In today’s briefing:
- Boqi Env (2377 HK)’s Partial Offer
- SF Holding H Share Listing: Updates Point to Improving Fundamentals
- NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
- Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
- Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
- Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
- China Gas Holdings (384 HK): Assessing the Spin-Off of Value-Added Business
- CiDi Inc. Pre-IPO Tearsheet
- [XPeng Inc. (XPEV US, SELL, TP US$5) Company Update]: Material and Component Pricing Drove Cost Down
- How Crane’s Process Flow Technologies Are Quietly Powering Revenue Growth!
Boqi Env (2377 HK)’s Partial Offer
- Back on the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
- The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
- A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November.
SF Holding H Share Listing: Updates Point to Improving Fundamentals
- S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
- SF is the largest integrated logistics service player in China and Asia and the fourth largest player globally in terms of revenue in 2023, according to Frost & Sullivan.
- The PHIP update shows that the business is in good health, with a return to growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.
NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
- It has been an eventful week for Naspers and Prosus – Tencent reported 3Q FY24 results yesterday after the HK close and Swiggy listed on the NSE and BSE.
- Prosus sold shares in Swiggy worth $500m and retains an interest of 25% (fully diluted basis).
- Since 2017, Naspers and Prosus invested $1.3bn to build a 31% stake. The group have created $2bn of value for shareholders following the listing.
Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
- On the 6th October, Sihuan Pharmaceutical Hldgs (460 HK) announced a HK$500mn, 12-month buyback programme. Shares jumped 31% on the news, but have since given all that gain back.
- Sihuan Pharma has now announced an intention to spin-off non-wholly-owned subsidiary Xuanzhu Biopharm on the HKEx.
- Concurrent with the spin-off news. Sihuan Pharma acquired 6.9% in Xuanzhu Biopharm for RMB596mn, implying a full value of ~RMB8.5bn (~HK$9.2bn). This compares to Sihuan Pharma’s market cap of HK$6.6bn.
Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
- Geely’s revenue grew by 20% YoY and deliveries increased by 19% YoY in 3Q24.
- The operating margin improved to 5.3% in 3Q24 versus 2.9% in 3Q23.
- We conclude an upside of 58% and a price target of HK$22 for the end of 2025.
Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
- Plover Bay Technologies (1523 HK) issued a profit alert stating that the profit for the first 10 months of FY24 grew by>10% over the entire FY23 profit (28 mn USD).
- Nov/Dec tend to be decent business months for the company, so we expect the profit to be a little over 40 million USD for FY24, implying a 17-18x FY24 PE.
- The company has net cash of more than 50 mn USD and consistent ROEs of more than 35% (currently >65%), with excellent prospects for future growth.
China Gas Holdings (384 HK): Assessing the Spin-Off of Value-Added Business
- The spin-off of the value-added business (VAS) of China Gas Holdings (384 HK) may add HK$0.22-0.83/share to the stock price, or 3.4-12.8%, based on our initial assessment.
- VAS generated an operating profit of HK$1.58bn in FY24, up by 5.7% YoY. It is significant to China Gas as this accounted for 23.5% of its total segment profit.
- The share price has not reacted much to the news because weak Chinese equity market and uncertainties on the upcoming 1H FY25 result. Once cleared, we see good upside.
CiDi Inc. Pre-IPO Tearsheet
- CiDi Inc (CIDI HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC, China Securities and Ping An.
- It is a leading provider of autonomous driving technology for commercial vehicles in China.
- It focuses on research and development of autonomous mining and logistics trucks, V2X technologies and high-performance perception solutions.
[XPeng Inc. (XPEV US, SELL, TP US$5) Company Update]: Material and Component Pricing Drove Cost Down
- C3Q24 results from LEAP Motors seems to indicate the profit margins of low-priced EV can reach high single digits.
- We thus revised up XPEV’s 2024-25 top line by 8% and 28% on successful launch of P7+, 2024-25 gross margins by 0.6ppt and 1.7ppt
- Despite these improvements, we opt to maintain the rating of SELL and TP of US$5 unchanged as XPEV’s path to profitability is still unclear.
How Crane’s Process Flow Technologies Are Quietly Powering Revenue Growth!
- Crane Company recently presented its third-quarter 2024 financial results, showcasing several key highlights and challenges.
- The company’s performance this quarter was marked by a solid increase in both core sales and earnings per share, despite encountering multiple operational disruptions.
- Firstly, Crane demonstrated robust financial performance by exceeding expectations, with adjusted earnings per share (EPS) rising to $1.38.
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