China

In today’s briefing:

Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62
Hainan Meilan Intl Airport (357 HK): Hainan SASAC’s Left/Right Pocket MGO
Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer
Kayou IPO Preview: 250%+ Growth + FCF of $500M+ in 2024, Leader in the Trading Card Sector in China
[Luckin (LKNCY US, BUY, TP US$39) TP Change]: Coffee Bean Price Hike Hurts Margin but Boosts Sales
Pre-IPO Fujian Lemo IoT Technology – The Outlook for Growth and Profit Margins Is Not Optimistic
Suzhou Ribo Life Science (瑞博生物) Pre-IPO Quick View: Scarcity of SiRNA Player

Meilan Airport (357 HK): Possible Unconditional MGO at HK$10.62

Haikou Meilan International Airport Company entered an SPA with Hainan Island Construction (600515 CH) to sell its Hainan Meilan International Airport (357 HK) 50.19% stake at RMB9.85 per share (HK$10.62).
The SPA completion requires several regulatory approvals, which are low-risk, particularly as Hainan SASAC is the largest shareholder of the offeror and the seller.
Under Rule 26.1 of the Takeovers Code, upon completion, the offeror will be required to make an unconditional mandatory cash offer at HK$10.62 per share. The MGO price is final.

Hainan Meilan Intl Airport (357 HK): Hainan SASAC’s Left/Right Pocket MGO

Hainan Meilan International Airport (357 HK) has announced a potential change of control, via the domestic shares.
Haikou Meilan’s major shareholder, Hainan Airport Industrial, has entered into a SPA with Hainan Island (600515 CH) to sell its 50.19% stake, the completion of which triggers an unconditional MGO.
The H-share Offer price will be HK$10.62/share. That’s not compelling; but it’s not meant to be as Hainan Airport Industrial and Hainan Island Construction are ultimately controlled by Hainan SASAC.

Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer

By Osbert Tang, CFA

The change in controlling shareholder at Hainan Meilan International Airport (357 HK) will trigger a general offer. At HK$10.62, we do not see the proposed offer price attractive.
The proposed price is only at 10.6% premium to the latest closing price, and equals to 1.15x 12-month forward P/B, way lower than the 5-year peak of 5.1x.
The new parent Hainan Airport Infrastructure (600515 CH) can generate synergy, and the turn of Hainan into a Free Trade Port will attract visitors, boosting the long-term outlook.

Kayou IPO Preview: 250%+ Growth + FCF of $500M+ in 2024, Leader in the Trading Card Sector in China

By Andrei Zakharov

Kayou Inc., early-mover in the trading card industry in China, filed for an IPO in Hong Kong. The company sells trading cards, toys, figures, badges, pens, and notebooks, among others.
Kayou Inc. received capital of ~$135M from HongShan Capital and Tencent Holdings in 2022. Mr. Li Qibin founded trading card and collectible toy firm in 2011.
Founder led company has delivered 250%+ growth and FCF of $500M+ in 2024. The market opportunity is large enough to support sustained high growth for Kayou for several years.

[Luckin (LKNCY US, BUY, TP US$39) TP Change]: Coffee Bean Price Hike Hurts Margin but Boosts Sales

By Eric Wen

Luckin reported C1Q25 revenue in-line/6% vs. our estimate/consensus, and non-GAAP operating profit 9%/75% higher than our estimate/consensus, thanks to warmer weather and constrained marketing spending;
Despite Luckin pre-emptive lock-ins, rising coffee bean price shall still take its toll as Luckin’s biggest rival Starbucks should be equally capable of managing the commodity price risk.
We keep Luckin as BUY rating but cut TP to US$39.

Pre-IPO Fujian Lemo IoT Technology – The Outlook for Growth and Profit Margins Is Not Optimistic

Lemo increased the number of massage equipment in the cinemas significantly, but the transaction value has reflected its ineffective business expansion. The Company may have already encountered a growth ceiling.
Lemo’s business model requires high occupancy fee and maintenance costs, which is hard to decrease. However, if revenue growth slows down, Lemo’s profits would be “eroded” due to high costs.
In Sep. 2024, valuation of Lemo reached RMB750 million. We think valuation of Lemo could be lower than that of peers in the future due to concerns on the outlook.

Suzhou Ribo Life Science (瑞博生物) Pre-IPO Quick View: Scarcity of SiRNA Player

By Ke Yan, CFA, FRM

Suzhou Ribo Life is looking to raise at least US$100 million via a Hong Kong listing. CICC and Citi are the deal sponsors.
Ribo Life is a world leading company in the area of siRNA research.
The company’s RBD4059 is potentially the first in class siRNA drug for thrombotic diseases.

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May 01

Daily Brief China: Soundwill Holdings, Suzhou Kematek, SunCar Technology Group , Chery Automobile Co. Ltd., Green Tea Group and more

In today’s briefing:

Soundwill Holdings (878 HK): Wide Spread Ahead of the 23 May Scheme Vote
Quiddity Leaderboard CSI All Share Semiconductors Jun25: Final Expectations
SDA: SunCar reports 2024 financial and operating results which showed strong revenue and adjusted EBITDA growth. The company continues to secure multiple business agreements and partnerships.
Chery Auto Pre-IPO – The Positives – Very Strong Earnings Growth
Green Tea Group Pre-IPO – PHIP Updates – Still Being Driven Purely by Store Expansion

Soundwill Holdings (878 HK): Wide Spread Ahead of the 23 May Scheme Vote

Soundwill Holdings (878 HK)’s IFA opines that the Foo family’s HK$8.50 offer is fair and reasonable. The vote is on 23 May.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders’ rejection) and a headcount test. No shareholder holds a blocking stake.
The offer is attractive compared to historical trading ranges. The vote risk is low. At the current price and for a June 11 payment, the gross/annualised spread is 4.3%/44.0%.

