In today’s briefing:
- SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next
- Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
- China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
- Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)
- Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys
- Route Mobile Ltd: Forensic Analysis
- Lasertec (6920) | Mind the Guidance Gap
SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next
- SenseTime Group (20 HK) stock has been crushed following the lock-up expiry at the end of June with the stock now trading 40% below the IPO price.
- The company has recently bought back stock providing some support. More importantly, SenseTime Group (20 HK) was included in Southbound Stock Connect on 29 July.
- We expect a big increase in the free float adjustment factor (FAF) in the Hang Seng Indexes at the September rebalance that will provide some much needed passive inflows.
Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
- Several news media outlets reported that Meituan (3690 HK) Ele.me and other food delivery platforms were summoned over food safety problems as well as price war among them.
- Food delivery platforms are ordered to strictly follow food safety management responsibilities and also prevent price wars that disrupt the market order.
- Though the anti-trust fine of RMB3.44bn was thought to be the end of an almost year long regulatory crackdown on Meituan, it seems that this is far from over.
China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
- Tencent and Huawei launched beta tests for car-hailing platform almost simultaneously.
- Alibaba begins to disconnect Ant Group to avoid implicating each other.
- Missfresh dismissed almost all employees in its headquarters in Beijing.
Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)
- Electronics Parts and Devices manufacturer Minebea Mitsumi (6479 JP) has announced a 25% premium Tender Offer to take over connector-maker Honda Tsushin Kogyo (6826 JP).
- It is not an overwhelming bid, but is supported by Panasonic Corp (6752 JP) which owns an equity affiliate stake, and crossholders and friendly shareholders hold a lot.
- This looks like it will complete, despite being a little light on price.
Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys
- In last week’s Int’l Compass (July 21) we discussed positive signals that suggested the lows for this bear market may have already been established, or that downside is limited.
- But we also noted that various downtrends remained firmly intact, and that we needed to see indexes reverse their downtrends in order to get more constructive at the index level.
- It appears the bullish reversals have begun, as the SPX, MSCI ACWI (ACWI-US), and STOXX 600 are the first three major indexes to reverse topside their 4-month and YTD downtrends.
Route Mobile Ltd: Forensic Analysis
- Route Mobile operates as a cloud communication provider to enterprises, OTT players and mobile network operators. The company got listed on the bourse in September 2021.
- Route is a growing company, and derives a significant chunk of its business internationally.
- Route Mobile is a story centralized by grey areas, be it accounting or management’s stance on contingent liability, or impairment in investments.
Lasertec (6920) | Mind the Guidance Gap
- We turn tactically bearish on Lasertec as we expect the stock to dip on weak order guidance
- After an exceptionally strong past year, we expect the order outlook to normalise
- Risks include weaker macro, Intel capex delays and restrictions on equipment sales in China
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