In today’s briefing:
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June25
- Tencent Music (TME): 1Q25, Unnoticed Growth Continued, 80% Upside
- SSE50 Index Rebalance Preview: 4 Potential Changes in June
- Tencent (700.HK) Q1 Earnings: Volatility Setup and Post-Release Price Behavior
- Unisound Pre-IPO: Growing Steadily but Burning Cash
- China Hongqiao (1378 HK): Leading the Low-Cost, Low-Carbon Aluminium Shift
- Busy Ming Group Pre-IPO Tearsheet
- Boxihe Outdoor Sports Pre-IPO Tearsheet
- Asia Real Estate Tracker (13-May-2025): ESR, Tokyu Land, Hulic break ground on SG shed
- Pre-IPO Xiamen Jihong Technology (PHIP Updates) – Lack of Sustainable Growth Logic
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June25
- 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 6 June.
- With no constituent changes, one-way turnover will be 1.9% with 3 stocks being capped and FAF changes for a few stocks due to a methodology change for Secondary Listings.
- We highlight 7 stocks that have a higher probability of being added to the index. Everything depends on the index committee, and we would not be surprised by zero changes.
Tencent Music (TME): 1Q25, Unnoticed Growth Continued, 80% Upside
- The 1Q25 result is quite healthy, but the shrinking minor business, social entertainment, covers the fact.
- The main businesses grew by two digits and the operating margin continued to grow by 28% YoY in 1Q25.
- We believe the stock has an upside of 83% and a price target of US$26 for the yearend 2025.
SSE50 Index Rebalance Preview: 4 Potential Changes in June
- With the review period complete, there are 2 non-constituents in direct inclusion zone and 4 current constituents in direct deletion zone.
- 4 changes result in a one-way turnover of 5.7%, leading to a round-trip trade of CNY 21.8bn (US$3bn). Index arb balances will increase the impact on the stocks.
- After drifting in a range, the forecast adds have outperformed the forecast deletes over the last month. There could be further outperformance as we near the announcement date.
Tencent (700.HK) Q1 Earnings: Volatility Setup and Post-Release Price Behavior
- Tencent has rallied 17.29% off the April low—against this backdrop, we analyze implied vol, the earnings-implied jump, and post-earnings price patterns.
- Relative to past earnings cycles, current implied vol screens lower across multiple timeframes and spread metrics.
- Post-Earnings price behavior reveals some non-intuitive dynamics worthy of consideration.
Unisound Pre-IPO: Growing Steadily but Burning Cash
- Unisound AI Technology (1053075D CH) is looking to raise at least US$300m in its upcoming HK IPO.
- The firm specializes primarily in speech recognition and text-to-speech capabilities
- In this note, we look at the firm’s past performance.
China Hongqiao (1378 HK): Leading the Low-Cost, Low-Carbon Aluminium Shift
- China Hongqiao has delivered steady ~6 Mt volumes, ~25% EBITDA CAGR, and 15–27% ROCE over the last three years, supported by integration and energy transition gains.
- China Hongqiao is relocating 4 Mt of capacity to Yunnan to tap low-carbon hydropower, advancing its green aluminium transition.
- China Hongqiao offers strong earnings visibility backed by low-cost operations, while trading at attractive valuations relative to peers.
Busy Ming Group Pre-IPO Tearsheet
- Busy Ming Group Co., Ltd. (BMG) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by GS, Huatai, and DB.
- BMG is a leading F&B retailer in China, offering value-for-money products which are priced c.25% lower than the average for similar products available in the supermarket channel.
- It mainly operates under a franchised model and focuses mostly on third-tier cities and below.
Boxihe Outdoor Sports Pre-IPO Tearsheet
- Boxihe Outdoor Sports Group (BOS HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by CICC and CITIC.
- BOS aspires to become a renowned leading outdoor brand globally, committed to providing high-performance outdoor garments and equipment.
- The firm began operations in 2012, with its core brand, Pelliot. Through Pelliot, BOS offered a wide range of products.
Asia Real Estate Tracker (13-May-2025): ESR, Tokyu Land, Hulic break ground on SG shed
- ESR, Tokyu Land, and Hulic have begun construction on a new shed in Singapore, helping to boost the real estate market in the region.
- Analysts predict that the drop in the Hong Kong interbank rate will have a positive impact on the market, leading to increased activity.
- China has cut housing loan rates to a record low in an effort to stimulate growth in the market, demonstrating proactive measures to support the economy.
Pre-IPO Xiamen Jihong Technology (PHIP Updates) – Lack of Sustainable Growth Logic
- In order to maintain revenue growth, it’s necessary to continuously increase advertising investment. However, due to fierce market competition, the ROI from advertising is declining, leading to weak profitability.
- The big concern here is once Jihong’s e-commerce business loses its growth momentum, future performance will inevitably enter a downward trend. Jihong lacks a sustainable growth logic for the future.
- Jihong’s valuation could be about RMB3.2-4.3 billion, based on the valuation of cross-border social e-commerce business (P/E of 15-20x) + the valuation of traditional paper packaging business (P/E of 10-12x).
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