China

In today’s briefing:

Asia Real Estate Tracker (14-Feb-2025): Bain Capital buys worker housing from Blackstone for $555M.
A Bullish Case for Cathay Pacific (CX)
More Countries Breaking Out; Bullish Outlook Intact; Buys in China, Europe, More; DXY & Yields Top

Asia Real Estate Tracker (14-Feb-2025): Bain Capital buys worker housing from Blackstone for $555M.

Bain Capital acquires worker housing in Singapore for $555M from Blackstone, expanding their real estate portfolio in the region.
Standard Chartered Marketing Shanghai Office Blocks due to BlackRock default, highlighting the impact of financial decisions on commercial real estate.
PAG successfully raises $4B for APAC real estate fund, demonstrating investor confidence in the region’s property market despite economic uncertainties.

A Bullish Case for Cathay Pacific (CX)

By Alex Ng

Cathay Pacific carried a total of 2,248,950 passengers in December 2024, an increase of 26.4% compared with December 2023.
The month’s revenue passenger kilometres (RPKs) increased 27.9% year on year.
Passenger load factor increased by 3.6 percentage points to 84.8%, while available seat kilometres (ASKs) increased by 22.5% year on year.

More Countries Breaking Out; Bullish Outlook Intact; Buys in China, Europe, More; DXY & Yields Top

By Joe Jasper

Our outlook remains bullish on MSCI ACWI. Discussed in Jan9,2025 report how we viewed the pullback as a buying opportunity and were watching for $116-$117 support to hold on ACWI-US.
$116 support held perfectly, and now both ACWI-US and the S&P 500 are coiling just below all-time highs, likely setting up for major breakouts. ACWI is now breaking out.
DXY and 10-Year Treasury yield are both topping, a crucial risk-on signal for global equities. More and more countries breaking out. Actionable Themes: Technology, Services, Communications, Industrials, Gold Miners, Financials

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Feb 14

Daily Brief China: Tencent, Contemporary Amperex Technology (CATL), Melco International Development, Jiangsu Hengrui Medicine, Link REIT, Semiconductor Manufacturing International Corp (SMIC) and more

In today’s briefing:

Asian Equities: It’s China’s Year – Our “China Twelve” In the Year of the Snake
CATL IPO Listing in Hong Kong Preview
StubWorld: Melco Is Trading Too Tight
Hengrui (恒瑞医药) A/H Listing: A Worthy Comparison with Hansoh Pharma
Asia Real Estate Tracker (13-Feb-2025): HK’s Link REIT Manager Now Offers Private Funds.
SMIC (SEHK: 00981, SSE STAR MARKET: 688981): Risky to Chase Strength

Asian Equities: It’s China’s Year – Our “China Twelve” In the Year of the Snake

By Manishi Raychaudhuri

We believe in 2025 HK/China shall outperform EM. While the undervalued and under-owned characteristic of the China market is well-known, monetizability of China’s technological capabilities has become apparent only recently.
Policy stimuli during the upcoming NPC could catalyze consumer sentiment and market performance. China’s structural hurdles, Debt, Demographics and Deflation, remain. But correct stock and sector selection can generate alpha.
We prefer the internet platforms, consumer discretionary and high dividend yield, the latter largely SOEs. Our “China Twelve” are mostly reasonably valued (low teen PE), with double digit EPS growth.

CATL IPO Listing in Hong Kong Preview

By Douglas Kim

Contemporary Amperex Technology (CATL) is getting ready to complete its IPO on the Hong Kong exchange. CATL is expected to raise at least US$5 billion.
CATL maintained its 36.8% share in the global EV battery market in 2023 and January to November 2024. CATL has excellent fundamentals and improving profit margins.
Major risk factors include additional tariffs by the US, recent addition to Pentagon’s blacklist, declining sales in 2024, and lower government subsidies for EVs globally.

StubWorld: Melco Is Trading Too Tight

At an 8% discount to NAV, Melco International Development (200 HK) is trading too tight for what is a simple holding company structure.
Preceding my comments on Melco 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%.

Hengrui (恒瑞医药) A/H Listing: A Worthy Comparison with Hansoh Pharma

By Ke Yan, CFA, FRM

Jiangsu Hengrui Medicine (600276 CH) a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing.
Given its similarity to Hong Kong-listed Hansoh Pharma, we think it is worth a comparison between the two.
Both companies are decent biopharma players and are trading at a premium to other pharmaceutical company peers. Upon comparison, we think Hengrui’s H should be at a premium to Hansoh.

