In today’s briefing:
- HSTECH Index Rebalance Preview: BYD (1211 HK) Could Replace China Literature (772 HK); Huge Trade
- CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace Sunny Optical (2382 HK)
- CATL A/H Listing – High Quality, Large Size Make It Unavoidable but Needs a Discount
- India: Potential Free Float Changes & Passive Flows in 3 Weeks
- Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters
- CATL H Share Listing (3750 HK): Valuation Insights
- Renesas Electronics Block – Well Flagged, Clean up but Momentum Isn’t Great
- CATL: Key Highlights in 1Q 2025 and PHIP Updates on Hong Kong Listing
- [Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals
HSTECH Index Rebalance Preview: BYD (1211 HK) Could Replace China Literature (772 HK); Huge Trade
- The review period for the June rebalance of the HSTECH INDEX ended on 31 March, the changes will be announced on 16 May and implemented on 6 June.
- Following the launch of the God’s Eye ADAS, BYD (1211 HK) could become eligible for index inclusion after meeting the Autonomous theme and Innovation screening.
- The inclusion of BYD (1211 HK) in the index could result in China Literature (772 HK) being deleted from the index in June.
CATL (3750 HK) H-Share IPO: Fast Entry to Global Indices Is Touch & Go
- Contemporary Amperex Technology (CATL) (300750 CH) could raise up to US$5.1bn in its H-share listing if the Offer Size Adjustment Option and the Overallotment Option are both exercised.
- There is a huge allocation to cornerstone investors that is locked up for 6 months. That significantly reduces float and the probability of Fast Entry inclusion to global indexes.
- CATL (3750 HK) will be added to Southbound Stock Connect from the open of trading on 16 June following the end of the Price Stabilisation period.
HSCEI Index Rebalance Preview: Pop Mart (9992 HK) Could Replace Sunny Optical (2382 HK)
- The review period for the June rebalance of the HSCEI ended on 31 March, the results will be announced on 16 May and will be implemented on 6 June.
- Pop Mart International Group L (9992 HK) could be added to the index while Sunny Optical Technology Group (2382 HK) could be deleted from the index.
- There are other stocks with big flows due to a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the rebalance in June.
CATL A/H Listing – High Quality, Large Size Make It Unavoidable but Needs a Discount
- Contemporary Amperex Technology (CATL) (300750 CH) , one of the world’s largest battery solutions providers, aims to raise around US$4bn in its H-share listing.
- CATL is the global leader in new energy vehicle battery solutions, in China and globally, as per SNE Research. Its A-shares have been listed since 2018.
- We have looked at the company’s past performance in our earlier notes. In this note, we talk about the IPO pricing.
India: Potential Free Float Changes & Passive Flows in 3 Weeks
- Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-December and/or end-September.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 6 stocks with passive inflows from global trackers while 4 could see passive outflows in May.
Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters
- Denso Corp (6902 JP) is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of Renesas Electronics (6723 JP) to international investors.
- The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday’s close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.
- We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.
CATL H Share Listing (3750 HK): Valuation Insights
- Contemporary Amperex Technology (CATL) (300750 CH) has launched its H Share listing at a maximum price of HK$263. Pricing will be on 19 May, and the listing on 20 May.
- I discussed the H Share listing in CATL H Share Listing: The Investment Case, CATL H Share Listing: AH Discount Views, CATL H Share Listing: PHIP Reinforces the Investment Case.
- Our valuation analysis suggests that the low AH discount can be justified. We would participate in the listing.
Renesas Electronics Block – Well Flagged, Clean up but Momentum Isn’t Great
- Denso Corp (6902 JP) is looking to raise US$940m via selling its remaining stake in Renesas Electronics (6723 JP).
- DENSO last sold some of its stake nearly a year ago and hence, this deal is well flagged.
- In this note, we will talk about the placement and run the deal through our ECM framework.
CATL: Key Highlights in 1Q 2025 and PHIP Updates on Hong Kong Listing
- CATL reported a 6.2% YoY increase in revenue in 1Q 2025. EV battery sales rose 14.0% YoY driven by healthy demand offset by lower ESS battery sales.
- CATL provided discussions about ongoing tariff disputes. It mentioned that the overall impact and outcome remain uncertain. The U.S. market accounts for about 7% of CATL’s total EV battery business.
- We maintain a Positive View of CATL. Our base case valuation of CATL is implied market cap of 1.3 trillion CNY which is 32% higher than current market cap.
[Japan M&A] Bain Deal for Nissin (9066) Is Still Light Vs Comparable Deals
- The deal price is higher than the Bloomberg article insinuated. The closing date is earlier than the Bloomberg article suggested. But that doesn’t mean it’s enough.
- The Large ToSTNeT-3 buyback last year changed the shareholder structure significantly, but many holders who sold are unknown. I would expect they were cross-holders.
- For that, this deal is NOT a done deal. There may be games played on this deal.
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