China Archives | Page 27 of 199 | Smartkarma

In today’s briefing:

HK Merger Arb: Opportunities Amidst the Market Selloff
CSI 300 Index Outlook After Trump’s Threat of 50% Tariff on China
Chagee (霸王茶姬) Pre-IPO: Very Few Exact Competitors – A Viewpoint on the Ground
Hong Kong Arbs: (Largely) Immune From Trump Tariffs
Hengrui (恒瑞医药) A/H Listing: An Updated Comparison with Hansoh
FWD: An Ideal Acquisition Target for Korean Insurers?
Jiangsu Zenergy Battery Technologies IPO – PHIP Updates & Quick Thoughts on Peer Comp and Valuation

HK Merger Arb: Opportunities Amidst the Market Selloff

The gross spreads of large HK merger arb situations have increased due to the unfortunate fallout from Trump’s trade war. The HSI closed down 13.2%.
We assess the widening spreads of HK’s merger arb situations based on offer structure, preconditions, conditions, and other factors.
The deals, ranked in terms of increasing deal risk, are Tam Jai, Soundwill, Vesync, Goldlion, Canvest, ESR, OneConnect, HKBN, and ENN Energy.

CSI 300 Index Outlook After Trump’s Threat of 50% Tariff on China

By Nico Rosti

The Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) was less impacted than other indices by the global sell-off: on Monday it was down only -10% from the recent top.
On Monday Donald Trump posted that if China does not withdraw immediately its +34% tariffs increase, the United States will impose ADDITIONAL Tariffs on China of +50%, effective April 9th!
Although the CSI 300 Index is more insulated than other indices from global market volatility, it is not completely immune and remains vulnerable to the impact of US’s tariff threats.

Chagee (霸王茶姬) Pre-IPO: Very Few Exact Competitors – A Viewpoint on the Ground

By Ming Lu

Chagee is the No. 6 largest teahouse chain in China according to store number.
Very few teahouses have a per customer transaction higher than Chagee.
We believe Chagee has advantages in the high price market.

Hong Kong Arbs: (Largely) Immune From Trump Tariffs

In Aussie Arbs: Trump Tariffs And MACs, I ran a ruler over the fifteen live deals Down Under, and how they may be affected by the Trump Tariffs.
This insight canvasses the ongoing Hong Kong arbs and wording surrounding material adverse changes (MACs). Hong Kong MACs are typically less onerous, and lack specificity, versus Aussie arbs.
Although the framework exists for an Offeror to enforce a MAC, I’m not aware of any evidence of this occurring under Hong Kong’s Takeovers Code.

Hengrui (恒瑞医药) A/H Listing: An Updated Comparison with Hansoh

By Ke Yan, CFA, FRM

Jiangsu Hengrui Medicine (600276 CH) a China-based pharmaceutical company, aims to raise around US$2bn in its H-share listing.
Given its similarity to Hong Kong-listed Hansoh Pharma, had done a comparison between the two.
In this note, we looked at the latest results releases from both companies and highlighted granular differences. It is also interesting to compare the relative valuation from a historical perspective.

FWD: An Ideal Acquisition Target for Korean Insurers?

By Alec Tseung

The saga of CK Hutchison’s Panama Canal Ports sale might also impact FWD due to tensions between China and the Li family.
Despite minimal mainland China presence, FWD faces exposure through its significant HK and Macau operations; HK and Macau contributed 40% – 50% of the group’s VNB and operating profits.
After FWD’s failed IPO attempts, PCG might consider a strategic sale for liquidity; FWD might offer a good strategic fit to Korean insurers looking to expand to Southeast Asia.

Jiangsu Zenergy Battery Technologies IPO – PHIP Updates & Quick Thoughts on Peer Comp and Valuation

By Akshat Shah

Jiangsu Zenergy Battery Technologies (JSZENERGY CH) is looking to raise US$130m in its Hong Kong IPO.
Zenergy is an EV and energy storage system battery manufacturer providing integrated battery solutions, encompassing battery cells, modules, packs and battery management systems dedicated to large-scale applications of electrochemical products.
In our previous note, we looked at the firm’s past performance. In this note, we talk about the IPO valuations.

