China

• Chinese logistics service provider SF Holding has filed for a listing on HKEx and seeks to raise HK$6.2bn (US$795m) through the issuance of 170m shares (3.4% of outstanding shares).
• The listing is priced at HK$32.3-36.3 per share, as expected at a 20-29% discount to the last closed price of SF Holding’s A-Shares on 18th November.
• Our valuation analysis suggests that SF Holding’s HK offering is attractive at the lower end of the indicative IPO price range.

• Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction.  Mainland investors bought a record amount the day after Trump’s win.
• Kingsoft Corp (3888 HK) reported consensus beating results with its online game segment surging.  The company is benefiting from AI upgrades in its office SAAS business.
• Precision Tsugami China (1651 HK) posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.

• On 18 November, it was announced that 65 Equity Partners (backed by Temasek) will invest US$100 million (S$134 million) for a 13% stake in Tuya Inc (TUYA US). 
• Net cash as a percentage of market cap is currently at 92%. Tuya’s sales growth and improvement in operating margin in 1Q-3Q 2024 have also been impressive this year.
• Comps are trading at average EV/EBITDA of 13.7x in 2025 versus 2.3x for for Tuya. If Tuya continues its turnaround, its valuation gap versus its peers could decrease further. 

• In 3Q24, PDD released strong revenue growth, but a flat margin.
• We believe, in 2025, PDD will continue to focus on growth rather than profit.
• We conclude an upside of 43% and a price target of US$167 for 2025. Buy.

• Xiaomi reported CY3Q24 revenue, non-IFRS EBIT and non-IFRS net income 4.7%, 7.8%, and 16.6% vs. consensus. 
• C4Q should be even stronger, as (1) appliance subsidy drive IoT revenue and margin improvement, (2) SU7 production output ~doubles
• We reiterate Xiaomi as our TOP BUY idea and raise Xiaomi’s TP to HK$ 33 to reflect the improved profit outlook. Our TP implies 26.6x CY25 P/E.

• TCOM reported C3Q24 revenue 1.4%/1.6% higher than our est./cons., non-GAAP operating income is 12.5%/5.4% higher than our est./cons., mainly due to strong domestic sales and efficient cost control.
• We expect revenue growth to accelerate in 4Q24 and 2025,backed by domestic travel recovery and steady overseas expansion.AI powered cost saving bringing extra leverage in margin is an additional positive.
• We keep the stock as BUY rating and raise TP to US$74/ADS.

• Saint Bella (SAINT HK)  is looking to raise up to US$200m in its upcoming Hong Kong IPO.
• It operates the second largest and fastest growing postpartum care and recovery service in China, as per Frost & Sullivan. It operates an extensive network of 59 premium postpartum centers.
• In this note, we look at the firm’s past performance.

• We compared similar growth stage of Alibaba to Pinduoduo, when GMV of both platforms increase from RMB1 trillion to RMB4 trillion, to facilitate better understanding of efficiency edge of Pinduoduo.
• Contrary to consensus, Pinduoduo didn’t do better than Alibaba on OPEX (advertising expenditure in particular), but it did extract much greater value from the ecosystem via significantly higher take-rate.
• The findings highlight how Pinduoduo aggregate user traffic at surprisingly high cost to beef up merchant competition in terms of cost optimization and user acquisition, with Pinduoduo  reaping greatest value.

• Hang Seng Index (HSI INDEX) implied volatility fell across the term structure and skew. The skew displays a smile favoring specific option strategies.
• The most traded HKEX traded tailor-made combinations are Call and Put Spreads. Straddles, Strangles and Butterflies have become less popular most recently.
• While three quarters of all strategies take a long volatility position, there is a balance in bullish, bearish, and market-neutral strategies.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke, Gajah Tunggal, ReNew Energy, Adani Green Energy, Bharti Airtel, UPL Limited
• Treasuries fell yesterday, with yields up 1-3 bps across the curve following a soft auction of 20Y notes.
• The yield on the 2Y UST rose 3 bps to 4.32%, while that on the 10Y UST was up 1 bp at 4.41%.

• BABA reported CY3Q24 top line, adjusted EBITA and non-GAAP net profit (1.0%), (1.6%) and in-line vs. consensus. 
• CMR improved amid monetization changes that narrowed the growth gap with GMV, but also eliminated some low-single profit sellers from its GMV. 
• Cloud and overseas e-commerce revenue also saw good growth and improved profitability. All of BABA’s key businesses are sputtering to life while macro tailwinds are also favorable. 

