In today’s briefing:
- Merger Arb Mondays (27 Oct) – Dongfeng, ENN, Joy City, Minmetals, Soft99, Ashimori, Pacific Ind
- Seres (9927 HK): Index Inclusion Timeline for a Max Offering of US$2.2bn; Big Discount to A-Shares
- China Healthcare Weekly (Oct.26) – Turning Point of Medical Device, Innovent-Takeda Deal Makes Sense
- HSBC (5 HK) Earnings on 28 Oct, 12:00 HKT: Price Action and Option Insights
- Bloks Group (0325.HK): Stock Premium Is Not Justified, Growth Has Slowed, ~30% Downside
- A/H Premium Tracker (2 Wks to 24 Oct 2025): Beautiful Skew Behaving Badly; High Div SOEs
- Pre-IPO Sichuan Biokin Pharmaceutical (PHIP Updates) – Some Points Worth the Attention
- ECM Weekly (27 October 2025)- Sany, Seres, PonyAI, WeRide, CIG, JST, Lenskart, Horizon, CRB
- WuXi AppTec (2359 HK): Continued Strong Momentum in 3Q Leads to Consecutive FY Guidance Raise
- HK Connect SOUTHBOUND Flows (2wks To 24 Oct 2025); Big Flows on Downdraft, Lower Flows on Rebound
Merger Arb Mondays (27 Oct) – Dongfeng, ENN, Joy City, Minmetals, Soft99, Ashimori, Pacific Ind
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Smart Share Global (EM US), Mayne Pharma (MYX AU), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Changhong Jiahua Holdings (3991 HK), Joy City Property (207 HK).
- Lowest spreads: Bright Smart Securities (1428 HK), Mandom Corp (4917 JP), Humm Group (HUM AU), Larvotto Resources (LRV AU), Seven West Media (SWM AU), Jinke Smart Services (9666 HK).
Seres (9927 HK): Index Inclusion Timeline for a Max Offering of US$2.2bn; Big Discount to A-Shares
- Seres Group (601127 CH) could raise up to HK$17.4bn (US$2.24bn) in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the already small possibility of Fast Entry inclusion to global indexes.
- Seres (9927 HK) should be added to Southbound Stock Connect from the open of trading on 1 December following the end of the Price Stabilisation period.
China Healthcare Weekly (Oct.26) – Turning Point of Medical Device, Innovent-Takeda Deal Makes Sense
- Whether it is big pharmaceutical company or Biopharma that currently generates revenue/profits mainly through one or two products, they may not be able to “defend” successfully in long term.
- The logic for innovative medical device is similar to innovative drugs – It takes 1-2 years from the turning point of policies to the turning point of fundamentals.
- The Innovent-Takeda deal is logical. However, stock price performance of Innovent was disappointing, which is due to the “turning point” of HK biotech sector.The current decline is far from over.
HSBC (5 HK) Earnings on 28 Oct, 12:00 HKT: Price Action and Option Insights
- Context: Index heavyweight HSBC (5 HK) / HSBC (HSBA LN) is set to report results on 28 October at 12:00 HKT — during the Hong Kong trading lunch break.
- Timing & Trading: The 30 Oct and 31 Oct option expiries offer direct instruments to gauge HSBC’s post-earnings volatility — or to take targeted exposure to, or hedge, the event.
- Expected Move: Historical data reveals HSBC’s announcement-day moves are significantly larger than on average trading days, with options currently pricing in a remarkably aligned ± 3.1% implied move.
Bloks Group (0325.HK): Stock Premium Is Not Justified, Growth Has Slowed, ~30% Downside
- Bloks Group shares returned ~47% for IPO investors as of today, trailing the HSI’s 30% gain. The stock peaked at HK$190+ and fell ~55% over the following four months.
- Shares saw pressure after lockup restrictions expired in July. Until this month, the lockup provision had prevented the majority shareholder and other early investors from selling their shares.
- The company’s revenue grew ~28% YoY in the first half of 2025, raising potential concerns of continued slowdown in sales of assembly character toys. Expect stock underperformance to continue.
A/H Premium Tracker (2 Wks to 24 Oct 2025): Beautiful Skew Behaving Badly; High Div SOEs
- The last two weeks have seen “Beautiful Skew” behave badly across the ten trading days. CNOOC Ltd (883 HK) is trading too wide for its div into year-end.
- The long reco on Guangzhou Automobile Group (2238 HK) two weeks ago saw the H-share rise 6.8% from the next day through Friday, and the H OUTperformed its A by 2.62%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.
Pre-IPO Sichuan Biokin Pharmaceutical (PHIP Updates) – Some Points Worth the Attention
- Chairman of the Board Zhu Yi hopes to build Biokin into an MNC with the success of BL-B01D1.In other words, Zhu Yi is prepared to bet all on this product.
- Biokin’s valuation should be lower than Akeso Biopharma Inc (9926 HK), but higher than RemeGen. If BL-B01D1’s development is successful, Biokin’s future valuation ceiling will be higher than Kelun Bio.
- Global peak sales revenue share of BL-B01D1 could reach approximately RMB20 billion. If based on P/S of 5x, market value is RMB100 billion. So, there’s bubble in valuation in A-share.
ECM Weekly (27 October 2025)- Sany, Seres, PonyAI, WeRide, CIG, JST, Lenskart, Horizon, CRB
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, Hong Kong and India markets appear to be gearing up for a year end rush.
- On the placements front, there were no large deals this week but we did have a look at the upcoming lockup expiries.
WuXi AppTec (2359 HK): Continued Strong Momentum in 3Q Leads to Consecutive FY Guidance Raise
- WuXi AppTec (2359 HK) has announced 3Q25 result, with revenue growing 15% YoY and net profit increasing 83% YoY. U.S. remains the main driving force behind the company’s strong performance.
- With continuous capacity expansion to better meet customer demand, backlog for continuing operations reached a record high of RMB60B as of September 30, 2025, up 41% YoY.
- Based on the current momentum and confidence in customers’ ongoing demand for enabling services, Wuxi AppTec has further raised its full-year revenue growth guidance to 17–18% from 13–17%.
HK Connect SOUTHBOUND Flows (2wks To 24 Oct 2025); Big Flows on Downdraft, Lower Flows on Rebound
- Gross SOUTHBOUND volumes just over US$21bn a day two weeks ago as markets fell sharply. About two-thirds that this past week as indices rebounded. High-div SOEs seeing buying demand.
- The recommended name was short Fuyao Glass Industry Group (3606 HK). The stock was -4.9% over two weeks, but the H outperformed its A by 0.55%.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The Southbound Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.
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