In today’s briefing:
- Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
- IntelliCentrics (6819 HK): Delisting and Special Dividend
- Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside
- Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside
- Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong
- Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock
- PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY
- Carote Ltd Pre-IPO Tearsheet
- Quick Ideas #9
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
- Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
- That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
- The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.
IntelliCentrics (6819 HK): Delisting and Special Dividend
- On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
- The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
- The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.
Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside
- In 4Q23, Tencent experienced a one-digit growth, but its margin improved significantly.
- We believe Tencent’s social networks will stop shrinking after the company sold movie assets to China Literature.
- We believe the stock will have an upside of 37.5% and a price target of HK$397 for year end 2024. Buy.
Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
- Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
- The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
- If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.
Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside
- Tencent (700 HK) reported 4Q results today. Both revenues and OP increased 7.1% and 42.0% YoY, however, both revenue and OP fell below consensus estimates.
- The company also announced an increase to 2023 dividends and more than doublethe size of the company’s share buyback in 2024 compared to 2023.
- We expect Internet VAS to grow at single-digits in 2024, however, high-margin new products to help boost margins in 2024.
Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong
- Akeso Biopharma Inc (9926 HK) is looking to raise US$155m from its primary placement.
- Proceeds from the deal would be geared towards R&D expenditure for its preclinical programs, expediting clinical trials, and towards commercializing its existing approved products.
- Accounting for 3% of shares outstanding, and representing 5.7 days of its three month ADV, the deal would be a relatively small one for the firm to digest.
Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock
- Xtep International (1368 HK) announced in-line 2023 results, with net profit up 12% yoy and sales up 11% yoy. 2024 outlook was also satisfactory.
- The company paid out 50% of its earnings in dividend, which amounted to a 5% dividend yield at current share price of HKD5.04.
- The company is currently trading at 10x 2024 PE (assuming a conservative 10% net profit growth in 2024).
PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY
- Both advertising revenue and commission revenue grew dramatically in 4Q23.
- Chinese consumers are seeking low price goods, after the economy went weak.
- PDD’s overseas brand, TEMU, is expanding rapidly in the U.S.
Carote Ltd Pre-IPO Tearsheet
- Carote Ltd (CARO HK) is looking to raise around US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are BNP Paribas, and CMB International.
- Carote is a distributor of kitchenware products. Expanding its lineup of products, the firm aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
- Initially engaged to provide original equipment manufacturing (OEM) overseas, the firm has since ventured into the online retail sector, introducing kitchenware products under its own brand name “CAROTE”.
Quick Ideas #9
- Another quick trade idea. A continuation of the China theme (see my last post for more info). Lufax holdings (LU). Again courtesy of JohnTill on Stocktwits.
- A Chinese lending company, lending out directly and providing a peer to peer lending platform for the Chinese market.
- With Ping An being a ~41% shareholder.
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