In today’s briefing:
- CSI 500/1000 Index Rebalance Preview: Strong Near-Term Outperformance
- Quiddity Leaderboard HSTECH Jun25: US$1.85bn One-Way; Announcement Soon
- Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year
- Tencent (700 HK): 1Q25, Game Revenue Up by 24% YoY, as Industry Encouraged by Authorities
- ChiNext/ChiNext50 Index Rebalance Preview: Whole Lotta Change
- CIMC Enric (3899 HK): Deep Value
- Tariffs Add To Uncertainty In Global Tire Markets
- Pre-IPO Mabwell (Shanghai) Bioscience – The ADC Technology Is Outdated
- Lucror Analytics – Morning Views Asia
CSI 500/1000 Index Rebalance Preview: Strong Near-Term Outperformance
- With the review period complete, there could be 50 changes for the CSI Smallcap 500 Index and 100 changes for the CSI 1000 Index in June.
- There are a lot of migrations expected between the two indices and the impacts for those stocks are lower with much of the flow cancelling out.
- The outright adds have outperformed the outright deletes over the last few months with the profit-taking in March giving way to renewed outperformance in April.
Quiddity Leaderboard HSTECH Jun25: US$1.85bn One-Way; Announcement Soon
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- The official index changes and indicative weights for the June 2025 index rebal event will be announced after the close 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$1.85bn one-way.
Jiangsu Hengrui (1276 HK) H-Share IPO: Index Inclusion Later This Year
- Jiangsu Hengrui Medicine (600276 CH) could raise up to US$1.6bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a big allocation to cornerstone investors that is locked up for 6 months. That eliminates the possibility of Fast Entry inclusion to global indexes.
- Jiangsu Hengrui (1276 HK) should be added to Southbound Stock Connect from the open of trading on 20 June following the end of the Price Stabilisation period.
Tencent (700 HK): 1Q25, Game Revenue Up by 24% YoY, as Industry Encouraged by Authorities
- In 1Q25, both total revenue and game revenue growth rates accelerated.
- The authorities have been turning from containing games to encouraging games.
- We expect the stock has an upside of 34% and a price target of HK$700. Buy.
ChiNext/ChiNext50 Index Rebalance Preview: Whole Lotta Change
- With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
- The largest flows will be in stocks that are adds/deletes for both indices – and there are a few of those. Plus there are some overlaps with other indices.
- While the forecast adds have outperformed the forecast deletes for both indices since January, near-term performance has not been great. That could change as we near the announcement date.
CIMC Enric (3899 HK): Deep Value
- CIMC Enric Holdings (3899 HK)‘s YTD decline in share price provides an opportunity to pick up this name, which sees a solid sequential earnings improvement this year.
- 1Q25 revenue growth accelerated to 24.4%, from 2.9% in 2H25. While 1Q25 new orders have dropped, there is a sharp rebound in Apr, with a more positive 2H25 outlook.
- At 9.3x FY25 PER after going ex-dividend (27 May), it is cheap relative to 14.7% 3-year EPS CAGR. The stock is also trading at the low-bound of the 3-year range.
Tariffs Add To Uncertainty In Global Tire Markets
- A new probe from EU on Chinese tire due to start May 19
- Lack of clarity on the range of tires under the scope of US auto tariff
- Lobbying to suspend or delay the implementation of auto tariff
Pre-IPO Mabwell (Shanghai) Bioscience – The ADC Technology Is Outdated
- Mabwell (Shanghai) Bioscience (MAB HK) has three commercialized products on the market, but their commercialization performance have been far lower-than-expected, leading to small revenue scale and continuously expanding losses.
- Mabwell’s ADC technology is actually outdated. We’re not optimistic about the final efficacy of 9MW2821, which is hard to become a Best-In-Class. Other pipeline candidates need to face fierce competition.
- Mabwell’s pipeline actually lack competitiveness in the market. Due to weak liquidity, share price of Mabwell in HK market would be traded at a discount to A shares.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Seazen Group, Softbank Group
In the US, the April CPI came in below expectations for the third straight month at 2.3% y-o-y (2.4% e / 2.4% p) and 0.2% m-o-m (0.3% e / -0.1% p). Core CPI (excluding food and energy) stood at 2.8% y-o-y (2.8% e / 2.8% p) and 0.2% m-o-m (0.3% e / 0.1% p).
Treasuries were largely steady yesterday, as supply pressure from corporate issuances offset the softer than expected April CPI print.
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