China

• After the China Traditional Chinese Medicine (570 HK) fiasco back in October, Hong Kong M&As have received some welcome Xmas cheer of late.
• Small-Cap CM Hi-Tech  (2115 HK) secured reg approvals in record time. Then CPMC (906 HK)‘s pre-cons were satisfied on 13th December. Now Shanghai Henlius (2696 HK)‘s pre-cons are also fulfilled. 
• Henlius’ spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.

• CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
• Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we look at the potential ADDs/DELs for the STAR50/STAR100 indices for the March 2025 index rebal event and suggest a high impact trade idea.

• At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December. 
• The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January. 
• I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.  

• Bloks Group, founded in 2014, is China’s top assembly character toy company, targetting primiary school students.
• Bloks faces competition from multiple domestic competitors in a slow growing market. The company’s aggressive market expanison in the past 2 years has come at a significant cost .
• The IPO valuation may be high, considering the industry’s low barriers to entry and the company’s unstainable growth.

• Global aviation supply continues to suffer from various supply chain disruptions, driving up lease rates and aircraft values and benefiting aircraft lessors, such as BOC Aviation (BOCA) 
• Although BOCA’s interim results were disappointing due to delayed aircraft deliveries, I expect its momentum to recover in 2025, driven by incoming aircraft and lower interest costs. 
• Stock is trading at 0.9x PB, nearing its historical trough of 0.8x, and offering a decent 5% dividend yield.

• Temu, the Chinese cross-border e-commerce platform owned by PDD Holdings Inc. has suffered its first major setback since launching in 2022 after Vietnam banned its operations citing regulatory non-compliance only two months after it entered the market.
• Temu was ordered by the Ministry of Industry and Trade to stop using the Vietnamese language on its website and app, to notify customers that its e-commerce registration was under review, and to halt all marketing activities in the country, according to a report by Vietnam News Agency on Dec.
• The suspension is Temu’s first since expanding into more than 80 countries around the world.

• The H share market continues to be the top performing market in Asia in 2024.  The HSCEI has outperformed all Asian markets on a USD basis.
• China Longyuan Power (916 HK) was rated a BUY at JP Morgan with the company hosting a roadshow to discuss its future growth strategy. 
• China Resources Beverage (2460 HK) was initiated as a BUY at CMB International as the company rapidly expands into the ready-to-drink category with teas and sports drinks.

• The tech giant Huawei Technologies Co. Ltd is to complete the spinoff of its intelligent automotive business unit to become an independent company, Shenzhen Yinwang Intelligent Technology Co.

• Huawei’s aim is to solidify its position as a leading smart vehicle supplier amid industry challenges and expanding partnerships.

• Founded in 2019, Huawei’s car business unit originally said it would not make cars itself, but focus on supplying automotive components, particularly autonomous driving systems, through its Huawei Inside (HI) model.

• UBTech Robotics (9880 HK) was listed in Hong Kong on 29th Dec 2023 after it raised US$130m. Its one-year lockup will expire on 28th Dec 2024.
• UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
• Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
• As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

• The Shanghai Shenzhen CSI 300 Index (SHSZ300 Index) exploded higher in mid-September 2024, then went flat in a range (still there as we write).
• Our models currently see uptrend and downtrend targets positioned at an equal distance from the last WEEKLY CLose on December 13th.
• In short this means that the index is “perfectly neutral” at the moment, a rare scenario that requires straddle and strangle-like strategies to be able to profit.

• China New Higher Education (2001 HK) has rebounded by 40% from its post-result trough but was still down by 34% from the pre-FY24 result level, despite healthy FY24 results.
• Net profit is healthy, but it is the all-scrip final dividends that dragged on the share price. Concerns are on higher gearing, but at 69.9%, this is still acceptable. 
• The consensus earnings forecast of a 6% growth in FY25 and FY26 seems not excessive. At 2.2x PER and 22% yield for FY25, it seems worthy of the risks.

• Bloks Group, a founder-led leader in China’s assembly character toy segment, updated its PHIP and continued to post hyper growth.
• In the nine months ended Sep-24, the company’s revenue totaled ~RMB1629m, representing a y/y growth of ~177%, due to significant increase in product sales volume.
• According to the most recent PHIP, Ultraman IP license in China was extended to 2027 and TRANSFORMERS IP license with Hasbro will expire only in 2028.

