In today’s briefing:
- Asia Cement (743 HK): Parent’s Ready-Mixed Offer?
- Asia Cement China (743 HK): Privatisation by Asia Cement?
- Tencent/Netease: Major Names Get Zeroed in May, Smells of Common Prosperity?
- HK CEO & Director Dealings (29 May 2024): J&T Global, Melco, Techtronic, Gushengtang, United Energy
- Monthly Chinese Tourism Tracker | Outbound Grinds Forward | Domestic Weakness Not New | (May 2024)
- Quantgroup Technology Pre-IPO Tearsheet
- QuantumPharm (Xtalpi) Pre-IPO – PHIP Updates – Strong Growth, Although Losses Continue to Pile Up
- Pre-IPO Mokingran Jewellery Group – Disappointing Profit Margin and Potential Risk in Business Model
Asia Cement (743 HK): Parent’s Ready-Mixed Offer?
- Chinese cement play Asia Cement China (743 HK) (ACC) is currently suspended pursuant to the Takeovers Code.
- Asia Cement (1102 TT) has been ACC’s majority shareholder since its 2008 IPO. Asia Cement currently holds 73.07%.
- Shares gained ~50% this week. On serious volume. With net cash of US$1.03bn vs. a market cap of US$66mn, a privatisation should command a punchy premium to the last close.
Asia Cement China (743 HK): Privatisation by Asia Cement?
- Asia Cement China (743 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. Bloomberg reports that Asia Cement (1102 TT) is considering a buyout.
- Privatisation interest is unsurprising, as ACC’s EV has been negative since 6 July 2022 due to headwinds from the weak Chinese property sector and uncertainty about cash use.
- An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per share.
Tencent/Netease: Major Names Get Zeroed in May, Smells of Common Prosperity?
- China announced game approval for the May batch. The number of games approved remained at a higher level than 2023.
- The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
- None of the listed companies that we followed received approval for mobile games.
HK CEO & Director Dealings (29 May 2024): J&T Global, Melco, Techtronic, Gushengtang, United Energy
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight include: J&T Global Express (1519 HK), Melco International Development (200 HK), Techtronic Industries (669 HK), Gushengtang (2273 HK), and United Energy (467 HK).
Monthly Chinese Tourism Tracker | Outbound Grinds Forward | Domestic Weakness Not New | (May 2024)
- Chinese outbound travel demand continued its gradual recovery in April
- Moderating domestic demand? It’s not new, and outbound matters more
- On a pullback to below US$50, we would again BUY Trip.com’s ADRs
Quantgroup Technology Pre-IPO Tearsheet
- Quantgroup Technology (1467534D CH) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by CICC and CMB International.
- Quantgroup Technology is a digitalization solutions provider in China. Its digitalization solutions primarily include digitalized marketing, including precision marketing for financial institutions and local merchants, and goods transaction facilitation.
- The apps that Quantgroup operates can be largely categorized into two Quant-enabled proprietary apps, namely Yangxiaomie and Consumption Guide.
QuantumPharm (Xtalpi) Pre-IPO – PHIP Updates – Strong Growth, Although Losses Continue to Pile Up
- QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
- QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
- In our previous note we looked at the company’s past performance. In this note, we discuss QuantumPharm’s PHIP updates.
Pre-IPO Mokingran Jewellery Group – Disappointing Profit Margin and Potential Risk in Business Model
- MOKINGRAN’s revenue fluctuated in the past three years. Profit margin was much lower than that of peers/industry average, which may not necessarily have big improvement even with upward gold price.
- MOKINGRAN once applied for IPO in A-share but failed. The concerns of SZSE included “unusual” gold trade-in business, large inventory balance and the risk of “false increase” in profits/revenues.
- The gold boom should not mask the risks of MOKINGRAN. Even if MOKINGRAN successfully goes public, it still faces many challenges. Valuation of MOKINGRAN should be lower than peers.
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