In today’s briefing:
- Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)
- Hang Seng TECH Index Rebalance: Float & Capping Changes
- HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow
- Weimob (2013 HK): Strategic Patience Will Be Rewarded (Part 2)
- Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow
- Galaxy Entertainment Group: Its 4.5% of Wynn Shares Key if the Stock Is in Play
- Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning
Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)
- Hang Seng Index continues its march to 80 names, after which it will commence a march, or a slog, to 100 names in an effort to gain more comprehensive coverage
- Doing so will admit names which move to Hong Kong from New York and will make way for more dynamism and lower SOE weights.
- The three ADDs are Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK), and Haier Smart Home Co Ltd (6690 HK) with a pro-forma combined weight just <1%.
Hang Seng TECH Index Rebalance: Float & Capping Changes
- As expected, there are no adds or deletes for the Hang Seng Tech Index (HSTECH INDEX) in December. However, there are plenty of capping and float changes to drive flows.
- The December rebalance is expected to have a one-way turnover of 2.3% resulting in a one-way trade of HK$1.9bn.
- Short interest is greater than 5% of float on a few stocks and a continued recovering in markets could lead to a squeeze higher.
HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow
- The HSCEI sees 4 names out, 4 names in. The ADDs are PetroChina (857 HK), Zhongsheng Group (881 HK), Li Auto (2015 HK), Haier Smart Home Co Ltd (6690 HK).
- The DELETEs are Alibaba Health Information Technology (241 HK), China Gas Holdings (384 HK), Innovent Biologics Inc (1801 HK), and Bilibili (9626 HK).
- One way volume is just under 4.7% with all the name changes, FAF changes, and capping flows.
Weimob (2013 HK): Strategic Patience Will Be Rewarded (Part 2)
- Weimob has emerged from the pandemic stronger and leaner, further consolidating its leadership in China’s e-commerce SaaS market.
- Drawing insights into the supply side (merchants/brands) on Alibaba platform, our bottom-up analysis suggests that Weimob potentially has a US$600mn revenue opportunity by 2025.
- We value Weimob at US$3bn assigning 5xPS on its US$600mn revenue by 2025, implying 25% CAGR over 3-year period. Patience needed to navigate high-inflation environment which pressures growth assets.
Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow
- The Hang Seng Tech Index Review was announced on Friday after the close. There are no name changes but there is decent flow. 3% one-way turnover.
- There are five capping changes and one very large share count change making things interesting.
- All told, this is less impactful than it was last time, and less impactful than the other index rebalances announced.
Galaxy Entertainment Group: Its 4.5% of Wynn Shares Key if the Stock Is in Play
- In 2018, shortly after the departure of Wynn founder Steve Wynn, Galaxy bought 4.9% of his shares atUS$175. The shares have been under water. But a new player has entered.
- Gaming, restaurant and sports entrepreneur Tillman Fertitta has just bought 6.1% of Wynn shares setting up a possible play on the shares, or a total takeover move.
- There are three scenarios that could play bullish for Galaxy if Wynn is in play. All auger well for movement on the stock.
Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – Disappointing Performance Is Just the Beginning
- Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)’s 22Q3 performance was disappointing because its strategy of “stabilizing” performance growth by raising prices has been ineffective.
- Endogenous growth problem would finally be reflected in the decline of company’s valuation. We recommend to think about long-term logic from a broader perspective,not simply tracking performance of individual companies.
- Pien Tze Huang’s valuation still has a lot of downward space. When the bubble bursts or its valuation is lower than Kweichow Moutai, it’s time to go long again.
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