• The two core businesses is corporate and digital marketing services (2B business) and health and medical services (2C business),the synergy of which can form a virtuous cycle within the platform.
• The key performance driver for HealthWay is 2B business, but the pain point is 2C business, which is hard to scale up. Actually, HealthyWay’s growth momentum has slowed down significantly.
• After completing the final round of financing, HealthyWay’s valuation reached RMB4.1 billion. We think its valuation could be higher than ClouDr but lower than JD Health and Alibaba Health.

• DiDi Global (DIDI US) has begun to generate positive EBITDA after several challenging years post-IPO.  With a high degree of operating leverage, the company is poised to grow quickly.
• Didi which maintains a 70% market share in the ride-hailing industry in China is expanding into Tier 3 cities where there is a large untapped opportunity.
• The company has indicated that it wants to list in Hong Kong in 2025 providing a catalyst for share price re-rating next year.

• After Goldlion Holdings (533 HK), an apparel manufacturer/distributor, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, from the Tsang family (63.09% stakeholder).  
• And that it’s exactly what unfolded.  The Cancellation Price is $1.5232/share (declared final), a 24.85% premium to last price, but a punchy 71% premium to undisturbed. 
• The long stop is the 30th September 2025. This will probably be completed in less than half the time. There will be a question mark over the low price-to-book multiple. 

• It is difficult for Fosun Tourism (1992 HK) to return to its peak and IPO share prices over the next two years. The buyback proposal represents a good exit opportunity.
• Net profit is unlikely to go back to FY19 level even in FY26F. The derating of the Chinese equities and Fosun Group, as well as its high gearing, are barriers.
• Its PER multiples have already aligned back to the sector average from the extremely depressed level previously. Relative to global names, it is now only at slight discounts.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight include: BeiGene (6160 HK), China Wantian Holdings (1854 HK), and Super Hi International Holding (9658 HK) / Haidilao International Holding (6862 HK).

• HKTV is a prominent e-commerce platform in Hong Kong facing challenges from the pandemic and retail market.
• Founder Ricky Wong has shown a history of moonshot diversifications and strong leadership from executives like Jelly Zhou, leading to renewed optimism for the company.
• With a low valuation, potential for growth, and Ricky Wong’s history of successful ventures, HKTV could be a lucrative investment opportunity in the future.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development, Vedanta Resources, Softbank Group, AAC Technologies
• In the US, the December (preliminary) S&P manufacturing PMI fell to 48.3 (49.5 e / 49.7 p), while the services PMI expanded to 58.5 (55.8 e / 56.1 p).
• The composite PMI also rose to 56.6 (55.1 e / 54.9 p). Treasuries were little changed, ahead of the Fed’s rate decision tomorrow. The yield on the 2Y and 10Y UST were flat at 4.25% and 4.40%, respectively.

• Medical industry characteristics are the seriousness of diagnosis/treatment and the irreversibility of the process, which are the difficulties in implementing technology. The value that AI can provide is limited. 
• Xunfei’s business model is not To C, but To G (government) model. It’s not possible for SOE customers to pay high price for Xunfei’s AI model/products, leading to questionable profitability.
• Pre-IPO valuation has reached RMB8.4 billion. Without sustainable growth and stable profitability, valuation/liquidity of Xunfei after listing wouldn’t be good. We think Xunfei’s valuation could be similar to Yidu Tech.

• We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
• We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
• There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

• In this insight, we provide a list of 70 prominent companies in Asia that could complete their IPOs in Asia next year. 
• This is a comprehensive, REFERENCE GUIDE to help clients so that they could get a broad view of the major IPOs that could get completed in Asia in 2025.
• Some of the most prominent potential IPOs in Asia next year include Reliance Jio, LG Electronics India, Shein, Sony Financial Group, Didi Global, and Okada Manila.

