China

• China Boqi Environmental Hol (2377 HK), a flue gas treatment play in China, is suspended pursuant to the Takeovers Code.
• Co-Founders Zeng Zhijun (27.71%, chairman) and Richard Cheng (16.76%, NED) collectively hold 44.47%. However, they had a falling out in January 2021, and probably won’t jointly bid. Individually, maybe.
• China Petroleum & Chemical (386 HK) (a.k.a. Sinopec) holds 10.97% and could make a move to secure control.

• Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance. 
• Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was “inappropriate”.
• If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.

• Back in October 2023, a consortium including First Pacific (142 HK) took Metro Pacific Investments Co (MPI PM) private. First Pac’s 46.2% share at delisting was worth ~US$1.25bn.
• Following Mitsui (8031 JP)–backed Mit-Pacific’s possible stake in a tollway operator held by MPIC, First Pac’s 43.2% holding in MPIC, including the 47.5% stake in Meralco, is potentially worth ~US$3.21bn.
• The question is whether this recent development from Mitsui has any bearing. First Pac’s discount to NAV is elevated versus its historical trading range. 

• China Resources Beverage (CRB HK), China’s largest purified drinking water company, is premarketing an HKEx to raise US$0.5-1 billion.
• We previously discussed the IPO in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case and CR Beverage IPO: The Investment Case. 
• In this note, we present our forecasts and examine CR Beverage’s potential valuation range for the first time.

• Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%. 
• The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month. 
• Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH).  The question: how much more in the tank?

• MDL Wholesale Limited is looking to raise about US$100m in its upcoming Hong Kong IPO.
• MDL is a leading food and FMCG distribution solution provider in China.
• In this note, we look at the firm’s past performance.

• The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 36%, stocks are trading at 5-18% dividend yields. 
• We await the November results of Pacific Textiles (1382 HK), which we will soon initiate coverage on.
• We note that Yue Yuen Industrial Holdings (551 HK) continues with its buybacks, having repurchased 3.2 million shares (0.2% of outstanding shares) since August 28th, 2024. 

• The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
• Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition. 
• Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.

• Bright Smart Securities is a successful brokerage firm in Hong Kong founded by Mow Lum Yip in 1995 and publicly listed in 2010
• The company has shown steady growth since its IPO, with impressive increases in revenue and net income
• Despite a challenging market environment in Hong Kong, Bright Smart has maintained stable results, grown its client base and assets under management, and pays out all earnings in dividends, with dividends exceeding net earnings over the last 5 years.

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.

• China Boqi Environmental Hol (2377 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. The shares have been up 39% since 30 September. 
• It is likely that management, representing 59.59% of outstanding shares, is seeking to privatise Boqi through a Cayman scheme. 
• Sinopec, a pre-IPO investor potentially holding a blocking stake, is likely seeking to exit. At the last close, Boqi trades in line with the median peers’ P/B multiple. 

• We believe price momentum for global container carriers is unlikely to improve from here
• As price momentum falters, carriers’ shares could continue to give back big gains
• We would look for near-term opportunities to reduce or eliminate exposure to sector

• ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
• The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.   
• The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.

• Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
• The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
• Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish. 

• The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.

• Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer 
• ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
• If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

• 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: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Capitol Health (CAJ AU). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Xingda International (1899 HK), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP). 

• Hang Seng Index (HSI INDEX), Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) and Nikkei 225 (NKY INDEX) all have elevated implied vols vs their peers and vs historical observations for October.
• NIFTY Index (NIFTY INDEX) , S&P 500 INDEX (SPX INDEX) and S&P/ASX 200 (AS51 INDEX)  implied vols are on the low end of what is typically realized in October.
• Most markets see price weakness in the 3rd week of the month with realized volatility underperforming over the back half of the month.

• By way of its 54.79% ownership in Zheshang Securities (601878 CH), Zhejiang Expressway Co H (576 HK) is an attractive indirect vehicle to access the mainland securities sector.  
• The attributable market cap of Zheshang equals 90% of ZJE’s market cap, implying that the toll road business is almost free. However, Zheshang only contributed 16% of ZJE’s 1H24 profit.
• ZJE trades on 6.7x FY24F PER, vs. 31.3x for Zheshang and 17.6x for H-share securities companies. A stable toll road business also minimises the risk for ZJE.

• Given its holdings in four A-share subsidiaries, AviChina Industry & Technology H (2357 HK) will benefit from the surge in their share prices as mainland markets re-open.
• These A-share all lagged benchmark Indices YTD. Avichina’s holdings in them are already valued at 2.23x its own market capitalisation. 
• The historical discount range is 51-70% and currently stands at 55%, suggesting AviChina’s share price has not yet excessively priced in the post-Golden Week rally.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• CIFI Holdings
• Vedanta Resources

• Half of all lithium-ion batteries could be made with recycled lithium by 2042, according to the founder of power cell giant Contemporary Amperex Technology Co. Ltd. (CATL) (300750.SZ +11.06%), who presented a vision of an eco-friendlier industry at a recent event.

