In today’s briefing:
- CATL A/H Listing – Thoughts on A/H Premium
- Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid
- Hang Seng Indexes: ADR Depositary Holding Changes; Round-Trip Trade Is US$5.1bn; NetEase Outperforms
- CATL H Share Listing: AH Discount Views
- Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- Quiddity Leaderboard TDIV Jun25: US$2.5bn One-Way; Several High-Impact Flow Names
- Quiddity Leaderboard ChiNext & ChiNext 50 Jun25: Last-Minute Methodology Changes; Final Expectations
- A/H Premium Tracker (To 2 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- Errors in Local Street’s Projections for the KOSPI 200 Rebalancing
- HEM: Dovish Prices Deranged
CATL A/H Listing – Thoughts on A/H Premium
- Contemporary Amperex Technology (CATL) (300750 CH), one of the world’s largest battery solutions providers, aims to raise at least US$5bn 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 its recent updates and provide our thoughts on valuations.
Toyota Industries (6201) – Thinking About How To Value a ¥6trln Bid
- Toyota Industries is a relatively complicated business. It owns lots of shares of Toyota and other companies. It has a financing business, and runs ¥500+bn of EBITDA.
- As of 31 March 2025, the “Enterprise Value” of the Operating and Financing Business together was about ¥2.2trln. The “Asset Ownership Business” was at ¥2.8trln (1yr ago it was ¥4trln).
- If you think buying the Operating Business at 6x EBITDA is appropriate, that means the Asset Ownership Business block buy gets done at 31-March-2025 prices. Worth thinking about.
Hang Seng Indexes: ADR Depositary Holding Changes; Round-Trip Trade Is US$5.1bn; NetEase Outperforms
- Most Secondary-listed companies have announced the number of shares that underlie ADRs and are held by the ADR depositaries as of end-March (or around that time).
- There are some significant increases in the number of shares held by the ADR depositaries. That changes the free float for the stocks and consequently the estimated flows.
- NetEase (9999 HK), Trip.com Group (9961 HK), Baidu (9888 HK) and Weibo (9898 HK) will have passives buying, while NIO (9866 HK) switches to a sell.
CATL H Share Listing: AH Discount Views
- Contemporary Amperex Technology (CATL) (300750 CH), the world’s largest supplier of EV and ESS batteries, is set to launch an H Share listing to raise US$5 billion.
- In CATL H Share Listing: The Investment Case, a leading market position, forecasted return to growth, peer-leading profitability, cash generation, peer-leading FCF margin and an attractive valuation are highlighted.
- In this note, I examine the likely discount CATL will offer its H Shares compared to the A Shares.
Rare Arb Opportunity from ATS Breakout in Korea: Day-Night Spread
- Local traders are targeting the spread between day and NXT’s after-hours, a classic arb play similar to what Japanese instos used when ATS first launched, now emerging in Korea.
- The gap persists because institutional flow on NXT is still minimal, with recent data showing instos accounting for just 1-2% of total turnover.
- NXT’s night session is seeing heavy retail flow, providing instos with the liquidity to trade. This creates a rare opportunity to capitalize on early inefficiencies before others catch on.
Quiddity Leaderboard TDIV Jun25: US$2.5bn One-Way; Several High-Impact Flow Names
- The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2025 index rebal event.
- We expect five changes for the TDIV index and there could be index flows of US$2.5bn one-way due to capping.
Quiddity Leaderboard ChiNext & ChiNext 50 Jun25: Last-Minute Methodology Changes; Final Expectations
- The ChiNext index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
- The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
- In this insight, we have presented our final expectations for the upcoming index rebal event. We expect 9 ADDs/DELs for the ChiNext index and 5 ADDs/DELs for the ChiNext 50.
A/H Premium Tracker (To 2 May 2025): AH Premia Fall Small; Spread Torsion Provides Continued Alpha
- A quiet week as most indices – HK and mainland – saw performance hover around zero for the three days both were open at the start of the week.
- For a couple of months I’ve thought warning signs were flashing and spreads could widen. Widening has paused. I am not comfortable it will remain paused or Hs will outperform.
- The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from spread torsion (wider spreads coming in, small premia widening). Alpha good again this week.
Errors in Local Street’s Projections for the KOSPI 200 Rebalancing
- One local desk misread the KOSPI 200 rules, thinking one screen was enough — but it’s a strict two-step filter, and that led to three wrong delete calls.
- KRX will drop the rebalance list post-close on May 21 or 22, and despite well-telegraphed outcomes, strong next-day price action has followed in past cycles.
- Consider a pre-announcement long/short basket trade, as this is the first rebalance post-short-selling resumption. NXT’s rising market share also creates opportunities in overnight-daytime price spreads.
HEM: Dovish Prices Deranged
- Despite concerns, activity continues to be robust with stable manufacturing and tight labour markets.
- There is a persistent issue of high underlying price and wage inflation.
- The Bank of England’s rate cut ahead of the Federal Reserve is seen as highly irrational, as rates do not reflect the rebounding risk sentiment.
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