• BYD Electronics benefits from two key growth drivers in 2025: a cyclical upswing in its legacy EMS business, and sustained strong growth in auto electronics and AI data cooling devices.
• Earnings momentum is expected to pick up in 4Q, with key segments entering an earning upcycle. Expect bottomline growth to accelerate to 45% in 2025 from 9% in 2024.
• The 13x 2025 PE multiple does not capture BYDE’s transformation from a low-end, cyclical EMS to a leading high-precision manufacturer with a more diverse and balanced set of growth drivers.

• Top Ten most active contracts for the week all traded on Monday. Most of the active contracts were Calls with December expiries.
• Xiaomi Corp (1810 HK) makes the Top Ten non-Tencent most active contracts with both Puts and Call active – likely stock replacement and hedges following torrid run higher.
• Tencent implied vols trading at their lowest levels of the past year.

• Both HSI and HSCEI show characteristics of being short gamma at higher strikes highlighted by Mondays pop in spot and vol in both markets.
• Implied vol did a complete round-trip closing virtually unchanged from last week despite spot holding on to modest gains on the week and large high – low range.
• Up-Strike Calls look to have been added in both markets which will help maintain the positive spot vol correlation.

• In this insight we chart the progress of China’s tourism recovery vs pre-pandemic levels
• In October 2024, Chinese outbound (international) demand finally reached pre-Covid levels
• The recovery in domestic activity was completed earlier and more quickly than outbound

• Performance declined sharply in 24H1 mainly due to the decrease in orders from Customer A. Herbs Generation’s business/financial performance would be easily affected if the contributions from Customer A decline.
• Current sales model of Herbs Generation is hard to change, and the Company still has to invest heavily in offline marketing and promotional efforts, but the efficiency is not high.
• Herbs Generation’s ability to resist risks is relatively weak, which prevents us from building optimistic expectations for sustainable growth in the future. Valuation should be lower than peers.

• 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: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Insignia Financial (IFL AU), Shanghai Henlius Biotech (2696 HK), Get Nice Financial Group Ltd (1469 HK). 
• Lowest spreads: Renewable Japan (9522 JP), Lifestyle China (2136 HK), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Nishimoto (9260 JP). 

• Fosun Tourism has emerged from its difficulties and started an upward trend.If it remains listed, it’s only a matter of time before its share price returns to the IPO price.
• Temasek was once in talks to buy a minority stake in Club Med from Fosun International for €500 million, based on which reasonable valuation for Fosun Tourism is RMB12.6 billion.
• Fosun has continued its style- When performance recovery hasn’t been reflected in stock price, it’s the right time to privatize valuable assets at cheap price. A share alternative is expected.

• Beijing Capital Grand (1329 HK)’s IFA opines that Beijing Capital Land Ltd H (2868 HK)’s HK$0.85 privatisation offer is fair and reasonable. The vote is on 10 January. 
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
• The Sino-Ocean Group (3377 HK) receivers, which hold a blocking stake, should support the transaction. At the last close and for the 6 February payment, the gross/annualised spread was 3.7%/22.2%.

• This Insight analyzes Hang Seng Index (HSI INDEX) tailor-made option strategies traded between December 9-13, covering strategy analysis, trends, highlights, and volatility context.
• Last week saw high activity with over 5,000 option contracts traded as combinations; the Iron Condor was notably popular, particularly on Monday and Tuesday.
• The highest premium earned was for a January ’25 Iron Condor. The largest trade was a December ’24 Bull Call Spread, reflecting the popularity of bullish and long volatility strategies.

• Shenzhen Dobot, a CICC-backed robotics unicorn, aims to raise up to HK$830M (~$107M) in the initial public offering in Hong Kong.
• The offering is expected to be between HK$18.80 and HK$20.80, implying a market cap of ~HK$8B or ~$1B at the midpoint of the price range.  
• Given Shenzhen Dobot’s long-term growth opportunities and high TAM, they are likely to get a premium valuation, and the company could trade like UBTech Robotics and Doosan Robotics.

• Management of China Tobacco International (HK) (6055 HK) is bullish on earnings in the next two years, with tobacco leaf import and cigarette export being the key drivers.
• Elevated tobacco leaf price is positive to CTI while more re-opening of duty-free shops (currently only 50% of pre-COVID level) will add to revenue momentum.
• A light gearing of just 2% and potentially more parent asset injection are CTI’s strengths. The company plans to maintain a steady uptrend on absolute DPS annually. 

