2.5bn).
• The forecast adds to the SSE STAR50 (STAR50 INDEX) have outperformed the forecast deletes with most of the outperformance coming in August. Been a volatile trade since then.

• There could be 1 change for the Hang Seng TECH Index (HSTECH INDEX) in December. Announcement is on 21 November with implementation at the close on 5 December.
• Depending on the stocks included in the universe, ASM Pacific Technology (522 HK) could be deleted and that could lead to Zhejiang Leapmotor Technologie (9863 HK)‘s inclusion. 
• If the add and deletes are as forecast, one-way turnover will be 4.25% and will result in a round-trip trade of HK$25.3bn (US$3.22bn).

• Seres Group (9927 HK) priced its H Share at HK$131.50 to raise HK$14,283 million (US$1.8 billion) in gross proceeds. The H Share will be listed tomorrow.
• I discussed the H Share listing in Seres Group H Share Listing: The Investment Case and Seres Group H Share Listing (9927 HK): Valuation Insights.
• The price momentum is weak, and the international oversubscription rates were below the median of recent large AH listings. Nevertheless, Seres’ AH discount remains attractive.

• We now expect the privatisation of ENN Energy (2688 HK) to be completed by mid-2026, given that the pre-conditions are yet to be satisfied.
• For 3Q25, the gas sales volume of ENN Energy has picked up. Meanwhile, net profit for ENN Natural Gas has also recovered. Both results are positive.
• Incorporating our latest timetable estimate, EPS forecasts, and adjusted undisturbed PERs, ENN Energy is valued at HK$67.40-72.16, meaning the share price is at 0.4% to 7% discount.

• Seres Group (601127 CH),  a Chinese NEV manufacturer, raised around US$2.1bn 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.
• We have looked at the past performance and likely A/H premium in our previous note. In this note, we talk about IPO trading dynamics.

• Iron ore futures slipped as China’s steel output fell for the fifth consecutive week, with weak demand and rising inventories weighing on sentiment.
• Managed money participants trimmed their net long positions across all futures and options expiries, signalling profit-taking and a more cautious market stance.
• The DCE-SGX spread is gaining momentum, with technical indicators hinting at a sustained near-term widening trend.

• NovaBridge Therapeutics, a China-based clinical-stage biotech company, is looking to raise at least USD 100 million via a Hong Kong listing. GS and CITIC are the joint sponsors.
• In this note, we look at the company’s history and its core product, givastomig.
• We are of the view that there is no fundamental improvement in the company, since it changed its name and restructured its China business.

• GDS is a leading developer and operator of high-performance data centers in China, strategically positioned to capitalize on the country’s rapid digitalization, cloud adoption, and the burgeoning demand for AI infrastructure.
• The company exhibits a strong growth trajectory, evidenced by consistent year-over-year revenue increases. However, this growth is capital-intensive, leading to persistent net losses and negative free cash flow due to heavy investment in data center construction and expansion.
• Key strategic priorities include expanding its data center footprint in key economic hubs in China and Southeast Asia, managing a high-debt load through innovative financing like C-REITs, and solidifying its relationships with major hyperscale and cloud service provider clients.

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• Successful Pivot Post-Regulation: New Oriental has effectively navigated the 2021 regulatory overhaul of China’s private education sector by shifting its focus from K-9 academic tutoring to a diversified portfolio. Key growth areas now include non-academic tutoring, overseas test preparation, study consulting, and a burgeoning live-streaming e-commerce business, demonstrating resilience and strategic agility.
• Strong Financial Recovery and Growth: The company has shown a robust financial turnaround, with significant year-over-year growth in revenue and net income. This recovery is driven by strong performance in its new and retained business segments, alongside effective cost management, leading to margin expansion.
• Dominant Brand and Market Position: As a long-standing leader in China’s private education market, New Oriental retains significant brand equity and a large, loyal customer base. This has enabled it to capture market share from smaller competitors who exited after the regulatory changes, positioning it for sustained growth in permissible segments.

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