• The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
• The indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.
• In this insight, we take a look at our updated flow estimates for December 2024. Separately, we have also presented our latest March 2025 index review predictions.

• The HS HK-Listed Biotech Index (“Hang Seng Biotech Index”) represents the 50 largest biotech companies listed in Hong Kong (HKEX).
• The official index changes and indicative weights for the December 2024 index rebal event will be announced on Friday 22nd November 2024.
• In this insight, we take a look at our updated flow expectations.

• Back on the 14th October, cleanroom play CM Hi-Tech (2115 HK) announced a pre-conditional Offer by way of a Scheme from MayAir Technology (688376 CH) and CM Hi-Tech’s senior management.
• The pre-conditional long stop for NDRC, Mofcom and SAFE was 60 days, which appeared highly optimistic. I was wrong, and the pre-cons were secured in a legendary 18 days.
• The Scheme Doc is now out, with a Court Meeting to be held on the 12 December. Expected payment on the 15 January. The IFA says fair & reasonable.

• Both online marketing and “other revenues” grew strongly in 3Q24.
• Both the gross margin and the operating margin improved over the same period last year.
• We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.

• NetEase reported C3Q24 revenue, GAAP operating profit and GAAP net income in line, (3.6%) and (5.3%) vs. our estimates, and in line, (4.4%) and (5.0%) vs. consensus. 
• Mobile game revenue decline is less a concern due to imminent pipeline launches, but PC game’s significantly beat is a positive surprise. 
• We raised the TP to US$118 for the better outlook of new game launches.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Health and Happiness (H&H), Yinson Production, Xiaomi Corp, ReNew Energy
• In the US, October housing starts declined 3.1% m-o-m to an annualised 1.31 mn units (-1.5% e / -1.9% revised p), the slowest pace in three months as builders put off projects in the wake of hurricanes Helene and Milton.
• Meanwhile, October building permits (a proxy for future construction) eased 0.6% m-o-m to an annualised 1.42 mn units.

• Changsha Intelligent Driving Institute, more commonly known as CiDi, filed for an IPO in Hong Kong. The company was valued at ~RMB9B in its last private funding round.
• CiDi was backed by HongShan Capital, Xinding Capital, Founder Hesheng Investment, Legend Holdings, Baidu Venture, and Lens Technology, among others.  
• The terms of the IPO were not disclosed. CiDi is a category winner that is addressing a large TAM (~$10B by 2030) with room for hyper growth for years.

• The skyrocketing gold prices have driven up the prices of gold jewelry, but actually dampen the enthusiasm of many people to buy gold jewelry, which will directly affect MOKINGRAN’s performance.
• MOKINGRAN’s prediction of gold price is incorrect. For an industry veteran, MOKINGRAN shouldn’t make such mistakes. The error in the judgment of important raw material trends is worth investors’ vigilance.
• We think that valuation of MOKINGRAN should be lower than that of Lao Feng Xiang (600612 CH)/Chow Tai Seng Jewellery (002867 CH)/Chow Tai Fook Jewellery (1929 HK) and industry average.

• Key 3Q24 takeaways include: 1) steady revenue growth reflecting government initiatives to promote consumer spending and trade-in activity, increasingly leveraging the company’s strategic partnership with JD.com, and rising brand awareness/visibility 2) we expect multi-category contribution to continue to build, as management leverages the company’s pricing and customer service competitive advantages to increasingly tap into massive/growing gold and luxury goods recycling markets 3) management remains focused on growing the number of new store openings over the next several years to meet rising demand trends and further expand the footprint and 4) senior officials seem intent on increasingly reinvesting in the business to accelerate customer acquisition growth, while remaining focused on managing expenses to support profitability.

• HKBN Ltd (1310 HK), a Hong Kong broadband play, is never short on privatisation rumours. China Mobile (941 HK) is reportedly (again) holding talks with HKBN’s major shareholders. 
• China Mobile is a logical suitor. I highly doubt a non-PRC (government-affiliated) corporation would be permitted to take HKBN private.
• Previous takeover rumours over the years came to nought. It may be different this time. HKBN was suspended this morning pursuant to the Takeovers Code.

• S.F. Holding (002352 CH), China’s largest express delivery company, is now looking to raise around US$800m in its H-share listing in Hong Kong.
• SFH is the largest integrated express logistics service provider in China and the fourth largest in the world. It has been listed on the Shenzhen Stock Exchange since 2017.
• We have covered the company and deal background in our previous notes. In this note, we talk about the IPO pricing.

• Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 December.
• With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
• Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• The official index changes will be confirmed later this week on Friday 22nd November 2024.
• In this insight, we take a look at our final index change expectations and updated flow estimates for the upcoming index rebal event.

• 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.
• The official index changes and indicative weights for the December 2024 index rebal event will be announced later this week on Friday 22nd November 2024.
• In this insight, we take a look at our updated flow expectations.

• The stock has risen by 38% since our last buy rate.
• The 3Q24 results are still healthy – both growth rate and operating margin.
• We set a downside of 19% for the end of 2025.

• S.F. Holding (002352 CH) has launched its H Share listing at HK$32.30-36.30 per share. Pricing will be on 25 November, and the listing on 27 November.
• We previously discussed the listing in SF Holding H Share Listing: Updates Point to Improving Fundamentals and SF Holding H Share Listing: AH Discount Views.
• Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.

• One important reason S.F. chose to go public on Hong Kong stock market is due to financial pressure, which mainly comes from its heavy asset development model and internationalization strategy.
• Considering the discount of the H-share price versus the A-share price, if the IPO pricing is at the lower limit of the range, then the safety margin would be higher.
• In the short term, S.F. is better than JD Logistics, so its valuation should be higher than JD Logistics and industry average. Future valuation expansion depends on international business performance.

• Going into FY24, ZTO aimed to focus on price,  cede volume share in support of margins
• It hasn’t worked: in Q324, adj EBITDA margin fell -290 bps Y/Y despite higher ASPs
• Q324 results reveal weak earnngs growth, & reduced FY24 volume target; AVOID

• SGX Iron Ore Futures dropped to USD 96.71/ton, down USD 5.49/ton, hitting a low of USD 96.30/ton amid pressure from declining housing prices and industrial output in China.
• Chinese portside inventories increased by 120k tons WoW to 148.51m tons last week, while average daily port discharge volumes rose by 131k tons WoW to 3.18m tons.
• Despite weak economic data from China, SGX Iron Ore Futures may rebound in November-December as pre-Lunar New Year restocking boosts steel demand.

• Back on 14 July 2024, WH Group (288 HK) (WHG) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ
• WHG the world’s largest pork producer, has now confirmed it will sell up to 20% of Smithfield’s shares on a fully diluted basis, in an initial public offering.
• WHG has also proposed an assured entitlement for existing shareholders by way of a distribution in specie of existing shares of Smithfield, or a cash alternative.

• The S.F. Holding (002352 CH) H-shares are being offered at a price range of HK$32.3-36.3/share, a discount of 20.2%-29% to the A-shares. The max raise (including oversubscription) is US$912m.
• Unlike Midea Group (300 HK), the S.F. Holding (002352 CH) H-shares will not get Fast Entry to any indices. Southbound Stock Connect inclusion will take place on 23 December.
• With no index inclusion in the short-term, the H-shares discount to the A-shares should remain wide. The H-shares could become short sell eligible in February.

• Bloomberg reports that China Mobile (941 HK) is exploring a buyout of HKBN Ltd (1310 HK) and is willing to pay at least HK$5.00, a 16.0% premium to last close.  
• HKBN has been the subject of numerous bid rumours, which seemingly came to nothing due to the challenge of meeting the largest shareholders’ (TPG and MBK) price expectations. 
• The rumoured offer price will struggle to gain TPG/MBK’s backing. The current valuation is unappealing, as HKBN trades at a premium multiple compared to peers at the last close. 

• Our 2024 High Conviction, the stock of Meituan has risen by 87% in one year.
• We believe the market ignores TME because of its flat revenue.
• However, we expect TME will significantly benefit from its dominant position in the Chinese music market.

• Vols have stabilized as market has moved away from peak short gamma levels just above the recent market highs.
• HSI Put positions appear to have been rolled down to the 19,000 strike.
• HSCEI saw significant put volume at the 6300 strike with ~15,000 contracts per day trading at that level.

• SF Holding’s HKEX listing launched on Tuesday, November 19th; deal to be priced by 26th
• SF hopes to raise about US$800 mn, less than originally anticipated in financial media
• About one quarter of the offering will be taken up by ten cornerstone investors

• Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.
• CRRC Corp Ltd H (1766 HK) gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.
• Tencent Music Entertainment Group (1698 HK) reported solid results as it shifts to a pay-to-stream subscription model. Xiaomi Corp (1810 HK) had a blowout quarter with EV sales surging.

