In today’s briefing:
- CSI Medical Service Index Rebalance Preview: Four Potential Changes in December
- China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- China Consumption Weekly (14 Oct 2024): Tencent, Lalatech, Seres, BYD, NIO, Trip.com
- HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- Anhui Conch (914 HK): Sharp Price Hikes Boost Our Confidence in 4Q Turnaround
- CIMC Enric (3899 HK): Mispriced, with Good Upside
- Quiddity Leaderboard SSE50/180 Dec 24: Multiple Changes to Expectations; US$2.2bn One-Way
- Quick Take on J&T Global Express Q324: Volume Growth in All Segments Slowed Dramatically
CSI Medical Service Index Rebalance Preview: Four Potential Changes in December
- The review period ends on 31 October, the changes should be announced on 29 November and will be effective after the close of trading on 13 December.
- We forecast 4 potential changes for the index in December where there could be buying of 0.5-3x ADV in the adds and selling of between 0.5-1.3x ADV in the deletes.
- The forecast adds have drifted lower versus the forecast deletes following the rally in the markets and the large ETF creations. That could reverse from now till review period end.
China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
- Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
- Index inclusions will commence with the HSCI in March 2025 – that will also result in Stock Connect inclusion. The next index inclusion will take place in June.
China Consumption Weekly (14 Oct 2024): Tencent, Lalatech, Seres, BYD, NIO, Trip.com
- Tencent repurchased 250 million shares and the market has not paid any attention to its significant margin improvements.
- Lalatech updated its IPO file for 1H24, in which both GTV and revenue were up by 18% YoY.
- Seres expects its revenue will grow by 518% YoY to 559% YoY for 3Q24.
HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- SOUTHBOUND was a net buyer the last five trading days (from before GW to 14 Oct). HUGE gross flows. Decent net flows. Very big in few names (BABA included).
- The Guotai Junnan/Haitong merger pushed H-share brokers hard, but SB wasn’t buying. They bought Alibaba Group Holding (9988 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Xiaomi Corp (1810 HK).
- Things may settle down a little bit as the fiscal policy announcements are out of the way, but I expect the trend is still your friend (until it bends).
Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- Anta top line outperformed competitors, both overseas and domestic brands, in China.
- We believe all margins will be stable and EPS will rise by 41% in 2024.
- However, we believe Anta is overvalued at the current price.
A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- A big “week” of 5 trading days from 30 Sep to 14 Oct, inclusive. Average AH premia dropped a lot. Liquid AH premia dropped less. Brokers are big winners.
- Average AH volatility is super high. Intracorrelation of spreads quite low. Lots of room to market-make wide spreads/high premia. High premia may continue to contract on speculation.
- Sharply differing onshore and offshore opinion regarding the nature and vibe of Chinese stimulus will lead to interesting dispersion. Identify the trend, then market make around it.
Anhui Conch (914 HK): Sharp Price Hikes Boost Our Confidence in 4Q Turnaround
- Recent significant clinker price hikes in Yangtze river region boost our confidence that 4Q will likely see the company’s earnings double Y/Y, ending 14 consecutive quarters of decline since 2Q21.
- Beijing’s bazooka stimulus package to lift the property market and revive economy also improve industry outlook in 2025.
- Consensus has been slow to adjust for the changes in industry dynamics. Our 2024 earnings is now 15% above consensus. We expect upward earnings revision will support P/B expansion.
CIMC Enric (3899 HK): Mispriced, with Good Upside
- CIMC Enric Holdings (3899 HK) has underperformed benchmark Indices YTD, and its business segments are undervalued based on their earnings performance.
- The clean energy segment is only valued at HK$3.4bn, or 24% of the stock’s total. However, it is the largest earnings generator in 1H24, contributing 60% of 1H24 profit.
- CLPT’s earnings contribution is 22% more than CIMC Safeway’s, but it is only valued at 27% of the latter, equivalent to an undemanding 9.8x annualised PER.
Quiddity Leaderboard SSE50/180 Dec 24: Multiple Changes to Expectations; US$2.2bn One-Way
- SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
- While our SSE 50 expected ADDs/DELs list remains unchanged, there have been multiple changes to our SSE 180 expected ADDs/DELs list.
Quick Take on J&T Global Express Q324: Volume Growth in All Segments Slowed Dramatically
- Last week J&T Global Express reported Q324 express parcel volume by segment
- Volume growth in all segments slowed dramatically compared to Q224
- Without needed context, we believe the numbers undermine J&T growth story
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