Daily Brief China: Great Wall Motor, Netdragon Websoft, China Merchants Bank H, Ping An Insurance (H), Zijin Gold, CF PharmTech, Suzhou Ribo Life Science, Beijing Roborock Technology and more

• Gross SOUTHBOUND volumes just over US$19bn a day this past 5-day week. Big. Quite decent net buying flows too though the market fell. 
• The recommended name last week was short Alibaba (9988 HK) was +4.65% on the week despite HK being down across the board.
• 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 for all SK readers.

• Netdragon Websoft (777 HK) stock has begun to rerate on the back of its deal with with Zhongke Wenge to integrate and launch AI applications outside of China.
• NetDragon will integrate Wenge’s LLM, YaYi, with its education products.  In August 2025, Cherrypicks and Wenge jointly launched AI applications, including social listening and multimodal content creation tools globally.
• NetDragon has consistently enhanced shareholder returns through substantial dividends and since its earnings announcement in August has begun buying back shares in the market.

• “Beautiful Skew” showed up slightly as Hs underperformed their As across the board (every sector, every premium tranche), but more on narrow AH Premia. 
• Last week’s short reco on China Merchants Bank H (3968 HK) saw the H-share underperform its A by 2.54% and it outright fell 3.14%. OK week. 
• 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.

• Context: Volatility cones provide a straightforward framework to evaluate whether options are trading cheap or rich. This Insight provides volatility analysis for eight prominent Hong Kong stocks
• Highlights: Ping An Insurance (H) (2318 HK)stands out with historically low implied volatility across the term structure. Alibaba (9988 HK)is rich in November and December contracts.
• Why Read: Spot opportunities, assess regime shifts, and manage risk effectively — volatility cones turn complex data into actionable insights for traders and investors.

• 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, this week saw a few good listings across the region while the spotlight will be on Zijin Gold (2259 HK) in the coming week.
• On the placements front, it was a relatively quiter week, as compared to some of the more recent weekly flows.

• Netdragon is a prominent player in China’s online gaming and mobile internet sectors, with a growing international presence in the education technology market.
• The company is strategically pivoting towards the integration of Artificial Intelligence (AI) in both its gaming and education segments, aiming to enhance user experience and operational efficiency.
• Despite recent revenue declines and market volatility, Netdragon maintains a strong dividend yield and has an active share buyback program, signaling management’s confidence in its long-term strategy.

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• CF017 is CF PharmTech’s core performance driver. Once CF017 faces policy adjustments or intensified market competition, revenue will be significantly impacted. Its ability to sustain operations will be severely tested.
• Although CF PharmTech has made a profit, problems such as a slowdown in revenue growth and heavy reliance on single product will lead to a valuation discount by the market.
• A reasonable valuation range might be between RMB3-5 billion. If valuation exceeds RMB5 billion, it would seem overly optimistic and require strong support from subsequent performance and solid fundamentals.

• The delivery system is a crucial element that drives the development/iteration of innovative oligonucleotide therapeutics. Ribo has mastered both GalNAc and LNP technologies, whose effectiveness/safety have been verified and recognized.
• The valuation fluctuations not only reflect the market’s prudence towards commercialization prospects of small nucleic acid drugs, but also highlight the balance problem between Ribo’s R&D investment and profit model.
• Since Sirnaomics’ delivery technologies have not been proven or validated scientifically, Ribo’s valuation should be higher than Sirnaomics.Valuation outlook is based on the druggability and commercialization performance of Ribo’s pipelines. 

• Roborock’s margins are expected to bottom-out after a tough four quarters of strategically prioritizing market share at the cost of margins. 3Q-4Q25 will mark the start of new margin cycle.
• Margins stabilizing at the new normal of 12-14% NPM will mean earnings will track revenue growth going forward. Meanwhile, revenues can surprise on the upside with >25% CAGR in medium-term.
• HK-Listing into 2H25/ 1H26 is a strong catalyst which can bring in fresh money, and improve disclosure standards – a key concern. We expect 70% upside in our bull case.