In today’s briefing:
- Alibaba (BABA, 9988HK): June Quarter, Actually 2-Digit Growth, To Win Price War
- Curator’s Cut: Arbs Go A-H, Copper Plays & China’s Property Pulse
- Alibaba (BABA US): Why Did the Stock Rally Despite 2Q25 Operating Profit Dip?
- Merger Arb Mondays (01 Sep) – Dongfeng, ENN, Joy City, Kangji, Mayne, Santos, Shibaura, CareNet
- (Mostly) Asia M&A, Aug 2025 Wrap: Dongfeng Motor, Kangji, Carenet, Nihon Chouzai, Technopro
- SHEIN IPO Update: HQ Shifted (Back) To China | End of US De Minimis Exemption, Everywhere
- Shanghai Fosun Pharmaceutical (2196.HK/600196.CH) 25H1 – The Performance Has Not Truly Improved
- Sino Biopharmaceutical (1177 HK): Innovative Drugs Drive 1H Performance; Pipeline Lends Visibility
- SJM Holdings – Earnings Flash – H1 FY 2025 Results – Lucror Analytics
Alibaba (BABA, 9988HK): June Quarter, Actually 2-Digit Growth, To Win Price War
- The de facto total revenue increased by 10% YoY excluding two disposed shopping malls.
- We believe Alibaba will win the price war for food deliveries, because competitors’ earnings were even worse.
- The stock surged by 13% in NYSE after the result release, but we still believe it has an upside of 48% for next twelve months.
Curator’s Cut: Arbs Go A-H, Copper Plays & China’s Property Pulse
- Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,200+ Insights published over the past two weeks on Smartkarma
- In this cut, we explore A-H share trading dynamics, consider copper market dynamics and plays, and China’s bottoming/stabilizing real estate market
- Want to dig deeper? Comment or message with the themes you’d like to see highlighted next
Alibaba (BABA US): Why Did the Stock Rally Despite 2Q25 Operating Profit Dip?
- Alibaba (BABA US) jumped 12.9% on Friday following better than expected 2Q2025 results and upbeat management commentary.
- Investors cheered growth plans centered around Consumption and AI + Cloud, signaling confidence in the company’s long-term strategy.
- 2Q2025 operating profits dipped slightly, as higher costs in quick commerce were largely offset by growth in other business segments.
Merger Arb Mondays (01 Sep) – Dongfeng, ENN, Joy City, Kangji, Mayne, Santos, Shibaura, CareNet
- I 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: Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Joy City Property (207 HK), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ashimori Industry (3526 JP), Carenet Inc (2150 JP), Ainsworth Game Technology (AGI AU).
(Mostly) Asia M&A, Aug 2025 Wrap: Dongfeng Motor, Kangji, Carenet, Nihon Chouzai, Technopro
- For Aug 2025, 17 new transactions (firm and non-binding) were discussed on Smartkarma (by the Quiddity team) with an overall announced deal size of ~US$18bn.
- The average premium for the new transactions announced (or first discussed) in August was 48%, with a year-to-date average of 47%.
- 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%
SHEIN IPO Update: HQ Shifted (Back) To China | End of US De Minimis Exemption, Everywhere
- SHEIN is reportedly moving its corporate HQ to China to pave way for HK IPO
- US ‘de minimis’ exemption for all countries ended Aug 29 (China/HK was May 2)
- We believe end of US ‘de minimis’ exemption changed the game for SHEIN
Shanghai Fosun Pharmaceutical (2196.HK/600196.CH) 25H1 – The Performance Has Not Truly Improved
- After excluding gains on the disposal of United Family Healthcare, profitability of main business was disappointing.The revenue decline confirms that Fosun Pharma is facing pressure. Short-term performance hasn’t truly improved.
- Fosun Pharma will continue to sell unprofitable assets to alleviate debt pressure and optimize business structure, which will be the short-term main theme. Fosun Pharma is still in adjustment period
- Whether high profit growth can be sustainable in long term is uncertain, which depends on if Henlius is able to achieve high growth to offset the negative impact of VBP.
Sino Biopharmaceutical (1177 HK): Innovative Drugs Drive 1H Performance; Pipeline Lends Visibility
- Sino Biopharmaceutical (1177 HK) announced 11% YoY revenue growth in 1H25, driven by 27% YoY growth in innovative products. Contribution of innovative drugs to total revenue increased to 44.4%.
- With the increasing contribution of innovative drugs to total revenue, gross profit margin expanded 40bps to 82.5%. With expanding margin and cost efficiency, net profit has more than doubled.
- The company expects to have more than 35 marketed innovative products by 2027, with revenue from innovative products accounting for over 60% of total revenue.
SJM Holdings – Earnings Flash – H1 FY 2025 Results – Lucror Analytics
- SJM Holding’s H1/25 results were weaker than anticipated, as the company lost GGR market share in Q2 (after a strong Q1).
- The top line continued to expand, in line with the ramp-up of Grand Lisboa Palace (GLP).
- That said, EBITDA unexpectedly contracted due to unfavourable win rates (particularly at GLP). FCF was likely negative, owing to the reduced profitability. Positively, the planned reorganisation of gaming assets will likely raise the properties’ margins and provide the company with operational flexibility to optimise its assets going forward.
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