In today’s briefing:
- HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- Hang Seng, HSCEI, HSTECH Sep24 Rebal Final Capping Flows
- MSC Aug 24 Rebalance: Brazil Takes the EM Flow, SA & China Downweighted Again (Tencent)
- ChiNext/ChiNext50 Index Rebalance Preview: 22 Changes & US$700m Trade
- China TCM (570.HK) Update – The Disappointing 24H1 Results Will Not Affect the Privatization Process
- CPMC (906 HK): Champion Tech Walks
- Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings
- HK Exchanges: Position Cuts Deepen Among Asia Ex-Japan Funds
- Didi Global Q224 Results: EBITA Margin Up | OpCF Still Strong | But Growth Slowed Noticeably
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
Hang Seng, HSCEI, HSTECH Sep24 Rebal Final Capping Flows
- The close of 3 September 2024 was the final price to determine capping for the Hang Seng Index Rebalances which will take place this Friday 6 September 2024 at close.
- The numbers are largely unchanged, though price changes in the interim cause more Kuaishou Technology (1024 HK) to be bought, and more Xiaomi Corp (1810 HK) to be sold.
- The biggest name in flows is, of course, ASM Pacific Technology (522 HK) which sees 15 days to buy.
MSC Aug 24 Rebalance: Brazil Takes the EM Flow, SA & China Downweighted Again (Tencent)
- South Africa was downweighted in ACW, EM and EM ex China for a second consecutive quarter.
- Brazil was the largest upweight in ACW, EM and EM ex China.
- Tencent was downweighted in the EM index but upweighted in ACW.
ChiNext/ChiNext50 Index Rebalance Preview: 22 Changes & US$700m Trade
- With 70% of the review period complete, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
- There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
- The potential adds have outperformed the potential deletes for both indices on a year-to-date basis, but near-term performance has been lackluster.
China TCM (570.HK) Update – The Disappointing 24H1 Results Will Not Affect the Privatization Process
- China TCM’s 24H1 results is weaker-than-expected. Net profit YoY growth for the whole year of 2024 could be negative. Based on calculation, without privatization, HK$3.26/share is fair for China TCM.
- The remedial tax is a “one-time expenditure” to clear the “obstacle” so as to smooth the completion of privatization. Weak financial performance in 24H1 should help the shareholder vote.
- Due to the low base in 2024, 2025 is expected to see an obvious performance rebound.Long-term outlook of TCM granules business is still promising, reasonable share price is above HK$5/share.
CPMC (906 HK): Champion Tech Walks
- At the first close , SASAC/NCSSF-backed Champion Holdings failed to secure the 50% acceptance condition. No surprises there. What was a surprise was Champion Tech letting the Offer lapse.
- Champion Tech could have extended the Offer to the 30th Sept, which would have achieved little. But they could have bumped terms. They did neither.
- That leaves ORG Technology Co., Ltd. A (002701 CH) as the sole bidder for CPMC Holdings (906 HK) . And arguably, an unwilling bidder at that.
Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Historical valuation affirms that Zhongzheng is the cheapest it has been in the past 10 years
- Chart analysis is to compliment our recent report Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play published yesterday
- Our TP of HKD12.5 is based on FY25 PE of 5x. This implies an UPSIDE POTENTIAL of 33%. It also delivers a dividend yield of ~9% at current prices.
Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings
- Midea Group Co Ltd A (000333 CH) aims to raise up to US$3bn in its H-share listing, as per media reports.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premiums.
HK Exchanges: Position Cuts Deepen Among Asia Ex-Japan Funds
- Asia Ex-Japan fund managers continue to reduce their positions in Hong Kong Exchanges & Clearing.
- Percentage of funds invested and the average weight of the stock in portfolios have been on a downward trend since the recent peak in early 2023
- Wave of position closures in 2024 by Allianz, T Rowe Price, and Baillie Gifford has resulted in over half of the historical investor base exiting the stock
Didi Global Q224 Results: EBITA Margin Up | OpCF Still Strong | But Growth Slowed Noticeably
- Estimated take rate up vs year ago and vs Q124, and EBITA margin turned +ive
- However, revenue growth in core China market slowed considerably in Q224
- Cash Flow and Liquidity both appear ample, little pressure to raise new funds
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