In today’s briefing:
- ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- Merger Arb Mondays (20 Jan) – Canvest, Henlius, Lifestyle China, Vesync, JAMCO, Insignia, AVJennings
- Lonking (3339 HK): A (Massive) Positive Profit Alert
- Plug Power’s $1.66 Billion Loan: Will It Thrive & Flourish In Trump’s Era?
ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.
- ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
- The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.
J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- J&T Global Express (1519 HK) listed in October 2023 and was added to one global index in June 2024 and to the HSCEI INDEX in September 2024.
- J&T Global Express (1519 HK) could be added to a global index in February and there will be a big passive buying impact. The company is also buying back stock.
- J&T Global Express (1519 HK) has underperformed its peers over the past year and the index inclusion could help in closing some of that gap.
Merger Arb Mondays (20 Jan) – Canvest, Henlius, Lifestyle China, Vesync, JAMCO, Insignia, AVJennings
- 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: Shanghai Henlius Biotech (2696 HK), Smart Share Global (EM US), Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Fuji Soft Inc (9749 JP), Avjennings Ltd (AVJ AU), Latin Resources (LRS AU), Pressance Corp (3254 JP).
Lonking (3339 HK): A (Massive) Positive Profit Alert
- Lonking Holdings (3339 HK)‘s positive profit alert suggested that FY24 earnings will beat the market consensus by a significant 25.8-34.6%.
- Better profitability indicates that it will further accumulate net cash. At an unchanged 50% payout ratio, it yields 7.8%, but at a higher payout of 70%, it will be 10.9%.
- Trading on 0.59x P/B, it is at the historical average valuation. If 1SD above average, there will be a 20% upside. It will go to HK$2.20 if 2SD above.
Plug Power’s $1.66 Billion Loan: Will It Thrive & Flourish In Trump’s Era?
- Plug Power, a leading name in the hydrogen economy, recently secured a $1.66 billion loan guarantee from the U.S. Department of Energy (DOE).
- This funding is set to propel the company’s plans to build several facilities for clean hydrogen production, with the first plant slated for Texas.
- The announcement comes amid political uncertainty, as President Donald Trump is set to take office with a potentially contrasting stance on clean energy policies.
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