Daily Brief China: Alibaba, NIO , China Longyuan Power, JD Industrials, Suzhou Novosense Microelectron, 52TOYS Development, Shenzhen H&T Intelligent A and more

• HK$77bn/Day of gross SOUTHBOUND activity last week vs HK$88bn the week before, HK$100+bn the week before. Gross flows are winding down.
• Watch for news on the Dual Counter (RMB) Trading eligibility for SOUTHBOUND near-term. That could re-up the pace .
• The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.

• NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed on three exchanges. 
• NIO’s Q4 deliveries guidance was below expectations, and sales momentum is on a declining trend. Sustainably hitting its 20% gross margin target and achieving breakeven in 2026 seems a stretch.  
• NIO’s valuation is stretched, trading at a material premium to the median EV/Sales and growth-adjusted EV/Sales multiples of Chinese EV peers. 

• Hs outperformed As on average by 0.99% within the liquid AH pair universe over the past two weeks. Beautiful Skew Behaved Badly.
• Quiddity H/A Portfolio performance slightly negative over two weeks, both outright and alpha.
• The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free for all SK readers.

• Based on 2025 revenue forecast of RMB24.1bn and the IPO price range, P/S is about 1.28-1.56x, higher than ZKH but lower than Ww Grainger. This is a reasonable valuation range.
• The median IPO price range (HK$14.1/share) is a more likely/relatively safe outcome.This not only acknowledges JD Industrials’ leading position/growth story, but also partly reflects the market’s perception of its challenges.
• The IPO pricing is the result of seeking a balance between the “premium of industry leaders” and “its shortcomings”.However, future valuation depends on whether JD Industrials can solve fundamental issues.

• Suzhou Novosense Microelectron (688052 CH), an analog chips producer, raised around US$285m in its H-share listing.
• According to Frost & Sullivan, in terms of revenue from analog chips in 2024, SNM ranked fifth among Chinese analog chip companies in the Chinese analog chip market
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• 52TOYS Development filed to go public in Hong Kong. The Beijing-based toymaker is planning H-share listing that could raise up to $200M.
• In my second insight about 52TOYS IPO, I discuss IPO valuation, examine competitive landscape and focus on comparable company analysis.
• 52TOYS manages 35 proprietary IPs and 80 licensed IPs, including pop, sci-fi and cultural IPs. The company collaborates with 400+ distributors, covering 20,000+ sales outlets. 

• Shenzhen H&T Intelligent is a major manufacturer of intelligent controllers for home appliances and power tools, strategically expanding into high-growth areas like automotive electronics and the Internet of Things (IoT).
• The company exhibits a strong long-term revenue growth trajectory, with a 10-year CAGR of 27.27%; however, recent performance shows significant margin compression and a concerning 3-year decline in net income and EPS.
• Valuation appears stretched, with a P/E ratio of 46.3x, which seems elevated given the recent deterioration in profitability and negative free cash flow, suggesting a high-risk, high-growth investment profile.

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