Daily Brief China: Dazhong Transportation (Group) – A, ASR Microelectronics, Zhejiang Leapmotor Technologie, Seres Group, ENN Energy, Seres Group , Iron Ore, NovaBridge Biosciences, GDS Holdings (ADR), New Oriental Education & Techn and more

• CSI 1000 represents the next 1000 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges after CSI 800. 
• In this insight, we have presented our final expectations for ADDs and DELs for the upcoming semiannual index rebal event in December 2025.
• We expect 100 ADDs/DELs for the CSI 1000 index during this index review based on the latest available data. 

• With the review period complete, we forecast 2 changes for the SSE STAR50 (STAR50 INDEX) and 7 changes for the STAR100 Index in December.
• We estimate turnover of 4.3% for the SSE STAR50 (STAR50 INDEX) and 6.7% for the STAR100 Index. The estimated round-trip trade is CNY 17.9bn (US$2.5bn).
• The forecast adds to the SSE STAR50 (STAR50 INDEX) have outperformed the forecast deletes with most of the outperformance coming in August. Been a volatile trade since then.

• There could be 1 change for the Hang Seng TECH Index (HSTECH INDEX) in December. Announcement is on 21 November with implementation at the close on 5 December.
• Depending on the stocks included in the universe, ASM Pacific Technology (522 HK) could be deleted and that could lead to Zhejiang Leapmotor Technologie (9863 HK)‘s inclusion. 
• If the add and deletes are as forecast, one-way turnover will be 4.25% and will result in a round-trip trade of HK$25.3bn (US$3.22bn).

• Seres Group (9927 HK) priced its H Share at HK$131.50 to raise HK$14,283 million (US$1.8 billion) in gross proceeds. The H Share will be listed tomorrow.
• I discussed the H Share listing in Seres Group H Share Listing: The Investment Case and Seres Group H Share Listing (9927 HK): Valuation Insights.
• The price momentum is weak, and the international oversubscription rates were below the median of recent large AH listings. Nevertheless, Seres’ AH discount remains attractive.

• We now expect the privatisation of ENN Energy (2688 HK) to be completed by mid-2026, given that the pre-conditions are yet to be satisfied.
• For 3Q25, the gas sales volume of ENN Energy has picked up. Meanwhile, net profit for ENN Natural Gas has also recovered. Both results are positive.
• Incorporating our latest timetable estimate, EPS forecasts, and adjusted undisturbed PERs, ENN Energy is valued at HK$67.40-72.16, meaning the share price is at 0.4% to 7% discount.

• Seres Group (601127 CH),  a Chinese NEV manufacturer, raised around US$2.1bn in its H-share listing.
• Seres Group (SG) is principally engaged in the research and development, manufacturing, sales and services of new energy vehicles (NEV) as well as core NEV components.
• We have looked at the past performance and likely A/H premium in our previous note. In this note, we talk about IPO trading dynamics.

• Iron ore futures slipped as China’s steel output fell for the fifth consecutive week, with weak demand and rising inventories weighing on sentiment.
• Managed money participants trimmed their net long positions across all futures and options expiries, signalling profit-taking and a more cautious market stance.
• The DCE-SGX spread is gaining momentum, with technical indicators hinting at a sustained near-term widening trend.

• NovaBridge Therapeutics, a China-based clinical-stage biotech company, is looking to raise at least USD 100 million via a Hong Kong listing. GS and CITIC are the joint sponsors.
• In this note, we look at the company’s history and its core product, givastomig.
• We are of the view that there is no fundamental improvement in the company, since it changed its name and restructured its China business.

• GDS is a leading developer and operator of high-performance data centers in China, strategically positioned to capitalize on the country’s rapid digitalization, cloud adoption, and the burgeoning demand for AI infrastructure.
• The company exhibits a strong growth trajectory, evidenced by consistent year-over-year revenue increases. However, this growth is capital-intensive, leading to persistent net losses and negative free cash flow due to heavy investment in data center construction and expansion.
• Key strategic priorities include expanding its data center footprint in key economic hubs in China and Southeast Asia, managing a high-debt load through innovative financing like C-REITs, and solidifying its relationships with major hyperscale and cloud service provider clients.

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• Successful Pivot Post-Regulation: New Oriental has effectively navigated the 2021 regulatory overhaul of China’s private education sector by shifting its focus from K-9 academic tutoring to a diversified portfolio. Key growth areas now include non-academic tutoring, overseas test preparation, study consulting, and a burgeoning live-streaming e-commerce business, demonstrating resilience and strategic agility.
• Strong Financial Recovery and Growth: The company has shown a robust financial turnaround, with significant year-over-year growth in revenue and net income. This recovery is driven by strong performance in its new and retained business segments, alongside effective cost management, leading to margin expansion.
• Dominant Brand and Market Position: As a long-standing leader in China’s private education market, New Oriental retains significant brand equity and a large, loyal customer base. This has enabled it to capture market share from smaller competitors who exited after the regulatory changes, positioning it for sustained growth in permissible segments.

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