In today’s briefing:
- Canvest (1381 HK): Get Involved
- Ping An’s Strategic Buyout of OneConnect: Navigating Shareholder Approval and Financial Implications Amidst Declining Performance
- China Mobile (941 HK): Expected Move on Profit Announcement and Option Insights
- Tencent Music (TME, 1698 HK): 4Q24, Historical Margins Better than Game Time
- Tencent Earnings: Implied Vs Realized Price Changes and a Post Earnings Pattern
- Xiaomi (1810 HK): 4Q24, Much Better than Expected, But Vehicle Still Overvalued
- Asian Equities: Keep an Eye on These Earnings Inflections
- Vesync (2148 HK): What Did the FY24 Results Tell?
- [Li Auto Inc. (LI US, SELL, TP US$20) Target Price Change]: Still No Convinced on a 2025 Turnaround
- Nanshan Aluminium IPO: Orphaned Security with Margin Risk
Canvest (1381 HK): Get Involved
- After SAFE gave the green light on the 19th Feb, I estimated only a week was required to secure the (strangely) outstanding internal guarantees. It took a frustrating three-and-a-half weeks.
- Nevertheless, all pre-cons are now done. Canvest Environmental (1381 HK)‘s Scheme Document is expected to be dispatched or before the 25th April.
- Assuming the Scheme gets up – and it will – expect payment around the 20th June. This is done.
Ping An’s Strategic Buyout of OneConnect: Navigating Shareholder Approval and Financial Implications Amidst Declining Performance
- OneConnect received a non-binding acquisition proposal from Ping An Group at $7.98/ADS, requiring 75% shareholder approval.
- Ping An acquired OneConnect’s virtual banking division for $119m and terminated its cloud services contract in 2024.
- The buyout is financially attractive for Ping An, acquiring OCFT at net cash levels, with a US$100m consideration.
China Mobile (941 HK): Expected Move on Profit Announcement and Option Insights
- China Mobile (941 HK) / China Mobile (600941 CH) will release 2024 results on Thursday 20 March 2025.
- Historically, the stock shows minimal post-earnings volatility, with rare exceptions. Options markets project moderate movement. Opportunities exist for investors with strong directional conviction.
- Given China Mobile’s recent history of dividend increases and strong stock performance, a significant dividend boost is possible.
Tencent Music (TME, 1698 HK): 4Q24, Historical Margins Better than Game Time
- TME’s revenue continued to grow in 4Q24, as shrinking game business became insignificant.
- The operating margin reached its historical high, which means music’s margin is high than game’s.
- We believe the stock price will be double at the end of 2025.
Tencent Earnings: Implied Vs Realized Price Changes and a Post Earnings Pattern
- We take a detailed look at the implied earnings move priced into Tencent options compared to historical outcomes.
- Post-Earnings price movements are analyzed to assess directional tendencies and magnitude based on earnings beats and misses.
- An interesting post-earnings pattern emerges, with an options strategy outlined.
Xiaomi (1810 HK): 4Q24, Much Better than Expected, But Vehicle Still Overvalued
- In 4Q24, all business lines grew even faster than we expected in the preview note.
- We are confident in its revenue growth and operating margin in 2025.
- We however still believe the market overvalues its electric vehicle business.
Asian Equities: Keep an Eye on These Earnings Inflections
- Change in earnings estimate directions, especially when estimates start increasing after a long period of decline, are what we call “inflections”. These, we believe, are the strongest share price catalysts.
- We identify nine market-sectors across Asia ex Japan exhibiting upward earnings inflections. Four are from financials, two from telecoms and one each from utilities, consumer durables and industrials.
- These market-sectors are from HK/China (3), Korea (1), ASEAN (5). Financials’ domination indicates that a broader Asian macroeconomic recovery could be under way. Eight companies are primarily driving the upgrades.
Vesync (2148 HK): What Did the FY24 Results Tell?
- While Vesync (2148 HK)‘s net profit grew 20.1% in FY24, there is a marked slowdown in 2H24 (+7.4%) vs. 1H24 (+37.5%), suggesting increased operating pressure.
- North American sales slowed to 10.7% growth in 2H24, from 13% in 1H24. The deteriorating financial and operating performance affirmed that privatisation is an exit opportunity.
- Its PER discount (on privatiation price) to peers has widened to 35-38%, compared with 25-30% in Dec. Its US exposure makes it unable to reap benefits from China market stimulus.
[Li Auto Inc. (LI US, SELL, TP US$20) Target Price Change]: Still No Convinced on a 2025 Turnaround
- Li Auto (LI) reported C4Q24 revenue 2.1%/in-line vs. estimate/consensus, and non-GAAP net income is 8.4%/10.3% vs. our estimate/consensus, thanks to OPEX savings which we believe may not be sustainable
- We cut 2025 vehicle delivery estimates by 7% and slashed net income forecasts by 33% due to delayed model launches and intensified competition
- We cut LI’s TP from US$25 to US$20 and keep at SELL.
Nanshan Aluminium IPO: Orphaned Security with Margin Risk
- Nanshan Aluminium International Holdings (NAI HK) is looking to raise up to US$358m in its upcoming Hong Kong IPO.
- NA is a leading high-quality alumina manufacturer in Southeast Asia. The firm sources bauxite domestically in Indonesia and utilizes low-temperature Bayer process.
- We have looked at the company’s past performance in our earlier notes. In this note, we discuss latest industry dynamics, conduct a quick peer comparison and discuss the company’s valuation.
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