Daily Brief China: Pony AI, Pop Mart, Sany Heavy Industry, UBTech Robotics, Dream International, China Resources Beverage, Orient Overseas International, Perfect Medical Health, Herb Standard Holdings Limited and more

• Pony AI (PONY US) plans to raise around US$1bn in its secondary listing in Hong Kong.
• The company won HK listing approval and filed its PHIP on 17th October 2025. It will look to launch its secondary offering soon.
• In this note, we’ll take a look at the deal and talk about the impact of the raising.

• The growth rate of total revenue accelerated to 245% YoY in 3Q25.
• Within China revenue, the growth rates of both online and offline accelerated in 3Q25.
• The company highlighted that revenues surged significantly in America and Europe.

• Sany Heavy Industry (600031 CH), the world’s third-largest construction machinery company, has launched an H Share listing to raise US$1.6 billion.
• I discussed the H Share listing in SANY Heavy Industry H Share Listing: The Investment Case. 
• The proposed AH discount of 17.2% to 13.1% (based on the 17 October A Share price) is attractive, and I would participate in the H Share listing.

• The increase in the stock price over the last 3 months could result in UBTech Robotics (9880 HK) being added to a global index in November.
• There is a fair amount to buy in the stock and cumulative excess volume has picked up since July. Short interest has dropped over the same period.
• The recent drop in the stock price provides a better entry point for a short-term trade as positioning builds up ahead of the potential passive buying.

• Our base case valuation of Sany Heavy Industry is target price of CNY21.1 per share. This represents 7.6% lower than current price of CNY22.83 per share.
• IPO price of Sany Heavy is expected to be set between HKD20.30 and HKD21.30. Our valuation analysis suggests lack of a meaningful upside for Sany Heavy Industry listing in HK.
• There are still lack of a major turnaround of the property market in China and this could continue to negatively impact the overall construction equipment market in China.

• We met with the management of Dream International (1126 HK) in Hong Kong. The company is riding a hectic phase with its Vietnam operations running at full capacity.
• Management is evaluating capacity expansion in Indonesia and Vietnam for plastic and plush toy production serving China, targeting an aggregate capacity increase of approximately 20–30% to meet demand.
• The stock has pulled back and trades at 8.9x PE, 5.1 EV-EBITDA, with a 6.2% dividend yield and 21% of the market capitalization in cash, and 10 Yr-Avg ROCE ~20%. 

• China Resources Beverage (2460 HK) (CRB) raised around US$750m in its Hong Kong IPO in October 2024. The lockup on its PE investor is set to expire soon.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China and is one of the largest players in its categories.
• In this note, we will talk about the lockup dynamics and possible placement.

• OOIL is a core subsidiary of the state-owned COSCO SHIPPING, operating as a key entity within the world’s fourth-largest container shipping group, which provides significant operational and financial backing.
• The container shipping industry is facing a challenging outlook with significant new vessel capacity entering the market, which is expected to outpace demand growth through 2026, potentially pressuring freight rates and profitability.
• Despite the cyclical downturn from the post-pandemic peak, the company maintains a strong balance sheet with a high net cash position, supporting a robust dividend payout and providing resilience against market volatility.

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• We met with Perfect Medical Health (1830 HK) in our recent trip to Hong Kong. Retail sales have shown signs of recovery recently in HK in August/September. 
• Unfortunately, the company has not yet seen its sales in positive territory, and it may be necessary to wait for the retail sales trend post-results in late November before concluding. 
• Factoring in the cost cuts guided by management in their post-results call, the stock trades at 9.0x PE FY26e with an 11% dividend yield (implying -9%/-8% YoY revenue/profit growth). 

• Herb Standard adopts light-asset model, which helps to bring about high gross margin.However, gross margin showed a declining trend due to increase in promotional discounts to capture more market share
• The total sales value of products returned was up 317% YoY in FY2025 due to unsold products after promotional events. There’re concerns whether the current strong growth momentum is sustainable
• Our forecast is revenue to increase 20%/15%/12% and net profit to increase 14% /11.7%/8.8% in FY2026/FY2027/FY2028, respectively.Due to higher growth/profit margin, valuation of Herb Standard could be higher than peer