In today’s briefing:
- A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms
- Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet
- JD.com (9618 HK) FY Earnings Recap: Intra-Day Swing of 7.3%.
- MIXUE Group (2097.HK) – Updates on Performance Forecast and Valuation Outlook
- Hong Kong Single Stock Options Weekly (March 03 – 07): From Caution to Euphoria as Sentiment Flips
- Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value
- Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share
- J&T Global Express H224 Results: Levers That Drove Earlier Improvement Are Losing Power
- AviChina Industry (2357 HK): The Discount to Narrow
A/H Premium Tracker (To 7 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- AH Premia continue to fall. Spread curve torsion reverses again with wide premia trades seeing Hs perform the best vs their As.
- To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile. Last week I recommended a HUGE trimming (30%) of the book.
- Hindsight is 20:20. I should have kept them, but the book still produced 51bp of alpha for the week on top of the 35bp of H/A beta.
HK Connect SOUTHBOUND Flows (To 7 Mar 2025); Big Volumes, Big Net; Tech, Banks, and Telecoms
- Gross SOUTHBOUND volumes dropped somewhat but still high. NET buying by SOUTHBOUND was HK$35bn which is still quite strong. Round-tripping volume down 20% week-on-week.
- The flows here are still striking. >20% of the top 100 most liquid Southbound eligible stocks saw SOUTHBOUND buy more than 10% of weekly volume.
- It feels like there is some common understanding among SOUTHBOUND investors which I do not understand. The numbers are big/growing.
Merger Arb Mondays (10 Mar) – Seven & I, Naigai, ESR, Soundwill, OneConnect, Goldlion, PointsBet
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Naigai Trans Line (9384 JP), Soundwill Holdings (878 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Smart Share Global (EM US).
- Lowest spreads: Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), PointsBet Holdings (PBH AU), Makino Milling Machine Co (6135 JP), Proto Corp (4298 JP).
JD.com (9618 HK) FY Earnings Recap: Intra-Day Swing of 7.3%.
- JD.com (9618 HK) Q4 2024 earnings significantly exceeded analyst expectations with revenue reaching RMB 347 billion (13.4% YoY increase).
- The stock experienced a volatile two-day reaction, rising 8.4% on March 6 followed by a 5.0% decline on March 7, resulting in a net gain of 3.03%.
- Options strategies including straddles, strangles, and call calendar spreads were actively traded ahead of earnings with potential intraday profitability. Longer dated implied volatility decreased following the announcement.
MIXUE Group (2097.HK) – Updates on Performance Forecast and Valuation Outlook
- MIXUE’s IPO debut was stellar. the IPO pricing of HK$202.5/share was indeed conservative. MIXUE is able to obtain more valuation premium space after IPO from a relatively low IPO pricing.
- However, concerns on future performance growth remains. Investors need to pay attention to the performance verification. Market sentiment is becoming “overheated”, and the pressure for short-term stock price corrections increases.
- We updated our forecast for 2025-2027. If based on P/E of 20-25x, market value is HK$109.4-136.8 billion, HK$122.5-153.2 billion, HK$134.8-168.5 billion based on 2025, 2026 and 2027 net profit, respectively.
Hong Kong Single Stock Options Weekly (March 03 – 07): From Caution to Euphoria as Sentiment Flips
- A dramatic shift saw stocks surge as market sentiment reversed week over week.
- Single stock option volumes were significantly lower vs prior two weeks.
- We highlight stocks that have had unusual moves in price, volume and implied volatility.
Chifeng Jilong A/H Trading – Weak Institutional Demand and Probably Close to Fair Value
- Chifeng Jilong Gold Mining (600988 CH) , a gold mining company in China, raised around US$363m in its H-share listing in Hong Kong.
- It operates six gold mines in Asia and Africa and has been listed on the Shenzhen Stock Exchange since 2004.
- We have covered the company and deal background in our previous notes. In this note, we talk about the trading dynamics.
Soundwill Holdings (878 HK): Founder’s Scheme At $8.50/Share
- After small-cap property developer Soundwill Holdings (878 HK) was suspended pursuant to the Takeovers Code, I expected an Offer by way of Scheme.
- And that is what unfolded. Grace Foo (ED) and her family, controlling 74.97% of shares out, are Offering $8.50/share, including a $1.00/share dividend, a 62.84% premium to undisturbed.
- That’s still a whopping 87.66% discount to the most recent NAV (30th June 2024). But what are the options for minorities (apart from the headcount test)? And terms are final.
J&T Global Express H224 Results: Levers That Drove Earlier Improvement Are Losing Power
- H224 showed moderating top-line growth, but solid Y/Y improvement in EBITDA margin
- However, the levers that drove margin improvement in 2024 appear to be losing power
- Within China’s express and logistics segment, we find SF Holding to be far more attractive
AviChina Industry (2357 HK): The Discount to Narrow
- The share price of AviChina Industry & Technology H (2357 HK) has picked up in Mar, and it will continue to chase the HSI and HSCEI, in our view.
- At 54.1%, AviChina’s discount to its A-share holdings has narrowed 4.2pp YTD, but is still behind the 6.2pp contraction for overall H-A shares. There is more room to catch up.
- The increase in defense spending, advancement in domestic commercial aviation and development of the low-altitude economy are major potential drivers.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
