In today’s briefing:
- AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote
- ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- Alibaba (BABA US): How Will Generative AI Improve Its Efficiency?
- Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO
- Tencent Holdings Ltd (700 HK) – Q2 2023 Correction Presents a MT Buying Opportunity at 302/330
- Air China (753 HK): Demonstrating Obvious Strengths
- Tianneng Power (819): Value Trap?
- SG’s Cosmose AI Hits $500m Valuation After Fresh Round
- CloudMinds: AI-Powered Robotic Developer
AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote
- The 27 April vote was adjourned as Aag Energy Holdings (2686 HK) Board was notified by “certain beneficial owners indicating that their latest voting instructions were not duly processed.”
- The meeting would not be adjourned if the YES vote was going to sail through. A delay helps the offeror as these owners will vote YES and deal fatigue sets in.
- Risk-Reward is still unfavourable at the last close. The deal break fair value range is HK$1.37-1.45 per share, with 16.0%-11.0% downside. This compares to the 13.5% upside from the offer.
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- With 1 trading day left in the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
- Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
- The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We’d be inclined to trim positions.
Alibaba (BABA US): How Will Generative AI Improve Its Efficiency?
- Recent research conducted by industry players – most notably OpenAI – about the impact of generative AI on labor markets provides a framework for gauging its monetization potential.
- We take a small step forward to apply them to two specific occupations in China including translators and computer programmers, which combined represent RMB1,400 bn TAM.
- For China’s internet giants such as Alibaba, generative AI could result in cost savings of up to RMB20 bn, or 14% of its FY2023 net profit.
Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO
- Alibaba Group Holding Ltd. slashed prices for its core cloud services by as much as 50% and offered free trials of some cloud products for as long three months, fueling competition in an already crowded market.
- Through the price cut, Alibaba Cloud hopes to make the cost of its cloud services significantly lower than costs offered by other data centers
- The valuation of cloud companies is generally based on the price-to-sales ratio rather than the price-to-earnings ratio
Tencent Holdings Ltd (700 HK) – Q2 2023 Correction Presents a MT Buying Opportunity at 302/330
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- Since peaking in January 2023, Tencent Holdings Ltd (700 HK) has produced a meaningful ABC correction that is yet to confirm its completion.
- We anticipate the correction confirming a MT bottom in the 302/330 range, ahead of a renewed multi-month uptrend. Our bullish multi-month target at 451.95 remains firm.
Air China (753 HK): Demonstrating Obvious Strengths
- Air China Ltd (H) (753 HK)‘s 1Q23 result demonstrated a significant YoY and QoQ reduction in losses. At Rmb2.9bn, this is the smallest losses in last six quarters.
- We witnessed a solid spike in overall yield and sharp margin recovery in the quarter. There is also encouraging performance in operating cash flow which turned around YoY to positive.
- Its associate Cathay Pacific Airways (293 HK) has seen Mar capacity returned to 50% of pre-pandemic level with over 90% load. More resumption of international flights will drive 2H23.
Tianneng Power (819): Value Trap?
- Tianneng Power International (819 HK) is a supplier of Chinese EV 2-wheelers and has enjoyed decent growth in the past few years.
- The correlation of top-line growth with its customers suddenly turned negative, a warning sign.
- Is it really cheap at 0.6x PBV? Maybe not, given the current status and the lead time before the recycling business is fully operational.
SG’s Cosmose AI Hits $500m Valuation After Fresh Round
- Singapore-based Cosmose AI said it has received an undisclosed sum from nonprofit Near Foundation to build a payment system that allows users to shop with cryptocurrency at low transaction fees.
- The deal bumped Cosmose AI’s valuation to US$500 million from US$100 million at the time of its series A round.
- Using smartphone data, Cosmose AI analyzes foot traffic and engages consumers online, providing insights into offline shopping habits and driving footfall across 20 million venues in Asia.
CloudMinds: AI-Powered Robotic Developer
- Founded in 2015, CloudMinds (CMDS US) Robotics is a globally renowned creator, producer and operator of cloud robot systems and services.
- Its flagship product “CloudMinds Operating System” is a powerful AI platform that enables robots to communicate with the cloud and perform tasks that require advanced AI capabilities.
- CloudMinds previous attempt to list in the US was withdrawn due to security concerns, however, the company is said to be exploring a Hong Kong IPO in the near future.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
