Daily Brief China: China Merchants China Direct Investments, Tianju Dihe Technology, Foxconn Industrial Internet and more

In today’s briefing:

CMCDI (133 HK): Kan Re-Elected. But Only Just
Tianju Dihe Technology IPO: Limited Room For Multiple Expansion Despite Healthy Growth
Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

CMCDI (133 HK): Kan Re-Elected. But Only Just

At the AGM yesterday, China Merchants China Direct Investments (133 HK)‘s director Elizabeth Kan was re-appointed, but by a wafer-thin margin: 29.97% of shares out FOR, and 29.44% AGAINST.
Stripping out Victor Chu’s stake (~2%?) and China Merchant’s (27.6%), or collectively ~29.6% of shares out, it’s fair to say the remainder of the shareholder register wants her out.
CMCDI is currently trading at a 55% discount to the latest NAV (as at 31st May 2024) of HK$30.42/share. Argyle continues to add to its position.

Tianju Dihe Technology, a provider of integrated API-enabled data exchange services in China, set terms for an IPO and plans to raise ~HK$400M in June.
The initial public offering is expected to be priced at HK$83.33 per H share, valuing the technology company at ~HK$4.2B or $535M based on 50.1M outstanding shares.
Cornerstone investors have agreed to acquire ~3.8M H shares, representing 80% of the offer shares or ~8% of the total outstanding shares.

Not much has changed since our latest Int’l Compass from May 31, 2024 titled “Buy the Pullback.”
We were buyers of the pullback in global equities (MSCI ACWI, ACWI ex-US, EAFE, EM, Europe, Japan, Taiwan, etc.) with important supports holding, combined with ongoing healthy market dynamics.
Supports are holding, and our bullish outlook (since early-November 2023) remains intact. Continue to buy dips.

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