In today’s briefing:
- Alibaba (BABA US): No Where to Go but Up
- A/H Premium Tracker (To 5 Jan 2024): STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving
- FXI Rebalance Preview: Two Potential Changes in March
- Anta Sports (2020 HK): In-Line 4Q23 Operational Update + Submission Of Amer Sports Listing On NYSE
- Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact
- HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought
- Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports’ IPO
- EQD | Tears and Despair for the Hang Seng Index May Not Be Over (Yet)
- Temu Versus Dollar Tree: More Online & Offline Adventures in Pursuit of Ultra-Cheap Stuff
- Mainland Connect NORTHBOUND Flows (To 5 Jan 2024): Big Names Sold, Banks Bought
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.
A/H Premium Tracker (To 5 Jan 2024): STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving
- The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
- STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.
FXI Rebalance Preview: Two Potential Changes in March
- With a few weeks to go in the review period, CGN Power (1816 HK) and Yankuang Energy Group (1171 HK) could be added to the ETF in March.
- China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK) are potential deletions while there is another stock close to deletion zone.
- There are a lot of shorts on Yankuang Energy in terms of days of ADV and as a percentage of float while short interest on the other stocks is lower.
Anta Sports (2020 HK): In-Line 4Q23 Operational Update + Submission Of Amer Sports Listing On NYSE
- Anta Sports Products (2020 HK) announced a set of in-line 4Q23 operating data.
- In addition, the company has filed a registration statement with the U.S. SEC on January 4 for a proposed listing of Amer Sports on the New York Stock Exchange.
- Anta currently trades at a forward PE of 17x based on estimated 2024 earnings, compared to a historical forward PE of 24x since 2017.
Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Aoki Super (9977 JP), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Probiotec Ltd (PBP AU), Adbri (ABC AU).
- Lowest spreads – Pact Group Holdings (PGH AU), T&K Toka Co Ltd (4636 JP), A2B Australia (A2B AU), Tietto Minerals Ltd (TIE AU), IJTT Co., Ltd. (7315 JP).
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.
Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports’ IPO
- Amer Sports, 52.7% owned by Anta Sports Products (2020 HK), has finally filed a US IPO registration. This is positive for Anta Sports as it can realise Amer’s value.
- Reported losses at Amer have increased YoY for 9M23 due to higher finance cost. But, its gross, operating, and adjusted EBITDA margins have all recorded solid improvements.
- Assuming Amer is listed at the sector’s average FY23 P/S of 1.6x, Anta Sports may book deemed disposal gain of HK$13.5bn, or about 6.8% of its market capitalisation.
EQD | Tears and Despair for the Hang Seng Index May Not Be Over (Yet)
- The HSI INDEX index closed December (barely) up, no rally, nullifying completely the MONTHLY time bar count pattern suggesting a LONG MONTHLY trade (the 1-bar reversal has already happened).
- The index is approaching the Q3 support at 16449. A WEEKLY bounce is possible from that level, but we don’t know if the bounce can last more than 1 week.
- If the index keeps going down this week, it could find support between 16500 and 16000. A longer correction could end in the 15800-15600 price area. Use tight stops.
Temu Versus Dollar Tree: More Online & Offline Adventures in Pursuit of Ultra-Cheap Stuff
- A recent report shows apparent gains by Temu against US “dollar” store chains
- In this insight we introduce the “dollar” store concept and share our experiences
- We conclude that Temu & SHEIN don’t likely view some categories as priorities
Mainland Connect NORTHBOUND Flows (To 5 Jan 2024): Big Names Sold, Banks Bought
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net SELL RMB 5.5bn of A-shares on lighter average activity. BIG net selling flows on the first day of the year for HK going north.
- Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.
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