In today’s briefing:
- BYD (1211 HK): Authorities Halting Severe Competition Throughout Industry and Industry Chain
- ENN Energy (2688 HK): ENN Natural Gas’ Application Proof Is Out. Interesting For What Is Not Present
- Cao Cao Pre-IPO: Grossly Overvalued
- BYD (1211 HK) Outlook Following Regulatory Pushback on Market Dominance
- CaoCao IPO (2643 HK): Valuation Insights
- StubWorld: Melco (200 HK) Needs To Fall
- HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September 2025
- Foshan Haitian: Upsized at Top Price. Near Term Upside, Long Term Value Play.
- Xiaomi (1810 HK): Strategic Insights and Top Option Trades
- Foshan Haitian Flavouring & Food Company Hong Kong IPO Valuation Analysis
BYD (1211 HK): Authorities Halting Severe Competition Throughout Industry and Industry Chain
- BYD announced that the company would provide price discounts for 22 models.
- BYD has scale advantage over other NEV car makers and the NEV industry has bargaining power over suppliers and dealers.
- The auto association and the Ministry of Industry are trying to protect small companies from bankruptcy.
ENN Energy (2688 HK): ENN Natural Gas’ Application Proof Is Out. Interesting For What Is Not Present
- On the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH) (ENN-NG), its largest shareholder.
- The pushback is that the scrip portion pivots off the value of newly-listed ENN-NG H-shares. And the IFA’s theoretical assessment on such leaves a lot to be desired.
- A redacted version of ENN-NG’s application proof is now out. Curiously, the share ratio – new ENN-NG H Shares for each ENN shares – is noticeably absent
Cao Cao Pre-IPO: Grossly Overvalued
- CaoCao (2643 HK) is looking to raise up to $236m in its upcoming Hong Kong IPO.
- It is a ride hailing platform in China originally incubated by Geely Group connecting passengers and drivers to deliver consistent and high-quality ride experiences.
- In this note, we examine the IPO dynamics, and look at the firm’s valuation.
BYD (1211 HK) Outlook Following Regulatory Pushback on Market Dominance
- As reported by Ming Lu, Chinese regulators are pushing back against BYD (1211 HK)’s dominance, which has strained smaller domestic EV competitors. Read his latest BYD insight for more details.
- In a recent insightwe signaled BYD was tactically overbought. The stock fell rapidly right after.
- The stock is currently mildly oversold according to our WEEKLY model: it could fall a bit more, but if this week closes in negative territory there could be a rebound.
CaoCao IPO (2643 HK): Valuation Insights
- CaoCao (2643 HK) has launched its IPO to raise US$236 million at HK$41.94 per share. The shares will be listed on 25 June.
- I previously discussed the IPO in CaoCao IPO: The Bull Case and CaoCao IPO: The Bear Case.
- In this note, I present my forecasts and discuss valuation. My analysis suggests that CaoCao is at best fairly valued at the offer price. Therefore, avoid the IPO.
StubWorld: Melco (200 HK) Needs To Fall
- Melco International Development (200 HK)‘s fully-paid rights shares commence trading today. Melco is down just ~14% since announcing a one-for-two rights issue; and 13% above the TERP.
- Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September 2025
- We see 21 potential and close adds and 34 potential and close deletes for the Hang Seng Composite Index in September. Some of the stocks are close on market cap/liquidity.
- There have been some big listings in the last couple of months and those stocks should be added to the index in September. That increases the number of potential deletions.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
Foshan Haitian: Upsized at Top Price. Near Term Upside, Long Term Value Play.
- Foshan Haitian has priced its Hong Kong offer at the top end (HKD36.3/share) and upsized it to 279 million shares, raising a strong HKD10.1 billion (USD1.3 billion).
- With a massive 696x oversubscription and nearly half the deal secured by cornerstone investors, the stock could see a lively debut when it lists on June 19th.
- We believe Foshan Haitian Flavouring (3288 HK) lacks a clear catalyst for growth and hence the growth expectations built into its Hong Kong pricing may prove difficult to materialise.
Xiaomi (1810 HK): Strategic Insights and Top Option Trades
- Over the past five trading days, Xiaomi Corp (1810 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
- Popular Strategies: Diagonal Spreads account for 27%of all strategies. This versatile strategy allows for many different profiles in terms of upfront premium (positive or negative), and time horizon.
- This Insight of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies.
Foshan Haitian Flavouring & Food Company Hong Kong IPO Valuation Analysis
- On 17 June, Bloomberg reported that Foshan Haitian Flavouring & Food Company has raised HK$10.1 billion after a strong remand for its shares to be listed in Hong Kong.
- We estimate the company to generate revenue of 29.4 billion RMB (up 9.2% YoY) and net profit of 6.8 billion RMB (up 7.1% YoY) in 2025.
- Our valuation analysis suggests that Foshan Haitian is undervalued. Our base case valuation suggests implied market cap of 286 billion CNY, which represents 25% higher than current levels.
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