In today’s briefing:
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
- CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
- NWD (17 HK): Markets Pricing In A Bust
- ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade
- Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
- Quiddity ChiNext/ChiNext 50 Jun25 Results: 23/26 Changes Correct Despite Methodology Change
- [Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
- Lens Technology H-Share Listing: First Look
- Plover Bay (1523 HK): Preview On Earnings For H1 2025
- Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
- The June rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
- The net round-trip trade across all stocks across the four indices is estimated at HK$63.55bn (US$8.1bn). There are 12 stocks with over 2x ADV to trade from passive trackers.
- The trade size is much bigger than usual due to the inclusion of BYD in the HSTECH Index and due to a change in the FAF methodology for Secondary Listings.
CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 June.
- Passive trackers are estimated to buy 2.7x ADV in Nexchip Semiconductor (688249 CH) and sell 1.5x ADV in Amlogic Shanghai (688099 CH).
- The delete has outperformed the inclusion this year. With 8 days left to implementation of the changes and decent impact, there could be a short-term reversal.
NWD (17 HK): Markets Pricing In A Bust
- 0.052x P/B! That’s New World Development (17 HK)‘s current trailing P/B ratio; roughly a quarter of the next comparable real estate peer.
- What’s new? The latest decline followed an announcement on the 30th May that it would defer payments on its perpetual bonds.
- NWD’s 6.15% and 4.8% perpetuals fell to 23 cents and 15.5 cents on the dollar on 2nd June, suggesting the market is pricing in the possibility of a bust.
ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade
- There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
- We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).
Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
- In 1Q25, total revenue grew by 47% YoY with home appliance up by 59% YoY.
- Both home appliance and electric vehicle will expand their capacities.
- The stock has an upside of 29% and a price target of HK$66 for the next twelve months.
Quiddity ChiNext/ChiNext 50 Jun25 Results: 23/26 Changes Correct Despite Methodology Change
- The June 2025 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
- There will be eight changes for the ChiNext index and five changes for the ChiNext 50 index.
- In this insight, we take a look at our final flow expectations for the the ChiNext and ChiNext 50 index rebal events.
[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
- Xiaomi reported C1Q25 top line, non-IFRS operating income and IFRS net profit 2.0%, 41% and 57% vs. our estimate.
- While there are a few product positives supporting outperformance, the main driver is still trade-in subsidy (TIS), which will start to end in C3Q25;
- We continue to view Xiaomi as having an enviable market position as a “Huawei without the sanctions”, its valuation has also become very rich.
Lens Technology H-Share Listing: First Look
- Shenzhen-Listed iPhone glass supplier Lens Technology (300433 CH) has filed for a listing on HKEx and plans to raise proceeds of around US$1-1.5bn.
- The company is heavily reliant on smartphones (mainly iPhones) however has diversified into other verticals. While this has helped grow revenues, margins have continued to decline.
- Though some exemptions have been given, the potential for further US reciprocal tariffs could increase costs and disrupt supply chains impacting Lens.
Plover Bay (1523 HK): Preview On Earnings For H1 2025
- We expect the Trump tariffs announced on Taiwan (base for suppliers/production of Plover Bay) to slightly affect growth rates for H1 FY25 and estimate a 15%/13% YoY revenue/profit growth number.
- A 32% tariff was imposed on Taiwan suppliers; however, electronic items, including routers, were subsequently excluded. Nonetheless, overall business sentiment had already been negatively impacted before these adjustments.
- Trading at 19.4x FY25e earnings (assuming a reversion to 15% growth), the stock is somewhat fairly valued, although we love this name’s execution and long-term track record.
Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds
- Wuxi Lead Intelligent Equipmen (300450 CH) aims to raise around US$400m in its H-share listing.
- WLIE is a global platform-based intelligent equipment enterprise, offering intelligent equipment and solutions to a wide range of emerging and high-end manufacturing industries.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
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