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Apr 07

Daily Brief China: Chagee Holdings, Crystal International, Jiangsu Zenergy Battery Technologies, Contemporary Amperex Technology (CATL), CK Infrastructure Holdings, Goldlion Holdings and more

In today’s briefing:

Chagee Holdings (CHA US) IPO: The Bear Case
HK-Listed Apparel & Footwear Screener: Tariff Drag On The Sector
Jiangsu Zenergy Battery Tech IPO: Growth Fueled By Volume
ECM Weekly (7 Apr 2025) – CATL, Maynilad, Chagee, Lotte Logistics, Sigenergy, Duality, Wuxi XDC
CKI (1038 HK): It Is the Best Time
Goldlion Holdings (533 HK) Privatization – Updates on Valuation Outlook Based on 2024 Results

Chagee Holdings (CHA US) IPO: The Bear Case

By Shifara Samsudeen, ACMA, CGMA

Chagee Holdings (CHA US), a leading premium tea drinks brand, is seeking to raise US$400-500 million through a Nasdaq IPO.
In Chagee Holdings (CHA US) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on unsustainable growth rates, pressure on KPIs, signs of margin pressure, increasing S&M expenses and weakening forward growth indicators.

HK-Listed Apparel & Footwear Screener: Tariff Drag On The Sector

By Sameer Taneja

Tariff introductions in Vietnam were 46%, PRC 34%, Bangladesh 37%, Indonesia 32%, etc, have rocked the textile complex, and share prices have reacted negatively.
The companies with the maximum revenue exposure to the US market are Stella International (1836 HK), with 47%, Crystal International (2232 HK), with 38%, and Lever Style (1346 HK), with 58%.
We anticipate that the negative sentiment will continue to hinder the sector until a reasonable negotiation occurs. In the meantime, there are no beneficiaries in this trade war.

Jiangsu Zenergy Battery Tech IPO: Growth Fueled By Volume

Jiangsu Zenergy Battery Technologies (JSZENERGY CH) (JZBT) is a lithium-ion battery manufacturer in China who is focused on developing a diverse portfolio of market-driven and technology-fueled battery products.
The company has filed for an IPO on the HKEx and plans to raise proceeds of around US$130m through the issue of 121m shares.
The company’s earnings have seen strong growth over the years driven by its LFP battery products and fall in lithium carbonate prices have helped turn around profitability.

ECM Weekly (7 Apr 2025) – CATL, Maynilad, Chagee, Lotte Logistics, Sigenergy, Duality, Wuxi XDC

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, we looked at the possible A/H premium for Contemporary Amperex Technology (CATL) (300750 CH).
On the placements front, WuXi AppTec (2359 HK) was back agai with a sale of WuXi XDC Cayman (2268 HK).

CKI (1038 HK): It Is the Best Time

CK Infrastructure Holdings (1038 HK)‘s share price should pick up as its portfolio of non-US infrastructure assets will become increasingly attractive.
Its assets will benefit from re-pricing as global inflation rates trend higher. Meanwhile, it will gain from the translation of foreign earnings back to HK$.
The secured 5.7% and 6.2% dividend yield for FY25F and FY26F makes CKI appealing, especially given a track record of 28 consecutive years of dividend hike.

Goldlion Holdings (533 HK) Privatization – Updates on Valuation Outlook Based on 2024 Results

2024 results is significantly below expectations. While revenue had negative growth, SG&A expenses remain high.Coupled with net fair value losses after tax on investment properties, we saw ugly net profit.
As consumer confidence won’t improve in short term, coupled with competition/corporate strategy lag, we adjusted next three-year growth based on 2024 results. This may increase the success rate of privatization.
Reasonable valuation of Goldlion is 9-14x P/E due to short-term headwinds.If performance picks up due to effective expansion in online channels or popular products launched, P/E may improve to 12-15x.

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Apr 06

Daily Brief China: WuXi AppTec , BeiGene , Hang Seng Index, Skyworth Group Limited and more

In today’s briefing:

China Healthcare Weekly (Apr.6) – SASAC to Encourage SOE M&A, WuXi AppTec Disposed XDC Shares Again
Quiddity Leaderboard Hang Seng Index Jun25: Beigene Is Our Top Pick
HSI Index Options Weekly (Mar 31-Apr 03): Global Meltdown, What to Expect on Monday
Weekly Deals Digest (06 Apr) – Skyworth, HKBN, Makino, Avjennings, Domain, Dropsuite, Dada Nexus

China Healthcare Weekly (Apr.6) – SASAC to Encourage SOE M&A, WuXi AppTec Disposed XDC Shares Again

Licensing-Out partnerships are expected to contribute approximately US$6–7 billion in annual upfront payments, US$12–14 billion in milestone payments, and US$25–30 billion in sales-sharing revenues to China’s innovative drug industry.
SASAC’s new policy promotes SOE M&A to strengthen industrial chains, especially in weaker sectors like biomedicine. The strategic deployment of state-owned capital is set to gain momentum.
WuXi AppTec is divesting its stake in WuXi XDC, viewing the shares as overvalued and aiming to lock in profits ahead of a potential price correction.