Quiddity Leaderboard CSI All Share Semiconductors Jun25: Final Expectations

By Janaghan Jeyakumar, CFA

CSI All Share Semiconductors & Semiconductor Equipment Index represents the largest and most-liquid stocks in the Semiconductor Industry Group from the Shanghai, Shenzhen, and Beijing Exchanges.
In this insight, we have presented our final expectations for ADDs and DELs for the upcoming semiannual index rebal event in June 2025.
We expect up to four ADDs and six DELs for the CSI All Share Semiconductors index during this index review based on the latest available data.

SDA: SunCar reports 2024 financial and operating results which showed strong revenue and adjusted EBITDA growth. The company continues to secure multiple business agreements and partnerships.

By Zacks Small Cap Research

SunCar Technology Group ((NASDAQ: SDA) is a leading Chinese cloud-based provider of digital enterprise auto services and auto eInsurance services in China.
The company offers one-stop, fully digital, on-demand automotive service systems to help enterprise clients build up their customer base and serve their end customers (auto owners).
The company has grown revenues rapidly in recent years, which we expect to continue in the near-to-midterm.

Chery Auto Pre-IPO – The Positives – Very Strong Earnings Growth

By Sumeet Singh

Chery Automobile is looking to raise about US$1bn in its upcoming Hong Kong IPO.
Chery Auto is a Chinese passenger vehicle company which designs, develops, manufactures and sells passenger vehicles, including internal combustion engine vehicles and new energy vehicles, both domestically and overseas.
In this note, we look at the company’s past performance.

Green Tea Group Pre-IPO – PHIP Updates – Still Being Driven Purely by Store Expansion

Green Tea Group (GTG) is looking to raise up to US$200m in its upcoming Hong Kong IPO. The deal will be run by Citi and CMBI.
GTG is a leading Casual Chinese restaurant chain operator in Mainland China, its revenue growth has been driven mainly via rapid store expansion.
Persistently negative SSSG post-COVID could signal potential cannibalization or a negative impact from a shift in consumer spending behavior.

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Apr 30

Daily Brief China: Horizon Robotics, Dickson Concepts Intl, Hainan Drinda Automotive Trim, Soundwill Holdings, Sichuan Biokin Pharmaceutical Co Ltd, BYD, Green Tea Group, ICBC (H), Amara Holdings and more

In today’s briefing:

Horizon Robotics (9660 HK): Global Index Inclusion After April & October Lock-Ups
Poon’s Underpriced Takeover. Minorities Deserve Better
Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash
Hainan Drinda New Energy (A/H IPO) – Business Was Acquired for 1/3rd the Price, Three Years Ago
Soundwill Holdings (878 HK): 23rd May Vote On Founder’s Offer
Sichuan Biokin A/H Listing: Good Time for Listing
BYD (1211 HK): Top Trades Reflect Bearish Bias in HKEX Options Trading Strategies
Pre-IPO Green Tea Group (PHIP Updates) – Some Points Worth the Attention
ICBC: Signs of a Turnaround in Fund Positioning
Asia Real Estate Tracker (29-Apr-2025): Link Points Tokyo expansion with Nuveen executive hire

Horizon Robotics (9660 HK): Global Index Inclusion After April & October Lock-Ups

By Dimitris Ioannidis

Free float is expected to increase from 10% to 70% on 24 April for Global-F and on 24 October for Global-M. The delayed increase is due to undisclosed shareholders.
Horizon Robotics (9660 HK) is forecasted to be added to global all-world in June 2025 following the 6-month lock-up expiry of most shareholders.
Horizon Robotics (9660 HK) is forecasted to be added to global standard in February 2026 following the 12-month lock-up expiry of undisclosed shareholders.

Poon’s Underpriced Takeover. Minorities Deserve Better

Dickson Concepts (113 HK) (DC)’s Chairman, Dickson Poon (& relatives), holding 61.98%, have tabled an Offer by way of a Scheme for shares not held, at HK$7.20/share (best & final).
That compares to DC’s net cash (as at 30 Sept 2024) of HK$7.44/share. Plus financial assets comprise an additional ~HK$2.16/share.
The IFA will cite liquidity and DC’s historical discount to NAV, and opine “reasonable”, and perhaps even “fair”. It is neither. Minorities should vote this down. But probably won’t …

Dickson Concepts (113 HK): Sir Poon’s Scheme Offer Below Net Cash

Dickson Concepts Intl (113 HK) disclosed a Bermuda scheme offer from the controlling shareholder (Sir Poon) at HK$7.20, a 50.6% premium to the last close price.
The offer is final. While the offer represents an all-time high and is attractive compared to historical trading ranges, it is below net cash.
No disinterested shareholder holds a blocking stake, and retail seems supportive (lowering the risk of the headcount test). The offer, while light, will likely succeed.

Hainan Drinda New Energy (A/H IPO) – Business Was Acquired for 1/3rd the Price, Three Years Ago

By Sumeet Singh

Hainan Drinda Automotive Trim (002865 CH) plans to raise up to US$234m via its A/H listing.
HDNET is a specialized manufacturer of PV cells which are used in making PV modules.
In this note, we look at the company’s recent performance and other deal dynamics, as well as valuations.