• Speaking at the World New Energy Vehicles Congress on Friday, Zeng Yuqun, also CATL’s chairman, highlighted the critical role power cells can play in driving the EV industry toward a zero-carbon future, saying that the sustainable development of the industry hinges on the use of recycled battery raw materials.

• CATL’s battery recycling business has already taken shape, with a current annual capacity to process 270,000 tons of used batteries, Zeng said.

• TCL Technology Group Corp.
• (000100.SZ +7.51%), a leading Chinese electronics maker, has agreed to pay 10.8 billion yuan ($1.54 billion) to acquire LG’s two display factories in Guangzhou, as Chinese manufacturers strengthen their dominance in the liquid crystal displays (LCD).
• TCL China Star Optoelectronics Technology (TCL CSOT), a subsidiary of TCL Technology, will acquire 80% of LG Display China and the entire stake of LG Display Guangzhou.

• Investors always have expectations for Chinese CXOs, believing that BIOSECURE Act will not pass and Chinese CXOs will bottom out. We can understand this, but we have to be rational.
• Selling the operations that have been negatively affected is a reasonable choice, which helps stabilize WuXi’s business/market expectations. But this does not necessarily mean the geopolitical conflict will end here.
• Without persuasive long-term logic, share price of Sihuan would still underperform. Despite strong performance of Chinese stocks, we advise investors to do short-term trading on Sihuan Pharmaceutical Hldgs (460 HK).

• In a new filing with HKEX, we can see Lalatech’s revenue growth slow
• The company’s grip on CoR loosened, but OpEx growth in H1 was minimal
• Given improving market conditions, we believe Lalatech may finally sell shares

• China’s key electric-vehicle (EV) makers set monthly delivery records in September as government subsidies and price cuts gave sales in the fiercely competitive industry a boost.
• BYD Co. Ltd. (002594.SZ +8.21%), the country’s top EV-maker, sold 419,426 vehicles in September, according to an exchange filing Tuesday.
• The figure, which consisted of 164,956 battery EVs and 252,647 plug-in hybrids, marked a 45.9% year-on-year increase and a new monthly sales record.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Biocon Ltd
2. Lippo Karawaci
3. Tata Motors Ltd
4. Softbank Group
5. Rakuten

and more…

• Despite the drastic bull turn in Chinese equity sending MNSO’s share 41% from its trough, we see MNSO’s investment in Yonghui Superstores as a risk venture.
• We believe the market has overestimated the scalability of the Pangdonglai rectification program for offline retail. 
• We downgrade the stock to SELL rating and cut TP to US$18/ADS

• Back on the 16th July, furniture trader Samson Holding (531 HK) announced an Offer, by way of a Scheme, from Shan Huei Kuo, Samson’s Chairman.
• The Cancellation Price is $0.48/share (final), a 50% premium to last close; but more notable if going back a month. This looks done. However, Samson is an illiquid micro-cap.
• The Scheme Doc is now out, with a Court Meeting to be held on the 21st October. Expected payment on the 14 November. The IFA says fair & reasonable.

• Samson Holding (531 HK)’s IFA opines that Mr Samuel Kuo (Chairman)’s HK$0.48 privatisation offer to be fair and reasonable. The vote is on 21 October. 
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). Despite the market rally, most peers’ shares have declined since the offer announcement. 
• The attractive premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. At the last close, the gross/annualised spread is 3.2%/29.8%.

• 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 December 2024.
• The index changes for the December 2024 index rebal event will be announced after market close on 22nd November 2024.

• Nanshan Aluminium International Holdings (NAI HK)  is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Huatai International.
• Nanshan Aluminium International is a leading alumina manufacturer in Southeast Asia.
• The firm’s primary focus has been tapping into Indonesia’s abundant bauxite and coal reserves, utilizing the low-temperature Bayer process to produce metallurgical-grade alumina in sand form.

• China Resources Beverage (CRB HK), China’s largest purified drinking water company, is premarketing an HKEx to raise US$0.5-1 billion.
• We previously discussed the IPO in CR Beverage IPO: The Bull Case and CR Beverage IPO: The Bear Case. In this note, we examine the latest updates in the PHIP.
• The investment case rests on core business offsetting slowing growth with margin improvement, beverage’s fast-paced growth, narrowing the margin gap with Nongfu Spring (9633 HK), and return to FCF generation.

• Oriental Watch (398 HK) will report its H1 FY25 result in mid-November. We expect earnings to be down 5-10% YoY, as SSSG would be flattish for the period.
• We expect a 25-26 cent dividend ( ~14% yield annualized). With the stimulus measures in place, we expect China’s mood to be slightly more upbeat.
• Oriental Watch (398 HK) goes ex-dividend today (23.5 cent/share dividend). As we enter trading today, it may be available at a higher yield. 

