In today’s briefing:
- STAR50 Index Rebalance: Index Committees Just Wanna Have Fun
- Alibaba: A Long Way Down Already and a Lot More to Go
- Jinmao Property Services IPO – Premium Asking Valuation and Cornerstones Took up 80% of Deal
- Yunkang IPO: Core Business Growth to Slow Down Post-Covid
STAR50 Index Rebalance: Index Committees Just Wanna Have Fun
- In keeping with tradition, the SSE and CSI have continued to use a 6 month minimum listing history. No one remembers how or why it started, but it carries on.
- There are only 10 trading days to implementation and passive funds will need to trade multiple days of ADV on the inclusions and exclusions.
- The adds, deletes and the SSE STAR50 (STAR50 INDEX) have moved in lockstep since November. The CSI500 Index has outperformed over the period opening up a trading opportunity.
Alibaba: A Long Way Down Already and a Lot More to Go
- Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
- The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
- We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.
Jinmao Property Services IPO – Premium Asking Valuation and Cornerstones Took up 80% of Deal
- Jinmao Property Services (JM HK) is looking to raise around US$105m in its Hong Kong IPO.
- At listing, it is asking for a steep premium and 82% of the deal size has already been taken up by cornerstones, not leaving a whole lot for other investors.
- In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.
Yunkang IPO: Core Business Growth to Slow Down Post-Covid
- Yunkang Group (YK HK) is a medical operation service provider in China and offers a full suite of diagnostic testing services.
- The company’s earnings had a boost in 2020 with the pandemic which resulted in huge demand for Covid-19 diagnostic tests.
- Yunkang has filed for an IPO to raise about US$200m. We expect the company’s earnings to gradually decline with pandemic conditions easing off.
Before it’s here, it’s on Smartkarma
