In today’s briefing:
- Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December
- Horizon Robotics (9660 HK) IPO: Valuation Insights
- SF Holding Pre-IPO: Proposed Interim & Special Dividends of 1.40 CNY Per Share Ahead of HK Listing
- T.S. Lines Pre-IPO – PHIP Updates – Shipping Volumes Improved, However Paid Another Large Dividend
- JD.com (9618-HK): Positive Technical Analysis Signals
- JNBY (3306 HK): >34% ROCE Track Record/10% Dividend Yield/Net Cash Business
- Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable
- China’s Corn Under Extreme Weather Threat // Bad News Again for Orange Production
- China Shineway Pharmaceutical (2877.HK) – Performance Would Pick up in 24H2
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Capping Flows in December
- The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
- Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
- The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.
Horizon Robotics (9660 HK) IPO: Valuation Insights
- Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
- We previously discussed the IPO in Horizon Robotics (9660 HK) IPO: The Bull Case and Horizon Robotics (9660 HK) IPO: The Bear Case.
- Our valuation analysis suggests that Horizon is unattractively valued at the IPO price range. Therefore, we would pass on the IPO.
SF Holding Pre-IPO: Proposed Interim & Special Dividends of 1.40 CNY Per Share Ahead of HK Listing
- SF Holding proposes interim & special dividends for owners of A-shares
- Combined cash dividend totals 1.40 CNY per share, yielding about 3.3%
- Meeting October 29 to approve dividends, Q3 results, planned HK listing
T.S. Lines Pre-IPO – PHIP Updates – Shipping Volumes Improved, However Paid Another Large Dividend
- T.S. Lines (TSL HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO.
- T.S. Lines (TSL) is a container shipping firm primarily operating in the Asia Pacific (APAC) region.
- In a previous note, we looked at the firm’s past performance. In this note, we talk about the recent updates from its filings.
JD.com (9618-HK): Positive Technical Analysis Signals
- Despite a share price correction this month, JD.com (9618 HK) remains firmly amid an earnings upgrade cycle driven by improved profitability expectations.
- Following significant share price volatility over the past 2 months, JD.com’s near-term momentum indicators currently display bullish signals.
- JD.com still trades at more than one standard deviation below its 5-year historic average forward PE ratio, and near the lowest level it has ever been.
JNBY (3306 HK): >34% ROCE Track Record/10% Dividend Yield/Net Cash Business
- HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 helped us screen out great names.
- JNBY Design Ltd (3306 HK), an apparel retailer trading at 9.2x FY24 with a ~10% yield and a long-term track record of >34% 10 Yr-average ROCEs, is one such name.
- Even with modest single-digit growth guidance, we see a growing yield and a great cash buffer (20% of the market cap), and dividends are sustainable.
Helixtap China Report: Declining Inventory Point At Improved Demand; Sustainability Questionable
- Inventory lowest since February 2024
- Arbitrage widens for African and Indonesian rubber
- Expansion in imports & exports in August
China’s Corn Under Extreme Weather Threat // Bad News Again for Orange Production
- China’s Corn Under Extreme Weather Threat China’s corn production is currently under pressure due to extreme weather events in the country.
- Still, as it seems this might not be enough to even lift prices up a little bit. Local prices have ticked higher since the end of September, but they’re still close to four-year lows.
- Stockpiles of corn are plentiful, and demand is currently sluggish as the second-largest economy of the world battles its own economy demons at the moment.
China Shineway Pharmaceutical (2877.HK) – Performance Would Pick up in 24H2
- Shineway’s revenue experienced negative growth in 24H1 as expected, but net profit performance beat expectations (up 27.5% YoY). However, if excluding those one-time gains, net profit was down 14% YoY.
- In 24H2, Shineway’s performance is expected to pick up, and YoY revenue growth 2024 full-year would return to positive (e.g. 5-10% YoY). The only concern is TCM formula granule VBP.
- China Shineway Pharmaceutical (2877 HK)’s overall financial position is healthy. However, even with large cash balance, the current dividend is not satisfactory, which has more room to improve.
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