In today’s briefing:
- Chinese RCBs: Two Bailouts. How Many More At Risk?
- OneConnect Financial (6638 HK/OCFT US): Precondition Satisfied for a Below Net Cash Offer
- Zijin Gold Pre-IPO Tearsheet
- Zhou Liu Fu (6168 HK): Are We or the Market Wrong?
- Meituan Possible US$4bn Selldown – Will End up Being Well-Flagged but Sentiment Isn’t Great
- Nameson Holdings (1982 HK) FY25 Concall And Results: Yield At 14% Following Weak Season
- Lucror Analytics – Morning Views Asia
- Pre-IPO Dermavon Holdings- Weak R&D and the Lack of Synergy in Pipelines Lead to Unfavorable Outlook
- [IO Fundamentals 2025/27] Industrial Cleanup, Trade Tensions, and Diverging Inventory Data
Chinese RCBs: Two Bailouts. How Many More At Risk?
- Last week, CICC Hong Kong and SOE Jilin Financial Holding Group tabled a rescue offer for Jilin Bank (6122 HK), as discussed in Jilin Bank (6122 HK): Another Hobson’s Choice
- This follows a similar bailout of Bank Of Jinzhou (416 HK) in early 2024, as detailed in Bank of Jinzhou (416 HK) To Be Taken Private.
- Tarring the sector with same brush is potentially oversimplifying the situation. But the issues faced by Jilin Bank and BoJ are unlikely to be isolated. Below I dig deeper.
OneConnect Financial (6638 HK/OCFT US): Precondition Satisfied for a Below Net Cash Offer
- The precondition for Oneconnect Financial Technology (6638 HK)’s scheme offer from Ping An is satisfied. The offer is HK$2.068 per share (US$7.976 per ADS). The offer price is final.
- Ping An Insurance (H) (2318 HK) is hoping that a dire 1Q25 and letters of support will nudge minorities to accept an offer that values OneConnect below net cash.
- The high minority participation rate and protest votes at the recent AGM are warning signs that the vote is far from a done deal. Tread carefully.
Zijin Gold Pre-IPO Tearsheet
- Zijin Gold (2579355D HK) is looking to raise up to US$2.0bn in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley and CITIC.
- It is a leading gold mining company formed by combining all the gold mines of Zijin Mining, located outside of China.
- It held interests in eight gold mines located in gold-rich regions across South America, Oceania, Central Asia and Africa.
Zhou Liu Fu (6168 HK): Are We or the Market Wrong?
- Zhou Liu Fu Jewellery (6168 HK) has an impressive debut, but it is currently expensive, at 4.33x PEG with just a 3-year EPS CAGR of 4.7%.
- It is overpriced by ROE vs. P/B, given it stands higher than the best-fit line. Its inferior market position in the industry makes it deserve to trade below.
- At 20% discount to Chow Tai Fook Jewellery (1929 HK), it should value at HK$27.80. Even at par, it still implies an 8.5% downside.
Meituan Possible US$4bn Selldown – Will End up Being Well-Flagged but Sentiment Isn’t Great
- As per news reports, Prosus NV (PRX NA) could look to sell some/all of its Meituan (3690 HK) stake, worth around US$4bn
- Prosus has held its stake for a few years, owing to the dividend payout by Tencent, but Meituan appears to be planning to take on one of its subsidiaries.
- In this note, we will talk about the possible selldown and other deal dynamics.
Nameson Holdings (1982 HK) FY25 Concall And Results: Yield At 14% Following Weak Season
- Nameson Holdings (1982 HK) reported FY25 revenue/net profit declines of 0.6%/5.3% YoY, respectively, primarily driven by a margin contraction of approximately 40 basis points.
- The company declared a 1.5-cent final dividend (total dividend 11.3 cents/share), maintaining a 75% payout ratio, resulting in a 14% yield on the current share price.
- The stock trades at a 5.5x FY26e PE with a 3x EV-EBITDA and a 14% dividend yield, assuming the company can maintain flat earnings for FY26.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Greentown China, Nissan Motor, Continuum Green
- UST yields rose slightly yesterday, with yields up for a fifth straight day. There were no apparent catalysts, albeit the move was in line with a broader sell-off in European and Japanese government bonds.
- The yield on the 2Y UST was unchanged at 3.89%, while that on the 10Y UST advanced 2 bps to 4.40%. Equities were little changed near all-time highs, amid renewed tariff concerns. US President Donald Trump has told reporters at a White House meeting that he plans to announce a 50% tariff on copper imports.
Pre-IPO Dermavon Holdings- Weak R&D and the Lack of Synergy in Pipelines Lead to Unfavorable Outlook
- The big gap between the revenue proportion of the two business lines indicates that there’s little synergistic effect, thus further delaying the formation of the “medicine and makeup complementary ecosystem”.
- The weakness in R&D has led to a low overlap in the demands of existing products among the customer groups,making it impossible to match the medical demand through self R&D.
- The business model of Dermavon is sales-driven rather than R&D-driven. There are concerns on the Company’s pipeline quality. Dermavon has not proved its sustainable profitability. Valuation should be lower peers.
[IO Fundamentals 2025/27] Industrial Cleanup, Trade Tensions, and Diverging Inventory Data
- Beijing’s push to cut inefficient capacity may support steel margins and create a steady floor for iron ore prices.
- Malaysia’s anti-dumping tariffs of 3.86-57.90% target Chinese steel exports, posing limited short-term impact but signalling broader risks to China’s iron ore demand over time.
- Portside inventories may continue rising as iron ore arrivals increase and weak pig iron output slows cargo pick-up across Chinese ports.
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