• Shenzhen Mindray Bio-Medical Electronics (300760 CH) reported double-digit growth in revenue and net profit in 1H24.
• In-Vitro diagnostics and medical imaging systems segments drive performance, while patient monitoring and life support lagged.
• International market continues to show strength, while China lingers for now.

• Chongqing Terminus (2471080D CH) is looking to raise about US$300m in its upcoming Hong Kong IPO. The deal will be run by CITIC Securities and Haitong.
• Chongqing Terminus is a leader and pioneer in China’s public realm AIoT (Artificial Intelligence of Things) industry.  
• It leverages its innovative AIoT operating system, TacOS, to provide enterprises, public administrators and public realm participants with full stack AIoT products i.e. software, hardware and services. .

• Biokin’s traditional chemical drug and TCM businesses would continue to shrink and their valuation contribution can be negligible. The collaboration agreement for BL-B01D1 with BMS changes the outlook of Biokin.
• The clinical data of BL-B01D1 look good so far, but the R&D failure risk of BL-B01D1 is not low. It is uncertain if BL-B01D1 would finally be druggable.
• Biokin is overvalued and there is big bubble in valuation. If BL-B01D1 fails in R&D or its clinical data fail to meet high expectation, Biokin’s market value will plummet.

• QuantaSing Group Limited (QSG) is a leading provider of “lifestyle solutions” (i.e., high-demand products and services) catering to middle-aged (45-64 years old) and elderly (65+) individuals, also known as the “silver” demographic, in China.
• The company’s legacy education business offers online courses across recreation and leisure, skills upgrading, and financial literacy programs.
• In addition to QuantaSing’s online education platform focused on individuals, the company provides marketing services to corporate enterprises.

• Bloomberg reported that KKR has made a non-binding, preliminary approach to taking ASM Pacific Technology (522 HK) private. ASMPT has been the subject of takeover rumours in the past.
• The trading patterns of the substantial shareholders suggest a willingness to exit. However, past privatisation rumours suggest issues with the offeror matching key shareholders’ price expectations. 
• A binding proposal is unlikely as the timing would be viewed as opportunistic, with the recent market rally eroding a potential takeover premium and ASMPT’s premium multiple compared to peers.

• Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
• The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.   
• Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management. 

• The second PE rumoured interest in ASMPT in 18 months, with KKR circling.
• Semiconductor M&A has surged in 2024 YTD with a 33% increase in deal activity compared to 2023.
• ASM’s leadership in TCB, potential growth within HBM, expansion at TSM and enabling the Nvidia Blackwell platform are all reasons for M&A interest.

• China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO. 
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.

• Argyle Street Management (ASM), a 9.01% shareholder in China Merchants China Direct Investments (133 HK), has been (very) publicly angling for change in this closed-end fund. Here is their website.
• The core issue is CMCDI’s P/NAV ratio of 0.41x compared to closed-end fund peers of 0.8x-0.9x. 
• CMCDI has finally responded to ASM’s overtures with the prospect of a share buyback and a special dividend. But details are thin on the ground. 

• Reportedly – Bloomberg – KKR has made a non-binding proposal for ASM Pacific Technology (522 HK), the world’s leading back-end semiconductor production equipment supplier. 
• ASMPT’s largest shareholder, ASM International Nv (ASM NA), with 25%, has been the focus of activists for some time to sell its stake. 
• This bid has all the hallmarks of the approach (also cited by Bloomberg) by PAG last year. Which came to nought. From a regulatory standpoint, I can’t see this happening.

• 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 final rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
• We do not expect any changes for the HSTECH index in December 2024. However, we expect there to be capping flows of US$1,079mn one-way.

• 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 December 2024.
• We see two ADDs/DELs – the same names we had in our last insight. At present, we expect US$474mn capping flows one-way but this can change by early-December 2024.

• China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and provided our initial thoughts on valuations. In this note, we will relook at valuations post its PHIP updates.

• Nongfu Spring is able to take a price war to grab market share,but the strategy of CR Beverage forced to cut prices may not work,making its profit margin further decline.
• CR Beverage’s business model is “single business + scale expansion”, worse than “multi-category structure + new product incubation”.Future performance growth may inevitably slow down if without the second growth curve.
• Whether in terms of product/revenue structure, profitability, or sustainability of growth momentum, CR Beverage isn’t as good as Nongfu Spring. Valuation of CR Beverage should be lower than Nongfu Spring.

