In today’s briefing:
- CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt
- Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off
- CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms
- GEM Funds: Extreme Stocks, July 2024
- Monthly Chinese Express Tracker | Strong June Volume | Weak Pricing and Intl | (July 2024)
- WuXi AppTec (2359.HK/603259.CH) 24H1- Backlog Looks Good but It May Not Bring a Performance Reversal
- Monthly Chinese Tourism Tracker | Outbound Recovery Sluggish, but Trip.com Too Cheap | (July 2024)
CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt
- Back on the 6th December 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer of $6.87/share, in cash, from SASAC/NCSSF-backed Champion.
- The Offer Document is now out. This is not a Composite Document. A “Response Document” is expected in two weeks, which will include the IFA opinion.
- All the above is moot. ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer is currently navigating the necessary regulatory approvals. With irrevocables, ORG has 46.44% in the bag.
Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off
- Earlier this month, WH Group (288 HK) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ,
- These ops accounted for 54% of WHG’s FY23 revenue and 22.4% of the operating profit; compared to 56% and 44.9% respectively in FY22.
- We’ve been here before. A Smithfield spin-off was touted in 4Q23 (in the media). WHG acquired Smithfield for US$4.7bn in 2013, ahead of its 2014 listing.
CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms
- Changping Industrial’s offer for CPMC Holdings (906 HK) opens at an unchanged HK$6.87, 4.7% below ORG Technology Co., Ltd. A (002701 CH)’s competing HK$7.21 offer.
- Changping Industrial thinks deal fatigue may tip the balance in its favour. However, minorities will call Changping’s bluff, as the offer at current terms has a low chance of success.
- Despite the current posturing, Changping Industrial will likely need to bump above ORG’s offer marginally to succeed. Expect more twists and turns in this contested battle.
GEM Funds: Extreme Stocks, July 2024
- We screen for stocks at the extreme ends of their positioning or momentum ranges among active Emerging Market equity funds.
- High Positioning, Negative Momentum: BYD Company Limited Class H, Novatek Microelectronics Corp.
- Low Positioning, Negative Momentum: Banco Bradesco SA Pfd, LG Chem Ltd.
Monthly Chinese Express Tracker | Strong June Volume | Weak Pricing and Intl | (July 2024)
- Parcel volume growth remained strong in June, but ASPs weakened (again)
- YTO Express seems to be managing price / volume tradeoff competently
- Year-To-Date, only YTO shares up > 10%; three companies down -10% or more
WuXi AppTec (2359.HK/603259.CH) 24H1- Backlog Looks Good but It May Not Bring a Performance Reversal
- The message WuXi AppTec hopes to convey in 24H1 report is that the Company isn’t losing orders/customers due to BIOSECURE Act and from 2025 it will return to high growth.
- TIDES business growth is below expectations. Whether WuXi AppTec’s performance can be reversed is no longer solely depends on fundamentals/industry cycles, but on whether geopolitical risks can be fully resolved.
- Regardless of the outcome of 2024 presidential election, securing US supply chain is a already bipartisan consensus. If any Bill does pass in the future, valuation will plummet again.
Monthly Chinese Tourism Tracker | Outbound Recovery Sluggish, but Trip.com Too Cheap | (July 2024)
- Outbound travel recovery remains sluggish, activity still far below 2019 levels
- Domestic activity up 5% Y/Y in June, now well above pre-Covid levels
- Trip.com gaining share during extended recovery, trades on 14x PER, BUY
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