In today’s briefing:
- HK Connect SOUTHBOUND Flows (To 20 Dec 2024); Financials and Telecoms Still Tops
- Pentamaster International (1665 HK): Pentamaster Corp and AchiCapital’s Light Scheme Offer
- China Healthcare Weekly (Dec.22) – Zai Lab, Junshi, How to Choose PA Good Doctor’s Special Dividend?
- A/H Premium Tracker (To 20 Dec 2024): Pairwise Intracorrelation and Vol Even Higher
- Monthly Container Shipping Tracker: November Pricing Weaker | January ILA Strike? (December 2024)
HK Connect SOUTHBOUND Flows (To 20 Dec 2024); Financials and Telecoms Still Tops
- SOUTHBOUND gross trading activity fell 20% week-on-week this week. Net buying was a little stronger.
- Alibaba Group Holding (9988 HK) was a net SOUTHBOUND sell this week for the first weekly sell since it became Southbound-eligible. Friday was the largest one-day sell in that period.
- Tech is still on the sell side and financials are still being bought very bigly.
Pentamaster International (1665 HK): Pentamaster Corp and AchiCapital’s Light Scheme Offer
- Pentamaster International (1665 HK) disclosed a Cayman scheme privatisation offer from Pentamaster Corp (PENT MK) and AchiCapital at HK$1.00 (HK$0.93 cash + HK$0.07 dividend), a 56.3% premium to the undisturbed price.
- The offer is final but unattractive compared to peer multiples. The shareholder with a blocking stake is a seller, but there is risk due to a high AGM participation rate.
- An arguably light offer in which the Holdco is privatising its OpCo by arbitraging the valuation discrepancies across two exchanges may not sit well with minorities.
China Healthcare Weekly (Dec.22) – Zai Lab, Junshi, How to Choose PA Good Doctor’s Special Dividend?
- Increasing revenue without increasing profits is “a big denial” of a company’s business model. Unless Zai Lab significantly reduces costs and maintains revenue high growth, its investment value is low.
- Junshi’s 2024 revenue is likely to return to over RMB1.5 billion due to market share expansion in PD-1. Strict cost control will be the main theme for the future.
- If PAGD’s share price is higher than HK$6.12, there would be arbitrage opportunity. If Ping An hopes other shareholders to choose cash dividend, future stock price may fall below HK$6.12.
A/H Premium Tracker (To 20 Dec 2024): Pairwise Intracorrelation and Vol Even Higher
- AH Premia are all over the place this week. Despite that, pairwise intracorrelation is…. up? Yup. Average Pairwise Volatility is up even more.
- Some of this may be stocks being bullied by large SOUTHBOUND flows in a quieter end-of-year market.
- Finance is seeing big net SOUTHBOUND buying but that is not showing up in A/H premia. I expect things stay noisy through year-end.
Monthly Container Shipping Tracker: November Pricing Weaker | January ILA Strike? (December 2024)
- November’s pricing weakness vs Summer peak is among the sharpest declines in 10+ years
- A work stoppage at some US ports could hit in January, but impact likely muted
- Share prices under pressure as investors begin pricing in softer conditions in 2025
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