Soundwill Holdings (878 HK): 23rd May Vote On Founder’s Offer

On the 7th March, small-cap property developer Soundwill (878 HK) announced an Offer from Grace Foo (ED) and her family, controlling 74.97% of shares out, by way of a Scheme.
The Offer Price of $8.50/share, including a $1.00/share dividend, was a 62.84% premium to undisturbed. But a 87.66% discount to the (then) most recent NAV. Terms were final.
The Scheme Doc is now out, with a Court Meeting on the 23rd May, and payment on or before the 11th June. The IFA (Altus Capital) says “fair & reasonable”.

Sichuan Biokin A/H Listing: Good Time for Listing

By Ke Yan, CFA, FRM

Sichuan Biokin reported 2024 results, with a large chunk of revenue from its product licensing to BMS.
We analyzed its key products’ current clinical trials and upcoming milestones. We also look at peer performance.
Overall, we are of the view that many factors bode well for Biokin’s H-share listing

BYD (1211 HK): Top Trades Reflect Bearish Bias in HKEX Options Trading Strategies

Over the past five trading days, BYD (1211 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Popular Strategies: Call/Put Spreads account for 88% of all strategies, with a bias towards bearish views.
Lottery Trades: a recent trend, observed in other stocks as well, manifests itself in BYD (1211 HK). A lotter trade bets on a low probability event with a high payout.

Pre-IPO Green Tea Group (PHIP Updates) – Some Points Worth the Attention

The decline in Green Tea’s performance in 2024 cannot be solely attributed to external factors such as economic downturn and the decline in consumption. There are deeper reasons behind it.
The growth is mainly contributed by delivery service. However, commission fee is high and average spending per order is lower than dine-in services.So delivery service has limited contribution to profits.
The aggressive expansion of restaurants may further dilute the performance of individual restaurant. We shared our three-year forecast.Valuation of Green Tea could be lower than Xiaocaiyuan and the industry average

ICBC: Signs of a Turnaround in Fund Positioning

By Steven Holden

Consistent declines in fund ownership in ICBC finally hit a floor.
Over the past six-months, 8 new positions — led by Goldman Sachs and Heptagon — have outpaced 3 closures, with 29 buyers versus 18 sellers.
ICBC is the 6th most widely owned stock in the China & HK Financials sector, ahead of Bank Of China Ltd but behind China Merchants and China Construction Bank.

Asia Real Estate Tracker (29-Apr-2025): Link Points Tokyo expansion with Nuveen executive hire

Link has appointed a former Nuveen executive to lead its expansion into Japan, signaling the company’s commitment to growing its presence in the region.
Amara Chairman is spearheading a $392 million bid to privatize a Singapore hotel group, demonstrating a growing trend of investments in the hospitality industry.
ANREV reports a significant decline of over 50% in global real estate capital raising from its peak in 2022, highlighting challenges in the current market environment.

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Apr 29

Daily Brief China: Geely Auto, Tencent, Guangzhou Xiao Noodles Catering Management, Auntea Jenny (Shanghai) Industrial, ZTO Express Cayman and more

In today’s briefing:

Geely (175 HK): To Be Only Comparable Competitor to BYD in 1Q25
Tencent (700 HK): Volatility Smile Signals Strategic Opportunities in Options Trading
Guangzhou Xiao Noodles Catering Management Pre-IPO Tearsheet
Tencent (700 HK): Top Trades and Strategic Insights from HKEX Options Trading
Pre-IPO Auntea Jenny (Shanghai) Industrial (PHIP Updates) – Some Points Worth the Attention
Monthly Chinese Express Tracker | March, Q125 Growth Solid | But Shares Lag Alibaba (April 2025)

Geely (175 HK): To Be Only Comparable Competitor to BYD in 1Q25

By Ming Lu

Geely’s deliveries reached 46% of BYD in 1Q25, while the number was 23% in 2024.
The delivery growth rate accelerated since December 2024 and reached 54% YoY in March 2025.
We believe, even without production capacity expansion, BEV deliveries can grow significantly YoY in 2Q25 and 3Q25.

Tencent (700 HK): Volatility Smile Signals Strategic Opportunities in Options Trading

Implied Volatility Trends: One-month implied volatility for Tencent (700 HK) has declined from recent peaks, aligning near its 3-year median, indicating a potential stabilization in market expectations.
Skew and Term Structure Dynamics: The term structure is largely flat with a slight uplift due to the upcoming earnings on 14 May 2025. A pronounced volatility smile favors spreads.
Open Interest Distribution: Liquidity is concentrated in near-term (April, May) and quarterly expiries, with call open interest slightly outweighing puts (48-60%).

Guangzhou Xiao Noodles Catering Management Pre-IPO Tearsheet

Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CMBI and CLSA.
It’s a leading Chinese noodle restaurants operator in China, operating under the Xiao Noodles brand, offering value-for-money cuisines.
Under its dual model of corporate-owned and franchising, it focuses on corporate-owned restaurants in first-tier & new first-tier cities in China.

Tencent (700 HK): Top Trades and Strategic Insights from HKEX Options Trading

Over the past five trading days, Tencent (700 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Popular Strategies: Call/Put Spreads account for 70% of all strategies. With a bias towards bullish views, Bull Call Spreads outnumber Bear Put Spreads by 2:1.
Lottery Trades: following observations of such strategies in other stocks, a lotter trade bets on a low probability event with a high payout. Trade size tends to be sizable.