Quiddity Leaderboard Hang Seng Index Jun25: Beigene Is Our Top Pick

By Janaghan Jeyakumar, CFA

The Hang Seng Index is the benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to predict index changes.
In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes during the next review in June 2025.
The index changes are expected to be confirmed on 16th May 2025.

HSI Index Options Weekly (Mar 31-Apr 03): Global Meltdown, What to Expect on Monday

A shortened trading week masks the true extent of the HSI sell-off, with global markets down sharply Thursday and Friday
We use related indexes and historical relationships to estimate Monday’s price change and 1M implied vol for HSI.
Put activity surged, with heavy interest at the 19,600 strike potentially adding pressure to price and vol on Monday.

Weekly Deals Digest (06 Apr) – Skyworth, HKBN, Makino, Avjennings, Domain, Dropsuite, Dada Nexus

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: DN Solutions (298440 KS) seeks to raise US$1.1 billion in a KRX IPO and Chagee Holdings (CHA US) seeks to raise US$400-500 million through a Nasdaq IPO.
Event-Driven developments: Skyworth Group Limited (751 HK), HKBN Ltd (1310 HK), Makino Milling Machine Co (6135 JP), Avjennings Ltd (AVJ AU), Domain Holdings Australia (DHG AU), Dropsuite Ltd (DSE AU).

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Apr 05

Daily Brief China: Regencell Bioscience Holdings, Xiaomi Corp, Ares Management and more

In today’s briefing:

Is This Chinese Biotech Going Out of Business?
Lucror Analytics – Morning Views Asia
Asia Real Estate Tracker (04-Apr-2025): JD Property buying Brisbane estate for $153M.

Is This Chinese Biotech Going Out of Business?

By J Capital Research

This Nasdaq-listed, Hong Kong-based company hopes to apply Traditional Chinese Medicine (TCM) to significant illnesses like ADHD, but that seems unlikely. The company is a family affair, with all research provided by the CEO’s father, so one wonders how objective scientific assessment can be.
The stock surged by more than 700% in a month without patent approval, a buyout offer, or other notable news. The CEO funded a share buyback, but rather than demonstrating faith in the company, the repurchase looked suspiciously like a way to inflate the short-term share price, possibly for an equity issue or insider self- enrichment since the CEO’s compensation is tied to market capitalization.
This is a highly speculative business run by a family team from Hong Kong, thus little trusted in the U.S. and very volatile.

Lucror Analytics – Morning Views Asia

By Trung Nguyen

In the US, the ISM services index declined to 50.8 (52.9 e / 53.5 p) in March 2025, the lowest level since June 2024, albeit remaining in expansion territory for the ninth consecutive month.
Meanwhile, the March 2025 final S&P services PMI climbed to 54.4 (54.2 e / 51.0 p), but was stable compared to the preliminary reading of 54.3.
The composite PMI rose to 53.5 (53.5 e / 51.6 p). Separately, the trade deficit narrowed to USD 122.7 bn (USD 123.5 bn e / USD 130.7 bn revised p) in February.

Asia Real Estate Tracker (04-Apr-2025): JD Property buying Brisbane estate for $153M.

By Asia Real Estate Tracker

JD Property is acquiring Brisbane estate from ESR JV for $153M, expanding their real estate portfolio in Australia.
M&G and Nuveen have appointed new global real estate heads, signaling strategic leadership changes within their respective companies.
GLP completes a $360M China data center fund, highlighting their continued investment in the growing data center market in China. Warburg Pincus acquires Tokyo office building through Life Sciences JV with Eastgate, further expanding their real estate holdings in Asia.

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Apr 04

Daily Brief China: ENN Energy, Dream International, HKBN Ltd, Duality Biotherapeutics, Dada Nexus , Xiamen Hithium, Chagee Holdings, New World Development, Blackstone and more

In today’s briefing:

ENN Energy (2688 HK): This Is An Avoid
Dream International (1126 HK) FY24 Results and Concall Update: Margins Bounce Back
HKBN (1310 HK): I Squared Inches Closer to a Competing Offer
Duality Biotherapeutics (映恩生物) Pre-IPO: Valuation and the Trap
Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer
Xiamen Hithium Energy Storage Technology Pre-IPO Tearsheet
Chagee Holdings IPO Preview
Lucror Analytics – Morning Views Asia
Asia Real Estate Tracker (03-Apr-2025): Warburg Pincus buys Tokyo office in life sciences JV.

