Daily Briefs

• Melco International Development (200 HK) is now trading at a premium to NAV for the first time since announcing a one-for-two rights issue.
• 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%.

• Zijin Mining Group is a leading global mining company with a significant presence in gold, copper, and zinc production. The company is strategically focused on expanding its international footprint through acquisitions and organic growth, particularly in gold and copper.
• The company is capitalizing on high commodity prices, especially for gold, to fuel its growth and is undertaking a significant corporate action by spinning off its international gold assets into a separately listed entity, Zijin Gold, in Hong Kong to attract global investors.
• While demonstrating strong financial performance and production growth, the company faces challenges related to geopolitical risks, resource nationalism, and the inherent volatility of commodity markets. A key focus for the future is balancing its aggressive expansion with sustainable and responsible mining practices.

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• US as the world’s largest service economy means artificial general intelligence (AGI) saves cost by replacing knowledge workers. 
• China’s AI monetization is today 1/3 of US but will improve to 1/2 by 2030. 
• We reiterate our TOP PICKS of Alibaba, HESAI, CATL and Kuaishou. BIDU stays as SELL.

• Minmetals Land (230 HK) entered a trading halt “pending the release of an announcement in relation to certain inside information and pursuant to the Hong Kong Code on Takeovers and Mergers.“
• It is likely that the controlling shareholder (China Minmetals), representing 61.88% of outstanding shares, is seeking to launch a privatisation through a Bermuda scheme. 
• With a 40% surge in its share price on Monday, Minmetals is trading at a significant premium to book, suggesting limited upside. I estimate a potential offer range of HK$0.54-HK$0.69.

• Taste Gourmet is a fast-growing, multi-brand restaurant operator in Hong Kong, demonstrating a remarkable growth trajectory with a 3-year net income CAGR of 53.6%.
• The company is an attractive income play, offering a high dividend yield of approximately 8.6%, supported by robust free cash flow generation.
• Valuation appears compelling at a significant discount to peers, with a potential rerating catalyst from its proposed migration from the GEM to the Main Board of the Hong Kong Stock Exchange.

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• For Sep 2025, nine new transactions (firm and non-binding) were discussed on Smartkarma (by the Quiddity team) with an overall announced deal size of only ~US$3bn.
• The average premium for the new transactions announced (or first discussed) in September was ~56%, with a year-to-date average of ~48%.
• The average premiums for transactions in 2024 (129 transactions), 2023 (117), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) were 43%, 39%, 41%, 33%, 31%, and 31%.

• Melco International Development is a holding company whose primary asset is its majority stake in Melco Resorts & Entertainment (MLCO), a leading operator of integrated casino resorts with a strong presence in Macau and expanding operations in the Philippines and Cyprus.
• The company is experiencing a significant financial turnaround, with revenues and cash flows rebounding strongly from pandemic-era lows. This recovery is driven by the resurgence of tourism and gaming demand in Macau, particularly in the high-margin premium mass market segment.
• Despite strong operational performance and growth, valuation appears stretched. The parent company (200 HK) trades at a premium to its Net Asset Value (NAV), a reversal of its historical discount, suggesting the market may have already priced in the near-term recovery.

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• Pateo Connect is a prominent provider of smart cockpit solutions in China’s rapidly growing New Energy Vehicle (NEV) market, demonstrating robust revenue growth driven by the adoption of high-end products.
• The company faces substantial profitability hurdles, characterized by persistent net losses and gross margins that are the lowest among its peers, signaling a challenging competitive position.
• The investment profile is high-risk, marked by a concentrated customer base, increased financial leverage, and a premium valuation for its upcoming IPO that appears stretched relative to its growth and margin outlook.

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• Asian USD high-yield bonds have outperformed on an improving sentiment toward emerging market credits.
• China 5-year CDS has declined 14 bps since June and we expect non-property Chinese credits to have more capital inflow on  the hunt for a better yield.
• We are in favor of Chinese high-yield credits with recurring revenue and operate in more defensive industries such as consumer non-discretionary, utilities, and pharmaceuticals.

• The essence of KEYING’s business model is a “middle man” and relies on making money through price difference in the process of sales of goods, but “de-intermediation” is a trend.
• The pain point is most retail solution providers are unlikely to become industry giants due to excessive investment/lack the say in core technologies/products.The underlying logic of the industry is changing.
• As the platform traffic dividend disappears and the trend of brand self-built teams intensifies, KEYING’s bargaining power is weakening.Valuation should be lower than peers due to weaker performance growth rate/profitability.