In today’s briefing:
- CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable
- Playmates Toys: Betting on Paramount’s New Teenage Mutant Ninja Turtle (TMNT) Movie
- Kingston Financial (1031 HK) Scheme: That Is a Pass
- Baidu (Bidu.US): AIGC to Bring More Potential and Empower Search Biz
- China Resources Beer Holdings (291 HK) – ST Technical Triggers Imply 8.5% Tactical Opportunity
- EQD | FXI US: Buying the Dip Using Options
- Nayuki (2150 HK) Rating Change: Broaden Addressable Market Is Priority No.1
- PICC Group / PICC P&C Pair: A Cheat Sheet to Improve Your Batting Average
- Dekon Food and Agriculture Group Pre-IPO Tearsheet
- Shanghai Haohai Biological Technology (688366.CH/6826.HK)- Disappointing Earnings and Gloomy Outlook
CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable
- CATL (A) (300750 CH) is looking to raise up to US$6bn in its upcoming Swiss GDR listing. Bookrunners on the deal are CICC, China Securities, Goldman Sachs, and UBS.
- The relatively large listing comes after the firm has been undertaking a series of capital raisings, since it’s A-share debut back in Jun 2018, to fund its expansion.
- In this note, we discuss GDR timelines, and the firm’s recent financial performance/valuations.
Playmates Toys: Betting on Paramount’s New Teenage Mutant Ninja Turtle (TMNT) Movie
- Playmates Toys (869 HK) has been listed since 2008 and makes TMNT toys. It has traded as high as 4 HKD/share on the back of successful TMNT movie launches
- Paramount is set to launch a highly anticipated Seth Rogen-produced, TMNT movie in August 2023. In 2013/2014 the stock went up 8x on the last successful TMNT movie launch
- Playmates Toys trades at negative enterprise value, hence giving a large margin of safety option to bet on the success of a TMNT revival
Kingston Financial (1031 HK) Scheme: That Is a Pass
- Kingston Financial (1031 HK)’s scheme resolution was approved at today’s scheme meeting – 99.89% of independent share votes cast FOR (0.09% of all independent shareholders AGAINST).
- The scheme comfortably passed the headcount test with 44 FOR and 13 AGAINST the scheme (56 FOR and 20 AGAINST on a look-through basis).
- The last trading is on 10 February. At the last close and for the 3 March payment, the gross and annualised spread to the offer is 3.4% and 69.3%, respectively.
Baidu (Bidu.US): AIGC to Bring More Potential and Empower Search Biz
- We estimate that Baidu’s 4Q22 top line/bottom line would miss cons. by (1.6%)/(3.1%), mostly driven by the temporal disturbance of increasing COVID cases after reopening in Dec. 2022.
- However, we remain optimistic about 2023 outlook: 1) Baidu’s ads would be recovering quickly in 1H23 as macro improves, and 2) leading position in AIGC development gives Baidu more potential.
- Maintain BUY rating and raise TP to US$170, implying 17.2X PE in 2023
China Resources Beer Holdings (291 HK) – ST Technical Triggers Imply 8.5% Tactical Opportunity
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- Bullish price action and LT momentum failure in Oct/Nov 2023 could be compared to holding a fully inflated balloon under water. Eventually it must rise.
- January 2023 delivered that spike and a recent correction and multi-day test of key support has delivered an impulsive positive price response today. Target an 8.5% tactical upswing towards 63.90.
EQD | FXI US: Buying the Dip Using Options
- Chinese equities have paused for breath this month underperforming most other global indices
- The outlook for the region remains strong as reopening strength gains momentum and the Government continue to announce new supportive measures
- We favour a buy the dip strategy and suggest using derivatives to play it
Nayuki (2150 HK) Rating Change: Broaden Addressable Market Is Priority No.1
- Nayuki bears the most resemblance to Starbucks in that it owns its stores and provides drink, food and space, yet its appealed audience is the narrowest;
- Shopping mall opening might hit an all-time low in 2023 and is saturated. Nayuki need to think new ways to broaden its targeted market;
- We downgrade Nayuki to SELL and lower TP from HK$13.9 to HK3.1
PICC Group / PICC P&C Pair: A Cheat Sheet to Improve Your Batting Average
- To build on our earlier work on the insurance space — and as we search for beta-neutral relative value plays — we look at PICC Group-H’s SOTP valuation.
- The group’s life and health business has historically traded at a steep implicit discount to China Life-H, perhaps deservedly so. But price dislocations do occur from time to time.
- We share our cheat sheet on how we approach these opportunities, which are often good for a quick 10% trade. As usual, we highlight the potential risks as well.
Dekon Food and Agriculture Group Pre-IPO Tearsheet
- Dekon Food and Agriculture Group (DFAG CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by CICC and Citibank.
- Dekon Food and Agriculture Group (DFAG) is a livestock and poultry breeding and farming enterprise in China, focusing on the breeding and farming of pigs and yellow-feathered broilers.
- As of 30th Sep 2022, its business footprint covered 39 cities across 12 provinces and autonomous regions in China.
Shanghai Haohai Biological Technology (688366.CH/6826.HK)- Disappointing Earnings and Gloomy Outlook
- Through continuous M&A/resource integration, Haohai has gradually established its four business segments, but such development strategy hasn’t brought ideal performance, which is disappointing if compared with Bloomage and Imeik.
- The future performance driver of Haohai still lies in the medical aesthetics business, but increasing competition and declining gross margin cast doubts on the outlook and growth potential.
- Shanghai Haohai Biological Technology-A (688366 CH) is overvalued. Due to lack of growth point with high certainty, we are not optimistic about the upside potential of Haohai’s valuation.
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