In today’s briefing:
- Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling
- DPC Dash IPO Trading – Tepid Demand Even as Capital Group Tops Up
- AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In
- Tencent Meituan Dividend – All Shares in CCASS – More Pressure Now but Will Have a Shorter Overhang
- [Meituan (3690 HK) Target Price Change]: Bracing for Douyin Impact with Limited War Chest
- CK Hutchison Holdings: Is a Retail IPO Coming?
- Yuzhou: Strong FY Results and Robust Liquidity Profile
- Parkson Retail: Positive 4Q SSS Growth, Overall SSS Growth Still Negative
- Ping An: Reassuring New Business Pickup
- Tencent Holdings Ltd (700 HK) – Bullish Multi-Month Outlook – Target 450+ (+20-25%)
Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling
- Following the settlement of Meituan (3690 HK) shares from Tencent (700 HK)‘s in-specie dividend, nearly all the shares are now in CCASS.
- Meituan (3690 HK) has underperformed Tencent (700 HK) by nearly 50% and Alibaba Group (9988 HK) by 27% since the announcement of the in-specie dividend.
- Short interest is higher over the last couple of months but is far lower than the selling that could come through, especially on the Prosus (PRX NA) holding.
DPC Dash IPO Trading – Tepid Demand Even as Capital Group Tops Up
- DPC Dash (1405 HK) raised around US$75m, after pricing its IPO at the bottom-end.
- The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 604 stores across 17 cities, as of Feb 2023.
- In this note, we talk about the subscription levels and trading dynamics.
AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In
- Aag Energy Holdings (2686 HK) noted that the pre-condition for Xinjiang Xintai Natural Gas (603393 CH) privatisation offer at HK$1.85 per share has been satisfied (which was expected).
- The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.
- It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price.
Tencent Meituan Dividend – All Shares in CCASS – More Pressure Now but Will Have a Shorter Overhang
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares.
- We have spoken about the background of the deal in our earlier notes. In this note, we talk about the overnight updates.
[Meituan (3690 HK) Target Price Change]: Bracing for Douyin Impact with Limited War Chest
- Meituan reported C4Q22 total revenue 4% higher than cons. Non-IFRS net margin beat cons. by 0.4ppt due to strong cost control during lockdowns.
- Meituan has limited options against Douyin’s fast expansion of new service categories and customized offerings. The competition against Douyin will continue to pressure the in-store business in the long run.
- Maintain SELL and cut TP to HK$125. Our TP implies 3x PS, 10x PE and 1x PS for on-demand delivery, in-store, and new initiatives, respectively.
CK Hutchison Holdings: Is a Retail IPO Coming?
- In-depth presentation of retail digitalization raises expectation of retail spin-off. Asset disposals and increased DPS potential 2H catalysts
- Limited impact from trade tensions; oil tailwind
- Following 2 years of single-digit earnings growth, growth is likely to accelerate to double digit as headwinds from strong euro/GBP and weak oil prices eases and global economy continues to rebound.
Yuzhou: Strong FY Results and Robust Liquidity Profile
- Yuzhou Properties Company Limited (Yuzhou) is a property developer that focuses on residential housing in West Strait Economic Zone and Yangtze River Delta.
- The company has moved its headquarters to Shanghai from Xiamen.
- The company has been listed on the Hong Kong Stock Exchange since November 2009. As of 31 Mar 2017, market capitalization of Yuzhou stands at HKD12.4b (USD1.6b).
Parkson Retail: Positive 4Q SSS Growth, Overall SSS Growth Still Negative
- Parkson Retail Group Ltd (Parkson) is a department store operator with 19 years of operating history in China.
- With an extensive network of 50 stores in 36 cities in China under the “Parkson” brand, the Group is one of the largest store operators.
- It targets the middle- and mid-upper-end of the Chinese retail market, with most of its revenues derived from concessionaire sales (90% of total revenues), while direct sales account for the rest.
Ping An: Reassuring New Business Pickup
- Interim results beat with strong results across most business lines
- Life insurance new business value growth reversed to positive growth in 2Q and should accelerate
- Fair value trimmed to HKD98 but headwinds abating in 2H
Tencent Holdings Ltd (700 HK) – Bullish Multi-Month Outlook – Target 450+ (+20-25%)
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- Last week complemented November 2022’s bullish LT confirmation with a bullish MT confirmation, re-instating the MT uptrend after a period of correction in Feb/Mar.
- Tencent Holdings Ltd (700 HK) has likely entered the 2nd leg of a material MT uptrend. Q2 2023 target towards 451.95 (+25%).
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