Asia Real Estate Tracker (13-Feb-2025): HK’s Link REIT Manager Now Offers Private Funds.

Link REIT’s HK manager is starting a private funds venture in the market, showcasing a new area of investment and growth potential.
Yanlord is looking to sell a half-stake in an Anson Road project for $240M, indicating a strategic move in their property portfolio.
Weave Living is expanding its presence in Singapore with 2 new locations, adding a total of 330 units to their portfolio.

SMIC (SEHK: 00981, SSE STAR MARKET: 688981): Risky to Chase Strength

By Scott Foster

Media reports of a sharp decline in profit linked to trade tensions are not correct. Gross, operating and total net profit all increased from 1Q to 4Q of 2024.
Management’s guidance for 1Q of 2025 has sales growth accelerating to 6% to 8% and the gross margin remaining relatively high at 19% to 21%. This looks reasonable.
But the shares are near their all-time high and too expensive to chase given the potential negative impact of President Trump’s trade policy. Take profits.

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Feb 13

Daily Brief China: Cambricon Technologies Lt, Guotai Junan Securities , Jiangsu Hengrui Medicine, Guming Holdings, Contemporary Amperex Technology (CATL), Toyota Motor, Swire Properties, Sunshine Lake Pharma and more

In today’s briefing:

China A50 ETFs Rebalance Preview: Three Changes in March
FXI Rebalance Preview: GTJA, ZTE In; CTG, China Coal Out
Jiangsu Hengrui Pharma A/H Listing – Innovation and Overseas Expansion Driving Earnings Rebound
Guming Holdings (1364 HK): Potential Valuation Upside with Upcoming Mixue IPO
CATL A/H Listing – IPO Filing Updates
EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market
Asia Real Estate Tracker (12-Feb-2025): LaSalle appoints APAC Co-Heads; Claire Tang moves to Rava.
Pre-IPO Sunshine Lake Pharma – “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

China A50 ETFs Rebalance Preview: Three Changes in March

With just over a week left to review cutoff, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
Guotai Junan Securities, Cambricon Technologies and SAIC Motor could replace CGN Power, Luzhou Laojiao and Inner Mongolia Yili Industrial Group.
Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.

FXI Rebalance Preview: GTJA, ZTE In; CTG, China Coal Out

Nearing the end of the review period, we expect two changes for the iShares China Large-Cap (FXI) (FXI US) ETF in March.
Guotai Junan Securities (2611 HK) is a high probability add while China Tourism Group Duty Free (1880 HK) is a high probability delete.
ZTE Corp H (763 HK) is a potential inclusion currently and could replace China Coal Energy Co H (1898 HK) as long as it stays in inclusion zone.

Jiangsu Hengrui Pharma A/H Listing – Innovation and Overseas Expansion Driving Earnings Rebound

Jiangsu Hengrui Medicine (600276 CH) a China-based pharmaceutical company, aims to raise around US$2bn 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.
In this note, we look at its past performance and other deal dynamics that might impact the listing.

Guming Holdings (1364 HK): Potential Valuation Upside with Upcoming Mixue IPO

Guming Holdings (1364 HK) ‘s shares closed 7% below issue price by end of yesterday’s trading.
Institutional investors may be cautious, with many likely waiting for the upcoming IPO of Mixue Group (MIX HK), widely viewed as a more attractive and bigger opportunity in tea space.
The upcoming Mixue IPO—aiming to raise about USD500 million—could spark broader investor interest in the sector and may boost valuations for Guming given its relative operational strengths.

CATL A/H Listing – IPO Filing Updates

Contemporary Amperex Technology (CATL), one of the world’s largest battery solutions providers, aims to raise at least US$5bn 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 updates from its most recent filings.

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

By Gaudenz Schneider

The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.
Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.
Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.

Asia Real Estate Tracker (12-Feb-2025): LaSalle appoints APAC Co-Heads; Claire Tang moves to Rava.

LaSalle appoints Japan, Korea-based APAC Co-Heads as Tang heads to Rava, highlighting leadership changes within the company.
Dash Living’s expansion in Japan to 19 locations through partnerships with BlackRock and Greystar reflects their growth strategy in the region.
Swire Properties expecting a $103M loss as Pacific Place rents drop 16% due to markdowns, showcasing the impact of market changes on the company.

