In today’s briefing:
- Alibaba (BABA US): No Where to Go but Up
- LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves
- HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought
- Taiwan Dual-Listings Monitor: TSMC Contraction Continues; ASE & Chunghwa at Historically Rare Levels
- Hollysys (HOLI US): Vote on 8 February as Hopes of a Rival Offer Fade
- TDCX (TDCX US): Laurent Junique’s NBIO
Alibaba (BABA US): No Where to Go but Up
- Alibaba is transforming into a leaner, more efficient and more profitable technology company with sharpened focus on core business and shareholder return.
- While we don’t expect growth to define the company in the near future, high single-digit P/E more than compensates for the lack of it.
- This worst-performing and cheapest technology stock among global peers stands a big chance of staging a comeback in 2024 in our view.
LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves
- The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
- Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
- The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.
HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought
- SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. Hs gave up some ground vs As in Week One.
- SOUTHBOUND saw HK$14.4bn of net IN-flows in the 4-day week to 5 Jan 2024. Total flows were HK$96bn.
- SOUTHBOUND start the year by buying ETFs, high-div SOEs like China Mobile and CNOOC, coal names, and sports/consumer names.
Taiwan Dual-Listings Monitor: TSMC Contraction Continues; ASE & Chunghwa at Historically Rare Levels
- TSMC: 7.7% Premium — Spread Has Fallen Further, Likely Can Short a Bit Further
- ASE: Drops to 5.1% Premium — Can Consider Going Long at Current Level Due to Maxed Headroom & ASE’s Strong Advanced Chip Packaging Story
- CHT: Trading at -0.9% Discount — Good Level to Long the Spread, Rare Discount
Hollysys (HOLI US): Vote on 8 February as Hopes of a Rival Offer Fade
- Hollysys Automation Technologies (HOLI US) shareholders vote on Ascendent’s US$26.50 offer on 8 February. The special meeting will not be held as the 30% shareholding threshold is no longer satisfied.
- The proxy statement shows that despite Dazheng Consoritum’s competing public campaign, it has withdrawn its court injunction and has struggled to provide proof of financing.
- The proxy statement suggests that the special committee ran a fair process. While shareholders should approve Ascendent’s offer, the 0.2% gross spread indicates an unfavourable risk/reward profile.
TDCX (TDCX US): Laurent Junique’s NBIO
- TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, has announced a preliminary non-binding proposal from Laurent Junique, founder/CEO, and largest shareholder (98.3% of the voting power).
- Junique is offering US$6.60/ADS, a 39% premium to the 30-day VWAP, but a 63% discount to its IPO price a little over two years ago.
- One issue dogging TDCX is the key man risk given Junique’s almost absolute control. Now he’s trying to take the company private on the cheap.
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