In today’s briefing:
- Giordano (709 HK): Cheng Family Offer Or Cashing Out?
- Tencent/Netease: Smell of Common Prosperity in June Game Approval
- Tencent – Cold Shoulder On New Game Approvals Is A Concern
- Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures
- WM Motor Pre-IPO Tearsheet
- STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- Tuhu Car Pre-IPO – The Negatives – Remains Unprofitable and Have Been Racking up Its Payables
- GOGOX IPO: Growth at All Costs
- Pre-IPO Mega Genomics – Immature Market and Over-Reliance on Meinian Put Future Performance in Doubt
- 58 Freight (GogoX) Pre-IPO – (June 2022) PHIP Updates – Prospects Seem Bleaker
Giordano (709 HK): Cheng Family Offer Or Cashing Out?
- Giordano International (709 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
- The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook?
- And just for some (possible) added excitement, David Webb holds 5.1%.
Tencent/Netease: Smell of Common Prosperity in June Game Approval
- China announced game approval last night for June batch, after a break in May.
- We discussed in our previous note that China had resume game approval but at a slower pace.
- Tencent and Netease continue to score zero in June domestic game approval.
Tencent – Cold Shoulder On New Game Approvals Is A Concern
- As reported by Reuters, yesterday China’s gaming regulator granted licences for 60 new games, none of which were published by Tencent or NetEase.
- The two dominant companies in the industry did not feature in the list of 45 approvals in April either and this pattern should not be ignored by investors.
- The lack of approval of foreign titles in the two batches is also striking and a further negative in our view.
Kakao Pay Block Sale: It Seems Alibaba Is Liquidating Investments to Fund Loss Making Ventures
- Ant Financial Services Group (6688 HK) is declaring a dividend at a time when regulators have forced the company to increase its capital base.
- Moreover, Ant’s financial performance doesn’t support a dividend payment of RMB 11.8bn in the short term.
- We think the sale of 5.0m Kakao Pay (377300 KS) shares today was forced upon Ant through the lack of usual funding sources at Alibaba Group (9988 HK)’s disposal.
WM Motor Pre-IPO Tearsheet
- WM Motor Technology Co Ltd (WMT CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. The deal will be run by Haitong International, CMBI and BOCI.
- WM Motor is a smart EV player in China. As of the latest practicable date, it had a total of four main EV models (with various versions of each model).
- As per the CIC, it was the first EV automaker in China to have established its own manufacturing facilities from the outset.
STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
- With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
- That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
- Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.
Tuhu Car Pre-IPO – The Negatives – Remains Unprofitable and Have Been Racking up Its Payables
- Tuhu Car (2007986D HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
- Tuhu is an integrated online and offline platform for automotive services in China.
- The firm remains loss making with no signs of being profitable in the near/medium term given its aggressive growth strategy.
GOGOX IPO: Growth at All Costs
- GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It has passed the listing hearing for an HKEx IPO to raise US$100-150 million.
- In GOGOX IPO Initiation: A Less than Perfect Delivery, we noted that as the losses are expected to persist over the next three years, we would avoid the IPO.
- In this note, we examine the PHIP for the 2021 results and recent developments. The fundamentals remain unattractive and we would give the IPO a pass.
Pre-IPO Mega Genomics – Immature Market and Over-Reliance on Meinian Put Future Performance in Doubt
- Mega should establish core competitiveness via entering hospital market and being recognized by hospitals. It’s not a long-term solution to exploit the market by mainly relying on Meinian.
- Although Mega’s competitive advantage in the channels is still more obvious due to Meinian, it is actually a double-edged sword, especially when Meinian is in financial difficulty.
- Without Meinian, whether Mega can develop independently is a question mark. In terms of valuation, BGI and Berry could be comparable companies, and Mega’s valuation could be lower than Berry.
58 Freight (GogoX) Pre-IPO – (June 2022) PHIP Updates – Prospects Seem Bleaker
- 58 Freight (GogoX) (1903638D HK) is looking to raise US$150m in its upcoming Hong Kong IPO.
- GogoX is an online intra-city logistics platform in Asia. The company operates in more than 30 cities across five countries and regions in Asia.
- GGX’s platform services segment continues to languish, even after the firm expended much higher incentives during the fiscal period. In this note, we look at GGX’s June 2022 PHIP updates.
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