Daily Brief China: Bio-Thera Solutions Ltd, XAG Technology, Softcare, Pop Mart, CGN Mining, Yunnan Yuntianhua Co A, Guangyuyuan Chinese Herbal Medicn, Hang Seng Index, Beijing Tongrentang Co A and more

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we have presented our final expectations for ADDs and DELs for the upcoming December 2025 index rebal event.

• XAG Technology (XAG HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by Huatai.
• Guangzhou Xaircraft Technology Co., Ltd. (XAG) is a global leader in agricultural robotics.
• The company integrates robotics, artificial intelligence, and renewable energy to create comprehensive solutions that make farming more efficient and sustainable.

• Softcare (SOFT HK) is looking to raise up to US$307m in its upcoming Hong Kong IPO.
• It is an international hygiene product corporation with a focus on fast-growing Emerging Markets including Africa, Latin America and Central Asia. 
• In this note, we examine the IPO dynamics, and look at the firm’s valuation.

• Pop Mart options recently began trading on HKEX and have gained considerable traction, ranking in the top 10 of volume traded.
• Pop Mart has had a tremendous rally but is in the midst of a double-digit slump.
• Option volumes have been skewed, and we outline how best to approach hedging in this environment.

• CGN Mining is uniquely positioned as the sole overseas uranium resources development and trading platform for its parent, China General Nuclear Power Corporation (CGN), a major nuclear power operator in the world’s fastest-growing nuclear energy market.
• The company is set to benefit from a strong uranium market uptrend, driven by a global nuclear energy renaissance and supply constraints. A lucrative off-take agreement with its parent company at prices reportedly 50% higher than previous contracts is expected to significantly boost revenues.
• Despite a robust long-term outlook, the company faces risks from geopolitical instability in key uranium-producing regions, potential price volatility, and recent financial pressures from managing high-cost inventory, which has impacted margins.

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• Yunnan Yuntianhua is a leading state-owned enterprise in China’s fertilizer and chemical sector, possessing significant competitive advantages through its vertical integration and access to vast phosphate rock reserves in Yunnan province.
• The company demonstrates strong financial performance with robust cash flow generation and an attractive dividend yield, though its revenue and earnings are subject to the cyclical nature of commodity markets.
• Future growth is anticipated to be driven by strategic expansion into new energy materials, such as iron phosphate, and a continued focus on high-value fine chemical products, alongside strengthening its market position in Southeast Asia.

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• Venerable Brand with Deep Heritage: Guangyuyuan is one of China’s oldest Traditional Chinese Medicine (TCM) brands, founded in 1541. This long history provides significant brand equity and consumer trust, a key advantage in the healthcare sector. The company was officially recognized as a “China Time-Honored Brand”by the Ministry of Commerce in 2006.
• Favorable Industry Tailwinds: The TCM industry in China is experiencing robust growth, supported by government policies, an aging population, and increasing health awareness. The market is projected to grow at a double-digit CAGR, creating a favorable environment for established players like Guangyuyuan.
• Financial Turnaround and Growth Focus: After a significant loss in 2022, the company has demonstrated a strong recovery in profitability through 2023 and 2024. Management is focused on a growth-oriented strategy, emphasizing product innovation and new marketing channels, including e-commerce and collaborations with influencers.

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• Busy news week with trade and deal headlines taking center stage.
• Stock have been treading water aside from the Materials Sector with breadth reversing from last week’s rebound.
• The thick of earnings season is past with only 15 companies reporting in the next week.

• Unmatched Brand Heritage and Market Leadership: With a history spanning over 350 years, Beijing Tongrentang is a premier brand in Traditional Chinese Medicine (TCM), commanding significant brand loyalty and market recognition. This “time-honored brand”status provides a substantial competitive advantage in a fragmented market.
• Favorable Industry Tailwinds: The company is well-positioned to benefit from China’s aging population, rising health consciousness, and strong government support for the TCM industry. These demographic and policy trends are expected to drive sustained demand for TCM products and services.
• Concerning Cash Flow Trend Despite Solid Growth: While the company has demonstrated consistent revenue and net income growth, a significant and persistent decline in operating and free cash flow over the past several years raises concerns about working capital management and the quality of earnings.

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