Pre-IPO Sunshine Lake Pharma – “Outdated” Pipeline Is Difficult to Obtain Decent Valuation

Most revenue was contributed by Kewei, but kewei has been included in VBP.Together with increasing competition, the outlook is gloomy if Sunshine Lake Pharma continues to mainly rely on Kewei.
There’s a significant gap in Sunshine Lake Pharma’s R&D progress/clinical data compared to the products of peers.The pipeline has been “disconnected” from the level of domestic biotech in recent years
Sunshine Lake Pharma is inferior to other pharmaceutical companies in China.Even if CJ Pharma will be merged into Sunshine Lake Pharma, its market value should be lower than leading Biotech.

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Feb 12

Daily Brief China: Alibaba Group Holding , HKBN Ltd, Guming Holdings, Semiconductor Manufacturing International Corp (SMIC), Shanghai Henlius Biotech , China Communications Construction, PegBio and more

In today’s briefing:

Alibaba (BABA) 3Q25 Preview: Benefit from Boycott Against Competitor and Disposals
HKBN (1310 HK): A Press Report Causes Trepidation
Guming (1364 HK): Upsized at Top-Price. Strong Retail Demand
SMIC (981.HK): Revenue Growth Decelerated in 4Q24, and Growth Momentum to Be Regained in 1Q25.
Guming Holdings IPO Trading – Strong Retail Demand, with Decent Coverage on the Insti Tranche
Shanghai Henlius Biotech (2696 HK)- LVC Is Betting on Higher Valuation Upside Due to Business Update
China Pair Trade: Long China Comm Const (1800 HK), Short China Railway Group (390 HK)
PegBio (派格生物) IPO: Thoughts on Valuation

Alibaba (BABA) 3Q25 Preview: Benefit from Boycott Against Competitor and Disposals

By Ming Lu

We believe the boycott against JD.com benefited Alibaba’s Taobao and Tmall Group in 3Q25 results.
We believe 3Q25 results will not reflect the benefits of the disposal of Intime and Sun Art despite that Alibaba may not revise its financial data in 3Q25 results.
We set a stock upside of 42% for the next twelve months.

HKBN (1310 HK): A Press Report Causes Trepidation

HKBN Ltd (1310 HK) shares declined 4.4% after a Sing Tao Daily article claimed that the precondition satisfaction of China Mobile (941 HK)’s offer is at a stalemate.
The mainland regulatory authorities have not provided any feedback on the approval process. The China Traditional Chinese Medicine (570 HK) deal break is cited as a cautionary tale.
While the China TCM deal break taught us that no deal is safe, even an SOE-sponsored deal, the article’s concerns have little merit. This is a buy.

Guming (1364 HK): Upsized at Top-Price. Strong Retail Demand

Guming Holdings, the leading mid-priced milk tea player in China, has priced its IPO at the top-end and upsized it to 182.6 mn shares, raising a total of HKD1.8 Bn.
With strong HK retail investor demand, International investors bidding for Guming stock in the IPO had their allocations scaled back to 56.5% from 90% earlier.
Guming will list at the HK stock exchange today and could likely see a good uptick upon listing given robust investor demand.

SMIC (981.HK): Revenue Growth Decelerated in 4Q24, and Growth Momentum to Be Regained in 1Q25.

By Patrick Liao

SMIC’s 1Q25 guidance is for revenue to increase by 6% to 8% QoQ, and the gross margin to range from 19% to 21%.
Client revenue contribution from China/Europe/US has changed from 80.8%/15.7%/3.5% in 4Q23 to 89.1%/8.9%/2% in 4Q24. These numbers indicate that SMIC is gradually becoming independent from Europe and the US.
SMIC’s guidance for the year 2025 is that revenue growth is expected to be higher than the industry average in the same markets.

Guming Holdings IPO Trading – Strong Retail Demand, with Decent Coverage on the Insti Tranche

By Clarence Chu

Guming Holdings (1364 HK) raised US$233m in its Hong Kong IPO. Guming Holdings (Guming) sells freshly-made beverages in China.
Guming Holdings (Guming) sells freshly-made beverages in China. Guming focuses on the mid-priced freshly-made tea beverage market with product prices typically ranging between RMB10-18.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

Shanghai Henlius Biotech (2696 HK)- LVC Is Betting on Higher Valuation Upside Due to Business Update

LVC continues to increase its holdings in Henlius, indicating that LVC remains optimistic about Henlius as its internationalization process significantly accelerated. We are interested to see Lin Lijun’s next move.
In the short to medium term, based on our conservative forecast on peak sales of HANQUYOU/HANSIZHUANG in overseas markets and domestic product sales, Henlius’ market value could reach RMB13-16 billion.
Considering other candidates(e.g. HLX15, HLX11, HLX14), indication expansion, drug combination, etc., revenue of Henlius could reach about RMB8-9 billion in the long term, with market value to reach RMB24-27 billion.

