In today’s briefing:
- Dah Sing Financial (2356 HK): Discounts On Discounts
- Asian Equities: Southbound Monthly – June Acceleration; Old Getting Sold, Dividends the New Darling
- Xuanzhu Biopharm (轩竹生物科技) Pre-IPO: Alarming Signs upon Further Checks
- Shanghai Conant Optical (2276 HKG): Lens of Strong Fundamentals Makes the Growth Optics Visible
- MegaRobo Pre-IPO Tearsheet
- Global Markets WEEKLY Tactical Outlook: July 7 to July 11
- Lucror Analytics – Morning Views Asia
- Genor Biopharma (6998 HK) – The Reverse Merger Will Unleash the Upside Potential of Valuation
Dah Sing Financial (2356 HK): Discounts On Discounts
- In the setup/unwind tables highlighted in StubWorld: Haw Par Looking Stretched, I see Dah Sing Financial (440 HK) at trading “cheap” to 74.4%-held Dah Sing Banking (2356 HK).
- I see DSF at a 51% discount to NAV, around its one-year average. However the simple ratio (DSF/DSB) and implied stub are at multi-year lows.
- Separately, DSB is trading at a ~62% discount to NAV – applying its 13.2%-holding in Bank of Chongqing (1963 HK) – around a one-year high. This is, however, a weak stub.
Asian Equities: Southbound Monthly – June Acceleration; Old Getting Sold, Dividends the New Darling
- The US$10.23bn net inflow through the Southbound Stock Connect in June marked a near-doubling from the May slump (US$5.85 bn), though it’s still lower than the 15-month average (US$12.1 bn).
- Investors bought high dividend yield SOEs heavily (e.g. China Construction Bank), and sold Tencent, Xiaomi, Alibaba. Healthcare companies – Innovent Biologics and CSPC Pharma were bought, underscoring investors’ defensive stance.
- Investors’ dividend yield fascination seems unabated. Some technology stocks (Tencent) do not seem overbought. Despite large buying, EV and ecommerce heavyweights (Meituan) are declining. Investors’ appetite in them could slump.
Xuanzhu Biopharm (轩竹生物科技) Pre-IPO: Alarming Signs upon Further Checks
- Xuanzhu Biopharm, the biotech arm of HK-listed Sihuan Pharma, is seeking to raise at least USD 100m via a Hong Kong listing. The sole sponsor is CICC.
- In previous insight, we looked at the company’s core products and key products, including XBP-3571, XZP-3287, and XZP-3621, and its management team and investor backing.
- In this note, we look at the company’s latest filing and its previous attempt to list in the A-share market.
Shanghai Conant Optical (2276 HKG): Lens of Strong Fundamentals Makes the Growth Optics Visible
- Shanghai Conant Optical (2276 HK) to utilize proceeds from its January placement for the research, development, design and manufacturing of lenses and vision solutions for smart glasses and XR headsets.
- The company will construct an automated RX resin lens production line with a focus on high-end customized lenses, at a cost of $4M, to be funded by internal accruals.
- The company declared that based on the preliminary assessments, it expects its 1H25 net profit to increase by 30% mainly due to strong volume growth and higher ASP.
MegaRobo Pre-IPO Tearsheet
- MegaRobo Technologies (MRT HK) is looking to raise at least US$300m in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley, Huatai, Deutsche Bank, CCB International.
- It is a leading provider of autonomous agents in robotic applications in China, dedicated to improving productivity and driving innovation for businesses across both laboratory and manufacturing settings.
- It serves a diversified customer base with over 880 customers. Key account customers newly acquired in 2022, had a repurchase rate of 74%, and a revenue retention rate of 115%.
Global Markets WEEKLY Tactical Outlook: July 7 to July 11
- A quick synoptic look at the tactical models for some key indices, stocks, commodities and bonds we cover, for the week July 7 – July 11.
- Since our Global Markets WEEKLY Tactical Outlook published last week, US markets became even more overbought by the end of the week, while some Asian stocks started to pull back.
- Stocks are falling on Monday, the Trump administration is threatening imposing 25% tariffs on a number of nations (including Japan and South Korea), global markets may close the week down.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Tata Steel
- The US market was closed for Independence Day on Friday. US President Donald Trump passed his signature tax cut and spending Bill into law on Friday, after it was approved by Congress in a 218-214 vote on Thursday.
- The fiscal package includes tax cuts, lower spending on social programmes (e.g. federal food stamps and college student loans) and the elimination of tax benefits encouraging the use of clean energies. The non-partisan Congressional Budget Office estimated that the new legislation will add more than USD 3 tn to the country’s deficit over the next decade.
Genor Biopharma (6998 HK) – The Reverse Merger Will Unleash the Upside Potential of Valuation
- The merger is good for both parties. On the one hand, it helps boost Genor’s valuation. On the other hand, it finally makes Edding realize its desire to go public.
- The outlook of Edding Genor Group depends on the pipeline quality. Core products Vancocin/Ceclor/FPN are facing different challenges. The pipeline strength/R&D capabilities of Genor hasn’t been recognized by the market.
- Short-Term valuation is expected to reach RMB7.5 billion. Future valuation could be above RMB10 billion if pipeline R&D progress/clinical data and the commercialization performance of marketed products meet the expectation.
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