In today’s briefing:
- China Resources Beverage (华润饮料) Pre-IPO: A Visit to Convenience Stores
- STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes
- A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote
- BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)
- Trying to Make Sense of Lufax
- Monthly Container Shipping Tracker | Pricing Still Firm | Spot Rates Fall | Closed Pair (July 2024)
- Pre-IPO Herbs Generation Group Holdings – Concerns Behind the Strong Growth
- Carote Limited Pre-IPO – Expanding Product Portfolio, Although Some Questions Remain Unanswered
China Resources Beverage (华润饮料) Pre-IPO: A Visit to Convenience Stores
- We visited convenience stores to look for China Resources Beverage products.
- The company is in a price war with Nongfu Spring, for both drinkable water and beverages.
- Some CRB products, such as plum syrup, do not have any competitors in physical stores.
STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes
- The review period for the September rebalance ends 31 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
- We forecast 6 changes for the index, including migrations between the STAR100 Index and the STAR50 INDEX. There is uncertainty for a few adds given profitability (or lack of it).
- The outright potential adds have outperformed the outright potential deletes since the start of the calendar year with 12% outperformance in just the last 3 weeks.
A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote
- A8 New Media (800 HK)’s IFA opines that Mr Liu Xiaosong (Chairman and CEO)’s HK$0.36 privatisation offer to be fair and reasonable. The vote is on 23 August.
- Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection).
- No shareholder holding a blocking stake, low AGM minority participation rate and the massive 162.8% takeover premium suggest a done deal. At the last close, the gross/annualised spread is 5.9%/36.0%.
BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)
- Low volatility investing has taken the mantle from Dividend yield as the top strategy during July
- BYD Electronics (285 HK) and Alibaba Group Holding (9988 HK) are rated BUYs as their businesses show improvement.
- Kingdee International Software (268 HK) is seeing a softening in its SME business, however there is potential to gain market share from foreign ERP companies given the pledged government’s policies.
Trying to Make Sense of Lufax
- Lot’s of confusion for me around Lufax (LU).
- I took my dividend in shares being under the impression the scrip price was $2.15 (1 ADR is 2 shares):“Option 2: Elect Stock – You may elect to receive the dividend paid in new ADRs of LUFAX HLDG LTD at rate USD 1.073647 per share held on record date.”
- But apparently it is actually $2.25? Did IBKR make a mistake, will I get my shares at $2.15 or did I misread the above?
Monthly Container Shipping Tracker | Pricing Still Firm | Spot Rates Fall | Closed Pair (July 2024)
- Overall, June container throughput growth and average container rates strong
- But spot rates have begun to wobble recently, and 2025 uncertainty grows
- We have decided to close our suggested container shipping pair trade
Pre-IPO Herbs Generation Group Holdings – Concerns Behind the Strong Growth
- Herbs Generation’s performance growth momentum is strong, with growth rate of net profit higher than that of revenue. However, net profit margin is not high due to high SG&A expenses.
- Due to small market size in Hong Kong, growth ceiling of Herbs Generation is obvious. It’s quite challenging to seize market share from top ranking providers due to fierce competition.
- We’re concerned that future revenue could decline to single-digit growth, as the effectiveness of continuing to invest in marketing/promotion will diminish. Valuation of Herbs Generation should be lower than peers.
Carote Limited Pre-IPO – Expanding Product Portfolio, Although Some Questions Remain Unanswered
- Carote Ltd (CARO HK) is looking to raise US$150m in its upcoming Hong Kong IPO.
- Carote Ltd is a distributor of kitchenware products. Expanding its lineup of products, Carote aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
- In this note, we look at the firm’s past performance.
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