China Pair Trade: Long China Comm Const (1800 HK), Short China Railway Group (390 HK)

By Osbert Tang, CFA

Long China Communications Construction (1800 HK), short China Railway Group Ltd H (390 HK) is a good strategy to capitalise on the recent underperformance of CCCC.
CCCC has a stronger contract momentum than CRG – its FY24 new contracts were up 7.3%, but CRG was down 12.4%. CCCC is also better positioned for urban construction growth.
In terms of dividend yield, CCCC is higher at 6.8% for FY25, yet CRG is only 6.3%. CCCC’s performance should pick up in the rest of 2025.

PegBio (派格生物) IPO: Thoughts on Valuation

By Ke Yan, CFA, FRM

PegBio, a China-based biotech company, plans to raise up to USD 150 million via a Hong Kong listing.
In our previous note, we examined the company’s core product namely PB-119.
In this note, we will provide a valuation for the company’s key products.

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Feb 11

Daily Brief China: Horizon Robotics, Get Nice Financial Group Ltd, China Life Insurance Company, Hanx Biopharmaceuticals, Li Ning, Mixue Group, SUNeVision Holdings, Guming Holdings, Fosun Tourism and more

In today’s briefing:

Quiddity Leaderboard HSTECH Mar 25: US$716mn One-Way; Large Outflow for Xiaomi
Get Nice Financial (1469 HK)’s Scheme Vote On The 7th March
A/H Premium Tracker (To 7 Feb 2025): AH Premia Fall Again – Tech Good, Foreigners Buying HK
Pre-IPO Hanx Biopharmaceuticals – The Risk of Pipeline Development Failure Is High
Quiddity Leaderboard HSCEI Mar25: One Change Likely; US$204mn One-Way; Sector-Neutral Trade Idea
MIXUE Pre-IPO – Refiling Updates – Slower Growth but Better Margins
Quiddity Leaderboard HSIII Mar25: Couple of Names Have High Impact; Time for a Trade
Guming (1364 HK): Global Index Inclusion Not Coming Soon
Get Nice Financial (1469 HK): Done Deal with Vote on 7 March
Fosun Tourism (1992 HK): Scheme Buyback a Done Deal with Vote on 4 March

Quiddity Leaderboard HSTECH Mar 25: US$716mn One-Way; Large Outflow for Xiaomi

By Janaghan Jeyakumar, CFA

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 March 2025 index rebal event will be announced on Friday 21st February 2025.
We continue to expect one change for the HSTECH index in March 2025, combined with capping flows of US$716mn.

Get Nice Financial (1469 HK)’s Scheme Vote On The 7th March

Back on the 5th November, Get Nice Holdings (64 HK) (GNH) announced a scrip Offer, by way of a Scheme, for 72.99%-held Get Nice Financial Group Ltd (1469 HK) (GNF).
The (then) HK$1.116/share implied scrip price & divvy compared to a book value of HK1.736/share. and net cash of ~HK$1.00/share. At the 22nd January EGM, GNH shareholders backed the Offer.
The Scheme Doc is now out, with a Court Meeting on the 7th March, with new GNH shares trading on the 7th April. The IFA (Veda Capital) botched its peer analysis.

A/H Premium Tracker (To 7 Feb 2025): AH Premia Fall Again – Tech Good, Foreigners Buying HK

By Travis Lundy

AH Premia are lower over the last two weeks spanning the CNY holiday. HK stocks up. H/A discounts slightly narrower on average.
The past two weeks saw Consumer and Financial AH premia drop. Utilities, energy, and Industrials widened slightly on average. Narrow premia AH dropped more than wide premia.
AH Premia on average at a new five year low. Some may be foreigners returning to HK. Some may be just drift. Many wide spreads still exist.

