In today’s briefing:
- Merger Arb Mondays (08 Sep) – Kangji, OneConnect, Ashimori, Pacific Ind, RPM, Santos, Zeekr
- Chery Automobile IPO: The Bear Case
- Volatility Cones: Spotting Opportunities in Tencent, JD.com, Ping An & More
- Pop Mart (9992 HK) – 2025 High Growth Is a Done Deal, but How About 2026?
- MicroPort MedBot (2252 HK): Overseas Markets Shine; Tuomai Drives Growth; Losses Narrow in 1H25
- SHEIN / Temu / AliExpress: After US Ended “De Minimis” Exemption, Shipments to US Declined 81%
Merger Arb Mondays (08 Sep) – Kangji, OneConnect, Ashimori, Pacific Ind, RPM, Santos, Zeekr
- 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: Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Joy City Property (207 HK), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Ainsworth Game Technology (AGI AU), Ashimori Industry (3526 JP), Toyota Industries (6201 JP).
Chery Automobile IPO: The Bear Case
- Chery Automobile (CH3456 CH), a Chinese automobile manufacturer, has secured HKEx listing approval for a US$1.5-2.0 billion IPO.
- In Chery Automobile IPO: The Bull Case, I highlighted the key elements of the bull case. In this note, I outline the bear case.
- The bear case rests on weakening trends of the primary business, gross margin pressure, declining contract liabilities and factoring of receivables.
Volatility Cones: Spotting Opportunities in Tencent, JD.com, Ping An & More
- Context: Volatility cones provide a clear framework to evaluate whether options are trading cheap or rich.
- Highlights: Major stocks, including Tencent (700 HK), Xiaomi (1810 HK), and Meituan (3690 HK), trade at historically cheap implied volatility. Upcoming earnings are starting to be reflected in November IV.
- Why Read: Spot opportunities, assess regime shifts, and manage risk effectively — volatility cones turn complex data into actionable insights for traders and investors.
Pop Mart (9992 HK) – 2025 High Growth Is a Done Deal, but How About 2026?
- The certainty of 2025 performance is actually high. 25H2 performance is expected to be better than that in 25H1. Our forecast is net profit to reach RMB10 billion in 2025.
- The concern is Pop Mart may face the sustainability problem of performance under the high base of 2025 starting from 2026. If consumers develop aesthetic fatigue towards LABUBU, performance would decline.
- In a neutral situation, 30-35x P/E is a comfortable range.Valuation upside depends more on the sustainability of THE MONSTERS popularity and whether the popularity of other IPs can exceed expectations.
MicroPort MedBot (2252 HK): Overseas Markets Shine; Tuomai Drives Growth; Losses Narrow in 1H25
- Shanghai MicroPort MedBot Group (2252 HK) recorded 1H25 revenue of RMB 176M, up 77% YoY driven by rapid expansion of commercialization of multiple products. Overseas market sales grew 189% YoY.
- Toumai Laparoscopic Surgical Robot continued to be the main growth driver securing new orders of 30+ units and achieving commercial installation of 22 units.
- MedBot’s recent approvals of Toumai variants, technology advantages, diversified portfolio and commercialization strength place it at an inflection point, expected to be back in the black soon.
SHEIN / Temu / AliExpress: After US Ended “De Minimis” Exemption, Shipments to US Declined 81%
- Postal parcel volume bound for the US fell -81% after exemption ended Aug 29
- In many cases, logistics providers unwilling to manage US Customs process
- We believe the change undermines US model used by SHEIN, Temu, AliExpress
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