In today’s briefing:
- Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing
- 7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
- Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
- Southeast Asia: The Passive Axe Hangs as Positioning Increases
- Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
- KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing
- VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close
- GJS/Haitong Merger: One Formality Reg To Go
- [Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
- Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well
Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing
- Jiangsu Hengrui Medicine (600276 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$2bn.
- In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
- There will be no Fast Entry in any indices but there will be index inclusions in multiple indices if the raise is larger or once the cornerstone investor lock-up ends.
7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
- Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
- Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
- The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
- The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
- There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
- Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.
Southeast Asia: The Passive Axe Hangs as Positioning Increases
- There are 8 stocks listed in Indonesia, Malaysia, Thailand and Philippines that could be deleted from passive portfolios in February.
- There is a fair bit to sell in the stocks with over US$50m flow and between 3.5-64x ADV. Positioning is not very high in a lot of the stocks.
- Stocks could avoid deletion if they move higher in the next week or two. But increased positioning could keep a lid on that.
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
- The exchange ratio for the merger between Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) is 0.62x.
- The merger closing is subject to several effectiveness and implementation conditions. The latest update suggests that the remaining conditions are CSRC and HKEx approvals.
- The satisfaction of the remaining conditions is a formality. At the last close and for an end February payment, the gross/annualised spread is 3.2%/26.4%.
KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing
- KRX confirmed no immediate changes on KRX Semicon and KRX Autos. The universe will switch from BMI to TMI large and mid-caps, with constituent updates happening in the September rebalancing.
- TMI rebalances quarterly, while KRX Semicon and Autos rebalance annually in September. KRX confirmed these indices will use the September TMI rebalancing results.
- TMI rebalances quarterly, likely releasing results before KRX Sector Indices, giving a window to predict shifts in KRX Semicon and Autos stocks and position ahead of the sector rebalancing.
VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close
- Back on the 20 December, VCredit Holdings (2003 HK), a provider of consumer financial services in China, announced a unconditional MGO from Ma Ting Hung, VCredit’s chairman. and concert parties.
- The catch? The Offer Price of HK$1.80/share was a 9.09% discount to undisturbed. It will not be increased.
- VCredit’s Composite Doc is now out, with the Offer open for tendering, with a 3rd February first close. The IFA says “not fair and not reasonable“. Trading 45% through terms.
GJS/Haitong Merger: One Formality Reg To Go
- Back on the 9th October, China’s leading state-backed brokerages Guotai Junan Securities (2611 HK) (GJS) and Haitong Securities (6837 HK) announced a scrip merger, with GJS the surviving entity.
- Barring a China Traditional Chinese Medicine (570 HK)-like obstacle/debacle, this transaction was a wrap. Fortunately, key regulatory approvals (SAMR and SASAC) have been ticked off.
- Approval from the Shanghai Stock Exchange was secured overnight. That was a formality. One approval remains – CSRC. Expect that condition to be satisfied shortly. GJS is no longer shortable.
[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
- In December, I thought the March 2025 Nikkei 225 Rebalance was going to be 2 ADDs 2 DELETEs and a double-capping for Fast Retailing.
- Fast Retailing has fallen sharply vs Nikkei 225, and another stock has announced a large-multiple share split, making it a strong candidate for Nikkei 225 ADDITION in March 2025.
- There is short-term path risk on all three ADDs, but they are definitely worth watching. Keep an eye out for separate insights on two of these names.
Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well
- WuXi AppTec (2359 HK) aims to raise around US$150m via selling around 3% stake in WuXi XDC Cayman (2268 HK).
- WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
- In this note, we will talk about the placement and run the deal through our ECM framework.
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