In today’s briefing:
- China A50 ETFs Rebalance Preview: Three Changes in September
- StubWorld: Swire Pac’s NAV Discount Widens. Bs Outperform As
- Kangji Medical (9997 HK): Consortium’s Light Preconditional Scheme Offer
- Kangji Medical (9997 HK): TPG/QIA/Founder’s Offer Is No Knockout
- 52Toys Development Pre-IPO: Steady Expansion But in a Highly Fragmented Market
- Eve Energy A/H Listing – One of the Leaders but Growth Has Been Slowing
- Tencent Music (TME): 2Q25, Concert Revenue Booming, Margin Hitting Historical High
- [Zai LAB (ZLAB US, BUY, TP US$40) Review]: Past Is Holding ZLAB Back but Future Is What Matters
- Unisound AI (9678.HK): ~US$6.5B Market Cap, ADTV ~US$6M, Is Secondary Share Sale On The Deck?
- Lucror Analytics – Morning Views Asia
China A50 ETFs Rebalance Preview: Three Changes in September
- Nearing the end of the review period for the September rebalance, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK).
- WuXi AppTec, Zhongji Innolight and BeiGene could replace China United Network, NARI Technology and China National Nuclear Power in the ETF at the close on 19 September.
- Passives will need to trade 0.1-0.7x ADV in the forecast changes. The forecast adds have massively outperformed the forecast deletes over the last 4 months.
StubWorld: Swire Pac’s NAV Discount Widens. Bs Outperform As
- As Swire Pacific (A) (19 HK) plumbs new 12-month lows for its NAV discount and implied stub, Swire’s B shares have significantly outperformed the As over the past month.
- Preceding my comments on Pac, Swire Properties (1972 HK) & Cathay Pacific Airways (293 HK), are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Kangji Medical (9997 HK): Consortium’s Light Preconditional Scheme Offer
- Hangzhou Kangji Medical Instrument Co., Ltd. (9997 HK) disclosed a preconditional privatisation from a consortium at HK$9.25, a 9.9% premium to last close and a 21.7% premium to the undisturbed price.
- The precondition relates to SAMR approval. The key condition will be approval by at least 75% disinterested shareholders (<10% of all disinterested shareholders’ rejection). The offer is final.
- The scheme vote risk is medium-to-high due to an unattractive offer, a blocking stake below the substantial disclosure threshold, unfavourable AGM voting patterns, and emerging retail opposition.
Kangji Medical (9997 HK): TPG/QIA/Founder’s Offer Is No Knockout
- Medical device play Kangji Medical (9997 HK) has announced an Offer, by way of a Scheme, from a consortium led by TPG and the Qatar Investment Authority, together with founders.
- The consortium is offering HK$9.25/share, a less-than-inspiring 9.9% premium to last close. The price has been declared final. It is 33.4% below the HK$13.88 2020 IPO price.
- Independent shareholders hold 25.25% of shares out. They could bare teeth; and they’ve been somewhat active at AGMs. But on balance, there’s probably enough here for this to get up.
52Toys Development Pre-IPO: Steady Expansion But in a Highly Fragmented Market
- 52TOYS Development (TOY HK) is looking to raise up to US$200m in its upcoming HK IPO.
- 52Toys Development is one of the leading IP toy companies in China, with a portfolio of over 100 proprietary and licensed intellectual properties (IPs) as of Dec 2024.
- In this note, we look at the company’s past performance.
Eve Energy A/H Listing – One of the Leaders but Growth Has Been Slowing
- EVE Energy (300014 CH) (EVE), a lithium battery provider, aims to raise around US$1bn in its H-share listing.
- EVE produces lithium batteries which cater to consumer battery, power battery and ESS battery sectors.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
Tencent Music (TME): 2Q25, Concert Revenue Booming, Margin Hitting Historical High
- In 2Q25, non-subscriber music revenue surged by 47% YoY and total revenue grew by 18% YoY.
- The operating margin hit the historical high since TME’s IPO.
- We believe the stock has an upside of 9% and a price target of US$27.60 for the year end 2025.
[Zai LAB (ZLAB US, BUY, TP US$40) Review]: Past Is Holding ZLAB Back but Future Is What Matters
- Zai Lab reported C2Q15 top line, non-GAAP operating loss and GAAP net loss 1.5% above, 31% narrower and 38% narrower than our estimate, and 12% below,
- We cut ZEJULA’s peak sales by 12% due to sustained competition. We are also concerned on the slow ramp up of AUGTYRO, which will likely persist.
- However, ZLAB has several catalysts ahead, including Bemarituzumab, KarXT, and ZL1310. We keep TP unchanged and maintain BUY.
Unisound AI (9678.HK): ~US$6.5B Market Cap, ADTV ~US$6M, Is Secondary Share Sale On The Deck?
- Unisound AI Technology, a founder-led AI solution provider with focus on conversational AI products and speech recognition technologies, completed its IPO in Hong Kong in June.
- Beijing based AI company priced an initial public offering at HK$205.00/share, raising ~HK$251M of net proceeds. The stock is up ~248% from its IPO price at Monday’s close.
- Unisound AI’s market cap today is on a par with market cap of SenseTime and 2x bigger than Beijing Fourth Paradigm. All these companies have the similar growth profiles.
Lucror Analytics – Morning Views Asia
- UST yield movements were muted yesterday, amid an absence of macro news and ahead of the CPI data release today.
- The yields on the 2Y and 10Y UST were unchanged at 3.77% and 4.29%, respectively.
- Equities retreated, with the S&P 500 and Nasdaq both declining 0.3% to 6,373 and 21,385, respectively.
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