ENN Energy (2688 HK): This Is An Avoid

Back on the 26th March, ENN Energy (2688 HK) announced a cash/scrip Offer from ENN Natural Gas (600803 CH), its largest shareholder.
Investors hoping for a clean (er) exit, or one where the back-end terms were clearly defined, will be disappointed. And minorities are active in this name.
The Offer pivots on where the newly-listed H-shares trade. The IFA’s assessment on the theoretical value of these H-shares is unrealistic.

Dream International (1126 HK) FY24 Results and Concall Update: Margins Bounce Back

By Sameer Taneja

Dream International (1126 HK) posted strong results, with revenues up 2% and profits down 11% YoY, demonstrating effective cost control in a challenging competitive environment.
Net cash on the balance sheet ended at 1.52 bn HKD (vs 1.35 bn), representing 33% of market capitalization. The company rewarded shareholders with 60 cents of dividend (~8.9% yield).
Trading at 6x/3x PE/EV-EBITDA FY24, with an 8.9% dividend yield and an average 10-year ROCE of 20%, the stock is worth exploring from here.

HKBN (1310 HK): I Squared Inches Closer to a Competing Offer

Today’s HKBN Ltd (1310 HK) monthly update notes that I Squared has completed due diligence and is finalising the terms of a possible preconditional offer.
The I Squared bid will likely be a modest premium to the China Mobile offer with a 50% minimum tendering condition. The key unknown is securing regulatory approvals.
China Mobile (941 HK) will first react to an I Squared offer by maintaining terms. However, regardless of whether I Squared secures regulatory approvals, it is likely to match terms.

Duality Biotherapeutics (映恩生物) Pre-IPO: Valuation and the Trap

By Ke Yan, CFA, FRM

Duality Biotherapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$250m via a Hong Kong listing.
We look at the company’s valuation based on its core products, namely DB-1303, DB-1311, and DB-1305.
We highlight key differences between our valuation and the broker valuation guidance.

Dada Nexus (DADA US): JD.Com’s US$2/ADS Firm Offer

Back on the 27th January, Dada Nexus (DADA US), a Chinese on-demand retail and delivery platform, announced a preliminary non-binding proposal from JD.com (9618 HK).
JD.com, a 63.2% shareholder, was offering US$0.50/share (US$2.00/ADS), a 42% premium to last close. Those terms are now firm and a definitive agreement entered into.
The merger is expected to close in the third quarter. Trading at 4.7%/15%, gross/annualised spread, assuming a four month off-ramp.

Xiamen Hithium Energy Storage Technology Pre-IPO Tearsheet

By Troy Wong

Xiamen Hithium Energy Storage Technology (XH) is looking to raise up to US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai, Citic, ABC, and BOC.
XH is a leading pure-play global energy storage company, it’s ranked third in the global energy storage market in 2024, in terms of lithium-ion ESS battery shipments, as per CIC.
With its integrated value chain and mainly in-house manufacturing, XH offers end-to-end energy storage solutions across various application scenarios, mainly collaborate with third-party system integrators in their main market, China.

Chagee Holdings IPO Preview

By Douglas Kim

Chagee Holdings (CHA US) is getting ready to complete its IPO on NASDAQ in the next several weeks. Chagee is one of the largest premium tea chains in China.
The company’s sales and profits have been exploding higher in the past three years. Its sales jumped from 0.5 billion RMB in 2022 to 12.4 billion RMB in 2024.
Chagee could raise more than $500 million in this IPO. However, this is subject to change.

Lucror Analytics – Morning Views Asia

By Leonard Law, CFA

US President Donald Trump has announced a minimum 10% tariff on all exporters to the US, as well as additional reciprocal duties on c. 60 nations.
Vietnam faces one of the steepest tariff increases at 46%, while China will be subject to an additional tariff hike of 34% (on top of an existing 20% duty tied to fentanyl trafficking).
Meanwhile, India, South Korea and Japan have been hit with tariffs of 26%, 25% and 24%, respectively.

Asia Real Estate Tracker (03-Apr-2025): Warburg Pincus buys Tokyo office in life sciences JV.

By Asia Real Estate Tracker

Warburg Pincus partners with Eastgate to acquire Tokyo office as part of Life Sciences joint venture, expanding their investment portfolio.
Greystar purchases GIC-Wee Hur Aussie student housing for $1B, solidifying their presence in the Australian real estate market.
Iron Mountain makes strategic move by acquiring Web Werks, an Indian data center group, enhancing their capabilities in the data management sector.

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Apr 03

Daily Brief China: Contemporary Amperex Technology (CATL), WH Group, Atour Lifestyle Holdings, Ho Bee Land Ltd, Yuexiu Property and more

In today’s briefing:

CATL A/H Listing – Thoughts on A/H Premium
HONG KONG ALPHA PORTFOLIO (March 2025)
[Atour Lifestyle (ATAT US, BUY, TP US$37) Review]: Higher-Quality Growth Extending into 2025
Asia Real Estate Tracker (02-Apr-2025): Warburg Pincus buys Japan living sector.
Lucror Analytics – Morning Views Asia

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.

