In today’s briefing:
- IMAX China (1970 HK): Parent Privatisation
- Ant Buyback, a Painful Reality for Its Investors or Not, Depending When You Enter
- IMAX China (1970 HK): IMAX Corp’s Privatisation Offer
- [Baidu, Inc. (BIDU US, BUY, TP US$162) TP Change]: Cut TP Due to Weaker Outlook in Ads and Cloud
- Fenbi (2469 HK): Strong Positive Profit Alert for 1H2023
- Short Note: HK RE – Supportive Mortgage Policy, Resi Developers Are Trading at Trough Valuation
- Autostreets Development Pre-IPO Tearsheet
IMAX China (1970 HK): Parent Privatisation
- This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
- The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
- IMAX US holds 71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out.
Ant Buyback, a Painful Reality for Its Investors or Not, Depending When You Enter
- Ant’s buyback valuation of $79bn is in line with market expectation
- While 40% loss is deep for the latest round investors, earlier investors are still in the money
- Alibaba is expected to record a profit of $18bn if it decided to join the buyback
IMAX China (1970 HK): IMAX Corp’s Privatisation Offer
- IMAX China Holding (1970 HK) disclosed a scheme privatisation offer from IMAX Corp (IMAX US) at HK$10.00 per share, a 39.5% premium to the undisturbed price (HK$7.17 on 10 July).
- The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- The offer price is final. While the offer price is light compared to peer multiples and historical share prices, the deal will likely succeed.
[Baidu, Inc. (BIDU US, BUY, TP US$162) TP Change]: Cut TP Due to Weaker Outlook in Ads and Cloud
- We estimate Baidu’s ads revenue growth in 2Q23 will be 10.8% YoY. We largely cut our forecast of 3Q23’s ads revenue growth from 14.7% to 7.1%.
- We lower Baidu’s core other revenue growth in 2Q23 from 18.0% to 9.0% YoY. Baidu’s smart transportation AI cloud business has been affected by the contraction in local government expenses.
- We expect Baidu’s 2Q23’s rev./non-GAAP net income to be (2.3%)/ (1.9%) vs cons, also cut the TP to $162, which implies 16.5X PE in 2023.
Fenbi (2469 HK): Strong Positive Profit Alert for 1H2023
- Fenbi Ltd (2469 HK) announced after market today a very strong positive profit alert for 1H2023, with adjusted net profit up not less than 182% yoy.
- As a reminder, share price was heavily sold off in June due to pre-IPO shareholders selling, as well as weak market sentiment, niche sector, and new stock (under researched).
- Even with the recent bounce back in share price with heavy volume, Fenbi is still very undervalued.
Short Note: HK RE – Supportive Mortgage Policy, Resi Developers Are Trading at Trough Valuation
- On July 7, HKMA announced measures to ease property based lending. The major changes involve relaxation of LTVs, according to property values
- We see these policies target the up-graders and will support the residential market. Housing price has been on a decline trend since early 2022
- Residential developers are trading at attractive valuation. In particular, we see a lot of upside for 17 HK NWD and 101 HK HLP
Autostreets Development Pre-IPO Tearsheet
- Autostreets Development (AUTOSTR0 CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Citic Securities and Haitong International.
- Autostreets Development is China’s largest used vehicle transaction platform in terms of transaction volume in 2022, according to CIC.
- In 2022, approximately 160,000 units of used vehicles were transacted through its transaction platform, with a market share of 12.6% among China’s used vehicle transaction platforms, as per the company.
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