In today’s briefing:
- Santos (STO AU): Why FIRB Should Block ADNOC’s Takeover
- Zijin Mining (2899 HK): This Is A Short
- Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- UK CPI Stickier For Longer
- Mori Hills REIT (3234) – Large Sponsor Buy in Market as % of Max Real World Float
- Soft99 Corp (4464 JP): Effissimo Sheds More Light on Its Hostile Offer
- Mandom (4917 JP): Welcome Activism as Hibiki Takes Issue with the Price
- Quiddity Leaderboard HSIII Dec25/Mar26: Interesting Implications of the Recent Methodology Changes
- Chow Tai Fook (1929 HK): Strong Rally, Weak Jewellery Demand. Growth Risks.
- Chery Automobile IPO (9973 HK): Valuation Insights
Santos (STO AU): Why FIRB Should Block ADNOC’s Takeover
- There is no shortage of opinions on whether FIRB will back/oppose the Santos Offer, as Australia seeks to balance attracting foreign investment with the need to protect national interests.
- The key question is how Australia benefits from Santos becoming a foreign-owned national oil/gas company? Can ADNOC accelerated/bolster existing projects/operations? Can ADNOC better negotiate native title rights for domestic supply?
- And should Australia readily sell 100% in a critical infrastructure complex; yet if the roles were reversed, foreigners are capped at 49% ownership in UAE’s similar critical assets?
Zijin Mining (2899 HK): This Is A Short
- In my June note, Zijin Mining Group (2899 HK) appeared fully valued; but I (thankfully) stopped short of being outright bearish. Its share price is up 48% since!
- A basket of peers is also up 37% since that note. Gold is up~8%, and 41% YTD. On the 14th September, Zijin released Zijin Gold’s PHIP. 1H25 numbers were solid.
- However, Zijin Gold’s earnings are by no stretch an outlier. Zijin’s Mining’s current share price is now baking in exceptional (unrealistic?) metrics for the gold play spin-off.
Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- Chery Automobile Co. Ltd. (9973 HK)‘s IPO range is HK$27.75-HK$30.75/share and will raise up to HK$10bn (US$1.3m) if the oversubscription option is exercised, valuing the company at HK$169bn (US$21.7bn).
- The stock should be added to the HSCI Index in December and that will make the stock eligible for inclusion in Southbound Stock Connect.
- There will be no inclusion in global indexes for the next year, but there is a possibility of inclusion in the Hang Seng TECH Index (HSTECH INDEX) in December.
UK CPI Stickier For Longer
- UK inflation data confirmed the substantial upwards drift in the consensus, worth 0.6pp since May and 1.1pp over the past year, while matching final forecasts for August.
- The consensus has shifted further than usual over the past month. It now aligns with our hawkish forecast until April, when hope again dominates in dragging inflation down.
- Although the MPC won’t be shocked by this outcome, the persistent excess in underlying inflation still seems set to keep it holding rates. We do not expect cuts to resume.
Mori Hills REIT (3234) – Large Sponsor Buy in Market as % of Max Real World Float
- In the past 24 months, J-REIT sponsors have bought units in their REITs at sharp discounts to PNAV to raise PNAV and reduce overhang pressure.
- The goal is, basically transparently, to get PNAV to a level at which the REIT can buy more properties from the sponsor, who carries them at a much higher WACC.
- Mori Building has announced a 4.99% buy on Mori Hills REIT Investment Corporation (3234 JP) which is a Very Big portion of Max Real World Float. This should influence price.
Soft99 Corp (4464 JP): Effissimo Sheds More Light on Its Hostile Offer
- Effissimo has formally launched its hostile tender offer for Soft99 Corp (4464 JP) at JPY4,100, which is 66.3% higher than the MBO price of JPY2,465.
- The Board stonewalled Effissimo’s attempts to negotiate a friendly offer. The huge premium of Effissimo’s offer relies on lower WACC assumptions compared to the target/special committee IFA.
- Management’s initial approach will be to rely on the Board to oppose the Effissimo offer. There is a good chance that Soft99 will remain listed with two large shareholders.
Mandom (4917 JP): Welcome Activism as Hibiki Takes Issue with the Price
- On 15 September, Hibiki Path Advisors issued an open letter questioning the rationale for the Mandom Corp (4917 JP) Board to recommend a CVC-sponsored preconditional MBO at JPY1,960 per share.
- Hibiki opines that the MBO is being done at the wrong price (Hibiki’s value is JPY3,050). Some of Hibiki’s criticisms are valid, while others are not.
- CVC’s initial approach will wait for precondition satisfaction and secure additional irrevocables. However, this is a stopgap measure, and a bump is likely to occur.
Quiddity Leaderboard HSIII Dec25/Mar26: Interesting Implications of the Recent Methodology Changes
- The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
- In this insight, we take a look at the impact of the new selection methodology for the December 2025 and March 2026 rebal/review events.
- We have also presented our index change expectations for the next semiannual index review which will take place in March 2026 (regular ADDs/DELs only take place in March and September).
Chow Tai Fook (1929 HK): Strong Rally, Weak Jewellery Demand. Growth Risks.
- China gold jewelry demand slumped in 2Q2025, while investment demand for coins and bars remained resilient amidst rise in gold prices, according to data released by China Gold Association.
- If gold rally continues, Chow Tai Fook Jewellery (1929 HK) faces heightened demand growth risk due to reliance on the competitive, price-sensitive, consumption-driven jewellery segment.
- Chow Tai Fook’s 140% YTD rally reflects optimism on branding-driven earnings growth, but stretched valuations overlook downside risks to growth if gold prices keep rising.
Chery Automobile IPO (9973 HK): Valuation Insights
- Chery Automobile (9973 HK) is a Chinese automobile manufacturer. It has launched an HKEx IPO to raise up to US$1.2 billion.
- I previously discussed the IPO in Chery Automobile IPO: The Bull Case and Chery Automobile IPO: The Bear Case.
- In this note, I present my forecasts and valuation. My analysis suggests that the IPO price range is reasonable.
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