Pre-IPO Hanx Biopharmaceuticals – The Risk of Pipeline Development Failure Is High

CD47 has been considered “problematic” by the industry, so in order to prove its druggability, it usually requires very good clinical data, and cannot rely on “conjectures” such as BsAb.
There’s no compelling evidence to prove that the toxicity issue of CD47 can be resolved. There’re concerns on the safety profile and efficacy of HX009/HX044, with high R&D failure risks.
After Series B+ of financing in June 2024, post-investment valuation of Hanx reached about RMB1.6 billion. Due to slower R&D progress. we think Hanx’s valuation should be lower than ImmuneOnco.

Quiddity Leaderboard HSCEI Mar25: One Change Likely; US$204mn One-Way; Sector-Neutral Trade Idea

By Janaghan Jeyakumar, CFA

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 March 2025 index rebal event will be announced on Friday 21st February 2025.
We continue to expect one change for the HSCEI index in March 2025.

MIXUE Pre-IPO – Refiling Updates – Slower Growth but Better Margins

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In our earlier notes, we have looked at the past performance, undertaken a peer comparison and spoken about valuations. In this note, we talk about updates from its recent filings.

Quiddity Leaderboard HSIII Mar25: Couple of Names Have High Impact; Time for a Trade

By Janaghan Jeyakumar, CFA

The Hang Seng Internet & IT (HSIII) Index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
The official index changes and indicative weights for the March 2025 index rebal event will be announced on Friday 21st February 2025.
We expect four changes for the HSIII index in March 2025.

Guming (1364 HK): Global Index Inclusion Not Coming Soon

By Dimitris Ioannidis

Guming Holdings (1364 HK) is forecasted to initially fail the fcap threshold for both global indices due to an IPO free float of ~6%.
The security is expected to be added at the global index’s March 2026 review as the lock-up expiry’s fcap increase becomes effective post September 2025 cut-off date.
The security will be eligible for the other global index at the May 2026 review following the 12-month lock-up expiry of the undisclosed shareholders.

Get Nice Financial (1469 HK): Done Deal with Vote on 7 March

Get Nice Financial Group Ltd (1469 HK)’s IFA opines that Get Nice Holdings (64 HK) (GNH)’s offer (4 GNH shares per GNF share + HK$0.50 dividend) is fair and reasonable.
The GNF vote required approval of the scheme by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The vote is low risk.
The spread remains high as GNH is not shortable. At the last close, for a 3 April payment, the gross/annualised spread was 10.2%/89.3%.

Fosun Tourism (1992 HK): Scheme Buyback a Done Deal with Vote on 4 March

Fosun Tourism (1992 HK)’s IFA opines that the share buyback privatisation offer of HK$7.80 is fair and reasonable. The vote is on 4 March.
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by <10% of disinterested shareholders). No disinterested shareholder holds a blocking stake.
Despite disclosing a potential REIT listing, there are no signs of dissent. At the last close, the gross/annualised spread for a 26 March payment was 3.5%/30.2%.

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Feb 10

Daily Brief China: Bestechnic Shanghai , Guming Holdings, Fosun Tourism, Tam Jai International, Yum China Holdings , Tencent, Hang Seng Index, Softcare, Xiaomi Corp and more

In today’s briefing:

China/HK: Passive Activity Expected Later This Month
ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool
Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March
Pre-IPO Guming Holdings – Thoughts on Valuation
Tam Jai Intl (2217 HK): Is It Privatisation or Takeover?
Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds
HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs
EQD | HSI Index Options Weekly (Feb 02-07): 94th Percentile 1-Week Move
Softcare Pre-IPO Tearsheet
EQD | Hong Kong Single Stock Options Weekly (February 02 – 07): Rally Narrows, Info Tech Hot

China/HK: Passive Activity Expected Later This Month

There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.

ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool

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, neither of the two listings performed last week, while more are lining up to list across the region.
On the placements front, given the ongoing earnings season there weren’t any deals. We did look at lockups and other possible upcoming deals.

Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March

On the 10th December 2024, Fosun Tourism (1992 HK) announced a Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a chunky 95% premium to undisturbed.
Assuming the Scheme gets up, Fosun International (656 HK) and concert parties would hold 100% in Fosun Tourism.
The Scheme Doc is now out, with a Court Meeting on the 4th March, and expected settlement on the 26th March. The IFA (Altus Capital) says “fair and reasonable”.

