In today’s briefing:
- Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
- China Consumption Weekly (6 Jan 2025): Alibaba, BYD, Tencent Music, JD.com, Mixue
- Bloks Group IPO – Outgrowing Its Peers, Decent Valuation
- Water Oasis (1161 HK): Discouraging Dividend, Value Intact
- Carvana Under Fire: Hindenburg Unveils Explosive Allegations!
- MINISO (9896 HK): From Blind Boxes to ACG Hits—Growth Magic Continues in 2025!
- Tesla’s Delivery Dilemma: How Chinese Rivals Are Stealing the Spotlight!
Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), ESR Group (1821 HK), Goldlion Holdings (533 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
- The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
- We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
- Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.
China Consumption Weekly (6 Jan 2025): Alibaba, BYD, Tencent Music, JD.com, Mixue
- Alibaba’s Freshippo remained profitable and double-digit growth in the past nine months.
- Brazil labor authorities are investigating BYD’s construction site for “slave-like condition”.
- Tencent Music will compensate MCSC (Music Copyright Society of China) for the unauthorized usage of music copy rights.
Bloks Group IPO – Outgrowing Its Peers, Decent Valuation
- Bloks Group (1850960D CH) is looking to raise US$187m in its Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In our previous notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison and discuss our thoughts on valuation.
Water Oasis (1161 HK): Discouraging Dividend, Value Intact
- Water Oasis (1161 HK) skimped on its final dividend and paid only 2 HK cents (compared to our expectation of ~5 HK cents), sending its share prices down 14% post results.
- Insider buying after the results helped steady the shares, but we see that buying after the declaration of dividends as sending a wrong signal to some minority shareholders.
- There is immense value, trading at 4.4x PE and 0.3x EV-EBITDA, with 485 mn HKD net cash (~90% of the market cap), but we need increased dividends to crystallize it.
Carvana Under Fire: Hindenburg Unveils Explosive Allegations!
- In a dramatic turn of events, Hindenburg Research has publicly disclosed a short position against Carvana, intensifying the scrutiny on the online used-car retailer.
- The latest report from Hindenburg, titled “Carvana: A Father-Son Accounting Grift for the Ages,” accuses the company of financial manipulation and unsustainable growth driven by a precarious subprime loan portfolio.
- This revelation has sent ripples through the stock market, causing Carvana’s shares to dip by 1.9% in New York, marking a significant shift after a remarkable 284% surge in the previous year.
MINISO (9896 HK): From Blind Boxes to ACG Hits—Growth Magic Continues in 2025!
- MINISO Group Holding (9896 HK) has surged 34% since announcing strong 9M24 results, backed by robust revenue growth, in end November, 2024.
- With strong growth prospects, the stock could scale further in 2025, driven by rapid store expansion, blind box toys, ACG goods, and collaborations with top IPs like Harry Potter.
- MINISO’s evolution from a value retailer into a lifestyle brand with trademarked IP goods, innovative blind boxes, and creative retail formats enhances its competitive edge and drives growth.
Tesla’s Delivery Dilemma: How Chinese Rivals Are Stealing the Spotlight!
- In early 2025, Tesla finds itself at a critical juncture as its global vehicle deliveries for 2024 dipped by 1% to 1.79 million units, marking the first annual decline in over a decade.
- Despite this setback, Tesla’s market capitalization surged by approximately 53%, positioning the company as a $1.2 trillion giant surpassing the combined value of the next 20 largest automakers.
- This paradox underscores a shift in Tesla’s valuation drivers—from traditional car sales to ambitious ventures in robotics, artificial intelligence, and the promising but uncertain robotaxi business.
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