In today’s briefing:
- Alibaba (BABA): Don’t Be Pessimistic About E-Commerce, Especially Big Platforms
- Beijing Jingneng (579 HK): Trading Cheap As Possible Offer Reload Looms
- Ausnutria (1717 HK): SPAs Done (Just Not Officially)
- Hang Seng TECH Index Rebalance Preview (March 2022): SenseTime Could Be Added with HUGE Impact
- Aquila Acquisition Corporation Tear Sheet – Aiming to Be Hong Kong’s First SPAC Listing
- Weibo (WB US): Alibaba Potential Stake Sale, More Visibility on Strategic Direction
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Sinotruk: Inventory Overhang at Dealers and Weak End Demand Will Take Time to Clear
Alibaba (BABA): Don’t Be Pessimistic About E-Commerce, Especially Big Platforms
- Market Research expects that e-commerce will grow 15% and 13% in following two years.
- Big platforms, such as Alibaba and JD.com will still have advantage in the growth.
- The risk is that consumers care significantly more about product brand than platform reputation.
Beijing Jingneng (579 HK): Trading Cheap As Possible Offer Reload Looms
- Beijing Jingneng Clean Energy (579 HK), whose privatisation unceremoniously failed last year, is inexpensive versus its peer basket.
- The 12-month moratorium restricting Beijing Energy Holding from relaunching an Offer expires on the 1 March.
- The key reason for privatisation remains. A new Offer should be structured such that no tendering condition is present.
Ausnutria (1717 HK): SPAs Done (Just Not Officially)
- 530.8mn shares of Ausnutria (1717 HK) crossed at the close yesterday at HK$10.06/share. That is the exact number of shares under the SPAs and the stated price under the agreements.
- China’s NDRC approval, a condition to the SPAs, was obtained earlier this month, leaving MoC and SAFE approvals outstanding. They appear to have been received.
- Expect confirmation shortly. The completion of the SPAs triggers an MGO, which is conditional on Inner Mongolia Yili Industrial Group (600887 CH) holding 50% of the voting rights.
Hang Seng TECH Index Rebalance Preview (March 2022): SenseTime Could Be Added with HUGE Impact
- SenseTime Group (20 HK) listed just prior to review cutoff and will be eligible for inclusion in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
- We expect SenseTime Group (20 HK) to be added to the index and replace Autohome (2518 HK) at the close of trading on 4 March.
- The real float of SenseTime Group is much lower than what HSIL is likely to use. Expect a BIG squeeze if the stock is added at a higher float.
Aquila Acquisition Corporation Tear Sheet – Aiming to Be Hong Kong’s First SPAC Listing
- Aquila Acquisition Corporation (AAC) aims to raise around US$300m via Hong Kong’s first SPAC listing.
- AAC is promoted by CMB International Asset Management Limited (CMBIAM) and AAC Mgmt Holding Ltd (AACMH).
- In this tear sheet, we will talk about the deal background and structure.
Weibo (WB US): Alibaba Potential Stake Sale, More Visibility on Strategic Direction
- News reported that Alibaba is in talks with Shanghai Media Group to sell its 30% stake in Weibo Corp (WB US), which we have expected since Weibo’s Hong Kong listing.
- Since 2013, Alibaba has started to invest in Weibo before its NASDAQ IPO and continued to increase the holdings. Alibaba remains a strategic partner with Weibo on platform advertisement.
- We view the potential transaction net positive for Weibo Corp (WB US) as it will realign Weibo strategic direction and Alibaba impact will be minimized. Weibo valuation is also attractive.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets closed almost flat with the S&P ending 0.15% lower and Nasdaq closing almost unchanged. The indices erased gains of over 2% post the hawkish FOMC meeting (details below). Sectoral gains were led by IT, up 0.7% while Real Estate led the losses, down 1.7%. US 10Y Treasury yields jumped 7bp higher to 1.85%. European markets recovered sharply yesterday with the DAX, CAC and FTSE up 2.2%, 2.1% and 1.3%. Brazil’s Bovespa closed 1% higher. In the Middle East, UAE’s ADX was flat and Saudi TASI was up 0.6%. Asian markets have opened in the red with Nikkei and HSI down 3.1% and 2.6% while Shanghai and STI are down 0.9% and 0.6% respectively. US IG CDS spreads were 1.4bp wider and HY CDS spreads were 5.4bp wider, EU Main CDS spreads were 1.3bp tighter and Crossover CDS spreads were 6.2bp tighter. Asia ex-Japan CDS spreads were 2bp tighter.
Sinotruk: Inventory Overhang at Dealers and Weak End Demand Will Take Time to Clear
- Sector outlook is weak with a -20% yoy decline on sales volume expected.
- End demand was largely brought forward in 1H2021. Lots of inventory at dealers are waiting to be sold.
- Sinotruk’s valuation looks fair now. However we see limited positive momentum to drive its share performance this year.
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