In today’s briefing:
- HSCEI Index Rebalance: PICC P&C (2328 HK) Replaces Longfor (960 HK)
- [PDD Holdings (PDD US, BUY, TP US$146) TP Change]: C3Q24: Painful Reversal of Its Merchant Squeeze
- HSCI Index Rebalance: Midea (300 HK) And Black Sesame (2533 HK) Added
- Weekly Deals Digest (24 Nov) – SF Holding, FineToday, KEPCO, Seven & I, Kadokawa, HKBN, Arcadium
- Tuya Inc – Growth Trajectory to Accelerate Following 13% Stake Purchase by 65 Equity Partners
- [KE Holdings Inc. (BEKE US, BUY, TP US$25) TP Change]: C3Q24 Review: C4Q24 Rebound but What’s Next?
- