China

• Tam Jai International (2217 HK), an operator of Asia noodle specialty restaurants, is currently suspended pursuant to the Takeovers Code.
• On the 13th November 2024, Tam Jai announced 1H25 net profit – to 30th September 2024 – declined 55.8% yoy to HK$36.1mn, its lowest six-month tally since listing. 
• Toridoll Holdings Corporation (3397 JP) controls 74.61% of Tam Jai. Expect a Scheme to unfold. An Offer price around HK$1.50/share would be welcome. That’s probably a stretch.

• Guming Holdings (GUM HK) is looking to raise US$202m 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.
• In this note, we discuss our thoughts on valuation at the IPO price range.

• LVC increased its holding of Henlius by 1,110,900 shares on January 23, reflecting its high recognition of the Company and optimism on its prospects, despite the biosimilar VBP headwinds.
• Even with concerns, LVC still repeatedly invested in Henlius at a valuation far higher than its actual value, offering support with real money during pre-IPO stage.
• Lin Lijun’s dissenting vote was a deliberate decision. We are interested to see Lin’s next move. Lin should have a very clear understanding of the true value of Henlius.

• By executive order, President Trump suspended section 321 (“de minimis“) imports on Feb 4th
• Direct-To-Consumer imports valued at < US$800 may no longer enter the US duty-free
• Added cost and new paperwork burden (both borne by US consumers) to hit SHEIN, Temu

• Guming Holdings (GUM HK) is offering 158.6 million shares in a price range of HK$8.68 to HK$9.94 in its Hong Kong IPO aiming to raise up to HK$1.58 Bn.
• Despite outperforming peers in revenue and profit growth, Guming is grappling with a bleak macro environment, operational slowdowns, and intensified competition.
• Guming Holdings (GUM HK) ‘s faltering operating metrics for last reporting period cast doubt on its near-term growth and profitability outlook—leaving investors to ask: Sip or skip?

• Gaw Capital secures $260M investment for Hong Kong CSI Properties, demonstrating confidence in the real estate market.
• CapitaLand Ascott Trust makes significant acquisition with purchase of 2 Japanese hotels worth $140M, expanding their portfolio.
• Hines JV embarks on condo complex development on Delhi’s Birla Mills site, reflecting growing investment interest in India’s real estate sector.

• Foshan Haitian Flavouring & Food (603288 CH) (FHCC), China’s leading condiments company, aims to raise around US$1.5bn in its H-share listing.
• FHCC is China’s leading condiments company within its main product categories of soy sauce, oyster sauce, flavored sauce, specialty condiment products and other products.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• On 27 December 2024, Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60. On 28 January, the antitrust condition was satisfied.   
• Despite a light offer, the scheme vote is low-risk. No disinterested shareholder holds a blocking stake, there is a scrip option with no cap, and there is no retail opposition. 
• The scheme document will be despatched by 11 April. At the last close and for an end-of-May payment, the gross and annualised spread is 6.9% and 22.7%, respectively.  

• Back on the 27th December, Vesync (2148 HK), a manufacturer of small home appliances, announced an Offer, by way of a Scheme, from the Yang family controlling ~69.04% of Vesync. 
• The Cancellation Price of $5.60/share, declared final, was a 33.3% premium to undisturbed, and above the 2020 IPO price of HK$5.52/share.
• The US anti-trust condition has now been fulfilled. The Scheme Doc dispatch has been extended to the 11 April. I estimate payment under the Offer late May. 

• Didi Global Inc. is a prominent mobility technology platform offering ride hailing, taxi hailing, and ride sharing services
• The company dominates the market in China and Latin America, especially in Brazil and Mexico
• Didi also has other initiatives including E-bike sharing, energy and vehicle services, intra-city freight, autonomous driving, and financial services.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We reviewed Lever Style’s (1346 HK)  positive profit alert and project a final dividend of 7-7.5 cents, an increase from 3 cents per share in H1 FY24.
• The overall dividend of 10-10.5 cents indicates a yield over 9%, with positive remarks on new customer additions and increased penetration within the existing customer base.
• Our top sector picks include JNBY Design Ltd (3306 HK) and Pacific Textiles (1382 HK), with a favorable mention of Nameson Holdings (1982 HK)  due to its attractive dividend yield.