Pre-IPO Auntea Jenny (Shanghai) Industrial (PHIP Updates) – Some Points Worth the Attention

Like peers, we saw the performance growth slowdown of Auntea Jenny in 2024, mainly due to industry slowdown and intensified competition. Auntea Jenny does not have advantage in lower-tier markets.
Auntea Jenny relies on third-party suppliers, with insufficient cold chain coverage, resulting in weak cost control.It’s difficult to maintain the current profit margin level. Franchisees may be forced to quit.
Valuation of Auntea Jenny should be lower than Guming and MIXUE. Considering the weak fundamentals and uncertain outlook, it is already good if valuation could be similar to Baicha Baidao.

Monthly Chinese Express Tracker | March, Q125 Growth Solid | But Shares Lag Alibaba (April 2025)

By Daniel Hellberg

March and Q125 parcel volume growth slowed only slightly vs strong Q424 and FY24
Single-Digit unit price declines should be manageable for most of the express companies
But express “story” generally unexciting, and most shares should continue to lag Alibaba

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Apr 28

Daily Brief China: Alibaba Group Holding , Laopu Gold, Bright Smart Securities And, SHEIN, China New Higher Education, Ping An Healthcare and Technology and more

In today’s briefing:

Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading
Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads
Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation
Ant Group Takes Out Yip’s Controlling Stake In Bright Smart (1428 HK)
Bright Smart (1428 HK): To Sell or Not to Sell?
May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress
China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B
Ping An Healthcare and Technology (1833 HK) 25Q1 Results – Concerns Behind and the Valuation Outlook

Alibaba (9988 HK): Top Trades and Strategic Insights from HKEX Options Trading

Over the past five trading days, Alibaba Group Holding (9988 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Diagonal Spreads account for nearly 30% of all strategies. Many of these strategies sell short term risk to finance longer term protection.
Several structures hedge against low probability tail events. One such strategy traded 100 contracts.

Alibaba (9988 HK): Volatility Surface Favoring Diagonal and Calendar Spreads

Alibaba Group Holding (9988 HK) one-month implied volatility has decreased from recent peaks but remains above the 70th percentile, while realized volatility exceeds 80% (96th percentile).
A relatively flat term structure and skew render Calendar and Diagonal Spreads interesting strategies.
Open interest extends to March 2026, with balanced call and put interest across all expiries.

Laopu Gold (6181 HK): Global Index Inclusion Likely Derailed by Full Circulation

By Brian Freitas

Laopu Gold (6181 HK) was on track to be added to a global index given its large H-share market cap and a free float that was close to 20%.
Completion of the full circulation in April pushed H-share market cap higher while free float market cap remained the same. Crucially, free float dropped below 15%.
Laopu Gold (6181 HK) could miss index inclusion in May, while inclusion in August will need some selling from non-float investors following lock-up expiry in June.

Ant Group Takes Out Yip’s Controlling Stake In Bright Smart (1428 HK)

When broker Bright Smart Securities (1428 HK) was suspended recently, one possibility was Chairman, Peter Yip Mow-lum, a 50.54% shareholder, cashing out. And that has now unfolded.
Yip has entered into a SPA with fintech giant Ant Group, the operator of Alipay. The agreement has been struck at HK$3.28/share, a 17.6% premium to undisturbed.
Should the SPA complete – the key condition is NDRC approval – an unconditional MGO is triggered, also at HK$3.28. The price is final.

Bright Smart (1428 HK): To Sell or Not to Sell?

By Osbert Tang, CFA

The offer price of HK$3.28 by Ant Financial is attractive – 2.9x P/B and 8.3x PER, both on 12-month forward basis. It is also appealing relative to peers.
Bright Smart Securities (1428 HK)‘s massive outperformance against the HSI showed its strong marketing and execution capabilities. Ant Financial will bring many synergies to it.
Risk-Averse investors may take this opportunity to cash out, but we are on the long-term bull camp and prefer to hold for further upside.

May 1st Marks End of US “De Minimis” Exemption that Has Enabled Growth of SHEIN, Temu, & AliExpress

By Daniel Hellberg

Crucial US “de minimis” imports exemption will end this Thursday night, May 1st
Beginning May 2nd, low-value direct-to-US consumer imports subject to duties, reporting
For US consumers, buying from SHEIN et al set to become more expensive, more onerous

China New Higher Education (2001 HK): Stays Cheap at 1.7x PER and 0.3x P/B

By Osbert Tang, CFA

China New Higher Education (2001 HK)‘s gearing (including contract liabilities) has come down to 61.2% in 1H25, from 69.9% in FY24 and 84.1% in FY23 – an encouraging trend.
Net profit grew 8.6%, even faster than the full-year consensus forecast of 3.5% growth. There are multiple drivers that support its medium-term outlook.
CNHE trades on 1.7x PER and 0.3x P/B, but the FY25 ROE is a solid 16.6%. Should the payout ratio remain unchanged, its yield will reach 28.4%.