HONG KONG ALPHA PORTFOLIO (March 2025)

By David Mudd

The Hong Kong Alpha simulated portfolio returned 0.97% in March outperforming its benchmark by 1.1%. Since inception the portfolio has outperformed Hong Kong indexes by 8% to 11%.
The portfolio has generated alpha while maintaining a correlation of 0.8 and a beta of 1.05. The HK Alpha portfolio has a Sharpe ratio of 2.19 YTD.
On 3/31/25 we sold Shanghai Electric Group Company (2727 HK) , Citic Securities (H) (6030 HK) , Sands China (1928 HK) , and Sunny Optical Technology Group (2382 HK)

[Atour Lifestyle (ATAT US, BUY, TP US$37) Review]: Higher-Quality Growth Extending into 2025

By Eric Wen

Atour (ATAT) reported C4Q24 revenue 0.7%/5.8% higher than our estimate/consensus, which translate to 0.5%/4.7% higher in non-GAAP net income, thanks to hotel supply chain consolidation and pillow retail sales.
Management’s guidance for a steeper-than-consensus decline in 2025’s RevPAR are conservative in our view. We see a “low-before-high” RevPAR pattern in 2025, supported by tightened hotel supply and government stimuli.
We keep the TP at US$37/ADS and maintain as travel sector TOP BUY

Asia Real Estate Tracker (02-Apr-2025): Warburg Pincus buys Japan living sector.

By Asia Real Estate Tracker

Warburg Pincus invests in Japan living sector by acquiring a 16,000-room portfolio.
Proprium Capital beats out Ho Bee Land with a $228M bid for an Australian homebuilder.
Hillhouse’s Rava secures majority stake in Dash Living with $150M investment; Ex-Macquarie exec Robson to advise on ESR privatization.

Lucror Analytics – Morning Views Asia

By Leonard Law, CFA

In the US, the JOLTS job openings decreased to 7.57 mn (7.66 mn e / 7.76 mn p) in February.
The job openings rate fell slightly to 4.5% (4.6% e / 4.7% revised p), while the layoffs rate was stable at 1.1% (1.1% revised p).
Separately, the March ISM manufacturing index declined to 49.0 (49.5 e / 50.3 p). This was driven by a drop in the new orders and employment components, while the prices paid component increased.

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Apr 02

Daily Brief China: Skyworth Group Limited, BYD, WuXi XDC Cayman , Dada Nexus , Shougang Fushan Resources, KE Holdings , ENN Energy, SGX Rubber Future TSR20, Jinke Smart Services, China Traditional Chinese Medicine and more

In today’s briefing:

Skyworth Group (751 HK)’s Latest Partial Buyback. Thoughts On Proration
BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers
Wuxi XDC Placement – Following Biologics Playbook, past Deals Have Been Mixed
Dada Nexus (DADA US): JD.com’s Binding Offer a Done Deal
Fushan Energy (639 HK): Cash 80% of Market Cap, 100% Payout Implies 12% Trailing Dividend Yield
KE (BEKE US, 2423 HK): 2024 Result, Accelerating Quarter by Quarter, Upside Above 100%
ENN Energy (2688 HK): Valuing ENN Natural Gas H-Share
Helixtap China Report: Short-term Downward Bias In China Demand Outlook Amid Tariff Tensions
Jinke Smart (9666 HK): Boyu Returns To The Well?
China TCM (570.HK) – Updates on Performance Forecast and Valuation Outlook Based on 2024 Results

Skyworth Group (751 HK)’s Latest Partial Buyback. Thoughts On Proration

Back on the 23 December 2022, Skyworth Group (751 HK) announced (another) partial buyback, at HK$3.80/share, a 20.25% premium to undisturbed. On the 28 March, terms were bumped to $5.00/share.
At the close of the Offer, the Wong Concert Group held 50.35%, and were no longer subject to the creeper rule. The Group now holds 56.04%
Yet another Partial Offer has been announced (HK$3.11/share, a 15.19% premium)), which will lift the Group’s stake to 66.45%. Minimum pro-ration is 37.84%. It is likely to go higher.

BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers

By Nico Rosti

A recent insight by Brian Freitas signals that BYD (1211 HK)buying from global index trackers is done (more passive buying from HSI/HSCEI trackers may come later this month).
As of Tuesday, the stock is currently in the middle of a modest pullback, 1 week down, reached a support area where the probability of a bounce is around 50%.
We are at the start of the month, it may be early to benefit from the passive buying discussed by Brian Freitas, however this pullback could support a buy-the-dips strategy.

