In today’s briefing:
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 2)
- Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand
- Baidu Inc.: Generative AI & Search Transformation Driving Our Bullishness! – Major Drivers
- EQD | The Come Back Of The Hang Seng
- [Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?
- Lucror Analytics – Morning Views Asia
- Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December 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$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
- Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
- Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next.
Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
- Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.
- We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 2)
- Hong Kong market breadth stays strong despite market pullback in November. Mainland investors continue to increase exposure to HK market through Southbound Connect platform.
- Baidu (9888 HK) , Baidu (BIDU US) , the global leader in Robotaxis, was granted a license to start operating its autonomous cars in Hong Kong.
- Vitasoy Intl Holdings (345 HK) shares surged on takeover rumours after Yeo Hiap Seng (YHS SP) increased its stake to more than 12% allowing them to call a Board meeting.
Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand
- Newjf’s Yuan Xunjun and Guo Xiaohong are both lawyers. They should be more familiar with the Pre-Condition requirements. Newjf has obtained SAMR clearance and we think Newjf will fulfill Pre-Conditions.
- Bi Hua and Hong Gang’s “new initiative” based on Nov.28 announcement may not necessarily succeed, since Newjf has a lot of room for rebuttal here and its Offer is attractive.
- Greatview’s chairman and Cloudview are in discussions with financial advisers to make a counterbid.Considering that this may be a “noise”,we recommend prioritizing Newjf’s Offer before any higher Offer from Greatview.
Baidu Inc.: Generative AI & Search Transformation Driving Our Bullishness! – Major Drivers
- Baidu’s third-quarter 2024 financial performance presents a complex picture, showcasing both opportunities and challenges that shape the company’s investment thesis.
- The company reported total revenues of RMB 33.6 billion, reflecting a 3% decline year-over-year.
- However, Baidu Core’s revenue remained stable at RMB 26.5 billion.
EQD | The Come Back Of The Hang Seng
- In a previous insight we presented a forecast where the Hang Seng Index could bounce after a 2-3 weeks pullback. The index started to rally from there.
- Currently the index is up for 2 consecutive weeks and from the charts and models that we will present here, you can see that it has room to go higher.
- Right now the index has not even reach the 25% (price) resistance level, and this confirms the bullish view.
[Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?
- Meituan reported C3Q24 revenue/non-IFRS operating profit 2%/12% above consensus, thanks to rising monetization and cost reduction. C4Q24 guidance, however, missed expectation due to low ASP mix and expansion;
- We see the following as positive catalysts: (1) consumption stimulus in 2025 that will likely include service coupons, (2) market share gains, (3) overseas expansion in Mid-East bearing quick fruits.
- We therefore opt to keep Meituan on our TOP BUY list and maintain TP at HK$165.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan
- In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.
- Equities rallied, with the S&P 500 rising 0.6% to a new record high of 6,032.
Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
- Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
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