In today’s briefing:
- Jiangsu Hengrui Pharma A/H Listing – Low-End Is Probably Close to Fair Value
- ESR Group (1821 HK): Precondition Satisfied
- Jiangsu Hengrui Pharma H Share Listing (1276 HK): Valuation Insights
- Quiddity Leaderboard HSCEI Jun25: US$396mn One-Way; Announcement Tomorrow
- Quiddity Leaderboard HSIII Jun25: US$423mn One-Way for Jun; Some Sector-Neutral Pair Trades for Sep
- CATL (3750 HK): Powered by the PetroDollar. HK Offer Overview and Valuations.
- FXI Rebalance Preview: Pop Mart (9992 HK) Pops Up Again
- OneConnect Financial (6638 HK/OCFT US): Ping An’s Preconditional Scheme Offer Is Below Net Cash
- Geely (175 HK): Revenue Up by 25% in 1Q25 and Deliveries Up by 53% in April – 26% Stock Upside
- CATL’s New Battery Tech Takes Aim at Issues Hindering EV Uptake
Jiangsu Hengrui Pharma A/H Listing – Low-End Is Probably Close to Fair Value
- Jiangsu Hengrui Medicine (600276 CH), a China-based pharmaceutical company, aims to raise around US$1.3bn in its H-share listing.
- JHP Has been ranked as one of the global Top 50 pharmaceutical companies by Pharm Exec for six consecutive years since 2019.
- We have looked at the company’s past performance and other deal dynamics in our previous note. In this note, we talk about the IPO pricing.
ESR Group (1821 HK): Precondition Satisfied
- The precondition for the consortium scheme offer for ESR Group (1821 HK) has been satisfied. The scheme document will be despatched by 22 May.
- The consortium has disclosed an additional irrevocable. Total irrevocables and letters of support represent 35.01% of outstanding shares (58.24% of disinterested shares).
- This is a done deal, helped by the material derating of peers. At the last close and for an early August payment, the gross/annualised spread is 4.3%/21.3%
Jiangsu Hengrui Pharma H Share Listing (1276 HK): Valuation Insights
- Jiangsu Hengrui Pharmaceuticals (1276 HK) has launched its H Share listing at HK$41.45 to HK$44.05 per H Share. Pricing will be on 21 May.
- I discussed the H Share listing in Jiangsu Hengrui Pharma H Share Listing: The Investment Case.
- The proposed AH discount can be argued as either light or attractive. I lean toward the latter and would participate in the H Share listing.
Quiddity Leaderboard HSCEI Jun25: US$396mn One-Way; Announcement Tomorrow
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- The official index changes and indicative weights for the June 2025 index rebal event will be announced on Friday 16th May 2025.
- We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$396mn one-way.
Quiddity Leaderboard HSIII Jun25: US$423mn One-Way for Jun; Some Sector-Neutral Pair Trades for Sep
- The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
- For the June 2025 index rebal, we estimate there to be US$423mn one-way flows due to capping.
- We also expect three index changes (so far) for the next semiannual index review which will take place in September 2025 (regular ADDs/DELs only take place in March and September).
CATL (3750 HK): Powered by the PetroDollar. HK Offer Overview and Valuations.
- Contemporary Amperex Technology (CATL) (300750 CH) has offered118 million shares in Hong Kong, priced at HKD263 per share, a modest discount to its A share price.
- More than half of the USD4 Billion Hong Kong share offering has already been subscribed by cornerstone investors.
- Middle Eastern sovereign wealth funds are amongst CATL’s key corner stone investors while the deal excluded US onshore investors given the mounting geopolitical tensions.
FXI Rebalance Preview: Pop Mart (9992 HK) Pops Up Again
- With two days left in the review period, Pop Mart International Group L (9992 HK) could replace China Railway Group Ltd H (390 HK) in the FXI ETF in June.
- The inclusion of Pop Mart International Group L (9992 HK) in the iShares China Large-Cap (FXI) (FXI US) will add to the potential inclusion of the stock in other indices.
- Short interest has been increasing in both stocks. Multiple index inclusions could result in short covering in Pop Mart while China Railway Group‘s stock price has been bouncing off its lows.
OneConnect Financial (6638 HK/OCFT US): Ping An’s Preconditional Scheme Offer Is Below Net Cash
- Oneconnect Financial Technology (6638 HK) disclosed a preconditional scheme offer from Ping An Insurance (H) (2318 HK) at HK$2.068 per share (US$7.976 per ADS).
- Despite the hefty premium, the offer is opportunistic as it values OneConnect below net cash, and the FCF burn is modest (net cash can fund 8 years of FCF burn).
- Ping An has secured support from M&G to lower vote risk. The key risk remains that an activist stealthily builds a blocking stake (below the 5% HKEx disclosure threshold).
Geely (175 HK): Revenue Up by 25% in 1Q25 and Deliveries Up by 53% in April – 26% Stock Upside
- Geely announced that total revenue increased by 25% YoY in 1Q25.
- Sales volume continued to grew strongly by 53% YoY in April 2025.
- The operating margin improved YoY for the third quarter in 1Q25.
CATL’s New Battery Tech Takes Aim at Issues Hindering EV Uptake
- Contemporary Amperex Technology Co. Ltd. (CATL) said its new electric vehicle (EV) battery technologies increase a car’s range, lower charging times and keep working at extremely low temperatures.
- The improvements that CATL touted in its announcement Monday aim to alleviate some of the major issues seen as hindering the uptake of EVs, such as “range anxiety” — the concern that a car’s battery might run out on longer drives.
- The highlight of the announcement was the Freevoy dual-power battery system, which divides a single battery pack into two independent energy “zones” — one to power a car for running around town and another that kicks in for longer trips that might test the vehicle’s range.
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