• In today’s Convertibles Brief publication we comment on developments of the following high yield issuers: Lenovo
• Credit markets widened on Friday, with the iTraxx X-Over increasing 8 bps to 304 bps.
• European bourses declined 0.1-1.3%, except for the IBEX 35 (+1.0%). In the US, the S&P 500 and Nasdaq fell 1.3% and 2.2%, respectively.

• Based on current performance, Jiuyuan has lost growth momentum, showing signs of stagnant growth. The main reason is VBP. So far, Jiouting, Yinuojia, Jifuwei have been included in VBP.
• Guyoudao is facing competitive pressure from both domestic and international competitors and could be finally included in VBP. JY29-2 is the next blockbuster product, but the prospects are not clear.
• Jiuyuan’s market value is expected to be higher than Qyuns. Future valuation performance will depend on the progress of JY29-2 and the overall market situation of GLP-1s at that time

• S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
• In SF Holding H Share Listing: Updates Point to Improving Fundamentals, we noted that SF is in good health, with a return to growth, rising margins, and strong cash generation.
• In this note, we examine the likely discount SF Holding will offer its H Shares compared to the A Shares.

• On its first closing date on 15 November, Xingda International (1899 HK) declared the Chairman’s offer unconditional as the offeror and concert parties represented 60.76% of outstanding shares. 
• The result was surprising. The IFA opined that the offer was not fair or reasonable, and the independent Board recommended that the shareholder not accept it. 
• The CCASS movements suggest that the offer was declared unconditional mainly because friends and family supported the Chairman’s offer. The gross/annualised spread is 1.6%/92.6%.

• 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: Renewable Japan (9522 JP), Shanghai Henlius Biotech (2696 HK), Macromill, Inc (3978 JP), Seven & I Holdings (3382 JP), Canvest Environmental Protection Group (1381 HK). 
• Lowest spreads: Nec Networks & System Integr (1973 JP), Net One Systems (7518 JP), Avarga Ltd (AVARGA SP), T Gaia Corp (3738 JP), Nishimoto (9260 JP), Elematec Corp (2715 JP). 

• PAGD’s business model is problematic, leading to continuous shrinking revenue scale. As PAGD will entirely lose competitiveness in the future, the management wants to find a suitable way to “exit”.
• Privatizing PAGD at low price and integrating it into the Ping An Group’s system is a good choice. In other words, Ping An hopes other shareholders to choose cash dividends.
• Due to high tax, Hong Kong Stock Connect investors would prefer to sell in advance. Arbitrageurs can wait until stock price drops then make decisions based on new conversion price.

• Back on the 24 September, tyre component manufacturer Xingda International (1899 HK) announced a zero-premium $1.30/share cash Offer from Liu Jinlan, chairman and executive director.
• Liu and concert parties held 37.03%, and the Offer was conditional on a 50% acceptance hurdle. The IFA concluded the Offer was not fair.
• Surprisingly, 23.73% of shares out have tendered, and the Offer is now unconditional in all respects. The Offer will remain open to acceptances until the 29th November.

• Pony AI (PONY US), an autonomous mobility solutions provider, is looking to raise up to US$195m in its US IPO.
• As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• Oriental Watch reported H1 FY25 revenues/profits down 2.6%/-13.7 % YoY despite the tough retail sales environment, especially in HK (25% of revenues).
• The company declared a 24.6 HKD cents dividend, equivalent to a 14% dividend yield annualized on the current price.
• With 62% of the market capitalization in cash, a 7x PE, and a 14% dividend yield (assuming a consistent 100% payout), this is a name to look at.

• CiDi, a China’s leading provider of AD technology for commercial vehicles, will tap equity markets in Hong Kong for growth capital.
• The autonomous driving company with focus on autonomous mining and logistics trucks, V2X technologies, and high-performance perception solutions, filed its IPO prospectus.
• I like CiDi’s leadership position in autonomous mining industry, hyper-growth trajectory and differentiated full-stack autonomous mining solution.

• The new round of national TCM decoction pieces VBP has started. We think the overall price reduction would be relatively mild, and the impact on related TCM enterprises is limited.
• The NHSA will vigorously promote the expansion of TCM VBP, which is another challenge for TCM injections. But the impact on exclusive TCM varieties and innovative TCM injections is smaller.
• CR Boya has completed the acquisition of 100% equity of Green Cross and has included it in the scope of consolidated financial statements starting from November. Future M&As will continue.

