In today’s briefing:
- Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Aux Electric IPO (2580 HK): Valuation Insights
- Ganfeng Lithium Group Co Placement – Past Deals Record Isn’t Great but Deal Is Small
- PDD (PDD): 2Q25, Impacted by High Comparison Base and Overseas Expansion
- Laopu Gold (6181.HK) 25H1 – Remember to Escape Before Collapsing
- Aux Electric IPO: Smallest Player but Superior Growth and Margins
- Global Markets Tactical Outlook WEEKLY: August 25 – August 29
- Alibaba (9988 HK): Expected Earnings-Day Swings and Options Market View
- AUX Electric IPO: Low-Price AC Strategy Drives Top Line Growth; Limited Upside to Margins
Dongfeng (489 HK)’s Privatisation And EV Backdoor Listing
- Dongfeng Motor (489 HK) has announced a privatisation; together with a concurrent listing of its EV arm.
- The same day as the dual proposals, Dongfeng announced an interim loss (1H25). Evidently, the way forward – from an investor standpoint – is electric, not internal combustion engines.
- The cash terms + scrip (into the EV listing) under the proposals are attractive. Even after this morning’s move (+53.6%) in Dongfeng’s share price.
Hang Seng Internet & IT Index (HSIII): Methodology Change & Impact
- Last evening, Hang Seng announced a methodology change for the Hang Seng Internet & Information Technology Index (HSIII Index) with implementation in two phases.
- The capping methodology will be updated at the September rebalance and the turnover and sector requirements will be updated at the December rebalance.
- The updated capping scheme increases turnover and flow in September, while there could be one constituent change for the index at the December rebalance.
Aux Electric IPO (2580 HK): Valuation Insights
- Aux Electric (2580 HK) is the fifth-largest air conditioner provider globally as measured by volume. It has launched an HKEx IPO to raise up to US$462 million.
- I discussed the investment case in Aux Electric IPO: The Investment Case.
- In this note, I present my forecasts and valuation. My analysis suggests that the IPO price is attractive.
Ganfeng Lithium Group Co Placement – Past Deals Record Isn’t Great but Deal Is Small
- Ganfeng Lithium (1772 HK) is looking to raise upto US$152m via a primary placement of 40m shares. There is also a concurrent CB offering for ~HKD1.3bn along with the placement.
- The company intends to use the proceeds towards repayment of loans, capacity expansion and construction, replenishment of working capital and other general corporate purposes.
- In this note, we will talk about the placement and run the deal through our ECM framework.
PDD (PDD): 2Q25, Impacted by High Comparison Base and Overseas Expansion
- Transaction services revenue was stagnant due to high comparison base.
- The gross margin declined significantly due to the overseas expansion.
- However, we believe revenue growth and margins will be stable in the long run.
Laopu Gold (6181.HK) 25H1 – Remember to Escape Before Collapsing
- Laopu maintained high growth in 25H1, mainly benefit from the upward cycle of gold price and the continuous improvement of the brand power. Accordingly, we raised our 2025 performance forecast.
- The key issue here is the sustainability of performance during stable and declining cycle of gold hasn’t been verified. Especially when gold price drops, it will also cause inventory depreciation.
- Laopu cannot “escape” the gold price cycle.The Fed’s rate cuts are usually accompanied by fluctuations in asset prices, and gold may also face sell-off, which may lead to valuation decline.
Aux Electric IPO: Smallest Player but Superior Growth and Margins
- Aux Electric (2580 HK) is looking to raise up to US$460m in its upcoming Hong Kong IPO.
- It is one of the global top five air conditioner providers, with capabilities covering the design, R&D, production, sales and related services of household and central air conditioners.
- In this note, we examine the IPO dynamics, and look at the firm’s valuation.
Global Markets Tactical Outlook WEEKLY: August 25 – August 29
- A quick synoptic look at the tactical setups for the indices, stocks, commodities and bonds we cover, for the week August 25 – August 29. .XLSX MODEL DATA FILE ATTACHED.
- OVERBOUGHT at the WEEKLY Close: Alphabet, S&P 500 INDEX , Tesla , China Mobile (941 HK) , Toyota Motor (7203 JP) , ASX 200 INDEX , CSI 300 Index , HSI INDEX.
- OVERSOLD at the WEEKLY Close: Meta (META US) , Softbank Group (9984 JP).
Alibaba (9988 HK): Expected Earnings-Day Swings and Options Market View
- Alibaba (9988 HK/ BABA US)will announce quarterly results on Friday, August 29, 7:30 p.m. Hong Kong Time. The timing is crucial for options expiries in HK and the US.
- Highlight: The options market provides estimates for the anticipated price move. Implied volatility is projected to decline post-event; this Insight maps the resulting term structure.
- Why Read: Get the expected move and a view of the post-event volatility term structure.
AUX Electric IPO: Low-Price AC Strategy Drives Top Line Growth; Limited Upside to Margins
- AUX Electric is one of the top 5 air conditioner providers globally whose low-price strategy has helped expand its top line and market share in a short span of time.
- Aux Electric (2580 HK) has filed for an IPO on HKEx and plans to raise proceeds of around US$460m through the issuance of 207m shares.
- AUX’s low-price strategy and higher share of ODM brands have led to margins that are lower than domestic AC peers Gree Electric Appliances (000651 CH) and Midea Group (300 HK) .
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