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
- 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.
- 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
- 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)
- 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
- 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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