Daily Brief China: China Galaxy Securities (H), Crude Oil, Tencent, Midea Group Co Ltd A, ZTO Express Cayman , Hive Box Holdings and more

• Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
• It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. 
• But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

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• China announced game approval for the September 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.
• Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

• Midea debuted on HKEx on 17th September and shares last closed at HK$74.25 per share, up by about 35% compared to final HK offer price of HK$54.80 apiece.
• We previously suggested that Midea’s HK offering was attractive as HK shares were priced at a 25% discount to its A-shares, and was at a discount to Haier Smart Homes.
• The PBOC announced several measures to revive the housing market in the country which contributed to the recent rally in the China home appliance sector.

• Amid fierce low-price competition in 1H24, low-end couriers  benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
• The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
• We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

• In this insight we compare Hive Box to InPost, a smart locker specialist
• The firms play in different geographies, making apples:apples comps tough
• In the absence of better comps, comparing Hive Box to InPost still useful