In today’s briefing:
- Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase
- Merger Arb Mondays (24 Mar) – HKBN, ESR, Canvest, Vesync, Seven & I, Proto, Makino, Spartan
- Taiwan Dual-Listings Monitor: TSMC Headroom Increases Again; ASE at Discount a Long Opportunity
- Micron. HBM Gets Even Better, NAND Gets Even Worse
- Didi Global Q424 Results: Another Set of Solid Numbers from China’s Ride Hailing Giant
- PC Partners (1263 HK): SGX Primary Listing Justified To Maintain NVIDIA Supply
- Foxconn’s Huge EV Bet Pays Off: Key Mitsubishi Win Could Spark Additional Automaker Deals to Come
- Kuaishou Technology (1024 HK) Earnings Today: Anticipated Price Movements
- Weekly Update (ANGI, IAC, SNRE)
- RoboSense Technology: Premium Multiple Is Not Justified. Long Path To Profitability
Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase
- Hang Seng Indexes has announced a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the next rebalance in June.
- NetEase (9999 HK), Baidu (9888 HK), Trip.com (9961 HK), NIO (9866 HK), New Oriental Education & Techn (9901 HK) and Weibo (9898 HK) benefit; GDS Holdings (9698 HK) loses out.
- The FAF changes along with capping changes will result in a round-trip trade of HK$34.2bn (US$4.4bn) at the June rebalance with the largest turnover for the Hang Seng TECH Index.
Merger Arb Mondays (24 Mar) – HKBN, ESR, Canvest, Vesync, Seven & I, Proto, Makino, Spartan
- 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: Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Insignia Financial (IFL AU), Smart Share Global (EM US), Soundwill Holdings (878 HK).
- Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Domain Holdings Australia (DHG AU), Tonami Holdings (9070 JP), PointsBet Holdings (PBH AU).
Taiwan Dual-Listings Monitor: TSMC Headroom Increases Again; ASE at Discount a Long Opportunity
- TSMC: +20% Premium; Wait for Higher Premium Before Shorting, ADR Headroom Has Increased Further
- UMC: -1.6% Discount; Wait for Lower Discount Before Going Long
- ASE: -0.1% Discount; Discounts Are Good Level to Long the Spread Given Maxed Headroom
Micron. HBM Gets Even Better, NAND Gets Even Worse
- Micron this week reported revenues of $8.1 billion, down 8% QoQ but up 38% YoY, and at the top end of the guided range
- Micron is expecting to reach an annual run rate of $7.8 billion by Q425. Wow!
- NAND is headed for yet another downturn after six quarters of sequential growth.
Didi Global Q424 Results: Another Set of Solid Numbers from China’s Ride Hailing Giant
- Most key P&L items and revenue drivers improved Y/Y and sequentially vs Q324
- Although GTV per transaction dipped slightly, estimated “take rate” improved in Q424
- Strong OpCF obviates need for quick FY25 IPO — but it could still happen this year
PC Partners (1263 HK): SGX Primary Listing Justified To Maintain NVIDIA Supply
- On the 18th June 2024, PC Partner (1263 HK)‘s board said it was considering an SGX listing, by way of introduction, and applying for the withdrawal of the HKEx listing.
- A 30th August 2024 announcement provided clarity on a step-by-step approach for the HKEx withdrawal. A secondary listing on the SGX was established on the 15th November.
- The next step is to establish a dual-primary listing in Singapore. Then withdraw the HKEx listing. The key driver behind this exercise is ensure the uninterrupted supply of NVIDIAs GPUs.
Foxconn’s Huge EV Bet Pays Off: Key Mitsubishi Win Could Spark Additional Automaker Deals to Come
- Mitsubishi Motors plans to outsource EV production to Foxconn, signaling the most significant commercial validation of Foxconn’s MIH EV platform to date.
- While Foxconn’s AI server manufacturing is currently the company’s strongest growth driver, its EV strategy is increasingly gaining credibility as a second long-term pillar.
- Foxconn — Structural Long. We see depressed share price as buying opportunity. Mitsubishi contract win increases the probability for additional major OEM production partnership wins this year for Foxconn.
Kuaishou Technology (1024 HK) Earnings Today: Anticipated Price Movements
- Kuaishou Technology (1024 HK) is set to report its latest financial results today, on March 24, 2025, after market close.
- Expected Price Movement: Historical median price movement post-earnings is 5.6%, with option implied movement at 5.9%, indicating consistent expectations.
- Options Strategies: Discussion of option strategies and trading opportunities, or the lack thereof, based on the narrow margin of the March 28 straddle pricing.
Weekly Update (ANGI, IAC, SNRE)
On March 31, 2025, IAC Inc (IAC) will spin off Angi Inc (ANGI). The first day of trading will be April 1st.
Transaction Structure: The spin-off is designed to be tax-free, providing IAC shareholders with direct ownership of Angi. This move will eliminate Angi’s dual-class share structure, transitioning to a one share/one vote system.
Distribution Ratio: IAC shareholders will receive approximately 0.5178 shares of Angi Class A common stock for each IAC share they hold. This ratio accounts for a planned 1-for-10 reverse stock split of Angi’s shares, effective March 24, 2025.
RoboSense Technology: Premium Multiple Is Not Justified. Long Path To Profitability
- RoboSense Technology shares significantly outperformed in 2025 with shares up ~43% over the year versus a ~18% gain on the HSI.
- Chinese mass producer of LiDAR products and sensor systems has successfully completed a placing of new shares and raised ~$HK1B or ~US$131M in March.
- I think the stock is overvalued vs. peers given long path to profitability, lower relative gross margin profile and intense competition in Mainland China.
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