In today’s briefing:
- CATL (3750 HK)’s Concentration Warning
- Jiangsu Hengrui Pharma H Share Listing (1276 HK): Trading Debut
- Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?
- Pony AI IPO Lockup – US$4.3bn Lockup Release with Stock at 69x EV/Sales
- Jiangsu Hengrui Pharma A/H Trading – Strong Demand for Quality Asset, but Is Pricey
- [Alibaba (BABA US, BUY, TP US$150) Earnings Review]: Has Market Underestimated T/T Stabilization?
- [NetEase, Inc. (NTES US, BUY, TP US$136) TP Change]: C1Q25 Review: Game Upcycle + Margin Leverage
- MFI: Initiating Coverage of a Differentiated Fintech Trading Platform
CATL (3750 HK)’s Concentration Warning
- Contemporary Amperex Technology (3750 HK) (CATL H), a global leader in providing battery solutions, was listed on the 20th May at $263/share. Here is the prospectus.
- Via the H-share listing, CATL raised ~US$5.2bn. Shares have since gained ~26% and trade at HK$330/share, as I type.
- It is worth noting the HKEx issued a high concentration warning in CATL’s H shares the day before shares were listed.
Jiangsu Hengrui Pharma H Share Listing (1276 HK): Trading Debut
- Jiangsu Hengrui Pharmaceuticals (1276 HK) priced its H Share at HK$44.05 to raise HK$9,890.1 million (US$1.3 billion) in gross proceeds. The H Share will be listed tomorrow.
- The timing of the H Share listing is fortuitous, as the peers have materially re-rated since the prospectus was released on 15 May.
- Hengrui had the highest oversubscription rates among recent large AH listings. The AH discount implied by the offer is attractive.
Soundwill Holdings (878 HK): An Opportunity or Another HK Arbageddon?
- The spread to the Foo family’s HK$8.50 offer for Soundwill Holdings (878 HK) has materially increased to 15.8% over the last two trading days. The vote is on 23 May.
- Several readers have asked if the Soundwill offer will mirror the Goldlion Holdings (533 HK) deal break. The two schemes share similarities but are also different in several ways.
- The share price action either reflects an imminent deal break or a result of a negative feedback loop. Tread carefully as this is a high-risk/high-reward situation.
Pony AI IPO Lockup – US$4.3bn Lockup Release with Stock at 69x EV/Sales
- Pony AI (PONY US) raised around US$260m in its upsized US ADR listing in Nov 2024. The lockup on its pre-IPO investors is set to expire soon.
- As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
- In this note, we will talk about the lockup dynamics and possible placement.
Jiangsu Hengrui Pharma A/H Trading – Strong Demand for Quality Asset, but Is Pricey
- Jiangsu Hengrui Pharmaceuticals (1276 HK) (JHP, 600276 CH ), a China-based pharmaceutical company, raised around US$1.5bn in its H-share listing.
- JHP Has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.
- We have looked at the company’s past performance and other deal dynamics in our previous note. In this note, we talk about trading dynamics.
[Alibaba (BABA US, BUY, TP US$150) Earnings Review]: Has Market Underestimated T/T Stabilization?
- Alibaba (BABA) reported C1Q25 top line in-line with our estimate and consensus. Taobao/Tmall (T/T) outperformed while Cainiao and Int’l commerce underperformed.
- Stabilization of domestic e-commerce is a major positive. However, on-demand e-commerce at home and video e-commerce abroad are two global growth drivers,
- We see new challenges emerging following business stabilization. We believe the management is up to the task. We keep BABA in our TOP BUY list and reiterate rating and TP.
[NetEase, Inc. (NTES US, BUY, TP US$136) TP Change]: C1Q25 Review: Game Upcycle + Margin Leverage
- NetEase reported C1Q25 revenue, GAAP operating profit and GAAP net income in line, 25% and 31% vs. our estimates, and in line, 29% and 30% vs. consensus.
- The game revenue up cycle was as we predicted, but the surprise came from AI-enhanced advertising and organizational streamlining, leading to operation margin improvements.
- With game revenue up cycle still in full swing, we incline to keep NTES on the TOP BUY list and raise TP from US$122 to 136.
MFI: Initiating Coverage of a Differentiated Fintech Trading Platform
- mF International Limited (NASDAQ: MFI) is a financial technology company providing foreign exchange (forex) and bullion/commodities trading platform solutions, financial/information services, and mobile applications to brokers, investment banks, institutional clients, and financial services companies primarily based in Hong Kong, mainland China, and Southeast Asia.
- The company’s principal operating subsidiary was incorporated in 2002 and is headquartered in Hong Kong.
- mF International listed on the NASDAQ Capital Market following the company’s Initial Public Offering (IPO) in April 2024.
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