In today’s briefing:
- BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
- BYD (1211 HK) Placement: Continuing to Power Up
- Baidu Inc.: When Will Its Efforts Towards Generative AI
- Quiddity STAR 50/100 Mar25 Results: US$1.4bn Total One-Way Flows; Mostly in Line with Expectations
- JD.com (9618 HK) FY Earnings on 6 March: Divergence Between Option-Implied And Historic Move
- Plover Bay Technologies (1523.HK) – A Milestone Year with Strong Growth and Expanding Opportunities
- OneConnect Financial (6638 HK/OCFT US): Negative EV Play Draws an Opportunistic Offer from Ping An
- MIXUE Group (2097 HK): What to Do Now?
- OneConnect Financial (6638 HK/OCFT US): Ping An’s Fair NBIO
- Chery Automobile IPO Preview
BYD US$5.2bn Placement – Large Only in Absolute Size, past Deals Have Done Well
- BYD (1211 HK) is looking to raise around US$5.2bn via selling 4% additional shares.
- The company has undertaken a few deals before and they have ended up performing well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
BYD (1211 HK) Placement: Continuing to Power Up
- Overnight, BYD (1211 HK) has announced a placement of 118m shares at a price range of HK$333-345/share that could raise up to HK$40.7bn (US$5.2bn).
- The Pink Sheets listing for BYD (BYDDY.PK) closed at US$87.1/share and traded US$155m for the day. That close implies an open of HK$338.7/share for BYD, middle of the placement range.
- There will be passive buying from global index trackers later this week while buying from Hang Seng Index and Hang Seng China Enterprises Index trackers will come in April.
Baidu Inc.: When Will Its Efforts Towards Generative AI
- Baidu’s fourth-quarter and full-year 2024 financial results reveal a company navigating both challenges and opportunities, driven by its ongoing transformation into an AI-centric entity.
- The reported total revenues for the fourth quarter amounted to RMB 34.1 billion, a 2% decrease year-over-year, while full-year revenues were down by 1%, at RMB 133.1 billion.
- Despite these slight declines, Baidu Core’s revenue performance was stable, increasing by 1% for both the fourth quarter and full year.
Quiddity STAR 50/100 Mar25 Results: US$1.4bn Total One-Way Flows; Mostly in Line with Expectations
- The March 2025 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 28th February 2025.
- There will be 3 changes for the STAR 50 index and 6 changes for the STAR 100 index.
- We expect one-way flows of approximately US$1bn and US$356mn for the STAR 50 and STAR 100 index rebal events respectively.
JD.com (9618 HK) FY Earnings on 6 March: Divergence Between Option-Implied And Historic Move
- JD.com (9618 HK) upcoming Q4 and Full Year 2024 results announcement on 6 March historically triggers significant stock volatility, with full-year announcements causing 12-14% price movements.
- Options market pricing implies a 9.4% post-announcement move (up or down), which is less than previous full-year announcement reactions but nearly double the average quarterly announcement impact.
- Long Straddle positions break even at 9.2% price movements, appearing expensive compared to quarterly announcement history but potentially profitable based on full-year announcement patterns.
Plover Bay Technologies (1523.HK) – A Milestone Year with Strong Growth and Expanding Opportunities
- Plover Bay Technologies (1523.HK , “Plover Bay”) with a market cap of approximately USD 739 million, experienced another stellar year with its FY24A annual results, showcasing a notable 24% revenue increase, exceeding the USD 100 million threshold (also known as the “valley of death ”) to reach USD 117 million, while also realizing a 36% YoY growth in net profit, amounting to USD 38 million.
- This success is complemented by strategic partnerships, and ongoing innovation.
- With deepening collaborations, an expanding product line-up, and an emphasis on recurring revenues, Plover Bay is well-positioned for sustained growth in 2025 and beyond.
OneConnect Financial (6638 HK/OCFT US): Negative EV Play Draws an Opportunistic Offer from Ping An
- Oneconnect Financial Technology (6638 HK) disclosed a preliminary non-binding privatisation offer from Ping An Insurance (H) (2318 HK) at HK$2.068 (US$7.98 per ADS), a 72.33% premium to the undisturbed price.
- Despite the hefty premium, the offer is opportunistic as it values OneConnect around net cash and is at a material discount to historical trading ranges.
- If a binding proposal materialises, the offer price will not be increased. A high minority participation rate could be an issue for the vote.
MIXUE Group (2097 HK): What to Do Now?
- Mixue Group (2097 HK) has a successful IPO in Hong Kong, with share price surged 43.2%. We will trim from here and will not buy at the current level.
- Our forecasts call for a decent 20.8% and 17.6% earnings growth for FY25 and FY26, putting it on RICH PERs of 19.1x for FY25 and 16.3x for FY26.
- The Chinese tea sector has average PERs of 12.4x and 10.5x, suggesting MIXUE’s leadership is well reflected in the over 50% premium, and the safety margin has significantly narrowed.
OneConnect Financial (6638 HK/OCFT US): Ping An’s Fair NBIO
- Dual-Listed OneConnect Financial Technology (6638 HK/OCFT US), a digital retail banking/commercial banking/ digital insurance play, has announced a non-binding proposal from Ping An, OneConnect’s controlling shareholder with 32.12%.
- Ping An is offering, by way of a Scheme, HK$2.068/share, or US$7.98/ADS, a 72.33% premium to last close, and a 131.66% premium to the 30-day average. The price is final.
- What now? Back in OneConnect’s boards’ court whether to engage or not. Which they should. No competing Offer will emerge.
Chery Automobile IPO Preview
- Chery Automobile is getting ready to complete an IPO in Hong Kong in the coming months. The company could raise up to US$1 billion in this IPO.
- Chery Auto is the second largest automaker in China and the 11th largest auto company globally. The valuation of Chery Auto could be more than 100 billion yuan (US$14 billion).
- Chery Auto has one of the best records among all the major auto companies globally in the past three years in terms of sales and net profit growth.
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