Daily Brief China: Xiaomi Corp, Tencent, BYD, Hansoh Pharmaceutical Group , CNY, Nanshan Aluminium International Holdings, MGM China Holdings, LXJ International Holdings and more

• Xiaomi Corp (1810 HK) is looking to place 750m shares at a price range of HK$52.8-54.6/share, a 4.2-7.4% discount from last. That could raise up to HK$40.95bn (US$5.27bn).
• There will be limited passive buying near-term. There will be more passive buying at the end of May. Then there will be passive selling early June.
• Shorts will be hurting from the relentless move higher in the stock and there could be short covering if the stock moves lower from these levels.

• Xiaomi Corp (1810 HK) is looking to raise around US$5.3bn via selling 3% additional shares.
• The shares have done exceedingly well this year and are now trading at their all time highs.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• China announced game approval for the March batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening. We see pick up in approval rate this month.
• Both Tencent and Netease received approval for one game. In addition, Kingsoft received approval for its legendary Sword Heroes series.

• BYD (1211 HK) posted a record 2024 net profit of 40.25B yuan ($5.55B) as revenue surged 29% to 777B yuan ($107.2B), beating analyst forecasts of $5.47B and $105.6B.
• Notably, BYD’s revenue topped Tesla’s $97.7B reported on Jan. 30. The Chinese automaker is now among the biggest in the world.   
• On March 4, our BYD’s insightcorrectly suggested to BUY the stock below 340 (now trading above 400). This insight will try to determine profit targets for the current rally.

• Hansoh Pharmaceutical Group (3692 HK) reported 33% YoY net profit growth to RMB4.4B on 21% YoY revenue growth to RMB12.3B in 2024. Oncology revenue jumped 32% YoY to RMB8.1B.
• Revenue from innovative drugs zoomed 38% YoY to RMB9.5B and its proportion to total revenue increased to 77.3% in 2024 from 67.9% in 2023.
• In 2024, three key innovative drug candidates entered the phase 3 clinical stage for the first time. Hansoh will continue to focus on R&D of innovative drugs and internationalization strategy.

• Market is seeing an uptick in CNY fixing, potentially halting the DXY bear trend temporarily
• Investors are focused on upcoming tariff event risk on April 2, leading to de-risking behavior
• Various potential scenarios for tariff implementation and FX response, with uncertainty around delivery and impact of tariffs on different sectors and countries

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• Nanshan Aluminium International Holdings (NAI HK) , raised around US$302m in its Hong Kong IPO.
• It is a leading high-quality alumina manufacturer in Southeast Asia.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: MGM China, Genting Berhad, Road King, Meituan, AAC Technologies
• In the US, Chicago Fed President Austan Goolsbee said that the inflation impact from tariffs could be transitory, if the duties are limited in scope and there is no retaliation from other countries.
• He added that the Fed is taking a wait-and-see approach for now, albeit he believes rates will be lower 12-18 months from now if inflation remains contained in the long run. Separately, New York Fed President John Williams expressed support for the Fed’s rate pause last week, stating that “the current modestly restrictive stance of monetary policy is entirely appropriate given the solid labour market and inflation still running somewhat above our 2% goal”.

• LXJ International Holdings Limited (LXJIH) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
• As a market leader in the Chinese-style QSR market in China, LXJIH was focused on its self-operated restaurant model for expansion but has recently ramped up its franchise business.
• Post-COVID, LXJIH’s margins have bounced but if LXJIH continues to expand its franchise business while converting self-operated restaurants, there might be pressure on revenue growth and margins going forward.

• We believe the stock’s upside is very limited after two buy rating this year.
• In 2024, total revenue grew by 29% and total automobile sales grew by 41%.
• The gross margin of automobile improved more than one percentage point.