• The special dividend actually exceeded investors’ expectations. As long as the dividend yield is higher than the risk-free rate, then Fu Shou Yuan is worth holding for the long term.
• Fu Shou Yuan’s 2024 full-year performance could fall short of expectations. As the business model is not as excellent as previously imagined, long-term growth rate would fall to single digit.
• Since high valuation is unsustainable without the support of strong future growth momentum, investors who pursue for capital gains could consider taking profits by taking advantage of share price rally.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Adani Ports, Vedanta Resources, Softbank Group, Tata Motors, UPL Limited
• In the US, the December personal spending came in above estimates at 0.7% m-o-m (0.5% e / 0.6% revised p), while personal income inched up to 0.4% m-o-m (0.4% e / 0.3% p).
• Separately, the PCE price index climbed to 2.6% y-o-y (2.6% e / 2.4% p) and 0.3% m-o-m (0.3% e / 0.1% p). That said, the core PCE price index (the Fed’s preferred measure of inflation) was largely stable at 2.8% y-o-y (2.8% e / 2.8% p) and 0.2% m-o-m (0.2% e / 0.1% p).

• There could be 1/2 changes to the iShares China Large-Cap (FXI) (FXI US) in March. Then there will be more changes as large Chinese companies list H-shares on the HKEX.
• Fast Entries and regular inclusion of newly listed H-shares will change the characteristics of the FXI and there could be further deviations from the Hang Seng China Enterprises Index (HSCEI INDEX). 
• That will provide opportunities for index rebalance traders as well as volatility traders that are active on the iShares China Large-Cap (FXI) (FXI US) options.

• 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: Chuoh Pack Industry (3952 JP), Giga Prize (3830 JP), Sanyo Special Steel (5481 JP), Ascot Corp (3264 JP), Lifestyle China (2136 HK), Seven & I Holdings (3382 JP). 
• Lowest spreads: Makino Milling Machine Co (6135 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Macromill, Inc (3978 JP), Millennium & Copthorne Hotels Nz (MCK NZ). 

• Fosun Tourism (1992 HK)‘s profit warning suggested a significant deterioration in profitability in 2H24, fading any near-term recovery hope. 
• With losses enlarged 89-126% YoY in 2H24, it is more difficult to return to its peak and IPO share prices. This makes the buyback proposal even more attractive.
• We take the inability to introduce the Potential Share Alternative Option as a lack of confidence by the existing shareholders in Fosun Tourism’s medium-term outlook.

• Back on the 10th December 2024, Fosun Tourism (1992 HK) announced a rare Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a punchy 95% premium to undisturbed. 
• A successful Scheme would result in Fosun International (656 HK) and concert parties holding 100% in Fosun Tourism – without having to outlay a cent. 
• A scrip alternative was afforded IF expressions of interests from 1% of shares out occurred. That didn’t happen. Still a clean deal. Scheme Doc dispatch is the 14th Feb.

• HK Alpha Portfolio returned -1.29% in December and outperformed the benchmark by 0.34%. The portfolio has outperformed Hong Kong indexes by 7.93% to 9.64% since its inception on 10/01/24. 
• About 75% of the portfolio’s excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy or Materials.
  
• At month-end we sold China Cinda Asset Management (1359 HK) , Citic Ltd (267 HK) , China Galaxy Securities (H) (6881 HK) and GDS Holdings (9698 HK) . 

• Bama Tea (BAMA HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by Huatai, ABC and TF International.
• Bama Tea, as per the firm, is the most recognized tea brand in China and the leading provider of premium tea leaves in China.
• It sells through its nationwide offline store network and comprehensive online sales platforms, and sells every major tea leaf category

• The market’s expectations for GLP-1 have changed, and the sales growth of GLP-1 may enter a turning point, which would cast a shadow over the prospects of PegBio’s GLP-1 pipelines.
• PB-119 would be the first commercialized product for PegBio. However, this market is highly crowded. It’s highly uncertain whether PB-119 can stand out from fierce market competition after its launch.
• The post investment valuation has reached RMB4 billion, which is already expensive in our view. Due to poor valuation performance of peers, we are not optimistic about PegBio after IPO.

• If product sales cannot continue to climb rapidly and dilute the costs, the final profit will gradually fade away. Therefore, Chinese biotech companies need new blockbuster products to drive growth.
• The decline in the number of biotech companies in the future is actually “a supply side reform” that fundamentally reduces market competition, which obviously benefit those first-tier companies.
• The acquisition of Tasly by China Resources Sanjiu Medical & Pharma is still in progress. The deal may not be completed until 25H1 if the approval time is not enough.