Ping An Healthcare and Technology (1833 HK) 25Q1 Results – Concerns Behind and the Valuation Outlook

PAGD achieved a dual increase in revenue and profit in 25Q1, which was mainly driven by the revenue from F-end business and B-end corporate health management business (up 43% YoY).
We always question PAGD’s capability of expanding new customers and business externally, apart from relying on the resource support of Ping A Group.This makes PAGD difficult to match high valuations.
Our forecast for 2025 revenue is RMB5.1 billion.If based on P/S of 3x, market value is RMB15.3 billion. Market value of RMB24 billion could be the peak of PAGD’s valuation

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Apr 27

Daily Brief China: Bright Smart Securities And, Tencent, Trip.com, Guangzhou Automobile Group, BYD, Shanghai Henlius Biotech and more

In today’s briefing:

Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28
HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling
Monthly Chinese Tourism Tracker | March and Q125 Demand Growth Weak Vs Trend (April 2025)
A/H Premium Tracker (To 25 Apr 2025): AH Premia Fall Sharply; “Feels” Risk-On But Noisy Spreads
BYD (1211 HK): Rev up by 36% in 1Q25, Scale to Bring 60% Upside
China Healthcare Weekly (Apr.27)- Flaws Behind BeiGene’s Breakeven, Fosun Increased Stake in Henlius

Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28

Bright Smart Securities And (1428 HK)‘s Chairman entered a SPA with Ant Holdco to sell his 50.55% stake at HK$3.28, a 7.5% premium to the last close.
The SPA completion requires approval from both the NDRC and SFC. Unusually, Ant has the option of extending the long-stop date, reflecting a possibility of extra scrutiny by the regulators.
Under Rule 26.1 of the Code, upon completion, Ant will be required to make an unconditional mandatory cash offer at HK$3.28. The MGO price is final and a knockout offer.

HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling

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. The first three weeks in April were HK$168bn.
The fourth week (this past week) saw net outflows on low volume as SOUTHBOUND investors sold SOEs quite heavily.
9 of the top 10 Net Sells as % of Volume this past week had China, Beijing, or Shanghai as the first word in their name.

Monthly Chinese Tourism Tracker | March and Q125 Demand Growth Weak Vs Trend (April 2025)

By Daniel Hellberg

March demand growth improved vs weak February, but Q125 showed clear slowdown vs trend
Relatively strong demand growth for outbound travel is no longer lifting airline load factors
Near-Term, we no longer view Chinese travel as attractive, as stocks appear to lack catalysts

A/H Premium Tracker (To 25 Apr 2025): AH Premia Fall Sharply; “Feels” Risk-On But Noisy Spreads

By Travis Lundy

AH Premia fall sharply. Spread curve torsion is mild but present, with narrow AH Premia widening, and wide premia narrowing.
For a month I thought warning signs were flashing and spreads could widen. That has taken a pause. I am not comfortable it will remain paused or Hs will outperform.
The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from wider spreads coming in, narrow spreads widening, and liquidity dropping. Alpha good again this week.

BYD (1211 HK): Rev up by 36% in 1Q25, Scale to Bring 60% Upside

By Ming Lu

In 1Q25, BYD’s revenue increased by 36% YoY and sales volume increased by 60% YoY.
We believe BYD’s scale advantage will help cashflow and the competition in the coming market concentration.
The P/E band suggests an upside of 59% for the end of 2025.

China Healthcare Weekly (Apr.27)- Flaws Behind BeiGene’s Breakeven, Fosun Increased Stake in Henlius

The rise of innovative drugs in China is actually in line with the interests of large pharmaceutical companies and MNCs. The only ones get “hurt” are small overseas startups/small biotech.
BeiGene’s turnaround from losses to profits has entered the countdown.However, investors may not be happy with the net profit margin brought by single revenue driver Brukinsa based on our calculation.
Fosun has increased its stake in Henlius by acquiring additional shares at HK$24.6/share, bringing its total ownership to 63.43%.This sends positive signals. A falling stock price is a buying opportunity.

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Apr 26

Daily Brief China: Hongkong Land, China Mobile, Deepexi Technology and more

In today’s briefing:

Hongkong Land (HKL SP) Recycles Nine Floors Of One Exchange Square
China Mobile (941 HK) Tactical Outlook Following Q1 2025 Results
Deepexi Technology Pre-IPO Tearsheet
Asia Real Estate Tracker (25-Apr-2025): HKEX buys 9 floors at Exchange Square for $810M.

Hongkong Land (HKL SP) Recycles Nine Floors Of One Exchange Square

In a rare move, Jardine Matheson (JM SP)-controlled Hongkong Land (HKL SP) has sold nine floors (147,025 square feet) of One Exchange Square to HKEX (388 HK) for HK$6.3bn (US$810mn).
HKL plans to use the proceeds to provide enhancements to the property sold, the reduction of net debt; and for a share buyback. Shares are up 9% as I type.
HKL is focussed on divesting US$4bn to US$6bn of its balance sheet assets in the next three years. HKL’s CEO Michael Smith: “Recycling capital is our top priority right now“.

China Mobile (941 HK) Tactical Outlook Following Q1 2025 Results

By Nico Rosti

On April 22, 2025, China Mobile (941 HK) reported its Q1 2025 financial results, revenues substantially unchanged, but increase in net income and subscriber growth indicates resilience in its operations.
The initial market reaction suggests mild disappointment, the stock retreated to a low <80 intra-week, then closed the week down at 80.85.
Our price model shows an oversold state, while the time model indicates there is room for another week down, possibly a buy-the-dip opportunity (3 weeks down should be the limit).

Deepexi Technology Pre-IPO Tearsheet

By Akshat Shah

Deepexi Technology (1843779D CH) (DT) is looking to raise atleast US$100m in its upcoming Hong Kong IPO. The deal will be run by CITIC, CMBC, Guotai, Bocom International and SPDB International.
The firm specializes in delivering AI solutions to enterprises to integrate their data, decisions and operations efficiently at scale.
DT ranked first among specialized providers of large model AI application solutions in China’s enterprise large model AI application solution market in terms of revenue in 2024, according to F&S.

