In today’s briefing:
- CPMC Holdings (906 HK): Steady Nerves Required
- China Consumption Weekly (9 Dec 2024): BYD, Geely, Li Auto, Seres, Xiaomi, Arawana
- Mao Geping Cosmetics IPO Trading – Highest Demand for This Year
- CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
- Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook
- EQD | Hong Kong Single Stock Options Weekly Dec 02 – 06
- EQD | Hong Kong Index Options Weekly – HSI and HSCEI Dec 02-06, Sell HSCEI Vol
- QuantumPharm US$750m Lockup Expiry – Financial Investors Checked 35% of Stock into CCASS
- Lucror Analytics – Morning Views Asia
- Dream International (1126 HK): Updates Postcard From Hong Kong
CPMC Holdings (906 HK): Steady Nerves Required
- ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has one remaining precondition: SAFE approval.
- Mr Wei’s irrevocable was terminated. Nevertheless, as a seller, he will accept the offer, as the shares trade below the offer price, and there is no competing offer.
- The precondition long stop date is 6 January, sufficient time to satisfy the precondition. It would be highly unusual to secure MOFCOM and NDRC approval but not SAFE approval.
China Consumption Weekly (9 Dec 2024): BYD, Geely, Li Auto, Seres, Xiaomi, Arawana
- BYD’s deliveries grew by 68% YoY in November 2024, which provides a positive signal for the whole NEV (New Energy Vehicle) industry.
- In November, Seres’ sales volume increased by 27% YoY with NEV up by 55% YoY.
- Arawana, the top cooking oil producer, finished acquiring 11% of Lihua’s stock.
Mao Geping Cosmetics IPO Trading – Highest Demand for This Year
- Mao Geping Cosmetics raised around US$345m in its Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the trading dynamics.
CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
- China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
- CNBM’s parent – the CNBM Parent Concert Group – will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently.
- That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer.
Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook
- Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.
- Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun’s system.
- If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.
EQD | Hong Kong Single Stock Options Weekly Dec 02 – 06
- Strong price action across the market this week coupled with implied vols having caught down to historic vols has put a floor on implied vols.
- Tencent sees strong call buying in December 410 and 420 Calls with month end 400 strike Put buying for December and January.
- Cathay Pacific, +21% over past 3 weeks, HSBC, at 52-week high plus up 38% on the year and BABA, down 21% from Oct 02 high all active names.
EQD | Hong Kong Index Options Weekly – HSI and HSCEI Dec 02-06, Sell HSCEI Vol
- Although vols have stabilized this week both HSI and HSCEI are still trading about 3-4 vol above where they were pre-stimulus and are still not monetizing.
- Strong price action this wek helped keep a floor under implied vols.
- Positions were added in both HSI and HSCEI with demand tilted towards up-strike Calls given the rally on the week.
QuantumPharm US$750m Lockup Expiry – Financial Investors Checked 35% of Stock into CCASS
- QuantumPharm (2228 HK) listed in Hong Kong after raising US$126m towards the bottom end of its IPO price range. Its six-month lockup will expire on 12th Dec 2024.
- QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Lucror Analytics – Morning Views Asia
- In the US, the November nonfarm payrolls came in marginally above expectations at 227 k (220 k e), and were up significantly from the upwardly revised 36 k figure for October (which was impacted by two hurricanes and a strike at Boeing).
- Still, the three-month average payroll growth slowed from earlier in the year to 173 k.
- Meanwhile, the unemployment rate inched up to 4.2% (4.1% e / 4.1% p). Average hourly earnings growth remained steady at 0.4% m-o-m (0.3% e / 0.4% p) and 4.0% y-o-y (3.9% e / 4.0% p).
Dream International (1126 HK): Updates Postcard From Hong Kong
- We met with the management of Dream International (1126 HK) on our trip to Hong Kong and summarize our major takeaways.
- The Plush Toy segment continues to experience growth driven by Disney revenues, but the Plastic Toys segment continues to be plagued by destocking.
- Despite a 15% YoY earnings decline on our numbers, the stock trades at 5x FY24 PE with an 11.0% dividend yield and 40% of the market cap in net cash.
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