• SF Holding’s domestic parcel volumes have grown slower than overall market volumes recently; is this strategic, or simply a loss of share?
• SF Holding is not closely aligned with any of the large online retail platforms in China; ultimately, is this independence an advantage or a disadvantage?
• When will SF Holdings’ varied international operations — and there are a few of them — begin to pull their own weight, in terms of profitability and growth?

• SOUTHBOUND gross trading activity still high. Net buying very strong. 7 names traded more than US$1bn. Last week I said tech would continue to be bought. It was.
• The trend continues to net sales of ETFs and high div SOEs. Net buying is very, very broad-based. Tracker Fund of Hong Kong (2800 HK) is batted around like crazy.
• I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US.

• With one trading day left in the review period, we expect one change with China Merchants Securities Co Ltd (H) (6099 HK) replacing Yankuang Energy Group (1171 HK) in December.
• Capping will result in selling for Meituan (3690 HK) and buying in Tencent (700 HK) and Alibaba Group Holding (9988 HK). 
• Short interest has jumped on both stocks, but the increase is far higher in China Merchants Securities Co Ltd (H) (6099 HK) compared to Yankuang Energy Group (1171 HK). 

• Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes bounced, and net buying was both large and broad-based.
• Stocks in HK and mainland markets fell heavily with HK’s main indices down 6-7% and China’s blue chip indices down 3.3-3.6% (CSI 500 – 4.8%). 
• Within H/A Pairs, after outperforming the HK/mainland spread for weeks, spreads got shellacked. Worst week in a long time (-3.7%), perhaps on the back of “disappointing” lack of stimulus measures.

• Tencent reported C3Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 11% vs. our estimates and in-line, in-line, 18% vs. consensus. 
• The bright spot is fintech transaction volume grew 10% YoY showing gain in market share, which coupled with rebound in consumption since October should rive recovery.
• We raise TP by 2% to HK$518. Tencent is still our TOP PICK in an uncertain geopolitical environment with an upswing fundamental story.

• The December review will use closing prices from 18 November to determine the list of stocks that will be included into and excluded from the ETFs.
• As of the close on 15 November, we see NAURA Technology Group (002371 CH) replacing Huaneng Lancang River Hydropow (600025 CH) in the ETFs.
• NAURA Technology has doubled in price this year, while Huaneng Lancang has corrected from its highs and could be deleted from the ETF in just one quarter.

• Pony AI, a China’s robotaxi operator and self-driving technology company, plans to raise up to $360M in upcoming IPO and concurrent private placements.
• Pony AI is expected to IPO next week. The company’s amended F-1 puts the price range per ADS at $11.00-$13.00, implying a market cap of ~$4.2B at the midpoint.
• I believe Pony AI may price its IPO at the bottom of a range after WeRide’s mixed debut. IPO valuation suggests a drop from last round valuation of ~$8.5B.

• Bilibili (BILI) reported C3Q24 revenue and GAAP net income 2.1%, 18% vs. our estimates and 2.5%, 24% vs. consensus. 
• We believe the market oversold on BILI because its traffic was rebounding in accelerating fashion, which shall benefit from a consumption recovery now visible into C1Q25. 
• We maintained our BUY rating and raised our TP to US$22. BILI is our mid-cap TOP PICK.

• Ping An Healthcare (1833 HK) (PA Gooddoctor), which was spun off from Ping An Insurance (601318 CH) and listed in May 2018, has announced a change in use of proceeds.
• Part of that change includes the payment of a punchy HK$9.70/share special dividend.
• The more interesting aspect is that a scrip dividend is also afforded, which should allow a stealth MBO from Ping An at zero premium.

• Total revenue grew slightly as we expected in our preview note.
• The operating margin improved significantly, but this was due to the shrinks of non-cash items.
• However, we believe Alibaba will benefit from the boycott against JD.com and the disposal of Sun Art.

• Chinese cemetery operator with three main assets: the Anxian Yuan cemetery in Hangzhou, the Fushouyuan cemetery in Yinchuan and the Dachenshan cemetery in Niuxin Village, Guizhou Province
• The stock is inexpensive at 6.1x trailing P/E with a 13.3% dividend yield that’s covered by cash flows. Further, net cash represents 82% of market cap with limited contract liabilities.
• Recent tomb sales has been weak for reasons that seem macro related. Other risks are historical share dilution: the 2020 rights issue was under-priced, 85% taken up by the founder. 