Wuxi XDC Placement – Following Biologics Playbook, past Deals Have Been Mixed

WuXi AppTec (2359 HK) aims to raise around US$250m via selling around 3.5% 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.

Dada Nexus (DADA US): JD.com’s Binding Offer a Done Deal

Dada Nexus (DADA US) disclosed a binding proposal from JD.com Inc (ADR) (JD US) at US$2.00 per ADS, a 41.8% premium to the undisturbed price of US$1.41 (24 January).
The shareholder vote is low-risk (two-thirds voting threshold), as JD.com represents 63.2% of voting power. The dissenting condition (less than 12% of outstanding shares) is waivable.
Although the offer is unattractive, this is a done deal. The transaction is expected to close within the third quarter of 2025.

Fushan Energy (639 HK): Cash 80% of Market Cap, 100% Payout Implies 12% Trailing Dividend Yield

By Sameer Taneja

Shougang Fushan Resources’ (639 HK) FY24 revenues/profits were down 14%/21% YoY due to the decline in coking coal prices, which were 14% YoY to 1666 RMB/ton (on similar volumes).
At 1295 RMB/ton, spot prices are 25% lower than last year’s average, yet the stock is supported by cash, which represents 80% of its market capitalization (10 billion HKD).
The company provided a 100% payout of 30 HKD cents, resulting in a 12% dividend yield; however, at current spot prices, the yield is 7%.

KE (BEKE US, 2423 HK): 2024 Result, Accelerating Quarter by Quarter, Upside Above 100%

By Ming Lu

Exhibiting home revenue recovered significantly in 4Q24, while new home revenue recovered from 3Q24.
The growth rate of active stores and active agents accelerated quarter by quarter.
We conclude an upside of 105% and a price target of US$42.00. Buy.

ENN Energy (2688 HK): Valuing ENN Natural Gas H-Share

We calculated that after the privatisation of ENN Energy (2688 HK), the EPS of ENN Natural Gas (600803 CH) will be Rmb1.94 for FY25F and Rmb2.11 for FY26F.
By using ENN Energy’s undisturbed PER (with and without a 10% discount) and Kunlun Energy (135 HK)‘s ex-cash PER, ENN-NG H-share is worth 6.8-7.9x for FY25F and 6.3-7.2x for FY26F.
ENN-NG H-share is hence valued at HK$14.11-16.37, implying that ENN Energy’s value under the privatisation proposal is HK$66.02-72.67, which is lower than Somerly’s HK$80 estimate.

Helixtap China Report: Short-term Downward Bias In China Demand Outlook Amid Tariff Tensions

By Arusha Das

Trade war impacts the trade flow
Arbitrage narrows on wintering
Fluctuating inventory level indicates at a whimsical buying pattern

Jinke Smart (9666 HK): Boyu Returns To The Well?

Back on the 27th September 2022, Boyu Group launched a HK$12/share VGO for PRC-incorporated property management play Jinke Smart Services (9666 HK), a 33.04% premium to last close.
Boyu and concert parties held 53.05%, and the Offer was contingent on regulatory approvals and 7.71% of shares out tendering. 4.79% tendered. Boyu also acquired 7.15% in the market.
Two days after announcing very ordinary FY24 results, Jinke shares were suspended pursuant to the Takeovers Code. Presumably Boyu is on the acquisition path again. Another VGO or a privatisation?

China TCM (570.HK) – Updates on Performance Forecast and Valuation Outlook Based on 2024 Results

TCM finished drugs and TCM decoction pieces businesses could be the second and third growth curve of China TCM when the concentrated TCM granules business is facing VBP headwinds.
2024 would be the performance low point. Due to 2024 low base, we would see positive growth in 2025.Performance recovery is expected in next three years based on our forecast.
Annual profit of RMB1 billion is achievable. If based on 10x P/E, market value is RMB10 billion.We think if valuations fall below RMB10 billion, investors can consider buying on dips.

