In today’s briefing:
- Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading
- Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads
- Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation
- Ant Group Takes Out Yip’s Controlling Stake In Bright Smart (1428 HK)
- Bright Smart (1428 HK): To Sell or Not to Sell?
- May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress
- China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B
- Ping An Healthcare and Technology (1833 HK) 25Q1 Results – Concerns Behind and the Valuation Outlook
Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading
- Over the past five trading days, Alibaba Group Holding (9988 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Diagonal Spreads account for nearly 30% of all strategies. Many of these strategies sell short term risk to finance longer term protection.
- Several structures hedge against low probability tail events. One such strategy traded 100 contracts.
Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads
- Alibaba Group Holding (9988 HK) one-month implied volatility has decreased from recent peaks but remains above the 70th percentile, while realized volatility exceeds 80% (96th percentile).
- A relatively flat term structure and skew render Calendar and Diagonal Spreads interesting strategies.
- Open interest extends to March 2026, with balanced call and put interest across all expiries.
Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation
- Laopu Gold (6181 HK) was on track to be added to a global index given its large H-share market cap and a free float that was close to 20%.
- Completion of the full circulation in April pushed H-share market cap higher while free float market cap remained the same. Crucially, free float dropped below 15%.
- Laopu Gold (6181 HK) could miss index inclusion in May, while inclusion in August will need some selling from non-float investors following lock-up expiry in June.
Ant Group Takes Out Yip’s Controlling Stake In Bright Smart (1428 HK)
- When broker Bright Smart Securities (1428 HK) was suspended recently, one possibility was Chairman, Peter Yip Mow-lum, a 50.54% shareholder, cashing out. And that has now unfolded.
- Yip has entered into a SPA with fintech giant Ant Group, the operator of Alipay. The agreement has been struck at HK$3.28/share, a 17.6% premium to undisturbed.
- Should the SPA complete – the key condition is NDRC approval – an unconditional MGO is triggered, also at HK$3.28. The price is final.
Bright Smart (1428 HK): To Sell or Not to Sell?
- The offer price of HK$3.28 by Ant Financial is attractive – 2.9x P/B and 8.3x PER, both on 12-month forward basis. It is also appealing relative to peers.
- Bright Smart Securities (1428 HK)‘s massive outperformance against the HSI showed its strong marketing and execution capabilities. Ant Financial will bring many synergies to it.
- Risk-Averse investors may take this opportunity to cash out, but we are on the long-term bull camp and prefer to hold for further upside.
May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress
- Crucial US “de minimis” imports exemption will end this Thursday night, May 1st
- Beginning May 2nd, low-value direct-to-US consumer imports subject to duties, reporting
- For US consumers, buying from SHEIN et al set to become more expensive, more onerous
China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B
- China New Higher Education (2001 HK)‘s gearing (including contract liabilities) has come down to 61.2% in 1H25, from 69.9% in FY24 and 84.1% in FY23 – an encouraging trend.
- Net profit grew 8.6%, even faster than the full-year consensus forecast of 3.5% growth. There are multiple drivers that support its medium-term outlook.
- CNHE trades on 1.7x PER and 0.3x P/B, but the FY25 ROE is a solid 16.6%. Should the payout ratio remain unchanged, its yield will reach 28.4%.
Ping An Healthcare and Technology (1833 HK) 25Q1 Results – Concerns Behind and the Valuation Outlook
- PAGD achieved a dual increase in revenue and profit in 25Q1, which was mainly driven by the revenue from F-end business and B-end corporate health management business (up 43% YoY).
- We always question PAGD’s capability of expanding new customers and business externally, apart from relying on the resource support of Ping A Group.This makes PAGD difficult to match high valuations.
- Our forecast for 2025 revenue is RMB5.1 billion.If based on P/S of 3x, market value is RMB15.3 billion. Market value of RMB24 billion could be the peak of PAGD’s valuation
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