In today’s briefing:
- A Pair Trade of Hanwha Aerospace and Hanwha Ocean
- Taiwan Dual-Listings Monitor: Market Volatility Has Opened Up Multiple Spread Trading Levels
- Gravita India: Expansion Momentum Amid Elevated Valuations
- Bright Smart (1428 HK): An Attempt to Derive a Value
- In Response to Tariff & “De Minimis” Changes, Temu Alters US Business Model, Morphing Into…Amazon?
- Mahindra & Mahindra (MM IN) – Top 5 Takeaways from Q4FY25 Results
- ArcelorMittal: Strengthening Core, Pivoting to Growth
- REIT Watch – S-REITs rebound 9.5% from Apr 9 lows, tracking volatility in global markets
- HIT: Newly Formed Advisory Board and Advisor With Extensive Public Affairs Experience Appear Timely
- HK-Listed Apparel & Footwear Screener May 2025: Can’t Shake The Tariff Overhang
A Pair Trade of Hanwha Aerospace and Hanwha Ocean
- In this insight, we discuss a pair trade between Hanwha Aerospace (012450 KS) (go long) and Hanwha Ocean (042660 KS) (go short).
- Hanwha Ocean faces bigger overhang risk of KDB continuing to sell additional shares of the company as compared to Hanwha Aerospace’s rights offering shares dilution risk.
- Hanwha Aerospace/Hanwha Ocean price ratio (5 year period) is near the 2 standard deviation (STD) mark which could suggest a reversion to the mean.
Taiwan Dual-Listings Monitor: Market Volatility Has Opened Up Multiple Spread Trading Levels
- TSMC: +15% Premium; Trading Near Level to Go Long the ADR Spread
- UMC: -1.8% Discount; Also Near a Level to Go Long the Spread
- CHT: -2.2% Discount; Good Level to Go Long the Spread
Gravita India: Expansion Momentum Amid Elevated Valuations
- Gravita reported steady FY25 results with ~10% EBITDA margins, strong cash generation, and maintained a net cash position despite ongoing capex.
- Business mix is evolving with increasing aluminium recycling, higher Africa contribution, and new verticals like lithium-ion, aiming to double capacity by FY27.
- Valuations appear elevated but are supported by strong ROIC, clear growth visibility, and alignment with global ESG trends.
Bright Smart (1428 HK): An Attempt to Derive a Value
- Bright Smart Securities (1428 HK) will benefit from Ant Financial’s technology innovation capabilities, customer group, digitalisation, and cross-selling to over 640m of Alipay users.
- With Futu Holdings Ltd (FUTU US) having an average PER of 19x for 2020-2025, we use 15x for BSS after a conservative estimate of 50% earnings growth in 5 years.
- We value BSS at HK$8.13, but this is a conservative estimate. Its earnings growth is likely to be faster than our forecast, given its better leverage on the new parent.
In Response to Tariff & “De Minimis” Changes, Temu Alters US Business Model, Morphing Into…Amazon?
- Last week Temu confirmed dramatic changes to its business model in the US
- Temu won’t sell Chinese goods directly to US consumers, & will rely on local fulfillment
- The moves seem to put Temu into direct competition with Amazon, Walmart.com
Mahindra & Mahindra (MM IN) – Top 5 Takeaways from Q4FY25 Results
- Strong Core Performance:Mahindra & Mahindra (MM IN) delivered robust growth in Auto &Farm segments in Q4FY25,with SUV volumes up 20% &tractor volumes up 12%,alongside market share gains in both segments.
- Strategic Expansion & Capital Allocation: The company outlined a clear roadmap for scaling EV and ICE capacities to 85K/month by FY27.
- Valuation Upside from Growth Platforms:With scalable and emerging “growth gems” across real estate, hospitality,renewables, and EVs, M&M’s Sum-of-the-Parts (SOTP) valuation pegs fair value at INR 3,437/share, including the EV business.
ArcelorMittal: Strengthening Core, Pivoting to Growth
- Q1 showed resilient performance; Q2 EBITDA to rise on European spread recovery, healthy orders, and stable North America.
- Over 60% of future capex targets India; Hazira and Visakhapatnam expansions drive sharp volume and margin growth.
- Stock trades at deep 60–70% discount to Indian steelmakers despite growing India focus and structurally stronger EBITDA.
REIT Watch – S-REITs rebound 9.5% from Apr 9 lows, tracking volatility in global markets
- In April 2025, S-REITs recorded a total net institutional selling of S$90.3 million and retail selling of S$54.6 million.
- ParkwayLife REIT, CapitaLand Integrated Commercial Trust, and Frasers Hospitality Trust were the top three year-to-date gainers in 2025.
- Stoneweg European REIT obtained unitholders’ approval for stapling to form Stoneweg European Stapled Trust, enhancing tax efficiency and investment scope.
HIT: Newly Formed Advisory Board and Advisor With Extensive Public Affairs Experience Appear Timely
- As HIT continues to expand services and enhance its platform, the company aims to broaden its target market, as it believes that organizations of all sizes can benefit from its AI-driven technology platform, which is designed to streamline and facilitate the process of researching and obtaining healthcare insurance.
- HIT began development of a large-group third-party AI-powered underwriting solutions for mid-sized and larger businesses and, in 1Q25, delivered solutions to large employers, including one that employs 1k+ people.
HK-Listed Apparel & Footwear Screener May 2025: Can’t Shake The Tariff Overhang
- Share prices are gradually stabilizing, influenced by news reports suggesting that Trump may eventually reduce tariffs on China (although trust overhang with Trump statements remains an issue).
- Besides Bosideng International Holdings (3998 HK), most companies have halted capital allocation decisions like buybacks till more clarity emerges.
- Stella International (1836 HK) has the highest US revenue exposure at 47%, followed by Crystal International (2232 HK) at 38%, and Lever Style (1346 HK) at 58%.
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