In today’s briefing:
- Merger Arb Mondays (23 June) – ENN Energy, Dickson, HKBN, Mayne, Insignia, Santos, Smartpay
- Hygon/Sugon Merger: BIG Index Flows on Completion
- Sanhua Intelligent Controls H Share Listing (2050 HK): Trading Debut
- Zhejiang Sanhua Intelligent Controls A/H Trading – Strong Demand, Weakening Sentiment
- Geek+ IPO Valuation Update: Growth Cratered, High U.S. Revenue Exposure
- MIXUE (2097 HK): Chill but Powerful Global Index Inclusion
- Two Asian Life Insurance Stocks (Both Up >30% YTD) Worth Closer Looks
- HK Connect SOUTHBOUND Flows (To 20 June 2025); Net Buying, Volumes Up, TECH Down, BANKS Bought
- ECM Weekly (23 June 2025) – Foshan Haitian, Sanhua, Anjoy, Sany, CaoCao, Eternal, Zhou Liu, HDB Fin
Merger Arb Mondays (23 June) – ENN Energy, Dickson, HKBN, Mayne, Insignia, Santos, Smartpay
- We 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: Mayne Pharma (MYX AU), Insignia Financial (IFL AU), ENN Energy (2688 HK), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities And (1428 HK), Ascentech KK (3565 JP), Brickworks Ltd (BKW AU), Toyota Industries (6201 JP), Avjennings Ltd (AVJ AU), Hainan Meilan International Airport (357 HK).
Hygon/Sugon Merger: BIG Index Flows on Completion
- On 26 May, Hygon Information Technology (688041 CH) and Dawning Information Industry (603019 CH) announced a merger in a sign of consolidation in China’s chipmaking industry.
- For each share of Dawning held, shareholders will receive 0.5525 shares of Hygon. With uncertainty on the timeline for merger completion, Dawning is trading at a 10% discount.
- On completion of the merger, passive trackers will need to buy over US$1.1bn of Hygon Information Technology C (688041 CH) with nearly of that from local index trackers.
Sanhua Intelligent Controls H Share Listing (2050 HK): Trading Debut
- Zhejiang Sanhua Intelligent Controls (2050 HK) priced its H Share at HK$22.53 to raise HK$9,336 million (US$1.2 billion) in gross proceeds. The H Share will be listed tomorrow.
- I discussed the H Share listing in Sanhua Intelligent Controls H Share Listing: The Investment Case.
- Sanhua had the highest international oversubscription rates among recent large AH listings. Despite the weak price momentum, the AH discount is attractive.
Zhejiang Sanhua Intelligent Controls A/H Trading – Strong Demand, Weakening Sentiment
- Zhejiang Sanhua Intellignt Controls (002050 CH) (ZSIC), a manufacturer of refrigeration and air-conditioning control components, raised around US$1.4bn in its H-share listing.
- ZSIC is a market leader in a number of products, with commanding market share both domestically and globally.
- We have looked at the past performance and likely A/H premium in our previous note. In this note, we talk about the trading dynamics.
Geek+ IPO Valuation Update: Growth Cratered, High U.S. Revenue Exposure
- Geek+, AI & robotics warehouse automation provider, has updated its filings and reported weak revenue growth in 2024.
- Beijing based AMR solution unicorn’s revenue grew to RMB2,409m in 2024, up ~12% YoY. However, gross margins improved, operating losses narrowed, and cash burn rate decreased.
- My IPO valuation analysis coalesces around initial valuation range between $2.3B and $2.7B for Geek+ upcoming offering.
MIXUE (2097 HK): Chill but Powerful Global Index Inclusion
- Mixue Group (2097 HK) is forecasted to be added to Global All-World at the September 2025 review with a low free float prior to the IPO lock-up expiry.
- Mixue Group (2097 HK) is expected to undergo a significant upweight at the December 2025 review following the 6-month lock-up expiry.
- Mixue Group (2097 HK) is forecasted to be added to Global Standard at the May 2026 review following the 12-month lock-up expiry.
Two Asian Life Insurance Stocks (Both Up >30% YTD) Worth Closer Looks
- Share prices of China Life and Prudential plc have been up by 33% and 40% – 50% YTD, respectively.
- China Life’s agency restructuring is bearing fruit, as evidenced by increasing agency productivity, and is expected to continue driving new business growth and margin expansion.
- Our previous thesis for Prudential plc remains largely intact. Albeit the strong share price performance YTD, valuation upside remains as its new business multiple continues to re-rate.
HK Connect SOUTHBOUND Flows (To 20 June 2025); Net Buying, Volumes Up, TECH Down, BANKS Bought
- Gross SOUTHBOUND volumes up to US$15+bn a day this past 5-day week. Net buying still positive but still below US$500mm/day.
- Among the top buys as a percentage of volume, FINANCIALS stood out, dramatically. PROPERTIES too. Among top sells, INFO TECH again. 10 weeks in a row negative. Tencent bigly sold.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
ECM Weekly (23 June 2025) – Foshan Haitian, Sanhua, Anjoy, Sany, CaoCao, Eternal, Zhou Liu, HDB Fin
- 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, Foshan Haitian (3288 HK) failed to perform at listing marking a turnaround for recent A/H listing. Sanhua Intelligent (2050 HK) will be next in line.
- On the placements front, deals continued to flow across the region, with blocks in India showing no signs of abating.
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