In today’s briefing:
- Goldlion Holdings (533 HK): An Unexpected HK Arbageddon
- HSTECH Index Rebalance Preview: BYD (1211 HK) Could Replace China Literature (772 HK); Huge Trade
- Curator’s Cut: “Bubble” Tea, Japan M&A 🍿and TSMC from Different Lenses
- HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace Sunny Optical (2382 HK)
- Weekly Deals Digest (11 May) – CATL, Hengrui, Imagica, MitShokuhin, NTT Data, Shibaura, Torii, ZEEKR
- Merger Arb Mondays (12 May) – ESR, NTT Data, Shibaura, Torii, Imagica, Zeekr, Sinarmas, Gold Road
- Zijin Mining Group: Undervalued, Diversified, and Scaling Fast
- ECM Weekly (12 May 2025) – CATL, Hengrui, Ather, Drinda, Green Tea, Swiggy, Sagility, Niva Bupa
- Asian Equities: Southbound Trades Re-Affirm Our China Preferences
- Goldlion Holdings (533 HK) Privatization – About the Deal Break and the Valuation Outlook
Goldlion Holdings (533 HK): An Unexpected HK Arbageddon
- Goldlion Holdings (533 HK) shareholders have voted against Mr Tsang’s HK$1.5232 per share offer. The minority participation rate was high, and the NO vote comfortably cleared the threshold.
- The Goldlion deal break was unexpected, and the HKEx merger arb rulebook will be rewritten. This deal break offers several lessons.
- Goldlion had the highest premium of the pre-deal break price to the undisturbed price compared to previous deal breaks. My estimated deal-break price is HK$0.953, 36.0% below last close.
HSTECH Index Rebalance Preview: BYD (1211 HK) Could Replace China Literature (772 HK); Huge Trade
- The review period for the June rebalance of the HSTECH INDEX ended on 31 March, the changes will be announced on 16 May and implemented on 6 June.
- Following the launch of the God’s Eye ADAS, BYD (1211 HK) could become eligible for index inclusion after meeting the Autonomous theme and Innovation screening.
- The inclusion of BYD (1211 HK) in the index could result in China Literature (772 HK) being deleted from the index in June.
Curator’s Cut: “Bubble” Tea, Japan M&A 🍿and TSMC from Different Lenses
- Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,200+ insights published over the past two weeks on Smartkarma
- In this cut, we look through the bubble in Chinese tea company listings, the recent entertainment provided by Japanese M&A situations and the varied ways analysts look at TSMC on Smartkarma
- Want to dig deeper? Comment or message with the themes you think should be highlighted next time
HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace Sunny Optical (2382 HK)
- The review period for the June rebalance of the HSCEI ended on 31 March, the results will be announced on 16 May and will be implemented on 6 June.
- Pop Mart International Group L (9992 HK) could be added to the index while Sunny Optical Technology Group (2382 HK) could be deleted from the index.
- There are other stocks with big flows due to a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the rebalance in June.
Weekly Deals Digest (11 May) – CATL, Hengrui, Imagica, MitShokuhin, NTT Data, Shibaura, Torii, ZEEKR
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Contemporary Amperex Technology (CATL) (300750 CH) and Jiangsu Hengrui Medicine (600276 CH) are set to launch H Share listings.
- Event-Driven developments: Imagica Robot Holdings (6879 JP), Mitsubishi Shokuhin (7451 JP), NTT Data Corp (9613 JP), Shibaura Electronics (6957 JP), Torii Pharmaceutical (4551 JP), ZEEKR (ZK US).
Merger Arb Mondays (12 May) – ESR, NTT Data, Shibaura, Torii, Imagica, Zeekr, Sinarmas, Gold Road
- 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: Imagica Robot Holdings (6879 JP), ENN Energy (2688 HK), Oneconnect Financial Technology (6638 HK), Insignia Financial (IFL AU), Smartpay Holdings (SPY NZ), Seven & I Holdings (3382 JP).
- Lowest spreads: Bright Smart Securities And (1428 HK), Abacus Storage King (ASK AU), AEON Mall (8905 JP), Dada Nexus (DADA US), SLB Development (SLB SP).
Zijin Mining Group: Undervalued, Diversified, and Scaling Fast
- 5-Year Growth: EBITDA doubled to RMB 72.6 bn; production scaled across copper, gold, and lithium through global M&A and low-cost execution.
- Capex Plans: USD 10.4 bn over 5 years across copper, lithium, and gold; includes Zijin Gold International spin-off by late 2025.
- Zijin is projected to deliver 19–27% CAGR in EBITDA and net profit through 2026, yet trades at just 6.3x 2025E EV/EBITDA — a notable discount to peers trading at 7–8x
ECM Weekly (12 May 2025) – CATL, Hengrui, Ather, Drinda, Green Tea, Swiggy, Sagility, Niva Bupa
- 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, Contemporary Amperex Technology (CATL) (300750 CH) and Jiangsu Hengrui Medicine (600276 CH) are gearing up for an IPO launch soon.
- On the placements front, there were two primary placements in Hong Kong, along with a number of lockup expiries coming up.
Asian Equities: Southbound Trades Re-Affirm Our China Preferences
- Onshore Chinese investors’ purchases of HK equity through the Southbound Connect accelerated rapidly after China’s September stimulus. Despite net selling in early May, the onshore bullishness seems sustainable for now.
- Onshore investors prefer internet platforms (Tencent, Alibaba), technology and consumer discretionaries (Xiaomi, SMIC, China Mobile), and lately EVs (Li Auto, XPeng). High dividend SOE banks were bought earlier, not recently.
- Our “China Twelve” stocks and focus themes closely align with onshore investors’ preferences. 6 out of 12 figure in the “top bought” Southbound list – reaffirming our bullishness on them.
Goldlion Holdings (533 HK) Privatization – About the Deal Break and the Valuation Outlook
- The privatization failed due to the inability to balance the interests of public shareholders. There is a gap between the current Offer and the expectations of small and medium-sized investors.
- Some shareholders may think Goldlion still has the potential for strategic adjustments/value reassessment, and are inclined to continue holding this stock. A cash reserve of HK$1.05 has given imagination space.
- We are not sure what strategies Goldlion will adopt to address the current negative situation. The outlook is vague. 9-14x P/E could be reasonable valuation due to the short-term headwinds.
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