• There’s great potential for PSCs, which provides new treatment options for complex diseases where traditional therapies are ineffective.The more solid the platform technology, the greater the dividends in later stage.
• Zephyrm’s pipeline candidates are promising. However, considering the R&D risks, the uncertainty of future commercialization and product safety profile, we think the investment risk of this Company is relatively high.
• Valuation of overseas peers is not high. In our view, valuation performance of Zephyrm would be largely depend on its clinical results of pipeline, which is a gamble for investors.

• Deepseek, formerly a quantitative hedge fund, has transitioned to building foundational AI models, causing a stir in the tech community
• Their recent paper on transformer LLM models has sparked interest and confusion, particularly regarding training and inference costs
• Despite claims of training on a small pool of GPUs, it is speculated that Deep Seq has access to tens of thousands of GPUs, challenging traditional notions of cost and capabilities in AI research.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Market sees major losses in tech complex, catalyzed by introduction of Chinese AI model Deepseek
• Concerns arise about cheap Chinese competitor impacting market heavily invested in AI companies
• Zvi Moshevitz, AI expert, discusses Deepseek model’s training cost and optimization techniques

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Back on the 27 December, Shandong Hi-Speed Holdings (412 HK) completed two SPAs, elevating its stake in Shandong Hi-Speed New Energy (1250 HK) to 56.97% from 43.45%, triggering an unconditional MGO. 
• The Composite Doc is now out, and the Offer is open for tendering. The close of the Offer is the 18th Feb, 21 days out. Don’t expect an extension.
• The IFA has declared the terms fair & reasonable. Which is probably true.

• The HSTECH index is trading higher on higher breadth and momentum in January, up 6% so far.  Analysts project an upside of 23% over 12 months.
• China’s semiconductor sector is advancing this year from AI enthusiasm and accelerated localization in the chip industry.  Semiconductor Manufacturing International Corp (SMIC) (981 HK) shares have benefited from this trend.
• Sunny Optical Technology Group (2382 HK) benefits from China’s announcement that it will subsidize more consumer products, including smartphones and new vehicles.

• On the 27th January, Dada Nexus (DADA US), a Chinese on-demand retail and delivery platform, announced a preliminary non-binding proposal from JD.com (9618 HK).
• JD.com, a 63.2% shareholder, is offering US$0.50/share (US$2.00/ADS), a 42% premium to last close. Should a definitive agreement be inked, this is done. 
• DADA has formed a committee to evaluate the proposal. The risk to the trade, as with many US-listed China plays, is one of timing. Trading at a 11.1% gross spread.

• Azeus Systems Holdings Ltd. (SGX: AZEUS SP) is a leading global IT solutions provider with over 30 years of experience, specializing in board governance and digital transformation solutions. The company’s flagship product, Convene, serves boardrooms and executive teams across more than 100 countries, with additional offerings like Convene AGM, Convene Records, and Convene ESG, tailored to meet specific enterprise needs.
• Two Business Segments: Azeus Products and IT Services. These segments cater to a diverse clientele with tailored solutions that address specific operational and strategic needs of Azeus’s clients. Azeus Products account for the lion’s share of revenue, at 81% as shown below.
• Convene Flagship Product: Convene is a leading board governance solution for boardrooms and executives, offering secure document sharing, real-time collaboration, voting tools, analytics, and workflow automation to streamline decision-making. Its user-friendly interface and mobile compatibility make it popular among enterprises and governments. Azeus also offers additional Convene-branded products for specific use cases.

• In our previous, Jan 11th. insight, we said the HSI INDEX could find support between 18.8K and 17.5K, and rally, and so it did (the bottom was at 18671).
• Since there the index has been rallying for 3 weeks, >8% returns so far.
• This insight is focused on tactical strategy: the Hang Seng Index may be readying for a new pullback, starting next week, so we are going to look at resistance levels.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Energy Solutions, China Water Affairs, Anton Oilfield, Tata Steel, China Vanke
• In the US, December 2024 new-home sales rose 3.6% m-o-m (1.7% e / 9.6% revised p) to an annualised 698 k units. Full-year newhome sales were up 2.5% y-o-y at 683 k units, with the median sale price rising 2.1% to USD 427 k.
• Treasuries rallied on haven demand amid a sell-off in equities, as well as on the back of a strong 5Y notes auction. The yield on the 2Y UST declined 7 bps to 4.20%, while the yield on the 10Y UST fell 9 bps to 4.54%.

