In today’s briefing:
- Quiddity Leaderboard HSTECH Sep25: 1 Low-Conviction Change + 1 FAF Revision; US$1.3bn One-Way
- CaoCao IPO: The Bull Case
- Chow Tai Fook (1929 HK): A Decent Rebound
- Eternal Beauty Pre-IPO – PHIP Updates – Perfumes Growing, Challenges Remain
- Fengxiang (9977 HK): PAG Invites Dissent After Scrapping Scrip Alternative
- Fengxiang (9977 HK): No Share Alternative Offer
- Liuliu Orchard Group Co Ltd Pre-IPO – Category Leader Scaling Direct Channels in Fragmented Market
- Denso Corp(6902 JP)–Value Zone, Upgraded Growth Outlook, Sooner Resolution of Cross-Holding Overhang
- JAKK: Further Tariff Proofing the Model Post Mgmt. Meetings; Reiterate Buy
- Meituan (3690 HK) Options: Unpacking the Top Trades of the Week
Quiddity Leaderboard HSTECH Sep25: 1 Low-Conviction Change + 1 FAF Revision; US$1.3bn One-Way
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- In this insight, we take a look at the potential index changes and the resultant capping flows for HSTECH index rebal event in September 2025.
- We see one low-conviction ADD/DEL and one significant float percentage revision which could collectively trigger roughly US$1.3bn in one-way index flows in September 2025.
CaoCao IPO: The Bull Case
- CaoCao Inc (1646553D CH) is the second-largest ride-hailing player in China. It has filed its PHIP to raise US$200-300 million.
- CaoCao was incubated by Geely Auto (175 HK). Geely founder Li Shufu owns 83.9% of CaoCao.
- The bull case rests on accelerating GTV growth, the improving fundamentals of the core business, reducing losses and shifting to cash generation.
Chow Tai Fook (1929 HK): A Decent Rebound
- While Chow Tai Fook Jewellery (1929 HK) has a stellar share price performance YTD, it still lags the HSI since 2023. The solid 2H FY25 result should support further upside.
- SSS growth has recovered sharply in Apr-May 2025 (the first two months of 1Q FY26), and CTF should reap further benefits from cost management and product transformation.
- FY26F ROE may reach 27.2%. While its current yield is only 4.6%, it is possible to declare special dividend this year, easily pushing it to over 10%.
Eternal Beauty Pre-IPO – PHIP Updates – Perfumes Growing, Challenges Remain
- Eternal Beauty Holdings (EB) is looking to raise around US$150m in its upcoming Hong Kong IPO.
- Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.
- We have looked at the company’s past performance in our previous note. In this note we talk about the PHIP updates.
Fengxiang (9977 HK): PAG Invites Dissent After Scrapping Scrip Alternative
- In an unusual move, the Offeror, PAG, and 59.42% shareholder of Shandong Fengxiang (9977 HK), has opted not to provide a scrip alternative, despite satisfying conditions to do so.
- The scrip option condition – not less than 0.5% of shares out expressing interest – was satisfied on the 12th May. Therefore at least 7.9mn shares got snubbed.
- Evidently PAG reckons the support for the scrip is not worth the trouble. Nor critical in mass to disrupt the Offer.
Fengxiang (9977 HK): No Share Alternative Offer
- PAG has decided not to introduce the share alternative offer. Therefore, its offer for Shandong Fengxiang (9977 HK) will be all-cash at HK$2.00 per H share.
- The recent Goldlion and Soundwill deal breaks have undoubtedly increased the vote risk, particularly as the blocking stake is below the HKEx substantial shareholder disclosure threshold.
- The decision not to introduce the share alternative offer underscores PAG’s confidence in the vote. The lack of protest votes at the recent AGM is helpful for the scheme vote.
Liuliu Orchard Group Co Ltd Pre-IPO – Category Leader Scaling Direct Channels in Fragmented Market
- Liuliu Orchard Group Co Ltd (LOGCL) is planning to raise about US$100m in its upcoming Hong Kong IPO.
- LOGCL is China’s leading plum-based snack player, benefiting from strong consumer demand, brand leadership, and favorable health trends.
- Despite operating in a fragmented market, LOGCL has consistently grown revenue through successful offline expansion, increased direct sales penetration, and effective cost control even amid raw material cost pressures.
Denso Corp(6902 JP)–Value Zone, Upgraded Growth Outlook, Sooner Resolution of Cross-Holding Overhang
- Cross-Holding Overhang Easing:Denso Corp (6902 JP) accelerates exit from Toyota Industries stake via tender offer, unlocking capital and aligning with capital efficiency and governance reforms.
- Profitability Set to Improve: FY2026 profit outlook strong, driven by reduced quality-related costs, better operating leverage, and ongoing cost controls post fuel pump recall.
- Valuation Comfort with Growth Drivers: Stock trades below historical average P/E; SDV, electrification, and semiconductor focus positions Denso well for re-rating amid sector tailwinds.
JAKK: Further Tariff Proofing the Model Post Mgmt. Meetings; Reiterate Buy
- We are reiterating our Buy rating and $40 price target, but lowering our 2025 and 2026 projections after meeting with JAKKS management and contemplating the near and longer term impact of China tariffs on the company.
- In the very near term, while only a short period (approximately 30 day) the impact of 100%+ tariffs on China goods created a virtual stop in sales at JAKKS, and with a business model focused on freight on board (“FOB”) shipping, necessitated a ramp period thereafter.
- Further, the current 30% tariff will mean that, yes, there will be a Halloween and Xmas, but it could be more cautious in terms of retailers placing product bets and, will obviously hurt returns for manufacturers and the entire toy supply chain.
Meituan (3690 HK) Options: Unpacking the Top Trades of the Week
- Discover sophisticated, live, multi-leg options strategies on Meituan (3690 HK), executed over the period from 5 June to 11 June on the Hong Kong exchange.
- Highlights: A range of strategies, spanning time-horizons from just a few days to several months. Including a low-cost call spread with the potential to return approximately 8x the invested premium.
- Why read: This breakdown of complex option strategies sheds light on market sentiment and positioning. Detailed examples provide actionable insights that could inspire similar strategies,
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