In today’s briefing:
- HSTECH Index Rebalance Preview: Universe Expansion Could Lead to One Change
- FWD IPO Trading – Tepid Demand
- HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace J&T Global (1519 HK)
- A/H Premium Tracker (To 4 July 2025): “Beautiful Skew” Continues as SB Buys Wide Spread Hs
- HK Connect SOUTHBOUND Flows (To 4 July 2025); Volumes Up, Net Buying Up, Banks Bought, SOEs Sold
- ECM Weekly (7 July 2025) – IFBH, HDB, Anjoy, FWD, Lens, Fortior, NTT DC, Daehan, Kanzhun, Nykaa, NH
- Weekly Deals Digest (06 Jul) – Lens Tech, FWD, Geekplus, NTT DC REIT, Fengxiang, HKBN, Insignia
- Fengxiang (9977 HK): Composite Doc Out. 24th July H-Class Meeting
- Hansoh Pharmaceutical (3692 HK): Outlicensing and Indication Expansion Of Core Drug Augur Well
- Pre-IPO Three Squirrels – Pain Points of the Business Model and the Performance Outlook
HSTECH Index Rebalance Preview: Universe Expansion Could Lead to One Change
- The review period for the September rebalance of the Hang Seng TECH Index ended on 30 June, the changes will be announced on 22 August and implemented on 5 September.
- No constituent changes will result in a one-way turnover of 4.1% and that will mean a round-trip trade of HK$15.2bn (US$1.94bn).
- An expansion of the index universe could lead to one constituent change and that increases the one-way turnover to 6.2% and the round-trip trade to HK$23.1bn (US$2.94bn).
FWD IPO Trading – Tepid Demand
- FWD Group Holdings (1828 HK), a pan-Asian life insurer founded by Richard Li, raised around US$442m in its HK IPO.
- FWD is a pan-Asia life insurer operating in ten markets including Hong Kong (and Macau), Thailand (and Cambodia), Japan, the Philippines, Indonesia, Singapore, Vietnam and Malaysia.
- We looked at the company’s past performance and valuations in our previous notes. In this note we talk about the trading dynamics.
HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace J&T Global (1519 HK)
- The review period for the September rebalance of the HSCEI INDEX ended on 30 June, the results will be announced on 22 August and will be implemented on 5 September.
- Pop Mart International Group L (9992 HK) could be added to the index while J&T Global Express (1519 HK) could be deleted from the index.
- There is a possibility of Pop Mart International Group L (9992 HK) being added to the Hang Seng Index (HSI INDEX) as well.
A/H Premium Tracker (To 4 July 2025): “Beautiful Skew” Continues as SB Buys Wide Spread Hs
- AH premia flat among liquid names but “beautiful skew” of wide premia converging more than narrow premia continues bigly. It has paid well to be long wide H discounts.
- Last week I said, “It has paid to be long the H on those H/A pairs with the biggest H discounts. I would continue to ride that trend.” Ride on.
- 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. Technical issue delayed this week’s Monitor.
HK Connect SOUTHBOUND Flows (To 4 July 2025); Volumes Up, Net Buying Up, Banks Bought, SOEs Sold
- Gross SOUTHBOUND volumes up to US$17+bn a day this past 5-day week. Net buying strong at +US$700mm a day.
- Among the top buys as a percentage of volume, FINANCIALS stood out, dramatically. Again. Neither INFO TECH nor Tencent were the big sells this week.
- 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. Technical issue delayed this week’s Monitor.
ECM Weekly (7 July 2025) – IFBH, HDB, Anjoy, FWD, Lens, Fortior, NTT DC, Daehan, Kanzhun, Nykaa, NH
- 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, next week will see a large number of listings across the region.
- On the placements front, given the HK and US holidays and approaching earnings season, there were only a few deals in the past week.
Weekly Deals Digest (06 Jul) – Lens Tech, FWD, Geekplus, NTT DC REIT, Fengxiang, HKBN, Insignia
- 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: FWD Group Holdings (1828 HK), Geekplus Technology (2590 HK), NTT DC REIT (NTTDCR SP) IPOs and Lens Technology (6613 HK) H Share listing.
- Event-Driven developments: Shandong Fengxiang (9977 HK), Yichang HEC Changjiang Pharma (1558 HK), Jilin Jiutai Rural Comm Bank (6122 HK), New World Resources (NWC AU), Insignia Financial (IFL AU).
Fengxiang (9977 HK): Composite Doc Out. 24th July H-Class Meeting
- After the Offeror for Shandong Fengxiang (9977 HK) fulfilled pre-cons on the 3rd July, the Composite was dispatched on the 4th July (but dated 5th July).
- The EGM/H-share class meeting will take place on the 24th July. Settlement should be on ore around the 11th August, well ahead of my prior estimate.
- Trading at a gross/annualised spread off 4.2%/49.6%. Get involved if illiquid arbs are your bag.
Hansoh Pharmaceutical (3692 HK): Outlicensing and Indication Expansion Of Core Drug Augur Well
- Hansoh Pharmaceutical Group (3692 HK) granted an exclusive worldwide license to develop, manufacture, and commercialize HS-20094, an investigational dual GLP-1/GIP receptor agonist.
- Globally, the only approved dual GLP-1/GIP receptor agonist is Eli Lilly’s Zepbound, which garnered revenue of $4.9B in 2024, with a potential of peak global sales of $27.2B by 2030.
- Hansoh’s mainstay drug Ameile was approved for an additional indication of treatment of adult patients with stage II to IIIB NSCLC whose tumors have EGFR mutations.
Pre-IPO Three Squirrels – Pain Points of the Business Model and the Performance Outlook
- As the traffic dividend of e-commerce fades, Three Squirrels is facing challenges.The offline predicament is essentially a conflict between the online traffic thinking mode and the logic of physical retail.
- Three Squirrels hasn’t built a true moat, and the high selling expenses would continue to erode the transformation space, leading to rely more on online channels and quick customer traffic.
- We have concerns on the expansion outlook and growth sustainability. Our forecast is CAGR could be 15% in 2025-2027. Valuation may not meet expectations if growth continues to slow down.
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