In today’s briefing:
- What’s Up (& Up) With Shandong Hi-Speed 412 HK)?
- Shengjing Bank (2066 HK): Another Rural Commercial Bank Delisting
- Shengjing Bank (2066 HK): Privatisation on the Cards?
- EM Neobanks – Closing Out Our Short on Nubank (NU US), Stick with the Long on Inter (INTR US)
What’s Up (& Up) With Shandong Hi-Speed 412 HK)?
- Back on the 18th Feb 2025, Shandong Hi-Speed (412 HK) (SHS) closed its unconditional Offer for Shandong Hi-Speed New Energy (1250 HK). Shortly thereafter, SHS’ share price took off.
- SHS is now up 190% in the past six months. And ~1800% since Covid.
- What gives? It’s not index related. And forward earnings do not justify the move. This looks like a bubble. Short interest is on the move.
Shengjing Bank (2066 HK): Another Rural Commercial Bank Delisting
- In Chinese RCBs: Two Bailouts. How Many More At Risk?, I concluded Shengjing Bank (2066 HK) was one bank I would avoid. It’s now suspended pursuant to the Takeovers code.
- Shengjing Bank had one of the largest P/B and net income declines in recent years. It had borderline allowance/provision coverage. It also had the lowest net interest margin.
- Shengjing Bank is PRC-incorporated, therefore any delisting proposal would involve a Merger by Absorption, incorporating a Scheme-like vote. And probably a tendering condition.
Shengjing Bank (2066 HK): Privatisation on the Cards?
- Shengjing Bank Co Ltd H (2066 HK) entered a trading halt “pending the publication of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers.”
- It is likely that the SASAC of Shenyang Municipal People’s Government, the largest shareholder, is seeking to privatise Shengjing.
- Precedents point to a voluntary conditional offer and delisting proposal. My estimated offer price range is HK$2.00-HK$2.80, a 75.4%-145% premium to the last close.
EM Neobanks – Closing Out Our Short on Nubank (NU US), Stick with the Long on Inter (INTR US)
- We close out our short on Nubank; despite the sharp share price move post 2Q25 results, our pairs trade just worked
- We therefore upgrade Nubank to a neutral from a sell on the back of a solid set of 2Q25 results, largely due to its sound operational performance
- We continue to recommend a long on Inter for its healthy credit quality credentials, improving operating performance and its very attractive valuations with premium earnings growth potential
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