Asia Real Estate Tracker (25-Apr-2025): HKEX buys 9 floors at Exchange Square for $810M.

Hong Kong Exchanges and Clearing Limited (HKEX) is purchasing 9 floors at Exchange Square in Hong Kong for $810 million, marking the top deal of the year.
The California Public Employees’ Retirement System (CalPERS) fund has acquired an office tower near Shanghai Xintiandi for $316 million.
Mitsubishi Estate has started construction on a $1.7 billion office project in London, further solidifying its presence in the city’s real estate market.

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Apr 25

Daily Brief China: Dickson Concepts Intl, Pop Mart International Group L, Wanda Hotel Development, CiDi Inc, China Hongqiao, Blackrock Inc and more

In today’s briefing:

Poon Moves On Dickson Concepts (113 HK)’s Cash Hoard?
Pop Mart (9992 HK): Eye-Popping Growth. Is It the Next Pokémon for Kidults?
Dickson Concepts (113 HK): Controlling Shareholder to Privatise a Negative EV Play?
Wanda Hotel (169 HK) To Offload Hotel Management Arm
CiDi Pre-IPO – Promising Company Amid Strong Industry Tailwinds & Narrowing Losses
Lucror Analytics – Morning Views Asia
Asia Real Estate Tracker (24-Apr-2025): Lone Star buys Yokohama block for hotel project.

Poon Moves On Dickson Concepts (113 HK)’s Cash Hoard?

Dickson Concepts Intl (113 HK) (DC), which is principally engaged in the sale of luxury goods business, is suspended pursuant to the Takeovers Code.
DC’s Chairman, Dickson Poon (& spouse), hold 60.5%. Super-net-cash rich DC is trading in sync with historical metrics. 1H25 (Mar Y/E) net profit dropped 40.1%. Shares are roughly flat yoy.
Given DC’s cash hoard, taking the company private makes sense. I doubt Poon is seeking to exit his stake.

Pop Mart (9992 HK): Eye-Popping Growth. Is It the Next Pokémon for Kidults?

By Devi Subhakesan

Pop Mart International Group L (9992 HK) ’s stock has nearly doubled in three months, fueled by surging revenue and the breakout popularity of its Labubu dolls.
Driven by strong international expansion and solid omni-channel demand in its home market, Pop Mart reported over 165% revenue growth in 1Q2025 compared to the same period last year.
Investors remain split on whether Pop Mart’s unconventional products and marketing are driven by lasting fandom or just a passing trend.

Dickson Concepts (113 HK): Controlling Shareholder to Privatise a Negative EV Play?

Dickson Concepts Intl (113 HK) has entered a trading halt “pending the release of an announcement pursuant to The Code on Takeovers and Mergers, which constitutes inside information of the Company.”
The controlling shareholder (Sir Poon) is likely seeking to launch a privatisation through a Bermuda scheme, particularly as the shares trade below net cash.
While no disinterested shareholder holds a blocking stake, the headcount test and a decent AGM participation rate necessitate an attractive offer. The potential offer price range is HK$5.60-9.24.

Wanda Hotel (169 HK) To Offload Hotel Management Arm

Wanda Hotel Development (169 HK), 65.05% held by Wang Jianlin, is selling its hotel property arm to Tencent (700 HK) and Trip.com (9961 HK)-backed Tongcheng Travel Holdings (780 HK).
Wang Jianlin’s cash-strapped Dalian Wanda Group has been offloading assets such as the $8.3bn sale of its mall management business to a PAG-led consortium in March last year.
Wanda Hotel proposes distributing all or part of the proceeds from the sale. Given Wang’s controlling shareholding, I’d tilt towards the former.

CiDi Pre-IPO – Promising Company Amid Strong Industry Tailwinds & Narrowing Losses

CiDi Inc. is looking to raise about US$200m in its upcoming Hong Kong IPO.
CiDi is a leading autonomous driving technology provider for commercial vehicles in China, with a strong foothold in the autonomous mining segment.
The company stands to benefit from sustained industry tailwinds. While still in its early stages, CiDi has made progress in narrowing its losses.

Lucror Analytics – Morning Views Asia

By Trung Nguyen

In today’s Morning Views publication we comment on developments of the following high yield issuers: China Hongqiao, Softbank Group, Vedanta Resources, China Oil & Gas, Biocon Biologics
In the US, new home sales jumped 7.4% m-o-m (1.3% e / 3.1% revised p) to an annualised 724 k units in March, driven by a surge in home sales in the South. The March (final) building permits rose 0.5% to an annualised 1.47 mn units.
Separately, the S&P manufacturing PMI edged up to 50.7 (49.0 e / 50.2 p), while the services PMI fell to 51.4 (52.6 e / 54.4 p). The composite PMI declined to 51.2 (52.0 e / 53.5 p).

Asia Real Estate Tracker (24-Apr-2025): Lone Star buys Yokohama block for hotel project.

Lone Star acquires Yokohama apartment block from Mapletree for hotel project, expanding their investment portfolio in the real estate sector.
Former executives from BlackRock and CapitaLand, including Simon Treacy, are taking on leadership roles in the energy startup PolarBlue.
It is important to stay positive and keep moving forward in the face of challenges, as success is attainable with perseverance and determination.