• Back on the 28th October, SOE Beijing Capital Group launched an Offer by way of a Scheme for Beijing Capital Grand (1329 HK) (BCG), a commercial property developer in China.
• The Cancellation Price of HK$0.85/Share (best & final) was a 46.55% premium to undisturbed. Irrevocables were secured from 8.13% of the 37.92% held by disinterested shareholders. This looked done. 
• The Scheme Document is now out, with a Court Meeting to be held on the 10th Jan. Expected payment on or before the 6th Feb. IFA says fair & reasonable.

• NEV retail volume increased by 51% YoY in November and 41% YoY for first eleven months.
• Jiyue Auto, as a car maker subsidiary of Baidu, is dismissing employees.
• Hisense, a home appliance producer, lays off 30,000 employees of its total 110,000.

• The decline of new home sales was narrowed in the past ten months.
• New home, rental, and furnishing businesses grew strongly in 3Q24.
• We believe the operating margin will improve in 2025 and 2026.

• 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, a number of offerings were live in India, in a bid to beat the year-end lull.
• On the placements front, there was a large placement for SenseTime Group (20 HK) and a number of smaller deals in India.

• SOUTHBOUND gross trading activity rebounded about 33% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK rebounded.
• Alibaba Group Holding (9988 HK) was again the top buy and Tencent (700 HK) and Meituan (3690 HK) the top two sells. Tech is having a mixed outing now.
• Gross SOUTHBOUND volumes back up this week to levels seen just off the autumn peak. An interesting week as stocks popped Monday, opened high Tuesday, then fell all week.

• Alibaba Group’s September Quarter 2024 results reveal a balance of positive developments and ongoing challenges.
• The company has shown resilience in its core business segments, leveraging an AI-driven strategy to enhance user engagement and operational efficiency.
• Steady growth has been noted in both domestic and international e-commerce segments, with Alibaba International Digital Commerce recording a substantial 29% revenue growth.

• Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB volumes rebounded, tech saw limited net buying, BABA was bought but other major tech sold.
• The first leg of China’s retaliatory acts against US trade measures appeared with export bans on gallium, germanium, antimony, graphite products, etc. These will not be lifted soon.
• China is also retaliating against the Phils, Vietnam, Taiwan and changing tack in Europe. The next couple of years threatens to be “interesting times.

• My conversation with the FA earlier this week largely put to rest a number of concerns, specifically on regulatory approvals, surrounding the Offer for CPMC Holdings (906 HK). 
• As announced on the 13th December, the last pre-condition, SAFE, has been satisfied. All pre-cons have been fulfilled.  The Offer Doc will be dispatched on or before the 20th December
• This could turn unconditional before year-end, depending on whether Zhang Wei promptly tenders. Expect the share price to trade tight (er) to terms Monday morning.

• 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 rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
• Based on the latest available data, we see four ADDs and four DELs for HSIII in March 2025.

• The 10th national VBP released results. The average price reduction was about 70%. CSPC, Kelun, Fosun Pharma, Sino Biopharmaceutical are the “main force” and their performance would be affected.
• WuXi Shares surge due to the absence of BIOSECURE Act from the proposed amendments to US NDAA. However, the rally could be short-term as the Bill may return next year.
• Pre-Conditions of Newjf have been smooth so far. We think investors can directly consider Newjf’s Offer. Based on the current situation, we are optimistic that Newjf will finally be successful.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
• At present, we see one change based on the 13th December 2024 data but the rankings can change until 31st December 2024.

• 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: Kioxia Holdings (285A JP) priced its IPO at JPY1,455, the midpoint of the IPO price range.
• Event-Driven developments: Fosun Tourism (1992 HK), CPMC Holdings (906 HK), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Topcon Corp (7732 JP), Insignia Financial (IFL AU). 

• Sinopharm will benefit from the strong expected growth in China’s healthcare spend.
• There is scope to increase its distribution which will continue to shield the company from short-term volatility.
• Pricing pressure in drug prices creates opportunity to optimise range and improve profitability.

