In today’s briefing:
- ENN Energy (2688 HK): ENN Natural Gas to Launch a Privatisation Offer?
- Quiddity Leaderboard CSI 300/500 Jun25: US$6bn+ One-Way Flows; One Intra-Review Addition Soon
- SSE50 Index Rebalance Preview: Three Changes; Some Misses
- Tencent (700 HK): 4Q24, Revenue Growth Back to Two Digits
- China Resources Beer Signals a Bottom in Consumption?
- Anta Sports (2020 HK): Need to Exercise Caution
- Meituan (3690 HK): Expected Move on Profit Announcement and Option Insights
- AIA Group & HDFC Bank: Big Hitters Lose Momentum
- Asia Real Estate Tracker (19-Mar-2025): Invesco buys Korea senior homes.
- WuXi AppTec (2359.HK/603259.CH) – The Concerns Behind the 2024 Performance Rebound and 2025 Outlook
ENN Energy (2688 HK): ENN Natural Gas to Launch a Privatisation Offer?
- ENN Energy (2688 HK) is in a trading halt “pending the issuance of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers containing inside information of the Company.”
- ENN Natural Gas (600803 CH), also in a trading halt, is likely seeking to privatise ENN through a Cayman scheme. A high AGM minority participation necessitates an attractive offer.
- I use several methods to triangulate the likely offer price, which suggests a price range of HK$66.50-85.01, with an average of HK$76.04, a 28% premium to the last close.
Quiddity Leaderboard CSI 300/500 Jun25: US$6bn+ One-Way Flows; One Intra-Review Addition Soon
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500 names.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
- Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.
SSE50 Index Rebalance Preview: Three Changes; Some Misses
- With nearly 90% of the review period complete, 2 non-constituents are in inclusion zone and 3 constituents are in deletion zone.
- We estimate one-way turnover of 4.7% at the June rebalance leading to a round-trip trade of CNY 16.4bn (US$2.27bn). Index arb balances will increase the impact on the stocks.
- The forecast adds have outperformed the forecast deletes over the last 6 months but there has been a retracement in returns over the last month.
Tencent (700 HK): 4Q24, Revenue Growth Back to Two Digits
- The growth rate of total revenue came back to two digits in 4Q24.
- The growth rate of game revenue reached 20% YoY in 4Q24.
- The gross margins of all business lines improved YoY in 4Q24.
China Resources Beer Signals a Bottom in Consumption?
- Historical results as expected with a sales and profit decline
- The first 2 months of the year show a positive trend
- Market reaction to the results should highlight low investor expectations
Anta Sports (2020 HK): Need to Exercise Caution
- Anta Sports Products (2020 HK)‘s strong FY24 result is masked by one-offs and Amer Sports (AS US). Without them, its earnings would have declined by an alarming 5.4% in 2H24.
- Its ANTA and FILA brands have seen YoY operating profit drop in 2H24, with heavy margin pressure. Their revenue growth has also showed meaningful slowdown sequentially.
- The 18.6x PER for FY25 is at a 50% premium to the sector, but the market expectation of 15% growth looks challenging. The YTD rally has opened room for profit-taking.
Meituan (3690 HK): Expected Move on Profit Announcement and Option Insights
- Meituan (3690 HK) is announcing 2024 Full Year Results on March 21, 2025, with historical data showing substantial price movement following earnings.
- The options market is pricing a 5-6% post-announcement move (below historical average), with the March 28 ATM straddle priced at 15.4-15.6, implying a 9.0% break-even by expiration.
- Three distinct option strategies are evaluated, considering an expected post-announcement drop in implied volatility.
AIA Group & HDFC Bank: Big Hitters Lose Momentum
- Ownership levels in AIA Group Ltd (1299 HK) and HDFC Bank (HDFCB IN) have started to reverse from the highs.
- SK Hynix, Meituan and Mediatek Inc all make recent gains in fund ownership, while HDFC Bank and AIA Group see closures.
- UBS in AIA Group and TT International in HDFC Bank lead the fund-level closures.
Asia Real Estate Tracker (19-Mar-2025): Invesco buys Korea senior homes.
- Invesco makes investment in Korea senior living portfolio by acquiring local operator Caredoc.
- KKR, Gaw, Alyssa Partners collaborate to host forum discussing Japan multi-family housing on Wednesday.
- Thailand approves funding of $2.7B for data centers with a total capacity of 347MW.
WuXi AppTec (2359.HK/603259.CH) – The Concerns Behind the 2024 Performance Rebound and 2025 Outlook
- WuXi AppTec’s 2024 results are in line with guidance. TIDES business was the key driver of WuXi Chemistry. However, the downturn of “R” business cast a shadow on performance recovery.
- 2025 is a crucial year for WuXi AppTec and the entire CXO industry, as it needs to verify whether about RMB40 billion revenue and 6,000 customers represent the ceiling/growth bottleneck?
- The disposal of WuXi XDC shares help boost WuXi AppTec’s share price. However, due to the geopolitical conflicts/recession risks, the long-term growth prospects of WuXi AppTec are still uncertain.
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