• The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
• We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
• If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

• PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
• There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
• There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

• China Dongxiang (3818 HK) stands on a discount of 82.1% to NAV after factoring in the recent market rally, not limiting to its Alibaba Group Holding (9988 HK) holdings.
• Its listed equities may have gained Rmb314m, but the HK$41m market capitalisation growth has not reflected this. The gains on its unlisted investments have not been included yet.  
• CNDX is now more likely to have a positive swing in the bottom line in FY25. Its tiny sportswear business has also witnessed a sequential moderation in sales decline. 

In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in September 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan.

In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on developments in the Asian corporate USD bond market.

• Considering 23H1 high base, it can be understood that 24H1 achieved a low single-digit growth. If excluding gain on disposal of subsidiaries, net profit in 24H1 would have negative growth.
• Mainland China contributed about 90% of total revenue, but an imminent risk is VBP, which will pose a challenge to the pricing autonomy of Tong Ren Tang’s OTC TCM drugs. 
• After absorbing the high base impact of 2023 this year, performance growth would return to double digits in 2025. Tong Ren Tang is undervalued. Reasonable valuation is P/E of 15.

• UMP Healthcare (722 HK) reported a tepid FY24 owing to weak sentiment in HK. Revenues were up 3% YoY; profits were down 27% YoY ( adj profits -34% YoY). 
• The environment in HK is gradually improving, and we believe there is a steady recovery on the horizon for the company.
• The stock trades at 7x FY25 PE and more than 58% of its market cap in net cash, with a yield trending towards 9%. 

• Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
• It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. 
• But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• China announced game approval for the September 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.
• Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

• Midea debuted on HKEx on 17th September and shares last closed at HK$74.25 per share, up by about 35% compared to final HK offer price of HK$54.80 apiece.
• We previously suggested that Midea’s HK offering was attractive as HK shares were priced at a 25% discount to its A-shares, and was at a discount to Haier Smart Homes.
• The PBOC announced several measures to revive the housing market in the country which contributed to the recent rally in the China home appliance sector.

• Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
• The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
• We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

• In this insight we compare Hive Box to InPost, a smart locker specialist
• The firms play in different geographies, making apples:apples comps tough
• In the absence of better comps, comparing Hive Box to InPost still useful

• 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: Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP). 

• Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
• Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
• Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.

• The medical insurance statistics reflected that medical insurance funds are facing increasing pressure. If income/expenditure maintain average growth rates in recent years, there would be a deficit state in 2024.
• Due to increasing pressure on medical insurance fund, the entire process of innovative drug evaluation/NRDL negotiation this year will be more strictly enforced, but Hansoh (3692 HK) is an exception.
• For Henlius’ privatization, completing Pre-Conditions in 24Q4 looks tight. Considering Chinese New Year holiday, the privatization may not be completed until at least mid-to-late February 2025.The deal will get up.

• SOUTHBOUND was a net buyer this week. But who cares. They actually net sold US$2bn of everything which was not Alibaba Group Holding (9988 HK). 
• Bigger news, of course, was China’s “Bazooka” which LOOKS exciting. Stocks are up 15-20% in four days. Lots of BIG numbers are being thrown around. Not everything is “real money.”
• It takes a little sleuthing to figure out where the real money is. For that, I suggest reading China’s [Maybe] Biggish [Quasi?] Bazooka and more below.

• The Chinese drinking water and beverage maker, China Resources Beverage (CRB HK) has filed for an IPO on the HKEx to raise around US$1.0bn.
• The company’s operations are heavily concentrated towards drinking water products where the market competition is intensifying leading into a price war.
• CR Beverage’s margins are inferior compared to peer Nongfu Spring (9633 HK) who has diversified into other beverage products from drinking water to grow its financials.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Despite weak consumer spending in China, there are a few bright spots—an example is Pop Mart International Group (9992 HK)’s strong sales growth partly driven by the “red lipstick effect.”
• Miniso (MNSO US)’s stock plunged early last week but quickly recovered, reinforcing our view that its deal with Yonghui Superstores Co., (601933 CH) has some promise.

• Temu as a subsidiary of PDD becomes the second largest global e-commerce website.
• Meituan merges departments into fewer business units to cut expenses further.
• Mercedes-Benz left the joint venture with BYD, as its high end products are not as popular as Tesla models.

• China’s central bank cuts rates and unveils new measures to combat economic slowdown, creating a more relaxed monetary policy environment to stimulate consumption and investment.
• Silergy’s Automotive segment remains a driving force, especially with the addition of the Electric Vehicle ( EV) market.
• While Silergy faced demand insufficiency previously, it has indicated that the end demand is expected to revive by the end of 2024 from the 4th quarter.

• The weak business, social entertainment, become insignificant in recent quarters.
• All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
• We set an upside of 20% and a price target of US$14.80 for the end of 2025.

• 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,  it hasn’t been this busy for a while, with deals live in Japan and Korea, and possible launches in Hong Kong and India as well.
• On the placements front, there were a few China ADR blocks and other placements across the region.