• SF’s revenue base is far larger, and in Q324 SF’s revenue also grew faster than JD Logistics
• SF and JD Log reported similar EBITDA margins in Q324, & both enjoyed Y/Y improvement
• JD Log appears far cheaper on EV/Revenue, perhaps due to its reliance on parent JD.com

• Vesync (2148 HK), a manufacturer of small home appliance, is currently suspended pursuant to the Takeovers Code. 
• FY23 was Vesync’s best result since its December 2020 listing; and FY24E is on track to go one better.  Yet the share price is 24% adrift of the IPO price.
• The Yang family, led by chairman/CEO, control ~69.26% of Vesync. An Offer price around the IPO price may be enough to take Vesync private.

• ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has received SAFE approval. Therefore, the precondition is satisfied. 
• The offer and response document will be despatched by 20 December and 3 January 2025, respectively. The Board will recommend the offer. 
• The offer should be declared unconditional by the first closing date. At the last close and late-January 2025 payment, the gross/annualized spread was 7.3%/88.0%.

• JD.com is a profitable Chinese e-commerce company trading below its cash value
• Despite challenges in China’s retail market and competition from rivals, JD.com offers a potential 2x-3x upside over the next two years
• Stock has fallen approximately 20% since last write-up, presenting a good opportunity for investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Vesync (2148 HK) is in a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers which contains inside information of the Company.” 
• The Yang family is likely seeking to privatise Vesync through a Cayman scheme. The shares are trading 24% below the HK$5.52 IPO price.
• We use several methods to triangulate the likely offer price, which suggests a price range of HK$5.09-10.30 per share, with an average of HK$6.71, a 59.8% premium to last close.

• VCredit Holdings Ltd (2003 HK), a provider of consumer financial services in China, was listed on the 21st June 2018 at HK$20/share. Shares are currently down 90%.
• Ma Ting Hung, VCredit’s chairman, held 35.6% at the time of listing, and currently holds 39.85%.  
• VCredit was suspended this morning pursuant to the Takeovers Code. Now might be the time for Ma to take VCredit back into the fold. 

• As discussed in PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
• This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
• Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It’s worth understanding how Ping An has taken its stake >50% and beyond. 

• The financial data for 2024 has already shown investors weak growth signal.After IPO, Xiaocaiyuan may face stricter scrutiny from investors and the market in terms of its sustainable performance growth.
• It’s not easy for Xiaocaiyuan to find new growth points. Catering companies commonly face problems such as performance fluctuations and uncertain profitability, which has left their share price underperforming.
• Post investment valuation has already reached RMB10 billion, which far exceeds the market value of A-share peers. Due to concerns on the outlook, valuation performance after IPO could be lower-than-expected.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
• We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.

• Welcome back to our weekly editorial on everything commodity and energy-related!This week is all about China as the Politburo and PBoC have announced new (undefined) stimulus measures aimed at simultaneously countering tariffs from the Trump administration in 2025 and bolstering the economy, regaining confidence as China battles structural issues.
• This naturally raises the question of how this will impact commodities.
• As the world’s largest importer of commodities by a significant margin, China’s injection of capital into its economy could provide a substantial boost.

• If ORG cannot obtain the SAFE approval by the end of December, this indicates something is wrong in the process. Then the success rate of this transaction is greatly reduced.
• Acquiring CPMC is in line with Baosteel’s strategic goals and CPMC is important to Baosteel.So, the possibility of state-owned capital to agree to withdraw completely from CPMC is not high.
• It’s unclear whether Zhang Wei will continue to side with ORG, or whether he still want to exit. This actually depends on the renegotiations between Baosteel/China Foods/COFCO and Zhang Wei.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We provide updates on results for our HK-listed universe and highlights from our recent management visits to Hong Kong. 

• REPT BATTERO Energy raised around US$270m in its Hong Kong IPO in Dec 2023. Its pre-IPO investors holding around US$1.2bn worth of shares will be released from their lockup soon.
• REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
• In this note, we will talk about the lockup dynamics and possible placement.

