In today’s briefing:
- Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance
- Huafa Property Services (982 HK)’s Knockout Offer
- Activism Takes On CMCDI (133 HK)
- Huafa Property Services (982 HK): Scheme Offer at HK$0.29
- Baidu Inc.: What Are Their Expansion Plans Of AI Offerings Beyond Ernie? – Major Drivers
- JD.com Inc.: How Are They Strengthening the Platform Ecosystem & Continuing Their Market Dominance? – Major Drivers
- iQIYI Inc.: Initiation of Coverage – How Are They Leveraging Generative AI capabilities? – Major Drivers
- Lalatech Compared to Full Truck Alliance, SF Intra-City, and GOGOX in Eleven Easy Charts
- Akeso Biopharma (9926.HK) – It’s Not Game over Yet
Alibaba/JD.com: Thoughts On The Recent Convertible Bond Issuance
- Alibaba Group Holding (9988 HK) and JD.com (9618 HK) both announced the issuance of convertible debt last week (Alibaba on May 23 and JD.com on May 21).
- Both have mentioned that the reasons for the issuance are the low funding cost (0.25% coupon for JD.com and 0.5% for Alibaba) and to fund their current share repurchase program.
- I think the convertible debt structures makes sense and it is beneficial for both companies to buy back as much as possible at the current share price.
Huafa Property Services (982 HK)’s Knockout Offer
- After entering a trading halt on the 16th May pursuant to the Takeover’s Code, property manager Huafa Property Services (982 HK) has now announced a privatisation by way of a Scheme.
- The cancellation price of A$0.29/share is a 30.63% to last close, a 70.59% premium over the 30-day average close, and a life-time high price. The price is final.
- The Offeror, Zhuhai Huafa, a state-owned enterprise wholly-owned by Zhuhai SASAC, plus concert parties hold 42.63% of shares out. Clean deal.
Activism Takes On CMCDI (133 HK)
- In January this year, Argyle Street, a (now) 8% shareholder of China Merchants China Direct Investments (133 HK) (CMCDI), a closed-end investment company, proposed a solution to boost shareholder value.
- Two months later, Rydal Value Fund (stake unknown) also proposed a means to boosting shareholder value along similar lines.
- CMCDI is currently trading at a ~63% discount to NAV. But it is up 78% since Argyle’s initial proposal, and recently touched a six-year high. Argyle is still buying.
Huafa Property Services (982 HK): Scheme Offer at HK$0.29
- Huafa Property Services Group (982 HK) announced a privatisation offer from Huafa Industrial Co., Ltd. Zhuhai (600325 CH) at HK$0.29 per share, a 30.6% premium to the undisturbed price.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
- The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.
Baidu Inc.: What Are Their Expansion Plans Of AI Offerings Beyond Ernie? – Major Drivers
- Baidu’s revenue growth for the first quarter exceeded expectations, with a year-over-year increase of 4%, reaching RMB 23.8 billion.
- Additionally, Baidu’s continued efforts in Gen AI path have resulted in a 12% year-over-year acceleration in the revenue growth from Baidu AI Cloud, which also delivered an operating profit on a non-GAAP basis.
- These positive results signify the company’s successful transition from an internet-centric business to an AI-first business.
JD.com Inc.: How Are They Strengthening the Platform Ecosystem & Continuing Their Market Dominance? – Major Drivers
- JD.com, a China-based multinational technology conglomerate, has announced its first-quarter results for 2024 in an earnings call and reported robust profit and revenue growth, along with an encouragingly high Net Promoter Score (NPS).
- The revenue growth was accelerated by strong execution amidst evolving industry dynamics, improved user experience, price competitiveness, and platform ecosystems.
- Importantly, the general merchandise and supermarket category recorded a notable jump in terms of gross merchandise value (GMV) and revenue growth.
iQIYI Inc.: Initiation of Coverage – How Are They Leveraging Generative AI capabilities? – Major Drivers
- iQIYI, an innovative market-leading online entertainment service provider in China, delivered robust first-quarter 2024 results, achieving numerous record highs, such as non-GAAP operating income and its corresponding margin.
- CEO, Mr. Yu Gong, shared that the expanding margin could be attributed to the high-quality growth of the company.
- The Membership Services business continued its growth trajectory with monthly ARM observed an all-time high.
Lalatech Compared to Full Truck Alliance, SF Intra-City, and GOGOX in Eleven Easy Charts
- We compare Lalatech’s scale, P&L, Balance Sheet, and Cash Flow to peers
- On several measures, Lalatech is comparable to Full Truck Alliance, SF-Intra
- Small, unprofitable GOGOX not an appropriate comp for Lalatech, in our view
Akeso Biopharma (9926.HK) – It’s Not Game over Yet
- We saw the collapse of Akeso’s share price after the Company released the clinical data of AK112 on ASCO. Judging from the market reaction, there are indeed“something unsatisfactory” about AK112.
- Akeso’s high valuation mainly comes from the expectation that it would be a player that can compete on international stage. But investors’ confidence in AK112’s future commercialization has been shaken.
- We advise investors to remain patient and “let the bullets fly”. It’s not yet time for the final result.But, if you want to bet, you need to pay the price.
💡 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
