In today’s briefing:
- Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
- A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
- Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
- SF Holding Pre-IPO: FY23, Q124 Results Reviewed | Sales Mix Impacts | Recent Monthly Revenue Trend
- HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly
- ECM Weekly (10th June 2024) – Webtoon, Shift Up, QuantumPharm, Guzman, Kakaopay, Telix, Yankuang
- Mainland Connect NORTHBOUND Flows (To 7 June 2024): Large Renewables Buying Drive Small Net Buying
- China Healthcare Weekly (Jun.9) – New Akeso-Summit Deal, Jacobio Is a Good Bet, Genscript’s Trouble
- China Consumption Weekly (10 Jun 2024): Tencent, PDD, Meituan, NIO, Tuniu, Smart Share
- RoboSense Technology: Pre-IPO Investors and Shareholders May Sell Shares As IPO Lock-Up Ends in July
Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK).
- Lowest spreads: Alumina Ltd (AWC AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), QV Equities Ltd (QVE AU).
A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND’s renewed buy streak continued this past week; every day net positive. Strong net buying. NORTHBOUND saw small net buying on renewables, utilities, and semiconductors.
- AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng/other HK indices fell and A-shares did not do much. Liquid Hs underperformed As by 2%.
Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
- Since the China/Taiwan situation looks increasingly tense, Xu Xudong/Far Eastern Group may be eager to privatize ACC considering geopolitical conflicts and political risks. Its business is subject to strict regulation.
- HK$3.22 Offer Price is disappointing, but the privatization isn’t completely impossible (The headcount does not apply now). A certain number of investors are still willing to accept the Offer Price.
- For arbitrageurs, the return looks not bad. However, considering the high uncertainties/failure risks, we still advise investors to be cautious. HK$2.5/share is a price point worth participating in.
SF Holding Pre-IPO: FY23, Q124 Results Reviewed | Sales Mix Impacts | Recent Monthly Revenue Trend
- In this insight we cover recent earnings results, revenue mix, YTD trends
- Fluctuating performance of its international segment impacted FY23 and Q124
- Improving international segment could boost overall momentum in Q2-Q4 2024
HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly
- SOUTHBOUND was again a net buyer, for HK$27.2bn this week, on small two-way volumes. China Mobile (941 HK) dominated as it reached dividend ex-date. Other high-div SOEs also saw buying.
- It is not clear how much of this is H/A discounts, expected dividend tax removal, and the KPIs for SOE CEOs to raise prices and payout ratios, but it continues.
- Valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.
ECM Weekly (10th June 2024) – Webtoon, Shift Up, QuantumPharm, Guzman, Kakaopay, Telix, Yankuang
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, we looked at Guzman Y Gomez (0817833D AU), QuantumPharm (QUP HK) and Webtoon Entertainment (WBTN US) this week.
- On the placement front, there were a few deals across Hong Kong, Australia and Japan.
Mainland Connect NORTHBOUND Flows (To 7 June 2024): Large Renewables Buying Drive Small Net Buying
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net BUY RMB 5.3bn of A-shares on lower gross volumes. NORTHBOUND bought utilities, renewables, and semiconductors, and sold Kweichow Moutai, Midea, Bk Jiangsu, and Wuliangye Yibin.
- Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.
China Healthcare Weekly (Jun.9) – New Akeso-Summit Deal, Jacobio Is a Good Bet, Genscript’s Trouble
- One interesting interpretation of the new Akeso-summit cooperation is that it aims to pave the way for potential acquisition of Summit by MNC. The climax of the story hasn’t arrived.
- Jacobio is a good target for potential M&A and licensing deals. So, this company has considerable potential returns and also strong safety margin, which is worth taking a gamble on.
- There’re concerns that Genscript could face US scrutiny due to alleged ties with Chinese government. Share price rebound may not last considering geopolitical conflicts and CXO industry downturn in 24H1.
China Consumption Weekly (10 Jun 2024): Tencent, PDD, Meituan, NIO, Tuniu, Smart Share
- Tuniu’s revenue grew by 71% YoY in 1Q24, as the company benefited from the travel industry’s recovery.
- Smart Share Global’s revenue plunged by 52% YoY in 1Q24 due to fewer customers in shopping malls.
- PDD plans to price products on behalf of retailers, which reflects the severe competition in e-commerce.
RoboSense Technology: Pre-IPO Investors and Shareholders May Sell Shares As IPO Lock-Up Ends in July
- Shares of RoboSense Technology, a mass producer of LiDAR products and perception solutions, rose ~86% since IPO and outperformed Hesai Group and Hang Seng Index on a YTD basis.
- Founder-Led LiDAR company priced its IPO at HK$43/share and raised ~HK$1B gross proceeds in January. RoboSense shares fell on first day of public trading on the Hong Kong stock exchange.
- Today, RoboSense Technology became the most valuable LiDAR company in the world and is now valued at roughly $4.6B.
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