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Apr 01

Daily Brief China: BYD, Skyworth Group Limited, China Merchants Bank H, Weichai Power Co Ltd H, Tencent, QingSong Health, Dongfang Electric, Longfor Properties and more

In today’s briefing:

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion
Skyworth (751 HK): Another Buyback
A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening
HK Connect SOUTHBOUND Flows (To 28 Mar 2025); Banks and Divs Bought Again
Tencent (700 HK): Volatility Plays and Skew Top Trades
QingSong Health Corporation – Pain Points of the Business Model and the Outlook
Dongfang Electric (1072 HK): Returning to Growth in 1Q25 Despite Weak FY24
Longfor Group – Earnings Flash – FY 2024 Results

BYD (1211 HK): God’s Eye & Potential HSTECH Index Inclusion

By Brian Freitas

BYD (1211 HK) raised US$5.6bn in a secondary offering a few weeks ago and the stock is trading a lot higher than the placement price.
Buying from global index trackers is done, but there will be more passive buying from Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) trackers later this month.
With the release of the God’s Eye advanced driver-assistance system (ADAS), the stock could be added to the Hang Seng TECH Index (HSTECH INDEX) in June, bringing more passive inflows.

Skyworth (751 HK): Another Buyback

On 27 March, Skyworth Group Limited (751 HK) launched a conditional buyback to acquire a maximum of 350.0m shares (15.67% of outstanding) at HK$3.11, a 15.2% premium to undisturbed price.
Unlike the previous buybacks, the controlling shareholder can vote. Therefore, while the buyback offer is unattractive, the shareholder vote will pass.
Based on the irrevocables, a 100% share minority participation rate implies a minimum proration of 37.84%. The actual proration was around twice the minimum proration for the previous two.

A/H Premium Tracker (To 28 Mar 2025): AH Premia Still Falling; Expect Curve Torsion or AH Widening

By Travis Lundy

AH Premia bounce higher. Spread curve torsion was as expected. Narrow spreads saw Hs suffer more. Wide spreads saw H outperformance.
The last few weeks I said warning signs were flashing and spreads could widen. This week they widened despite big SOUTHBOUND buying.
I expect the right thing to do is hunker down and be flat H/A risk.

HK Connect SOUTHBOUND Flows (To 28 Mar 2025); Banks and Divs Bought Again

By Travis Lundy

Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. This week was +HK$37bn.
That’s decent net buying still. Keeping that pace would mean a new record. It IS possible this excess flow is state-managed (or state-insisted as insurers up equity investment ratios).
Included is a summary of important China Stocks-relevant news as I saw it this week, but tariffs, retaliation, US growth prospects, etc will all matter more.

Tencent (700 HK): Volatility Plays and Skew Top Trades

By Gaudenz Schneider

Over the past five trading days, Tencent (700 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights and volatility context are provided.
With short-term implied volatility below its median, long volatility strategies dominate, with a balanced mix of bullish and bearish positions.
Open interest spread across monthly and quarterly expiries, with some notable strategies taking advantage of longer expiration dates, and a steep negatively sloped skew $475.

QingSong Health Corporation – Pain Points of the Business Model and the Outlook

The business model of QingSong is a platform offering comprehensive healthcare services and tailored financial resources. By connecting different stakeholders, QingSong can monetize its user base, creating a virtuous cycle.
Qingsong’s revenue structure has undergone significant changes. However, if Qingsong’s future business focus is on Qingsong Healthcare services, it may be difficult to generate large-scale profits in the end.
Listed insurance intermediary platforms have been in the shadow of a decline in stock prices. So, there is concerns that future share price performance of QingSong may not be optimistic.

Dongfang Electric (1072 HK): Returning to Growth in 1Q25 Despite Weak FY24

Dongfang Electric (1072 HK)‘s 1Q25 express report suggested earnings may increase 15-25% YoY, reversing the YoY decline in 4Q24 and FY24. This is encouraging.
Its signs record new orders in FY24, fuelling its order backlog to Rmb152.6bn, which equals 2x the FY25F revenue. 2H24 new order momentum is better than 1H24.
The pending A-share placement, while diluting EPS, will enhance book value for the H-share holders. Its 6.4x PER and 7.3% dividend yield are inexpensive.

Longfor Group – Earnings Flash – FY 2024 Results

By Leonard Law, CFA

Longfor Group’s FY 2024 results were acceptable.
The earnings decline was in line with expectations, driven by lower revenues and margins from the property development segment.
We project that Longfor’s contracted sales will continue declining in FY 2025, given the company’s slowdown in land bank replenishment.

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Mar 31

Daily Brief China: Jinke Smart Services, Vesync, ENN Energy, Hang Seng Index, China International Capital Corporation, Xiaomi Corp, Mixue Group, Hang Seng China Enterprises Index and more

In today’s briefing:

Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?
Vesync (2148 HK): Scheme Vote on 23 April
Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road
Vesync (2148 HK): 23rd April Scheme Vote. Done Deal
HSI Index Options Weekly (Mar 24-28): Volatility Softens as HSI Takes a Breather
CICC (3908 HK): Underestimated by the Market
ECM Weekly (31st Mar 2025) – Xiaomi, NIO, FCT, Gigabyte, DN Sol, Nanshan Al, Zenergy, LXJ, Veeda
Hong Kong Single Stock Options Weekly (March 24 – 28): Earnings Wrap as Breadth Deteriorates
Mixue Vs Guming: Valuation Premium. Comparing Earnings Growth in 2024
HSCEI Index Options Weekly (Mar 24-28): Call Volumes Rise as Market Digests Key Events

Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

Jinke Smart Services (9666 HK) is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”
It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.
I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.