Pre-IPO Guming Holdings – Thoughts on Valuation

If based on the market value of HK$20.246 billion to HK$23.185 billion in this IPO, a single store market value is about HK$2-2.4 million, higher than that of Baicha Baidao.
Our forecast of 2024 net profit is RMB1.4 billion. Based on IPO price range of HK$8.68-9.94 per share, P/E is about 13.5-15.5x. There is still some upside room for valuation.
Investors may need more “safety margins” on valuation due to the pressure of performance growth after IPO.The higher the IPO price, the greater the risk of future valuation downward revisions.

Tam Jai Intl (2217 HK): Is It Privatisation or Takeover?

By Osbert Tang, CFA

Tam Jai Intl (2217 HK)‘s suspension has led to speculation about a privatisation or takeover. Its huge net cash, equal to 115% of market capitalisation, makes it appealing.
Its controlling shareholder Toridoll Holding Limited owns a 74.61% stake and there is no shareholder with more than a 5% interest. This makes a deal seemingly simple.
Assuming priced at the average P/B of 1.63x, this means HK$1.90, or 110% premium to the latest close, which is costly to the major shareholder.

Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds

Yum China Holdings (9987 HK) posted robust year-over-year operating profit growth in 4Q2024 on the back of low single digit sales increase and operating efficiencies.
Despite significant sector headwinds, Yum China has managed to outperform peers and grow ahead of sector in 2024 by swiftly adapting to shifting consumer preferences.
Yum China’s value-for-money QSR model with mid-tier pricing amidst tough sector outlook implies limited margin upside, a likely single-digit sales growth outlook, and a modest dividend yield for 2025.

HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs

By Travis Lundy

In the post-CNY return, SOUTHBOUND gross trading activity was stronger per day than the previous several weeks, but SB Net Buying was not.
Tech ended up being a big net buy, but Tencent (700 HK) a big net sell.
Lower-Than-Expected tariff rates against China meant foreigners are back to buying Chinese stocks for the time being which may lower SB net buys near-term.

EQD | HSI Index Options Weekly (Feb 02-07): 94th Percentile 1-Week Move

By John Ley

Powerful rally for HSI lands its 1-week price change in the 94th percentile of all weekly moves since 2000.
Implied vols raising a caution flag, trading at the 78th percentile over the past year and 68th percentile since the start of 2001.
Call volumes as a percentage of total option volumes has been dropping over the past three weeks.

Softcare Pre-IPO Tearsheet

By Nicholas Tan

Softcare (SOFT HK) is looking to raise at least US$300m in its upcoming Hong Kong IPO. The deal will be run by CICC, CITIC and GF Securities.
SC is principally engaged in the development, manufacturing and sales of baby and feminine hygiene products, focusing on the fast-growing emerging markets, including Africa, Latin America and Central Asia.
As of September 30, 2024, SC had 18 sales branches in 12 countries, and an extensive sales network across over 2,500 wholesalers, distributors, supermarkets, and other retailers in total.

EQD | Hong Kong Single Stock Options Weekly (February 02 – 07): Rally Narrows, Info Tech Hot

By John Ley

Third week in a row with declining participation in the rally.
Information technology the hottest sector with all names up more than double digits, all but 2 stocks closing at a 52-week high and median implied vols at 96th percentile.
Single Stock option volume registers the two highest days in the last 3 months but Call trading as a percentage of the total slipped week over week.

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Feb 09

Daily Brief China: Guming Holdings, Vesync and more

In today’s briefing:

Guming Holding IPO Valuation Analysis
China Healthcare Weekly (Feb.9) – Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies
Weekly Deals Digest (09 Feb) – Guming, Hexaware, Shibaura, Fuji Soft, Proto, Tohto, Pentamaster

Guming Holding IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Guming Holding is implied target price of HKD 13.70, which is 38% higher than the high end of the IPO valuation range.
Given the solid upside, we have a Positive view of this IPO. Our valuation sensitivity analysis suggests a range of HKD 11.09 to HKD 16.57 per share.
Our base case valuation is based on 2025E P/S multiple of 3x, which is a 30% premium to the two closest comps (Sichuan Baicha Baidao Industrial and Helens International Holdings).

China Healthcare Weekly (Feb.9) – Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies

Relevant departments are discussing the promotion of drugs included in VBP scope to enter retail pharmacies. However, the new business model will be detrimental to valuation performance for retail pharmacies.
The gap in the distribution of funds among biotech companies is rapidly widening. We suggest investors focus on leading biotech rather than take risks in areas with higher uncertainties.
Vesync is a good company. Due to the low liquidity, the Proposal presents a good opportunity for shareholders to exit. Considering its future growth potential, Share Alternative can be considered.

