In today’s briefing:
- Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
- StubWorld: Unicom’s “Hs” Are Cheap
- GOGOX IPO Initiation: A Less than Perfect Delivery
- Lepu Biopharma IPO: PHIP Updates
- China Three Gorges Renewables (600905 CH): Good, and Better Is Coming
- Allianz’s 3.875% Perp Drops 5 Points After Skipped Call
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
- Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
- There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
- If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.
StubWorld: Unicom’s “Hs” Are Cheap
- Despite the recent share price gain, China Unicom (762 HK) is inexpensive with respect to parent China United Network (600050 CH) – its pseudo domestic A-share twin – and to peers.
- Preceding my comments on Unicom, 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%.
GOGOX IPO Initiation: A Less than Perfect Delivery
- GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It is pre-marketing an HKEx IPO to raise US$200 million, according to press reports.
- The fundamentals are unattractive as intensifying competition is pressuring growth, increasing losses and spurring cash burn.
- As the losses and cash burn is expected to persist over the next three years, we would give the IPO a pass.
Lepu Biopharma IPO: PHIP Updates
- Lepu Biopharma (LBP HK) is a biopharmaceutical company focusing on oncology therapeutics. The company has filed for an IPO to list on the Hong Kong Stock Exchange.
- Lepu has the leading ADC candidate pipeline in China, in terms of number of clinical-stage ADC drug candidates. In our previous insight, we discussed the company’s business, products and outlook.
- In this follow-up insight, we have highlighted and discussed some of the key new data points from the company’s Post Hearing Information Pack (PHIP).
China Three Gorges Renewables (600905 CH): Good, and Better Is Coming
- China Three Gorges Renewables (600905 CH) (CTGR) has an splendid FY21 as it pre-announced result with a range of 46.5-53.1% growth in recurring profit, fuelled by generation and disposal gains.
- The first full-year contribution of many projects commissioned in 4Q21, which boosted a 28.4% QoQ surge in power generation, should underpin FY22 earnings – consensus forecast is expecting 41% growth.
- YTD, CTGR’s share price performed in line with Shanghai Composite Index (-6.1%), but its strong EPS CAGR of 22% for FY21-23 provides room for it to outperformed in medium term.
Allianz’s 3.875% Perp Drops 5 Points After Skipped Call
German insurer Allianz saw its dollar-denominated 3.875% perpetuals fall about 5 points late on Monday after the 30-day call announcement window closed, indicating that the issuer will not be redeeming the bonds on the first call date of March 7. The fixed-for-life perpetuals (Term of the Day, explained below) fell 4.7 points this week thus far to currently trade at 93.85 cents on the dollar, yielding 4.13%. A senior syndicate banker told IFR, “There is a long, long track record of issuers making a call based on economics in the US dollar fixed-for-life market. This is not the first time this has happened. I’m quite amused, I can only infer from the price move that some people investing in the bond thought it was going to get called at the first call date, but I’m not sure why.” The bonds are now callable at any time and bankers expect the bond to move close to par once the dust settles, IFR reported.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets fell with the S&P and Nasdaq ending 0.4% and 0.6% lower. Sectoral gains were led by Energy, up 1.3% while losses were led by Communication Services, down 2.2%. US 10Y Treasury yields rose 3bp to 1.94%. European markets were higher with the DAX, CAC and FT SE up 0.7%, 0.8% and 0.8%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.4% higher. Asian markets have opened mixed with HSI and Shanghai down 1.54% and 0.90% while STI and Nikkei are up 0.57% and 0.24% respectively. US IG CDS spreads were 0.4bp wider and HY CDS spreads were 3.1bp wider. EU Main CDS spreads were 1bp wider and Crossover CDS spreads were 7bp wider. Asia ex-Japan CDS spreads were 3.9bp wider also.
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