• Based on Atour (ATAT)’s strong pillow sales in 11.11, we raised C4Q24/2025 revenue estimate by 6.9%/7.1%. Our number is now 7.9%/15% higher than consensus;
• The outstanding performance of the retail business may draw more consumer attention to the brand, thus bring contribute to Atour’s hotel expansion.
• We raise the TP by US$1 to US$37/ADS and maintain the BUY rating.

• Fed Chairman Jerome Powell yesterday said that there is no need for the US central bank to rush rate cuts.
• He said: “The economy is not sending any signals that we need to be in a hurry to lower rates,” adding that “the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully”.
• Following Mr Powell’s comments, traders reduced their expectations for an interest-rate cut in December to 60% from 80% earlier. 

• Back on the 23rd October,  flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
• The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties  to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
• A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November. 

• S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
• SF is the largest integrated logistics service player in China and Asia and the fourth largest player globally in terms of revenue in 2023, according to Frost & Sullivan.   
• The PHIP update shows that the business is in good health, with a return to growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.

• It has been an eventful week for Naspers and Prosus – Tencent reported 3Q FY24 results yesterday after the HK close and Swiggy listed on the NSE and BSE.
• Prosus sold shares in Swiggy worth $500m and retains an interest of 25% (fully diluted basis).
• Since 2017, Naspers and Prosus invested $1.3bn to build a 31% stake. The group have created $2bn of value for shareholders following the listing.

• On the 6th October, Sihuan Pharmaceutical Hldgs (460 HK) announced a HK$500mn, 12-month buyback programme. Shares jumped 31% on the news, but have since given all that gain back.
• Sihuan Pharma has now announced an intention to spin-off non-wholly-owned subsidiary Xuanzhu Biopharm on the HKEx. 
• Concurrent with the spin-off news. Sihuan Pharma acquired 6.9% in Xuanzhu Biopharm for RMB596mn, implying a full value of ~RMB8.5bn (~HK$9.2bn). This compares to Sihuan Pharma’s market cap of HK$6.6bn. 

• Geely’s revenue grew by 20% YoY and deliveries increased by 19% YoY in 3Q24.
• The operating margin improved to 5.3% in 3Q24 versus 2.9% in 3Q23.
• We conclude an upside of 58% and a price target of HK$22 for the end of 2025.

• Plover Bay Technologies (1523 HK) issued a profit alert stating that the profit for the first 10 months of FY24 grew by>10% over the entire FY23 profit (28 mn USD). 
• Nov/Dec tend to be decent business months for the company, so we expect the profit to be a little over 40 million USD for FY24, implying a 17-18x FY24 PE.  
• The company has net cash of more than 50 mn USD and consistent ROEs of more than 35% (currently >65%), with excellent prospects for future growth.

• The spin-off of the value-added business (VAS) of China Gas Holdings (384 HK) may add HK$0.22-0.83/share to the stock price, or 3.4-12.8%, based on our initial assessment.
• VAS generated an operating profit of HK$1.58bn in FY24, up by 5.7% YoY. It is significant to China Gas as this accounted for 23.5% of its total segment profit.
• The share price has not reacted much to the news because weak Chinese equity market and uncertainties on the upcoming 1H FY25 result. Once cleared, we see good upside.

• CiDi Inc (CIDI HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC, China Securities and Ping An.
• It is a leading provider of autonomous driving technology for commercial vehicles in China.
• It focuses on research and development of autonomous mining and logistics trucks, V2X technologies and high-performance perception solutions.

• C3Q24 results from LEAP Motors seems to indicate the profit margins of low-priced EV can reach high single digits.
• We thus revised up XPEV’s 2024-25 top line by 8% and 28% on successful launch of P7+, 2024-25 gross margins by 0.6ppt and 1.7ppt
• Despite these improvements, we opt to maintain the rating of SELL and TP of US$5 unchanged as XPEV’s path to profitability is still unclear.

• Crane Company recently presented its third-quarter 2024 financial results, showcasing several key highlights and challenges.
• The company’s performance this quarter was marked by a solid increase in both core sales and earnings per share, despite encountering multiple operational disruptions.
• Firstly, Crane demonstrated robust financial performance by exceeding expectations, with adjusted earnings per share (EPS) rising to $1.38.

