In today’s briefing:
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
- Soundwill Holdings (878 HK): Privatisation Expected From The Controlling Family
- Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58
- Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer
- Soundwill Holdings (878 HK): Privatisation from the Controlling Shareholder?
- Trip.com (TCOM) 4Q24 Preview: Rising with Travelers, But High in Stock Price
- NPN X PRX: Discounts Likely to Catch Further Bid on China News Flow
- Pre-IPO MIXUE Group Update – The Snow King Is Facing Headwinds
- EQD | Hong Kong Single Stock Options Weekly (Feb 10 – 14): Strong Option Volumes Fuel Rally
- Haitian Flavouring: Looking for Soy Sauces on the Ground
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
- Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 March.
- With no constituent changes, one-way turnover will be 2.75% with 3 stocks being capped downward. This gives the index committee the opportunity to add more stocks without significantly increasing turnover.
- The return of the high and medium probability inclusions has matched the performance of the Hang Seng Index over the last few months, Shorts have climbed in some names.
Soundwill Holdings (878 HK): Privatisation Expected From The Controlling Family
- Small-Cap property developer Soundwill Holdings (878 HK) is currently suspended pursuant to the Takeovers Code
- Soundwill is controlled as to 74.97% by Grace Foo (ED), and her descendants, Wai Ling Chan (deputy chairman), and Hing Tat Chan (chairman).
- Soundwill is trading at a staggering 0.08x P/B, with the majority of its book value tied up in investment properties.
Tam Jai (2217 HK): Toridoll (3397 JP)’s Scheme Privatisation at HK$1.58
- Tam Jai International (2217 HK) announced a scheme privatisation offer from TORIDOLL Holdings Corporation (3397 JP) at HK$1.58 per share, a 75.6% premium to the last close price.
- The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). No disinterested shareholder holds a blocking stake.
- The offer price is final. While 53% below the IPO price, the offer is attractive compared to peer multiples and historical trading ranges. This is a done deal.
Tam Jai (2217 HK): Toridoll (3397 JP)’s Excellent Offer
- After Tam Jai (2217 HK) was suspended, in Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer I expected an Offer from TORIDOLL Holdings (3397 JP).
- I also thought an Offer price ~HK$1.50/share would be welcome, but wasn’t hopeful. We got both – a Scheme from Toridoll at HK$1.58/share (best & final).
- Clean deal. Just a question of timing. Docs may be delayed to incorporate FY25E (Mar Y/E) financials.
Soundwill Holdings (878 HK): Privatisation from the Controlling Shareholder?
- Soundwill Holdings (878 HK) has entered a trading halt “pending the release of an announcement relating to inside information and pursuant to the Codes on Takeovers and Mergers.”
- It is likely that the controlling shareholder (Foo Family Trust), representing 74.94% of outstanding shares, is seeking to launch a privatisation through a Bermuda scheme.
- While no disinterested shareholder holds a blocking stake, the headcount test necessitates an attractive offer. We estimate a potential offer price range of HK$7.53-19.44.
Trip.com (TCOM) 4Q24 Preview: Rising with Travelers, But High in Stock Price
- In China, travelers grew by 13% YoY in 4Q24 and 15% in 2024, according to the National Bureau of Statistics.
- We expect total revenue will grow by 19% YoY in 4Q24 and 2024.
- We are confident in the company’s financial performance, but the stock price is overvalued.
NPN X PRX: Discounts Likely to Catch Further Bid on China News Flow
- Discounts likely set for further narrowing as Chinese government adopts a more positive stance towards the private sector (Tencent).
- The discounts of Naspers and Prosus have recovered to levels last seen prior to the publication of the Chinese Military Companies list by the DoD at start of the year.
- Last week Friday, Tencent rallied 7.4% following news that the Chinese government are expected to host a summit with Jack Ma and DeepSeek founder, Liang Wenfeng.
Pre-IPO MIXUE Group Update – The Snow King Is Facing Headwinds
- MIXUE invited experts to conduct calculations based on population data. The result is a maximum of 45,000 stores can be opened. So, MIXUE has reached the growth ceiling in China.
- The pain point is since MIXUE’s growth depends significantly on its ability to expand store network, once the growth of franchised stores slows down, a performance decline would be inevitable.
- Due to larger scale effect/stronger supply chains/higher net profit margin, MIXUE’s valuation should be higher than peers. Higher valuation depends on whether MIXUE is able to make breakthrough in internationalization.
EQD | Hong Kong Single Stock Options Weekly (Feb 10 – 14): Strong Option Volumes Fuel Rally
- Complete rally mode across single stocks and sectors with the 3 highest single stock option volumes of the past 3 months recorded.
- More than 25% of issues experience more than 100% increase in options volume.
- We highlight names with the largest increases in both Put and Call volumes including Alibaba, Alibaba Health, AIA, China telecom and Kingdee.
Haitian Flavouring: Looking for Soy Sauces on the Ground
- We have visited three supermarkets in Shanghai, looking for Haitian Sauces.
- We believe Haitian is obviously the top brand among soy sauces.
- However, there are many competitors and Lee Kum Kee is the most important.
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