In today’s briefing:
- HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- Quiddity CSI National Defense Dec 24 Results: Seven Changes; US$124mn One-Way
- Quiddity ChiNext/ChiNext 50 Dec 24 Results: ~80% Hit Rate; US$1bn+ One-Way Flows
- HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer
- Ping An Healthcare and Technology (1833 HK) – About The Special Dividend and the Outlook
- EQD | Hong Kong Single Stock Options Weekly Nov 25-29
- EQD | Hong Kong Index Options Weekly – HSI and HSCEI Nov 25-29
- HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Dec 2024
HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
- The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.
- An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray.
ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
- We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).
CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
- Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH).
- The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.
Quiddity CSI National Defense Dec 24 Results: Seven Changes; US$124mn One-Way
- The December 2024 index review results for the CSI National Defense Industry Index were announced after market close on Friday 29th November 2024.
- There will be seven changes for the CSI National Defense Industry Index.
- In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance.
Quiddity ChiNext/ChiNext 50 Dec 24 Results: ~80% Hit Rate; US$1bn+ One-Way Flows
- The December 2024 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
- There will be seven changes for the ChiNext index and five changes for the ChiNext 50 index. Some of these names surprised us.
- In this insight, we take a look at our final flow expectations for the confirmed index changes.
HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer
- China Mobile (941 HK) was a logical suitor for HKBN Ltd (1310 HK). A non-PRC (or government-affiliated) corporation taking over a media/broadband/telco in Hong Kong is probably a non-starter.
- China Mobile has a made a pre-conditional voluntary Offer at HK$5.23/share, a 40.97% premium to undisturbed. The price is final.
- Pre-Cons are the usual suspects (NDRC, Mofcom & SASAC). The Offer itself conditional on a 50% acceptance hurdle, with 24.96% in the bag. The intention is to maintain HKBN’s listing.
Ping An Healthcare and Technology (1833 HK) – About The Special Dividend and the Outlook
- PAGD’s Special Dividend announcement made investors “unhappy”. PAGD’s operation after IPO is a big failure, which is why there were large amounts of funds left that were not used.
- Being a “vassal” of Ping An Group won’t bring high valuation due to limited growth potential. There’s still room for stock price/valuation to decline. Investors need not rush to buy.
- The Special Dividend will be approved. Ping An’s idea is to increase shareholding ratio by distributing dividends, which can also lower PAGD’s stock price, providing opportunity for a low-price privatization.
EQD | Hong Kong Single Stock Options Weekly Nov 25-29
- Put trading was heavy in the Financial sector this week. ICBC and Bank of China were the main contributors to that with 73% and 63% of their volume in Puts.
- ANTA Sports Products had a notable pick up in Call activity this past week as the stock bounces around 3 year lows vs the Hang Seng index (graph at bottom)
- Energy and Real Estate sectors might be the best area to look for low vol opportunities.
EQD | Hong Kong Index Options Weekly – HSI and HSCEI Nov 25-29
- Price jump on Wednesday led implied vol higher but vols were otherwise soft with passing of key events in November.
- Large jump in option activity on Wednesday was likely due to positions being closed out as open interest declined for both Puts and Calls on the week.
- HSCEI has more support for implied vols at these levels with short term historic vols trading above 1M implied vol.
HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Dec 2024
- The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 38%, stocks are trading at 5-15% dividend yields.
- We update investors with results from Nameson Holdings (1982 HK) H1 FY25: 16-17% Dividend Yield Intact and Pacific Textiles (1382 HK), which guided down earnings due to interruptions in Vietnam.
- We also flag Yue Yuen Industrial Holdings (551 HK) results, buybacks, and some updates from our conference call with Nameson Holdings (1982 HK) management.