• SC Capital purchased the Fukuoka Hilton in Japan from Mizuho Leasing for $420M in a significant Hotel REIT transaction.
• GIC has divested its stake in a London office project to Modon, a move that indicates strategic restructuring for the company.
• Despite a rise in revenue, CapitaLand Ascott Trust’s 2H 2024 payout decreased by 7%, reflecting potential challenges in the market.

• Goertek Inc A (002241 CH) is looking to raise up to US$400m in its upcoming Hong Kong IPO. The deal will be run by CICC, CSI, CMB and UBS.
• It is a world-leading provider of smart sensing interaction solutions.
• Anchored by its robust one-stop smart sensing interaction platform, the firm is dedicated to driving the transformation of next-generation smart sensing interactions in collaboration with global ecosystem partners.

• Information technology very strong with AAC Tech, Sunny Optical, Kingdee Int’l and Byd Elec all posting > 10% weekly gains.
• Gains were positive with helpful seasonals but not as widespread as last week with fewer singles stocks and Sectors participating in the rally.
• China Vanke has big increase in option trading, in particular Calls, with implied vols also rising. 

• Lifestyle China (2136 HK)’s IFA opines that Mr Thomas Lau’s HK$0.98 privatisation offer is fair and reasonable. The vote is on 20 February. 
• The IFA analysis is flawed. The revised and final offer is light compared to precedent transactions, peer multiples and historical trading ranges.
• The high AGM minority participation rates remain a vote risk, mainly as retail seems firmly against the offer. The 14.0% gross spread is high but justified. 

• Consumers accused that Alibaba and JD.com took national consumption subsidies.
• Kuaishou’s new year sales GMV (Gross Merchandise Value) increased by 71%.
• Honor Smartphone CEO resigned largely due to the IPO plan.

• Dada Nexus (DADA US) disclosed a non-binding proposal from JD.com Inc (ADR) (JD US) at US$2.00 per ADS, a 41.8% premium to the undisturbed price of US$1.41 (24 January).
• The offer is light compared to the IPO price (US$16.00), average sell-side price targets (US$2.19) and historical trading ranges. 
• The shareholder vote is low-risk (two-thirds voting threshold), as JD.com represents 63.2% of the voting power. The key risk is the timing of a binding proposal. 

• All three markets exhibited larger average returns in the 5 days leading up to Lunar New Years compared to out-of-sample data.
• The pattern for the period after Lunar New Year does not show the same characteristics as prior to Lunar New Year.
• The strongest returns were seen in FXI with average returns 10X out-of-sample average returns.

• On the 21st January 2025, WH Group (288 HK), the world’s largest pork producer, announced Smithfield had made a public filing of the “Preliminary Prospectus” with the SEC.
• A US$23-US$27/share indicative price range backed out a possible market cap for Smithfield of US$9.0bn-US$10.6bn, at the high end of my estimate, and more than twice its 2013 privatisation value. 
• Reportedly,  WHG are now guiding that Smithfield is likely to be priced at $20/share. Expect WHG to sell off here.

• The lead up to Lunar New Year typically sees stronger than normal returns and last week was no exception with the strong rally continuing for both markets.
• Price action was more volatile than has been seen lately pushing up short term historic volatility measures with 1M implieds +- 1point.
• June 6000 Puts in HSCEI seeing continued trading interest at the June 27 expiry.

• After four straight months of decline, our index of price momentum stabilized in December
• But unsustainably strong US imports & potential Suez re-opening suggest rates to keep falling
• We retain our bearish view of the container shipping segment, and suggest staying SHORT

• Visen Pharmaceuticals is looking at raising up to USD 300m to list in Hong Kong.
• We look at the company’s core product and highlight two unfavorable trends.
• We are not excited about the company’s fundamentals, and are not keen in the deal.

• In other to attract and retain high-quality dentists, dental services providers need to pay higher salaries than public hospitals, which inevitably drives up manpower costs and drag down profit margin.
• Regulatory pricing controls and centralized procurement policies on dental implants and orthodontic materials will affect the pricing of Dazhong’s dental services, thus put pressure on its future revenue growth.
• The future valuation performance largely depends on if Dazhong is able to expand out of Central China and achieve nationwide coverage. However, so far, no successful cases have emerged.

• Haitong Securities (H) (6837 HK) and Haitong Securities (A) (600837 CH) shares will stop trading after 5 February following the merger with Guotai Junan Securities (2611 HK). 
• There will be small buying in Guotai Junan Securities (2611 HK) at the close on 5 February and there should be more buying in the A-shares and H-shares in March.
• There will also be a stock added to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) to bring the number of index constituents back to 300.

