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In today’s briefing:
- SAIC’s Unconditional Offer For Dongzheng Now Open
- CALB IPO: Updates Support the Bull Case
- Dongzheng’s Unconditional MGO at HK$1.2430 Opens
- Lepu Medical GDR Listing – Financials Improved Sequentially, However, Price Momentum Has Been Weak
- CALB Pre-IPO – Thoughts on Valuation
- EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
- Xinyi Solar, BYD, and Bank of China
- Morning Views Asia: China SCE, CIFI Holdings, Fosun International, Sino-Ocean Service
SAIC’s Unconditional Offer For Dongzheng Now Open
- Back on the 19 May, SAIC (600104 CH) acquired China Zhengtong Auto Services (1728 HK)‘s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction. This triggered the mandatory Offer.
- SAIC confirmed a possible unconditional mandatory cash Offer for Dongzheng on the 26 May.
- The Composite Doc has now been dispatched. The Offer is open for tendering and closes on the 16 October
CALB IPO: Updates Support the Bull Case
- CALB (CALBLZ CH), a leading EV battery manufacturer, is seeking to raise US$2.0 billion through an HKEx IPO, according to press reports.
- We previously discussed the IPO in CALB IPO: The Bull Case and CALB IPO: The Bear Case. This note updates our view for the PHIP and recent developments.
- The 1Q and truncated 1H numbers outline the highest growth among peers, customer diversification and sequential improvement in gross margin. The IPO is worth a look.
Dongzheng’s Unconditional MGO at HK$1.2430 Opens
- Dongzheng Automotive Finance (2718 HK)‘s composite document is out with the offer open from 15 September to 6 October. The IFA considers the offer to be fair and reasonable.
- SAIC Motor (600104 CH), which acquired a 71.04% stake, has launched an unconditional MGO at HK$1.2430 per H Share. SAIC intends to maintain Dongzheng’s listing status.
- At the last close and the 17 October payment, the gross and annualised spread to the MGO price is 1.1% and 13.3%, respectively.
Lepu Medical GDR Listing – Financials Improved Sequentially, However, Price Momentum Has Been Weak
- Lepu Medical Technology A (300003 CH) is looking to raise up to US$550m in its Swiss GDR listing. Bookrunners on the deal are CICC, Citic Securities, and Credit Suisse.
- The firm has earlier secured CSRC’s approval to list a maximum 36.09m GDRs (or 180.46m A-shares, at a 1:5 conversion).
- As per media reports, Lepu Medical will look to launch its Swiss GDR offering soon and the eventual deal size might amount to US$300m.
CALB Pre-IPO – Thoughts on Valuation
- CALB aims to raise around US$1.5bn in its Hong Kong IPO.
- CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
- In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.
EQD | HSI (HSI Index): Use Derivatives to Play Tactical Long and Relative Value Vol Trade Vs SPX
- HSI INDEX is trading back down to recent lows and support levels. It looks oversold and there are potential catalysts for a bounce
- Implied vols are low and options offer a great way to play a tactical long
- We highlight a relative value vol trade vs the SPX
Xinyi Solar, BYD, and Bank of China
- The main drivers for Hong Kong stock rallies are short covering, buybacks, and China government real estate support measures announcements.
- Hang Seng Index and most of its constituents continue to read like bear porn. Without a meaningful reversal/impulse rally, it is hard to call for a reversal.
- I hear and agree the case is so bad that it must be a buy signal. The sentiment is precious, BUT it needs a price action supporting the exhaustion thesis.
Morning Views Asia: China SCE, CIFI Holdings, Fosun International, Sino-Ocean Service
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.
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