Weekly Deals Digest (09 Feb) – Guming, Hexaware, Shibaura, Fuji Soft, Proto, Tohto, Pentamaster

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: Hexaware Technologies (HEXW IN) seeks to raise US$1 billion, and Guming Holdings (1364 HK) seeks to raise US$202 million.
Event-Driven developments: Shibaura Electronics (6957 JP), Fuji Soft Inc (9749 JP), Proto Corp (4298 JP), Tohto Suisan (8038 JP), Tecnos Japan (3666 JP), Pentamaster International (1665 HK).

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Feb 08

Daily Brief China: China National Building Material, Breton Technology, Japan Hotel Reit Investment, SGX Rubber Future TSR20 and more

In today’s briefing:

CNBM (3323 HK): A Closer Look At Proration
Breton Technology Pre-IPO: Growing but Continues to Bleed
Asia Real Estate Tracker (07-Feb-2025): KKR & Gaw negotiating $660M sale of Hyatt Regency Tokyo.
Helixtap China Report: China Navigates Uncertain Rubber Market Amid US Tariff Tensions

CNBM (3323 HK): A Closer Look At Proration

Back on the 6th December, China National Building Material (3323 HK) (CNBM), China’s leading building materials company, offered to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
As this elevates CNBM’s parent’s stake to 50.01% of total shares from 45.02% currently, independent H-shareholder will vote on a whitewash waiver on the 19th February.
Minimum pro-ration is 19.24%. It is likely to be higher. The question is whether to buy, and/or borrow, and tender; or simply short outright.

Breton Technology Pre-IPO: Growing but Continues to Bleed

By Nicholas Tan

Breton Technology (1884270D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO.
It is a new energy solution provider in China, focused on the design, development and commercialization of electric-powered engineering machinery, including battery-electric loaders and wide-body dump trucks.
In this note, we look at the firm’s past performance.

Asia Real Estate Tracker (07-Feb-2025): KKR & Gaw negotiating $660M sale of Hyatt Regency Tokyo.

KKR and Gaw are in talks for a $660M sale of Hyatt Regency Tokyo to Japan Hotel REIT, potentially reshaping the hospitality market.
Singapore worker housing rents have surged by 10.8% in the second half of 2024, attributed to a significant increase in labor influx.
Despite falling rent trends in APAC office markets, Australia and Japan have shown resistance, according to Knight Frank’s report.

Helixtap China Report: China Navigates Uncertain Rubber Market Amid US Tariff Tensions

By Arusha Das

Trade war impacts the market sentiment
Arbitrage widens for international cargoes
Lower inventory could bring some buying back

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Feb 07

Daily Brief China: Guming Holdings, Sino-Ocean Group and more

In today’s briefing:

Guming Holdings (Good Me) IPO Preview
Lucror Analytics – Morning Views Asia

Guming Holdings (Good Me) IPO Preview

By Douglas Kim

Guming Holdings (1364 HK) (Good Me) is getting ready to complete its IPO on the Hong Kong Exchange in February.
At the high end of the IPO price range, the listing will raise about HK$1.58 billion (US$220 million).
Guming is a ready-to-drink beverage company specializing in freshly made tea beverages.

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: Sino-Ocean
In the US, the ISM services index declined to 52.8 (54.0 e / 54.0 revised p) in January. This was driven by decreases in the new orders and prices paid components, albeit the employment component edged up to 52.3 (51.3 revised p). Separately, the January (final) S&P services PMI fell to 52.9 (56.8 p), with the composite PMI dropping to 52.7 (55.4 p).
Meanwhile, the trade deficit expanded to USD 98.4 bn (USD 96.8 bn e / USD 78.9 bn revised p), the second largest deficit on record. Exports decreased 2.6% m-o-m to USD 267 bn, while imports jumped 3.5% to a record high of USD 365 bn due to import front-loading ahead of expected new tariffs.

