In today’s briefing:
- What if China ADRs Are Delisted from US Exchanges?
- Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- HK Connect SOUTHBOUND Flows (To 11 Apr 2025); Record Net Buying
- A/H Premium Tracker (To 11 Apr 2025): Sharp AH Premia Widening
- Merger Arb Mondays (14 Apr) – ESR, Fengxiang, Vesync, Goldlion, Shibaura, Tsuruha/Welcia, Aeon Mall
- Chagee IPO: Luckin X Starbucks of Tea. Pricing, Valuation, Key Facts & Financials
- China Healthcare (Apr.13) – Trump’s Tariffs on Pharmaceuticals, NSCEB’s Report, RemeGen’s Pain Point
- Fengxiang (9977 HK): PAG’s Pre-Con Offer
- Jiangsu Zenergy Battery Technologies IPO Trading – Muted Overall Demand, No Stabilisation
- ECM Weekly (14 Apr 2025) – Suzuki, EBOS, Hengrui Pharma, Zenergy, Chagee, LG India, Huge Dental
What if China ADRs Are Delisted from US Exchanges?
- We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
- If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
- PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.
Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- Midea Group (300 HK) went public on HKEX on 17 September 2024 and achieved fast-entry in both global indices due to high free float and a market cap of ~$4.5bn.
- The 6-month lockup on cornerstone investors expired on 17 March 2025.
- The free float is forecasted to increase from ~65% to ~75% for both global indices in May and June 2025 following the lockup expiry.
HK Connect SOUTHBOUND Flows (To 11 Apr 2025); Record Net Buying
- Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. The first two weeks in April were HK$145bn.
- The first two weeks in April were HK$145bn as what appeared to be national team, or equally patriotic buyers, showed up droves to buy financials, energy, telecoms, and big techs.
- Included is a summary of important China Stocks-relevant news as I saw it this week, but frankly, the only thing that matters is the back and forth by the Donald.
A/H Premium Tracker (To 11 Apr 2025): Sharp AH Premia Widening
- AH Premia bounce higher. Spread curve torsion is mild given how much AH is widening again. Two weeks in a row we see a big net move.
- For a month I thought warning signs were flashing and spreads could widen. They are still widening despite really big net SOUTHBOUND buying.
- I expected the right thing to do was hunker down and be flat H/A risk. Hs underperformed As by 3.7% over two weeks so it’s tough to be flat enough.
Merger Arb Mondays (14 Apr) – ESR, Fengxiang, Vesync, Goldlion, Shibaura, Tsuruha/Welcia, Aeon Mall
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: ENN Energy (2688 HK), Insignia Financial (IFL AU), Oneconnect Financial Technology (6638 HK), Shandong Fengxiang (9977 HK), Seven & I Holdings (3382 JP), Smart Share Global (EM US).
- Lowest spreads: Shibaura Electronics (6957 JP), Sinarmas Land (SML SP), Millennium & Copthorne Hotels Nz (MCK NZ), Makino Milling Machine Co (6135 JP), Spartan Resources (SPR AU).
Chagee IPO: Luckin X Starbucks of Tea. Pricing, Valuation, Key Facts & Financials
- Chagee Holdings (CHA US) is offering 14.68 million shares for USD26 to USD28 each to raise upto USD411 million in its initial public offering in the US.
- Chagee’s premium branded teahouses blend traditional tea culture with modern, tech-driven service, distinctly setting itself apart from bubble tea kiosks.
- Chagee’s IPO is priced at a discount to forward valuations of recently listed (in HK) China-based freshly brewed drinks players and leading Cafe companies.
China Healthcare (Apr.13) – Trump’s Tariffs on Pharmaceuticals, NSCEB’s Report, RemeGen’s Pain Point
- Trump’s administration will soon impose tariffs on pharmaceuticals. Chinese API companies will be hit the most. Pharmaceutical companies that mainly focus on domestic market could be better investment options.
- NSCEB released “Changing the Future of Biotechnology”, among which WuXi AppTec was named again. Chinese CXO’s performance this year could be lower than expected due to geopolitical conflicts.
- RemeGen’s 2024 results improved, but concerns remain due to its “disorganized” pipeline layout and uncompetitive products. The reasonable market value of Remegen is about RMB10 billion to RMB15 billion.
Fengxiang (9977 HK): PAG’s Pre-Con Offer
- When Shandong Fengxiang (9977 HK) was suspended last month due to the Takeovers Code, I expected PAG to launch an Offer by way of a Merger by Absorption at ~HK$2.00.
- And that is exactly what unfolded. The price, which is a 33.33% premium to last close is final. 42.35% of independent H-shareholders are supportive. A scrip alternative is afforded.
- PAG was permitted to take control of Fengxiang, via the domestic shares, late 2022. There will be no regulatory roadblock as PAG now seeks to privatise Fengxiang.
Jiangsu Zenergy Battery Technologies IPO Trading – Muted Overall Demand, No Stabilisation
- Jiangsu Zenergy Battery Technologies (JSZENERGY CH) raised US$130m in its Hong Kong IPO.
- Zenergy is an EV and energy storage system battery manufacturer providing integrated battery solutions, encompassing battery cells, modules, packs and battery management systems dedicated to large-scale applications of electrochemical products.
- We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.
ECM Weekly (14 Apr 2025) – Suzuki, EBOS, Hengrui Pharma, Zenergy, Chagee, LG India, Huge Dental
- 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, we looked at the possible A/H premium for Jiangsu Hengrui Medicine (600276 CH), along with two live deals in Hong Kong .
- On the placements front, only Suzuki Motor (7269 JP)‘s shareholders were brave enough to launch a placement in the turbulent markets.
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