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Apr 24

Daily Brief China: Bright Smart Securities And, BYD, Xiaomi Corp, Bama Tea, China Petroleum & Chemical, ICBC (H), Liuliu Orchard Group, Perfect Medical Health and more

In today’s briefing:

Bright Smart Securities (1428 HK): A Takeunder MGO?
BYD (1211 HK) Positioning Ahead of Q1 2025 Results
Xiaomi Corp (1810 HK): Top Trades and Strategic Insights from HKEX Options Trading
Xiaomi Corp (1810 HK): Volatility Insights and Analysis Identify Spread Opportunities
Pre-IPO Bama Tea – The Business Model, the Challenges and the Outlook
Sinopec (386) Earnings: Volatility Setup and Post-Release Price Behavior
Bright Smart (1428 HK): Chairman’s Scheme, Or Cashing Out?
ICBC (1398.HK) Earnings: Volatility Pricing, Post-Release Trade Setup & Tactical Hedge
Liuliu Orchard Group Co Ltd Pre-IPO Tearsheet
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – April 2025

Bright Smart Securities (1428 HK): A Takeunder MGO?

Bright Smart Securities And (1428 HK) is in a trading halt “pursuant to the Hong Kong Code on Takeovers and Mergers, which constitutes inside information of the Company.”
It is likely that Mr Lum, the founder and chairman, has entered a sale and purchase agreement to sell his controlling stake, which would trigger a mandatory general offer (MGO).
The shares are at an all-time high and have a P/B multiple that is a material premium to peers. The MGO price is likely to be lower than last close.

BYD (1211 HK) Positioning Ahead of Q1 2025 Results

By Nico Rosti

BYD (1211 HK) will release its Q1 2025 results on April 25. The company has issued a positive profit alert, projecting net income around RMB 8.5 – 10 billion.
Expected earnings per share ranging from RMB 2.91 to RMB 3.42, up from RMB 1.57 in the same period last year.
Our model currently does not indicate the stock is overbought, but a surprise pullback is always possible around earnings releases, so we will discuss also support/buy zones.

Xiaomi Corp (1810 HK): Top Trades and Strategic Insights from HKEX Options Trading

Over the past five trading days, Xiaomi Corp (1810 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights are provided.
Bearish and Bullish strategies balance each other, with only 12% of trades expressing a neutral view, such as Iron Condors. Some strategies were traded in unusually large size.
Diagonal Spreads account for over 25% of all strategies and can make for near self-financing strategies. An inverted volatility term structure, aka backwardation, supports calendar and diagonal spreads.

Xiaomi Corp (1810 HK): Volatility Insights and Analysis Identify Spread Opportunities

Xiaomi’s (1810 HK) one-month implied volatility has decreased from recent peaks but remains above the 90th percentile, while realized volatility is exceptionally high, exceeding 100% (100th percentile).
The options market exhibits an inverted term structure (backwardation) favoring calendar or diagonal spreads, with a slightly negatively sloped skew supporting put and call spreads.
Open interest extends to March 2026, with balanced call and put interest across most expiries, except for March 2026, which is heavily call-dominated.

Pre-IPO Bama Tea – The Business Model, the Challenges and the Outlook

The most significant issue in the domestic tea industry is product standardization. This makes it difficult for tea companies to expand their market share and achieve economies of scale.
Bama’s revenue growth showed an upward trend, but the growth rate is declining. There’re already signs of growth stagnation. High selling and marketing expenses will put pressure on profit margin.
Lancang and Tenfu Caymans (6868 HK) are comparable peers. Due to larger market share/revenue scale and higher profit margin in 24Q1-Q3, we think Bama’s valuation should be higher than peers.

Sinopec (386) Earnings: Volatility Setup and Post-Release Price Behavior

By John Ley

With Sinopec down 8.47% since the last quarter, we take an in-depth look at price patterns, implied vol, and the earnings implied jump compared to historical outcomes.
Implied vols stand out across a variety of metrics including relative valuation.
Examining average absolute price moves across quarters, Q1 tends to have the second-largest average absolute move.

Bright Smart (1428 HK): Chairman’s Scheme, Or Cashing Out?

Mid-Trading yesterday, broker Bright Smart Securities And (1428 HK) was suspended pursuant to the Takeovers Code. Shares closed up 9.3% before suspension.
Bright Smart’s ops are tonking along nicely. It recently announced a (preliminary) 10% increase in FY25 profit (Mar Y/E). The share price is up 97% yoy.
Bright Smart’s Chairman, Yip Peter Mow Lun, holds 50.54%. Unusual timing to take the company private. Alternatively Yip, at 73-years of age, may be cashing in his chips.

ICBC (1398.HK) Earnings: Volatility Pricing, Post-Release Trade Setup & Tactical Hedge

By John Ley

An in-depth look at price patterns, implied vol, and the earnings implied jump compared to historical outcomes.
Based on ICBC’s historical post-earnings behavior and current implied vol levels, we recommend a hedge into the event.
We explore post-earnings moves that show a potentially exploitable pattern.

Liuliu Orchard Group Co Ltd Pre-IPO Tearsheet

By Rosita Fernandes

Liuliu Orchard Group (LLO HK) (LOGCL) is planning to raise about US$100m in its upcoming Hong Kong IPO. The lead bookrunners for the deal are Citic and Guoyuan.
The company was established in 1999. It is one of the leading producers of plum-based products in China’s fruit snacks category.
As per F&S Report, LOGCL ranked first in China’s fruit snacks industry by retail sales value, with a market share of 4.9% in 2024.

