In today’s briefing:
- Kangji Medical (9997 HK): Speedy Turnaround On Pre-Cons
- Pop Mart (9992 HK): Index Inclusion & Beyond. Toy Craze or Emerging ACG Play?
- Tencent Holdings: An Evergreen Game Strategy to Diversify Portfolio & Reinforce Market Position!
- Alibaba (9988 HK): Stock Surges Post-Earnings, Options Market Reprices
- Asian Equities: Changes to Our Model Portfolio; More Selective on Chinese Consumption
- Three Squirrels A/H Listing: Heavy Price Competition; Thin Margins
- Zylox Tonbridge Medical (2190 HK): No More Interventions Needed, Blockages Cleared for Growth
Kangji Medical (9997 HK): Speedy Turnaround On Pre-Cons
- Kangji Medical Instrument (9997 HK) announced last night all pre-cons have been squared away. That must be some kind of record to secure SAMR approval for a Hong Kong-listed privatisation.
- Back on the 12th August, Kangji Medical announced a less-than-ideal Offer, by way of a Scheme, from a consortium led by TPG and Qatar Investment Authority, together with the founders.
- What next? The Scheme Doc dispatch remains the 31st October, unless announced otherwise, as the Cayman Court is still on its six week “vacation”.
Pop Mart (9992 HK): Index Inclusion & Beyond. Toy Craze or Emerging ACG Play?
- Pop Mart (9992 HK) will be added to both the Hang Seng Index (HSI) and the Hang Seng China Enterprises Index (HSCEI) — effective Monday, September 8, 2025.
- Beyond the tail winds from this technical upgrade, stock’s further upside rests on investor conviction on its potential to continue to deliver strong growth beyond the short term.
- Pop Mart’s near term growth rests on proving IP durability and executing global scale-up.
Tencent Holdings: An Evergreen Game Strategy to Diversify Portfolio & Reinforce Market Position!
- Tencent Holdings Limited delivered a robust financial performance for the second quarter of 2025, driven by significant growth across its business segments.
- The company reported a 15% year-on-year increase in total revenue, reaching RMB 185 billion.
- This growth was supported by a 22% surge in gross profit to RMB 105 billion and an 18% increase in non-IFRS operating profit to RMB 69 billion.
Alibaba (9988 HK): Stock Surges Post-Earnings, Options Market Reprices
- Context:Alibaba (9988 HK) reported Q1 results on 29 Aug. Despite a revenue miss, strong cloud growth and its AI chip announcement drove the stock up double digits.
- Highlight: Implied volatility deflated sharply post-earnings, with the September contract down 8.5% and back months also lower, while skew shifted down in parallel.
- Why it matters: Put the current volatility surface into context. This insight can serve as a case study of how earnings-driven repricing can inform positioning ahead of future events.
Asian Equities: Changes to Our Model Portfolio; More Selective on Chinese Consumption
- Since inception, our Model Portfolio underperformed, having appreciated 5.8%, while MSCI Asia-ex-Japan moved up 8.3%. BYD, Hyundai Engineering and Digiplus dragged it down. Alibaba, Trip.Com, Tencent, Maruti pulled it up.
- We exclude the secular underperformers BYD and Digiplus and the unexciting Yum China. We include Tencent Music, Wuxi AppTec, International Container Terminals. Focus on China’s “new consumption” trends, CRDMO prowess.
- We remain overweight HK/China despite the market’s recent outperformance. Immense stock selection opportunities in the market guide our stance. We remain overweight Korea, neutral India and underweight Taiwan.
Three Squirrels A/H Listing: Heavy Price Competition; Thin Margins
- Three Squirrels (TRS HK) is looking to raise around US$200m in its upcoming H-share listing.
- It began selling nuts through e-commerce channels. Over the years, it had evolved significantly, growing from a single category nut brand into the largest domestic snack company in China.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
Zylox Tonbridge Medical (2190 HK): No More Interventions Needed, Blockages Cleared for Growth
- Zylox-Tonbridge Medical Technology (2190 HK) carried forward 2024 momentum, moving into 1H25. In 2024, sales had grown 48% to RMB 783M, followed by 32% rise to RMB 482M in 1H25.
- Leveraging their robust R&D expertise and integrated technology platforms, the company has made significant progress and lined up launches of several critical innovative projects in neuro and peripheral-vascular interventional device.
- China remains the main growth market for Zylox, though the company is deepening its presence overseas. Zylox stands at an inflection point from where the growth momentum will gain pace.
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