• Hanwha Corporation (000880 KS) is “expensive” on my monitor. But that doesn’t paint the whole picture. And what’s up with Genscript Biotech (1548 HK)‘s deconsolidation of Legend Biotech (LEGN US)?
• Preceding my comments on Hanwha and Genscript Biotech/Legend Biotech 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%.

• In 3Q24, game revenue increased by 13% YoY, higher than our estimate, 9% YoY.
• The gross margins of all business lines improve in 3Q24, especially “others”.
• We set the upside at 50% and the price target at HK$605 for the end of 2025. Buy.

• Although Hong Kong markets have slumped after Trump’s election, mainland China’s markets have gained.  Southbound net buying of HK stocks hit a 2024 high on the day Trump won.
• Sands China (1928 HK) had a breakout from a double top as Macau recorded good Golden Week arrivals.  Blue Moon Group Holdings (6993 HK) had a breakout after 3 years.
• CanSino Biologics (6185 HK) formed a breakout after a new vaccine was approved and it reported better results.  Haidilao International Holding (6862 HK) share price advanced as it expands stores.

• BRUKINSA QoQ growth slowed down to single digit in 24Q3, thus dragging down the overall product revenue growth.However, such QoQ growth and market share growth were still higher than Imbruvica/Calquence. 
• BRUKINSA’s full-year revenue is expected to reach US$2.5 billion. Due to lower 24Q3 product revenue growth, we adjusted our 2024 forecast – Full year revenue would reach about US$3.7 billion.
• BeiGene’s performance in 24Q1-Q3 is still on track. Peak sales of BRUKINSA + tislelizumab is about US$5.5 billion. Reasonable market value range for BeiGene is US$18.5-27.5 billion. 

• In the 3rd quarter of 2024, revenue was NT$4,284 million, the gross margin (GM) was 55%, the operating profit margin (OPM) was 24%, and the net margin was 15%.  
• The Gen-4 product line is ramping up and is expected to contribute around 4% of total revenue by the end of 2025. 
• Chinese current economic stimulus programs may impact demand in the Consumer segment.  

• We expect Kuaishou to report C3Q24 revenue, IFRS operating profit and IFRS net income in-line, 5.9%, and 7.0% vs. consensus.
• The quarter is marked by robust advertising but moderated GMV growth due to weak consumption. 
• We maintain our BUY rating and TP of HK$75 . 

• Pony AI (PONY US)  an autonomous mobility solutions provider, is looking to raise up to US$300m in its US IPO. 
• As per Frost & Sullivan, Pony AI was among the first companies in China to obtain licenses to operate fully driverless robotaxis in all four Tier-1 cities in China.
• In this note, we talk about the positive aspects of the deal.

• Horizon Robotics (9660 HK) raised around US$800m, including over-allocation, in its Hong Kong IPO. 
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading updates.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Shui On Land’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.

• Together with the just-announced HK$0.40 special DPS, SITC International (1308 HK) has already handed back HK$1.12/share to shareholders YTD, realising a dividend yield of 6.5%.
• Its 3Q24 performance is impressive, with revenue surging 56.6% YoY. Both volume (+13.4%) and average freight rates (+44.1%) have exhibited solid momentum. 
• While the consensus forecasts have been upgraded by 7-11% since the 1H24 result, there appears more room to go. FY24 ROE is now expected to be 32.2%.

• Pony AI, a founder-led global autonomous driving company, filed for an IPO in the United States and may raise up to $300M on the Nasdaq exchange.  
• The technology company operates fully driverless robotaxis (L4) in Beijing, Shanghai, Guangzhou and Shenzhen, Mainland China.
• Pony AI has raised ~$1.4B in equity financing from top-tier investors, including Toyota Motor, HongShan, IDG Capital, 5Y Capital, ClearVue Partners, and Eight Roads Ventures, among others.

• Biostar’s revenue growth decreased obviously in the first five months in 2024. Under the fierce competition and anti-corruption campaign, the expectation for the commercialization performance of Biostar is not high.
• Although Biostar has invested a lot of resources in market exposure, high customer concentration indicates that the Company faces challenges in marketing/customer relationship expansion. Biostar has also encountered overcapacity issues.
• After Series E Financing, Biostar’s post-investment valuation was RMB4.49 billion. But we’re not optimistic about the outlook of Biostar. This valuation could be difficult to achieve in HK stock market.

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.

• Adani Green Energy