In today’s briefing:
- ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher
- CSI 300 Index: Tactical Outlook Following the Labor Day Holiday
- Bright Smart (1428 HK): An Attempt to Derive a Value
- HIT: Newly Formed Advisory Board and Advisor With Extensive Public Affairs Experience Appear Timely
- HIT: Strong 1Q25 Revenue Growth as HIT Expands its Offerings & Broadens its Target Market
- American Integrity Insurance Group (AII): Specialty Insurer Eyes IPO, Winner in Florida
- Aspen Insurance Holdings Limited (AHL): Valuation Entices Investors as Orders Flow into IPO
ShinKong (2888 TT)/Taishin (2887 TT) – Time To Deal Is Shorter, But Risk To Peers Is Higher
- The last couple of days have seen the TWD increase value against the USD extremely sharply. This has caused the Shin Kong/Taishin risk arb spread to widen.
- There is no expectation that the merger will be delayed, but the change in USDTWD rate introduces a new dynamic into the ShinKong-as-Taishin-vs Peers trade.
- Careful consideration of this trade going forward is worthwhile. What may have been the better trade may no longer be the better trade.
CSI 300 Index: Tactical Outlook Following the Labor Day Holiday
- Following an extended holiday beginning May 1st, the CSI 300 Index (SHSZ300 INDEX) resumes trading on May 6th.
- The WEEKLY close before the holiday—during a shortened trading week—was modestly negative. However, the index would need to decline to 3697 or lower to trigger a buy-the-dip opportunity.
- Since the index has already closed 1 week down, our time model suggests there is a good chance (62%) it could go up this week.
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.
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.
HIT: Strong 1Q25 Revenue Growth as HIT Expands its Offerings & Broadens its Target Market
- To broaden its TAM, HIT began beta testing a large-group 3rd-party AI-powered underwriting platform in 4Q24 & is optimistic about its prospects, based on interest generated to-date.
- In 1Q25, the company delivered solutions to large employers, including one with 1k+ employees.
- HIT believes the infrastructure it has established position it for strong growth, as it broadens its TAM and expands its offerings, often via collaborations such as one formed recently with DialCare to integrate DialCare’s virtual primary care, therapy, and psychiatry services into Health In Tech’s self-funded health plan offerings.
American Integrity Insurance Group (AII): Specialty Insurer Eyes IPO, Winner in Florida
- According to our sources, the deal is oversubscribed with a good amount of accounts still to hear from.
- Management has strong numbers as of year-end 2024 and have gained even more momentum in Q1 2025.
- While smaller in size, this company has a sustainable expansion plan and a profitable balance sheet with a tailwind from a growing Florida market.
Aspen Insurance Holdings Limited (AHL): Valuation Entices Investors as Orders Flow into IPO
- According to guidance that the deal is multiple-times oversubscribed with high-quality 1-on-1 conversions.
- Aspen is selling itself at or slightly below the $30.73 per share book value of comps.
- Apollo Global has done a fair job of cleaning up Aspen and making it increasingly more profitable while reducing exposure to reinsurance and property in vulnerable areas.
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