• The IFA opines that the China National Building Material (3323 HK) share buyback, which will acquire a maximum of 841.7 million H Shares at HK$4.03, is fair and reasonable.
• The share buyback seems designed to enable the CNBM parent company to bypass the creeper rule and squeeze the shorts. 
• The fortuitous material derating of peers has helped make the buyback attractive. Therefore, the votes should pass, and the minimum acceptance condition should be met. 

• 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: SLB Development (SLB SP), Japfa Ltd (JAP SP), Seven & I Holdings (3382 JP), Lifestyle China (2136 HK), Get Nice Financial Group Ltd (1469 HK).
• Lowest spreads: Makino Milling Machine Co (6135 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Auswide Bank (ABA AU), Pressance Corp (3254 JP). 

• On the 6th December, China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, offered to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
• The thrust of the buyback lifts the stake of CNBM’s parent – the CNBM Parent Concert Group – to 50.01% of total shares from 45.02% currently, necessitating a whitewash waiver.
• Pre-Cons were satisfied on the 24th Jan. The independent H-class shareholders vote for the waiver is on the 19th Feb. Minimum pro-ration is 19.24%. Implied back-end price is well down. 

• China International Marine Cntnrs Gp (2039 HK)‘s positive profit alert suggested a very solid performance for Singamas Container Holdings (716 HK) in 4Q24. 
• Annualising Singamas’ 1H24 earnings for the full year will mean a 78% profit surge in 2H24, but this is still conservative – CIMC’s 2H24 profit leaped 93x YoY.
• Trading on 6x PER, versus CIMC’s 10.3x, the stock is cheap. Net cash equals 86% of market capitalisation, potentially providing a yield higher than the 8.8% currently projected.

• China National Building Material (3323 HK) published the H-share offer document and if everything is smooth, the payment will be made on 14 Mar 2025. 
• Its two subsidiaries forecast poor profit/losses for FY24, suggesting a tough operating environment. The buyback valuation remains attractive relative to peer multiples.
• For non-holders, at the current price of HK$3.59, we do not think the safety margin is good enough, assuming that most existing shareholders will accept and tender.

• 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, we had a look at the possible A/H listing for Contemporary Amperex Technology (CATL) (300750 CH), along with a few large IPOs in India .
• On the placements front, while there weren’t any large deals launched, we did look at the lockup expiry for Timee Inc (215A JP) and Sanil Electric (062040 KS).

• Due to disappointing performance in 24Q1-Q3, both revenue and net profit attributable to the parent company in 2024 could face negative growth, but 2025 is expected to have positive growth.
• As pharmaceutical distribution business can just maintain stable but medical device distribution business and retail pharmacies cannot contribute high growth, the overall performance of Sinopharm has lost growth momentum.
• Due to longer payment cycles from hospitals and its business characteristics, Sinopharm is facing significant demands for working capital. Insufficient cash flow makes it difficult to increase the dividend rate.  

• SOUTHBOUND gross trading activity was again not stronger per day than the previous several weeks, but SB Net Buying was again BIG. Given the change in Tencent, remarkable even.
• The story was follow-through, but SMIC and Xiaomi were also big buys. This is shaping up to be a “let’s buy what US Persons cannot” moment.
• No sectors saw net selling through CCASS data five days to Weds. Top 10 activity was quite concentrated this week. Very few stray names.

• AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on telcos, banks, brokers, insurers, tech, and airlines.
• The average AH Premium across all pairs is now the lowest it has been in five years.
• INFO TECH and FINANCIALS saw significant H outperformance vs As this week. Most others (other than perhaps MATERIALS) were limited in their volatility. No bias by premium tranche seen.  

• There have been quite a few M&As in the field of TCM, with a clear trend of SOEs taking over TCM enterprises due to strategically significant and advantageous integration.
• Whether a drug can be approved does not depend on whether it has entered Phase II/III trials. The areas with clearly unmet medical needs often indicate good investment opportunities.
• The privatization of Henlius failed. Lin Lijun’s dissenting vote was based on a deliberate decision. We are optimistic about the outlook of Henlius due to its strong fundamentals and internationalization. 

• Two years after most Covid restrictions ended, pace of travel recovery has slowed, naturally
• Gov’t estimates ahead of LNY travel period seem tepid, actual growth could exceed them
• Trip.com has been stellar performer in segment, but in recent months airlines outperformed