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – April 2025

By Sameer Taneja

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), Philippine Stock Exchange (PSE PM), and Ginebra San Miguel (GSMI PM)
We provide updates on Ginebra San Miguel (GSMI PM), The Keepers Holdings (KEEPR PM), Philippine Stock Exchange (PSE PM), Shakey’s Pizza (PIZZA PM), and Uchi Technologies (UCHI MK).

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Apr 23

Daily Brief China: Jilin Jiutai Rural Comm Bank, Vcanbio Cell & Gene Engineering, Sichuan Baicha Baidao Industrial, Hang Seng Index, NetEase , LXJ International Holdings, Keppel Corp, Sunac China Holdings, Hi-Think Technology International Ltd and more

In today’s briefing:

Jilin Jiutai Bank (6122 HK): Now Is The Time To Be Delisted
CSI Medical Service Index Rebalance Preview: Five Potential Changes in June
Sichuan Baicha Baidao Industrial IPO Lockup – Steep Losses for Pre-IPO Investors
HSI Tactical Outlook: Fading Momentum Signals Pullback Risk
Tencent/Netease: One Game for Netease in April
Pre-IPO LXJ International Holdings – The Pain Points and the Outlook
Asia Real Estate Tracker (22-Apr-2025): Wanda sells hotel business for $347M.
Lucror Analytics – Morning Views Asia
Hi-Think Technology Pre-IPO – Steady Outlook Amid FX Pressures

Jilin Jiutai Bank (6122 HK): Now Is The Time To Be Delisted

Jilin Jiutai Rural Comm Bank (6122 HK), a small bank focusing on rural and small business lending, is suspended pursuant to the Takeovers Code.
Jilin Jiutai was initially suspended on the 12th March. Then on the 31st March, it indefinitely postponed its FY24 results. The share price is down 61% in the past year.
My guess is that Jilin Province Trust will put Jilin Jiutai out its misery via an Offer by way of a Merger by Absorption. Pricing? Perhaps HK$0.80/share.

CSI Medical Service Index Rebalance Preview: Five Potential Changes in June

By Brian Freitas

The review period ends on 30 April, the changes should be announced on 30 May and will be effective after the close of trading on 13 June.
We forecast 5 potential changes for the index in June where there could be buying of 0.5-2x ADV in the adds and selling of between 0.7-3.8x ADV in the deletes.
The forecast adds and deletes have performed in line over the last few months and there could be outperformance as we near the end of the review period and announcement.

Sichuan Baicha Baidao Industrial IPO Lockup – Steep Losses for Pre-IPO Investors

By Sumeet Singh

Sichuan Baicha Baidao Industrial (2555 HK) raised around US$330m in its Hong Kong IPO, in April 2024. The lockup on its pre-IPO investors is set to expire soon
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market in 2023, with a market share of 6.8%
In this note, we will talk about the lockup dynamics and possible placement.

HSI Tactical Outlook: Fading Momentum Signals Pullback Risk

By Nico Rosti

In our previous insight we highlighted a buy-the-dip opportunity in the HSI INDEX in the HSI Index during the late-March pullback. However, Trump’s tariff announcement dramatically shifted the outlook.
Following a sharp drop to 19260, the Hang Seng Index staged a fierce rally to 21000—but momentum has since stalled.
The index has rallied for three straight weeks (including this one), but remains below key resistance levels. Our model signals weakness, and a likely pullback ahead.

Tencent/Netease: One Game for Netease in April

By Ke Yan, CFA, FRM

China announced game approval for the April batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening.
While Netease received one game approval for its domestic game, Tencent received an approval for an imported game.

Pre-IPO LXJ International Holdings – The Pain Points and the Outlook

LXJ’s revenue/net profit showed an upward trend from 2022 to 24Q1-Q3, but growth momentum was decreasing. The same store sales growth dropped significantly. Profit margin is also lower than peers.
There’re significant differences in dietary habits and tastes across China, making it difficult for LXJ to expand nationwide. So, the future growth potential may not be as good as expected.
In December 2021, valuation of LXJ had reached RMB18 billion. Since LXJ’s revenue growth/profit margin are inferior to Xiaocaiyuan, we think the valuation of LXJ should be lower than Xiaocaiyuan.

Asia Real Estate Tracker (22-Apr-2025): Wanda sells hotel business for $347M.

Wanda sells hotel business to Tencent-backed firm for $347M, indicating a strategic shift in their business operations.
Keppel raises $1.5B for data centre, education funds, and urban renewal, showing a focus on diverse investments.
Cushman & Wakefield appoints Matthew Bouw as APAC CEO for EMEA, highlighting leadership changes in the real estate industry.

Lucror Analytics – Morning Views Asia

By Leonard Law, CFA

In today’s Morning Views publication we comment on developments of the following high yield issuers: Sunac China
US President Donald Trump has ramped up pressure on Fed Chairman Jerome Powell. In a Truth Social post yesterday, Mr Trump called for “pre-emptive cuts” in interest rates, stating that “there can almost be no inflation, but there can be a slowing of the economy unless Mr Too Late, a major loser, lowers interest rates now”.
The latest salvo came after White House economic advisor Kevin Hassett said on Friday that the Trump administration was studying whether it could fire Mr Powell. Mr Trump also told reporters on Friday that Mr Powell would resign if the President asked him to.

Hi-Think Technology Pre-IPO – Steady Outlook Amid FX Pressures