In today’s briefing:
- FXI Rebalance: 3 Changes as H/A Premium Trades Back in Focus
- JD Industrials IPO – Valuation Cut Means Its Priced to Go
- China A50 ETF Rebalance: Two Sets of Changes
- JD Industrials IPO (7618 HK): Valuation Insights
- Unisound AI IPO Lockup (9678.HK): ~US$1.6B Early Lockup Release for Co-Founders
- Mandi Pre-IPO Tearsheet
- JD Industrials (7618 HK) IPO: Only Attractive if Priced Cheaply
- JD Industrial IPO: Structural Efficiency, Asset Light Model, Upscaling Paves Way for Growth
- 3SBio Inc (1530 HK) Placement – The Placing Price Indicates Decent Upside Potential in Valuation
- Sinopharm Group (1099 HK) – Downgrade to a Sell
FXI Rebalance: 3 Changes as H/A Premium Trades Back in Focus
- As forecast, there will be 3 constituent changes for the iShares China Large-Cap (FXI US) at the close of trading on 19 December.
- Two of the inclusions will also have inflows from the FGlobal Index at the same time, while the third is an HSCEI INDEX add at the close tomorrow.
- The HA premiums for CATL (3750 HK) and Jiangsu Hengrui Pharmaceuticals (1276 HK) dropped prior to lock-up expiry and there could be a short-term premium expansion closer to index/ETF inclusion.
JD Industrials IPO – Valuation Cut Means Its Priced to Go
- JD Industrials (7618 HK) is now looking to raise up to US$421m, in its Hong Kong IPO.
- JDI is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
- We looked at the company’s past performance in our earlier notes. In this note, we talk about valuations.
China A50 ETF Rebalance: Two Sets of Changes
- CMOC (603993 CH) and Sungrow Power Supply (300274 CH) will replace S.F. Holding (002352 CH) and Bank of Jiangsu (600919 CH) in the ETFs at the close on 19 December.
- Passive trackers will need to trade between 0.1-0.5 days of ADV in the constituent changes.
- The adds have outperformed the deletes by a big margin over the last 6 months. After a period of underperformance in November, the adds have started moving higher again.
JD Industrials IPO (7618 HK): Valuation Insights
- JD Industrials (7618 HK) is a leading industrial supply chain technology and service provider in China. It has launched an HKEx IPO to raise up to US$420 million.
- I previously discussed the IPO in Jingdong Industrials (JDI) IPO: The Investment Case.
- In this note, I present my forecasts and valuation. My analysis suggests that the IPO price range is attractive.
Unisound AI IPO Lockup (9678.HK): ~US$1.6B Early Lockup Release for Co-Founders
- Unisound AI Technology, a Beijing-based AI solution provider focusing on the sales of conversational AI products and solutions, completed an initial public offering at HK$205/share in June.
- The company raised HK$251M in its Hong Kong IPO, including additional net proceeds from the over-allotment shares issued upon the full exercise of the over-allotment option.
- The stock peaked at HK$879.00 in September and fell ~41% over the next two months. The company’s early IPO lockup will expire on December 29, 2025.
Mandi Pre-IPO Tearsheet
- Mandi (MANDI HK) is looking to raise up to US$200m in its upcoming Hong Kong IPO. The deal will be run by Huatai.
- Mandi is a leading specialized consumer pharmaceuticals company in China, primarily focused on skin health (including hair health) and weight management.
- The company was spun off from 3SBio (1530.HK) to operate as a distinct entity.
JD Industrials (7618 HK) IPO: Only Attractive if Priced Cheaply
- Although JD Industrials (7618 HK) is China’s largest MRO player, its maximum IPO price of HK$15.5 implies a rich FY26 PER of 28.2x.
- The stock’s highest justified valuation is a 20% premium to the sector average FY26F PER, implying only 8% upside from the IPO price, providing a limited safety margin.
- We think it will only be attractive to price below the mid-point of the IPO range, that is, HK$14.10.
JD Industrial IPO: Structural Efficiency, Asset Light Model, Upscaling Paves Way for Growth
- JD Industrial launched its Hongkong IPO aiming to raise up to HK$3.3B. The company plans to sell 211.2M shares at a price band of HK$ 12.7-HK$ 15.5 per share.
- Proceeds to be used to enhance industrial supply chain capabilities, for business expansion across geographies, for potential strategic investments or acquisitions and for general corporate purposes and working capital needs.
- Topline growth momentum expected to remain strong in the near term alongside strengthening margins. We feel JD Industrial issue is fairly priced and investors can surely subscribe to the offer.
3SBio Inc (1530 HK) Placement – The Placing Price Indicates Decent Upside Potential in Valuation
- Mandi’s valuation logic is drifting away from the main line of 3SBio.Mandi is “good asset but not core asset” within 3SBio system, so it’s difficult to drive up overall valuation.
- Innovative drug R&D will be the main driver for future valuation growth in “post-Mandi era”. The Placing can be regarded as the continuous development of 3SBio after Mandi spin-off .
- 3SBio is undervalued. Valuation would be higher than Sino Biopharm and may also surpass Akeso, Hengrui in the future if its SSGJ-707 can deliver good clinical data in future trials.
Sinopharm Group (1099 HK) – Downgrade to a Sell
- We expected growth to improve, however, on the contrary growth has slowed, and there seem to be limited short to medium term positive catalysts.
- Pricing pressure is still a problem, and competition is intense especially in the fragmented medical device market.
- Given the relatively low growth outlook, and the fact that Sinopharm is largely a distribution model, we see limited opportunity for the company to re-rate from the current level.
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