In today’s briefing:
- CSI500/1000 Index Rebalance Preview: Adds Outperform Deletes Early On, Then Hit a Wall
- CNGR A/H Listing: Healthy A/H Premium and Cheap Valuation
- Mitsui Chemical (4183): Releasing the Crackers!
- CNGR Advanced Material H Share Listing (2579 HK): Valuation Insights
- JFE Holdings (5411 JP) – Deep Value with Hidden JSW Optionality
- Weekly Update (Q, IAC, ANGI, LION, SNREY)
- A/H Premium Tracker (Week to 7 Nov 2025): Beautiful Skew Behaving Badly, CNOOC Better
- Company Halts Operations, Initiates Strategic Review with Potential 50% Upside to Net Cash by Year-End
- Overview #40 – Trouble in Paradise: Cracks in the AI Trade
- Oil futures: Crude recovers from lows, refining margins lift gloom
CSI500/1000 Index Rebalance Preview: Adds Outperform Deletes Early On, Then Hit a Wall
- With the review period complete, we forecast 50 changes for the CSI Smallcap 500 Index and 100 changes for the CSI 1000 Index at the December rebalance.
- We estimate a one-way turnover of 10.15% for the CSI Smallcap 500 Index and 10.22% for the CSI1000 Index. Gross round-trip trade across both indices is CNY 73.4bn (US$10.3bn).
- The outright forecast adds have outperformed the outright forecast deletes over the last 6 months with most of the outperformance coming between June and August.
CNGR A/H Listing: Healthy A/H Premium and Cheap Valuation
- CNGR Advanced Material (300919 CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
- CNGR is a Chinese battery-component producer and a new energy materials company. It is the global leader of nickel-based and cobalt-based pCAM (cathode) for lithium-ion batteries.
- In this note, we examine the IPO dynamics, and look at the firm’s valuation.
Mitsui Chemical (4183): Releasing the Crackers!
- Mitsui Chemicals is slashing exposure to commodity chemicals and ramping up high-margin specialty films and resins—setting the stage for its RoE to soar from 5% to over 13%.
- Restructuring is unlocking massive cost savings while driving growth from cutting-edge segments that are poised for double-digit growth and global dominance.
- The stock trades at a deep discount, but could easily command a premium with solid execution, driving the share price to more than double or even treble within 3 years.
CNGR Advanced Material H Share Listing (2579 HK): Valuation Insights
- CNGR Advanced Material (2579 HK), a new energy materials company, has launched an H Share listing to raise US$507 million.
- I discussed the H Share listing in CNGR Advanced Material H Share Listing: The Investment Case.
- The proposed AH discount range of 36.9% to 29.9% (based on the 7 November A Share price) is attractive, and I would participate in the H Share listing.
JFE Holdings (5411 JP) – Deep Value with Hidden JSW Optionality
- Trough valuations: JFE trades at only US$525/t EV/t and 0.5× P/B, despite stable guidance and improving high-value steel mix.
- Hidden value: 15% JSW Steel stake (~¥500 bn) equals ~45% of JFE’s market cap—cheap India exposure with re-rating potential.
- Upside case: SOTP implies +50–60% equity upside, supported by 4–5% dividend yield and H2 margin recovery.
Weekly Update (Q, IAC, ANGI, LION, SNREY)
Dupont (DD) spin off its electronics business, Qnity (Q), early this week.
DQnity will be one of the world’s largest pure-play electronic materials companies, with a portfolio spanning semiconductor fabrication materials and advanced electronics/interconnect solutions.
- Qnity’s Semiconductor Technologies division creates consumable products that are used during semiconductor manufacturing.
A/H Premium Tracker (Week to 7 Nov 2025): Beautiful Skew Behaving Badly, CNOOC Better
- Beautiful Skew still AWOL/MIA. The wider the spread, the worse the result.
- Large SOE H vs A generally strong. Strong net inflow into SOE Hs via SOUTHBOUND.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Pairs Monitor are both there – free – for all SK readers.
Company Halts Operations, Initiates Strategic Review with Potential 50% Upside to Net Cash by Year-End
- The company has halted operations, laid off most staff, and initiated a strategic review with seven employees remaining.
- Insiders, owning over 20% of shares, are incentivized to unlock value through liquidation, reverse merger, or sale.
- A resolution from the strategic review is expected by year-end or early 2026, with ample margin of safety.
Overview #40 – Trouble in Paradise: Cracks in the AI Trade
- Sentiment has started to wobble in the AI mega cap trade
- Risk is elevated as bearish divergences and rolling tops abound
- No top yet signalled in the major US indices – so what to do in this environment
Oil futures: Crude recovers from lows, refining margins lift gloom
- Crude oil futures nudged higher Friday but were heading for a second week of losses, albeit modest, with the market unable to shake off the gloom surrounding predictions of a massive oversupply in Q1.
- Front-month Jan25 ICE Brent futures were trading at $63.72/b (2005 GMT) versus Thursday’s settle of $63.38/b, while Dec25 NYMEX WTI was at $59.84/b against a previous close of $59.53/b.
- The oversupply narrative amid soaring supplies and tepid demand growth has taken hold of markets this week, overshadowing geopolitical concerns.
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