• Pou Sheng, the second-largest sporting goods retailer in China, is facing challenges like declining sales
• The company is trading at an undervalued price with a negative EV but remains profitable
• Despite concerns about China’s geopolitical situation and low cash returns, Pou Sheng offers a high dividend yield and has a strong balance sheet with significant net tangible asset value, indicating potential for upside if sales performance improves.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The author presents an analysis of TAL Education Group, highlighting its low valuation and steady growth among Chinese ADRs
• TAL has a current market cap of $4.5B, net cash of $3.8B, and generated $200m in operating cash flow in the last quarter
• The company is projected to have $4.5B in net cash by the end of 2025, with revenue expected to grow at a 30% CAGR and reach over $2.5B with a 15% operating margin by 2026

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Back on the 29th August 2024, CPMC Holdings (906 HK) announced  ORG Technology Co., Ltd. A (002701 CH) had secured SAMR approval.  Mofcom and NDRC approvals subsequently followed. 
• The pre-condition long stop date is the 6th January. SAFE is the outstanding pre-condition. Separately, Zhang Wei’s 22.01% irrevocable expired on the 5th December – with no HKEx announcement.
• Quite a lot to pack in with 16 business days to the pre-con long stop. Sounding out people involved with the transaction would be ideal.  So that’s what I did. 

• Fosun Tourism (1992 HK) disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00. 
• The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by <10% of disinterested shareholders).
• The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.    

• When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
• Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
• The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question.  Clean deal.

• For the first time in 2024, Prosus NV (PRX NA) lodges a substantial shareholder notice,  as its stake in Tencent (700 HK) dips below 24%. 
• Preceding my comments on Prosus, Tencent and Naspers (NPN SJ), are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Consistent compounders, stocks with steady earnings growth and excess returns over a long period of time, are difficult to find. It’s even more difficult to find reasonably valued compounders.
• From the universe of large Asian companies, we screen those with steady profit growth (>10%) and excess returns in each of last 10 years and over next three forecast years.
• Our list of 20 inexpensive compounders comprises 10 from onshore China, 5 from HK, 3 from India and 1 each from Japan and the Philippines.

• Geely’s sales volume grew by 27% YoY in November 2024.
• BEV delivery growth rate accelerated to 173% YoY in November from 26% YoY in July.
• Geely’s forward financial ratios are lower than its major competitors.

• Long Beijing Capital International Airport (BCIA) (694 HK), and short Air China Ltd (H) (753 HK) strategy should bring in good sector-neutral returns over the next 12 months. 
• BCIA will return to profit next year, fuelling the rebound of its share price. Air China, however, may face uncertainties related to stronger USD and higher-than-expected US interest rates.
• Higher duty-free sales for BCIA should propel earnings outlook. BCIA’s P/B is well below the 5-year average, while Air China has already returned to the historical average level.

• Based on the new announcement released by CR Sanjiu, due diligence, auditing, evaluation, valuation and verification of material assets reorganization are in progress. Approvals by the SASAC/SAMR haven’t been obtained.
• Sanjiu is now facing performance headwinds due to VBP. So, Sanjiu needs new/stable performance increments to alleviate future performance pressure, and completing the acquisition of Tasly becomes even more urgent.
• China Resources excels in M&As and has strong internal business integration capabilities.We’re optimistic about the future synergies after the merger. Valuation for Tasly is expected to reach P/E of 30.

• TAL Education Group’s second quarter fiscal year 2025 results provide an insightful look into the company’s current trajectory, presenting both promising developments and areas to watch cautiously.
• On the positive side, TAL Education’s robust year-over-year growth in net revenues stands out, with reported figures of USD 619.4 million, marking an impressive increase of over 50%.
• This growth is largely backed by the company’s strategic expansion in its learning services, particularly the enrichment learning programs like Peiyou small classes.

• Viomi has undergone a radical transformation to shed unprofitable business lines and focus on the home water systems market which is poised to experience steady growth in China in coming years.
• The company is hoping to expand into fairly mature international markets including the US with new home water systems that offer advantages over current offerings.
• The company’s investment in a largely automated manufacturing facility should help the company achieve above average margins in the Chinese market as utilization rates improve.