In today’s briefing:
- Weekly Deals Digest (01 Oct) – Cainiao, Kokusai, Doosan, IMAX China, Keiyo, Toyo, Liontown
- Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem
- Haitong International (665 HK): Haitong Securities Ponders an Offer
- Quiddity HK Connect SOUTHBOUND Flows (Week to 28Sep23) : Meituan, Tencent, Kuaishou and Banks
- Quiddity Mainland Connect NORTHBOUND Flows (To 28Sep23) : Wuxi Apptec, Longi Green BUYS, BYD a SELL
- Cainiao Pre-IPO: An on the Ground Introduction
- Pinduoduo (PDD US): Growth Cadence Matters
- High Conviction Update: Sonoscape (300633.CH) – Stock Price to Rebound After Temporary Headwinds
- Lalatech IPO: New Filing’s H123 P&L Shows Impressive Growth, Unanswered Questions
Weekly Deals Digest (01 Oct) – Cainiao, Kokusai, Doosan, IMAX China, Keiyo, Toyo, Liontown
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments Kokusai Electric (6525 JP), Doosan Robotics (454910 KS), Seoul Guarantee Insurance (031210 KS), Cainiao Smart Logistics (1437124D HK), J&T Global Express (1936374D CH),VNG (VinaGame) (VNG US) IPOs.
- Event-Driven developments – Keiyo Co Ltd (8168 JP), System Information (3677 JP), Toyo Construction (1890 JP), IMAX China Holding (1970 HK), Nws Holdings (659 HK), Symbio Holdings (SYM AU).
Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem
- 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 – Keiyo Co Ltd (8168 JP), 111 Inc (YI US), Eoflow (294090 KS), Symbio Holdings (SYM AU), IMAX China Holding (1970 HK), JSR Corp (4185 JP).
- Lowest spreads Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), Pact Group Holdings (PGH AU), T&K Toka Co Ltd (4636 JP), Celltrion Healthcare (091990 KS), Seiko Pmc Corp (4963 JP).
Haitong International (665 HK): Haitong Securities Ponders an Offer
- Haitong International Securities Group (665 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 27 September.
- Bloomberg reported that Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, plans to buy the remainder of Haitong International to stem its losses.
- Privatisation through a Bermuda scheme involves the headcount test, so a decent premium is required – privatisation precedents suggest HK$1.08-1.13 per share offer (52%-59% premium to last close).
Quiddity HK Connect SOUTHBOUND Flows (Week to 28Sep23) : Meituan, Tencent, Kuaishou and Banks
- This is the brand spanking new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
- The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
- We like the nifty interactive tables+charts (please play with them!) and we welcome feedback. This 4-day week saw HKD 14.0bn+ of net buying. That makes 11 weeks of net inflows.
Quiddity Mainland Connect NORTHBOUND Flows (To 28Sep23) : Wuxi Apptec, Longi Green BUYS, BYD a SELL
- This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
- The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
- Please play with nifty interactive tables+charts. We welcome feedback. This 4-day week saw RMB 17.5bn+ of net selling. Back to the trenches!
Cainiao Pre-IPO: An on the Ground Introduction
- We talk about what we see and hear here on the ground, that the company may not mention in its prospectus.
- We believe Cainiao has the ambition to take the whole logistics chain from retailers’ doors to shoppers’ doors since the company’s inception.
- We also believe Cainiao has been trying to take competitors’ market share by taking their client lists.
Pinduoduo (PDD US): Growth Cadence Matters
- We reviewed our PDD investment thesis trying to incorporate and make sense of various channel checks and sell-side’s research which are often inconsistent and even conflicting.
- While there are many unknowns and ambiguities, we are convinced the street still significantly underestimates PDD’s growth outlook for 2H23, and fails to see a slowdown in FY24.
- Our price target remain unchanged as lower target P/E multiple (to reflect slowdown prospect) is offset by higher FY23 earnings which flow to outer years.
High Conviction Update: Sonoscape (300633.CH) – Stock Price to Rebound After Temporary Headwinds
- Sonoscape maintained strong growth momentum in 23H1. Profit margin further improved. The Company has entered a stage where scale effect has emerged. However, declining contract liability balance raised our concern.
- Japanese companies setting up factories in China would shake competitive landscape of the domestic market. The anti-corruption campaign could lead to “unexpected impact” on performance in 23H2.
- We lowered 2023 revenue forecast to RMB2 billion. After negative factors are fully priced in, share price would rebound.
Lalatech IPO: New Filing’s H123 P&L Shows Impressive Growth, Unanswered Questions
- In an updated HKEX filing posted on September 28th, Lalatech disclosed H123 financial results
- Solid Revenue growth plus sharp expense reductions led to +28 ppt OP margin expansion
- Is this progress sustainable, defendable? Lalatech management needs to explain gains
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