In today’s briefing:
- Sun Corp (6736) – Still Cheap
- Meituan (3690 HK): 4Q24, High Growth and Higher Margin, 60% Upside
- A/H Premium Tracker (To 21 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- BYD (1211 HK) Earnings Today: Anticipated Price Movements and Options Insights
- TSE Growth Market Reforms Also Expected to Be Effective in “Request”
- Fu Shou Yuan (1448.HK) – 2025 Outlook May Remain Sluggish Despite the Ugly 2024 Results
- HSI Index Options Weekly (March 17-21): A Divergence in Volatility
- Workman Fixes the Big Problem: Colors Replaces Workman Joshi
- HSCEI Index Options Weekly (March 17-21): Optimism Fades as Key Earnings Weigh on Markets
- Miniso: Undeterred by Tariffs. IP-Strategy, Global Expansion on Track. Value Buy
Sun Corp (6736) – Still Cheap
- Eight months on from the Tender Offer which changed the shape of the shareholder register, Sun Corp (6736 JP) is as cheap to its main asset as it was before.
- Sun Corp is cheap to its holding in Cellebrite DI (CLBT US). How cheap depends on the form and structure of its eventual exit.
- Understanding what the options are (and the dynamics around hedging/exposure) is worthwhile.
Meituan (3690 HK): 4Q24, High Growth and Higher Margin, 60% Upside
- In 4Q24, Meituan’s revenue growth rate was 20% YoY with all businesses rising.
- The operating margin improved to 8.8% in 4Q24 versus about zero in 4Q23.
- We set an upside of 61% and a price target of HK$270. Buy.
A/H Premium Tracker (To 21 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
- AH Premia continue to fall. Spread curve torsion was a barbell this week. Narrow and wide spreads see Hs outperform. Middling spreads outperform less.
- To me, warning signs are flashing on spreads. They are at their narrowest in 5yrs and they are volatile, though volatility is coming down.
- Lots of spreads see the HA premium less than 15%. That is historically tight.
BYD (1211 HK) Earnings Today: Anticipated Price Movements and Options Insights
- Today,BYD (1211 HK) is scheduled to report its annual 2024 financial results. Timing: 24 March 2025, after market close.
- Expected Price Movement: Option implied movement is above the historically recorded movement.
- Implied volatility and options strategies: Discussion of implied volatility term structure and option strategies.
TSE Growth Market Reforms Also Expected to Be Effective in “Request”
- A drastic shift by the TSE to focus on quality without increasing the number of listed companies by reducing the number of IPO companies is not very promising.
- TSE will raise the hurdle for listing maintenance criteria slightly, but it will ask companies to make a commitment to post-listing growth during the listing examination process.
- It’ll take time for quality of market to increase, and we expect that companies that are aware of listing costs with help from investors will naturally move to de-list themselves.
Fu Shou Yuan (1448.HK) – 2025 Outlook May Remain Sluggish Despite the Ugly 2024 Results
- Fu Shou Yuan had a sharp decline in performance in 2024. The performance in recent years has often missed management guidance, which makes us question the integrity of management.
- The “crisis” of Fu Shou Yuan has evolved from a short-term headwind to the failure of its long-term business model. Good dividends cannot conceal the problem of gloomy outlook.
- Valuation logic is undergoing a transformation – from a leading company with “high growth/stable cash flow” to a struggling company with “weak growth/questionable profit model”. 2025 performance may remain lower-than-expected.
HSI Index Options Weekly (March 17-21): A Divergence in Volatility
- HSI started the week strong but reversed course as earnings reports pressured the market into week’s end.
- We examine the divergence between implied volatility and historic volatility.
- Option volumes climbed throughout the week, with Friday seeing the heaviest Call buying, though overall activity remained below the long-term average.
Workman Fixes the Big Problem: Colors Replaces Workman Joshi
- Workman’s slower same-store growth can be blamed on its shift to mass market fashion and the choice of Workman Joshi as a banner, putting off male customers.
- The outdoor and workwear retailer has now acknowledged the misstep and will rebrand the chain as Workman Colors while adjusting merchandise back to more apparel basics.
- This will take time to implement but could mean a return to form for the apparel retailer.
HSCEI Index Options Weekly (March 17-21): Optimism Fades as Key Earnings Weigh on Markets
- A weekly recap of volatility and price metrics, covering option volumes, volatility trends, the spot/implied relationship, and open interest statistics.
- A strong start to the week reversed sharply after key earnings releases.
- We examine the dislocation between implied and historic volatility and assess whether this week’s drop in implied vol was overdone.
Miniso: Undeterred by Tariffs. IP-Strategy, Global Expansion on Track. Value Buy
- MINISO Group Holding (9896 HK) committed to expanding in the U.S. with plans in place to mitigate the impact of U.S. tariffs on Chinese goods via its diversified supply chain strategy.
- Key investor concern: Slower store expansion in Mainland China in 2025 may temper near-term sales and profit growth. Capital intensive overseas expansion could dilute potential returns.
- Miniso (MNSO US)’s accelerating shift toward higher-margin IP co-branded lifestyle products—a strategy poised to sustain double-digit revenue growth, makes it an attractive investment play in the lifestyle retail space.
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