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Feb 06

Daily Brief China: Shanghai Allist Pharmaceuticals, Guming Holdings, PegBio, Pentamaster International, SHEIN, Gold, Greentown China, Suntec REIT, WH Group, SGX Rubber Future TSR20 and more

In today’s briefing:

STAR50/STAR100 Index Rebalance Preview: One Is Meh; The Other Is👍
Guming Holdings (1364 HK) IPO: Valuation Insights
PegBio 派格生物 IPO: A (Supposedly) Straightforward GLP-1 Challenger Story
Pentamaster International (1665 HK): Light Offer but Lack of Opposition Ahead of the Vote
SHEIN: Back in India in Alliance with Reliance, Amid Woes in the West
EQD | February Macro Vol Roadmap – Stay Alert to Trend Change in 2nd Half of Month
Lucror Analytics – Morning Views Asia
Asia Real Estate Tracker (05-Feb-2025): CapitaLand buys Osaka site for $700M data centre.
StubWorld: WH Group (288 HK) IPOs Smithfield (SFD US). Now What?
Tariffs Will Affect Tire Industry; Rubber Market

STAR50/STAR100 Index Rebalance Preview: One Is Meh; The Other Is👍

With the review period complete, we forecast 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index. There are a few migrations between the indices.
We estimate turnover of 3.8% for the SSE STAR50 (STAR50 INDEX) and 9.9% for the STAR100 Index. The estimated net round-trip trade is CNY 13bn (US$1.8bn).
The forecast adds to the STAR50 INDEX have underperformed the forecast deletes. For the STAR100 Index outright changes, the forecast adds have outperformed the forecast deletes by a lot.

Guming Holdings (1364 HK) IPO: Valuation Insights

Guming Holdings (GUM HK) (Good me), a freshly-made tea store brand, has launched an HKEx IPO to raise up to US$202 million.
We previously discussed the IPO in Guming Holdings (Good Me) IPO: The Bull Case and Guming Holdings (Good Me) IPO: The Bear Case.
There are five cornerstone investors. Our valuation analysis suggests that Guming is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

PegBio 派格生物 IPO: A (Supposedly) Straightforward GLP-1 Challenger Story

By Ke Yan, CFA, FRM

PegBio is looking to raise at least USD 100m via its Hong Kong IPO.
In this note, we looked at the company’s fundamentals, particularly its core product PB-117.
We think the story might look simple as a straightforward GLP-1 challenger but there are quite a number of concerns as we dig into the company’s story.

Pentamaster International (1665 HK): Light Offer but Lack of Opposition Ahead of the Vote

Pentamaster International (1665 HK)’s IFA opines that Pentamaster Corp (PENT MK) and AchiCapital’s HK$1.00 privatisation offer is fair and reasonable. The vote is on 28 February.
The IFA analysis is biased because it conveniently ignores a relative valuation analysis, which would show that the final offer is unattractive compared to its global peers.
Disappointingly, there is little minority opposition to an arguably light offer in which the Holdco is privatising its OpCo by arbitraging valuation multiple discrepancies across two exchanges.

SHEIN: Back in India in Alliance with Reliance, Amid Woes in the West

SHEIN (1895674D HK) returns to India after a five-year hiatus under a license agreement with Reliance Industries (RIL IN) owned Reliance Retail ltd.
India’s vast, untapped market for fast fashion, driven by a large and growing young population, rising disposable incomes, and increased e-commerce penetration presents an attractive growth opportunity for Shein.
Shein faces growing challenges in the US due to new trade restrictions. Its partnership with Reliance could serve as a strategic move to develop alternative supply chains outside China.

EQD | February Macro Vol Roadmap – Stay Alert to Trend Change in 2nd Half of Month

By John Ley

All markets surveyed here tend to see price weakness along with increased volatility in the second half of February.
SP500 was the only market for which realized vol in January was greater than implied at the end of December.
Gold, SP500 and SPASX200 have all gone over 450 days without a 10% correction. Nifty moving in opposite direction, 127 days without a 10% rally.

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: Greentown China, Health and Happiness (H&H)
In the US, the December JOLTS job openings unexpectedly declined to 7.6 mn (8.0 mn e / 8.2 mn revised p). The JOLTS lay-off and quits rates were stable at 1.1% and 2.0%, respectively, in December.
Treasuries rallied yesterday, with yields declining 4-5 bps across the curve, on account of the weaker-than-expected JOLTS report.

Asia Real Estate Tracker (05-Feb-2025): CapitaLand buys Osaka site for $700M data centre.

CapitaLand Investment secures Osaka site for $700M data centre project, expanding presence in Asia’s growing tech market.
Singapore’s Temasek boosts investment in CenterSquare’s commercial real estate debt fund with $200M injection for growth.
Gordon Tang faces setback as Suntec REIT buyout likely to fail with extended deadline, raising uncertainty in real estate market.

StubWorld: WH Group (288 HK) IPOs Smithfield (SFD US). Now What?