Vesync (2148 HK): Scheme Vote on 23 April

Vesync (2148 HK)’s IFA opines that the Yang family’s HK$5.60 cash offer is fair and reasonable. The IFA does not recommend the scrip option. The vote is on 23 April.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
The vote is low-risk due to a lack of opposition. At the last close and for the 15 May payment, the gross/annualised spread is 2.9%/28.7%.

Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: ENN Energy (2688 HK), Seven & I Holdings (3382 JP), OneConnect Financial Technology (OCFT US), Insignia Financial (IFL AU), Smart Share Global (EM US), Soundwill Holdings (878 HK).
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), PointsBet Holdings (PBH AU), Millennium & Copthorne Hotels Nz (MCK NZ), Tonami Holdings (9070 JP).

Vesync (2148 HK): 23rd April Scheme Vote. Done Deal

On the 27th December, Vesync (2148 HK), a manufacturer of small home appliances, announced an Offer, by way of a Scheme, from the Yang family controlling ~69.04% of Vesync.
The Cancellation Price of $5.60/share – declared final – was a 33.3% premium to undisturbed, and above the 2020 IPO price of HK$5.52/share.
The Scheme Doc is now out, with a Court Meeting on the 23rd April, and expected payment on or before the 15th May. The IFA (Somerley) says “fair & reasonable”.

HSI Index Options Weekly (Mar 24-28): Volatility Softens as HSI Takes a Breather

A weekly recap of volatility and price metrics, covering option volumes, volatility trends, the spot/implied relationship, and open interest statistics
Implied vol softened this week—we examine the trend and its potential implications.
HSI’s performance vs. SP500 is highlighted against a backdrop of tariffs and global shifts.

CICC (3908 HK): Underestimated by the Market

China International Capital Corporation (3908 HK)‘s 2H24 net profit surged 33.6% in 2H24, reversing the downtrend in 1H24. It has benefited from lower staff and other operating costs.
Better 1Q25 market turnover and activities, more IPOs and placements and improved cost dynamics imply that the consensus forecasts are too conservative.
Its 0.55x P/B cannot adequately reflect better profitability. Despite the denial, CICC’s potential merger with China Galaxy Securities (H) (6881 HK) cannot be completely ruled out.

ECM Weekly (31st Mar 2025) – Xiaomi, NIO, FCT, Gigabyte, DN Sol, Nanshan Al, Zenergy, LXJ, Veeda

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, DN Solutions (298440 KS)‘s range looks a little pricey, while Eco-Shop Marketing (ECO MY) could trade ahead of its listed peers, in our view.
On the placements front, Xiaomi Corp (1810 HK) matched BYD (1211 HK) in size, but couldn’t do so in returns.

Hong Kong Single Stock Options Weekly (March 24 – 28): Earnings Wrap as Breadth Deteriorates

Weekly recap of key option metrics across single stocks, including most active names and strikes, largest volume increases, biggest movers, and key earnings reports.
Breadth continues to deteriorate against an increasingly hostile global backdrop.
Both price and implied volatility declined on average, with the typical stock still well below its 52-week high.

Mixue Vs Guming: Valuation Premium. Comparing Earnings Growth in 2024

By Devi Subhakesan

The comparison between Mixue Group (2097 HK) and Guming (1364 HK)’s 2024 annual results highlight how their financial and operational performance diverged sharply.
Mixue’s vertically integrated operations provide it a strong competitive edge and superior margins while Guming, operating in the mid-priced segment faced fierce competition
Mixue’s high-quality earnings growth underscores a robust business model that attracts premium valuation multiples.

HSCEI Index Options Weekly (Mar 24-28): Call Volumes Rise as Market Digests Key Events

A weekly recap of volatility and price metrics, covering option volumes, volatility trends, the spot/implied relationship, and open interest statistics.
HSCEI price and implied vols both softer on the week after digesting large share sale and key earnings reports.
We highlight the performance of HSCEI vs SP500 and note that this is a relationship to monitor in the rapidly changing political climate.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 30

Daily Brief China: JD.com , Hang Seng TECH Index, Innovent Biologics Inc and more