In today’s briefing:
- HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent
- FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
- EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling
- EQD | Kospi Index Options Weekly – January 06 – 10
- Cellnex’s Strategic Divestment of Swiss Subsidiary
- Plover Bay 1523 HK FY24 Earnings Preview: What Should We Expect in FY25
- China Consumption Weekly (13 Jan 2025): NEV 2024, Tencent in Blacklist, Energy Monster Going Private
HK Connect SOUTHBOUND Flows (To 10 Jan 2025); YUUUUGE Net Buying by SB, $4bn on Tencent
- SOUTHBOUND gross trading activity was not stronger per day than the previous two weeks. But SB Net Buying was HUGE. The biggest week since global index deletions in January 2021.
- The story was similar. On Tuesday in the US, Tencent was put on a DoD list leading to a possible CMC list appearance (which would lead to index deletions).
- Tencent saw US$4bn of SOUTHBOUND net buying. SMIC, Xiaomi, and China Mobile were another $1bn.
FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
- Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
- Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
- The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.
EQD | Tencent – Call Buyers Haven’t Lost That Loving Feeling
- Investors haven’t lost their enthusiasm for Tencent. The put/call ratio is a long way from indicating panic.
- Implied vols have risen but are far from panic levels with 1M implied at it’s 39th percentile over the past year and 15th percentile since 2001.
- Skew has risen significantly for out-of-the-money Puts as spot has moved into a range where there is higher Put positioning vs Call positioning.
EQD | Kospi Index Options Weekly – January 06 – 10
- Strong price action, Kospi rising 2.32% on Monday and finishing the week up 3.24%
- Implied vol was virtually unchanged and historic vols came down in the move higher.
- Kospi tends to have its largest monthly average absolute price change during January.
Cellnex’s Strategic Divestment of Swiss Subsidiary
- Cellnex plans to sell its 72% Swiss subsidiary stake, potentially generating €1.1 billion, as part of a broader strategy to divest non-core assets and reduce debt.
- Recent divestments in Austria, Ireland, and Scandinavia enable Cellnex to focus on strategic markets, targeting a debt-to-EBITDA ratio of 5-6x by 2025/2026.
- Optimizing its portfolio, Cellnex aims to boost shareholder returns via buybacks, higher dividends (which should attract income funds), and leveraging its strong market position in core European markets.
Plover Bay 1523 HK FY24 Earnings Preview: What Should We Expect in FY25
- We preview Plover Bay Technologies’ (1523 HK) FY24 earnings and expect 25% revenue growth and 38% profit growth, aligning with the profit alert’s trends.
- The company will declare its results on February 27th and hold a conference call to clarify its growth prospects for FY25 (vs our assumption of 20% avg-10 Yr growth)
- This is a name worth exploring, trading at 16x/14x FY24e/25e, net cash, with >50% ROEs and 5%/6% dividend yields for FY24e/25e.
China Consumption Weekly (13 Jan 2025): NEV 2024, Tencent in Blacklist, Energy Monster Going Private
- NEV retail deliveries grew by 41% in 2024, higher than 36% in 2023.
- The US Department of Defense designated Tencent as a Chinese Military Company.
- Smart Share Global plans to go private, as the company has no exclusive advantage.
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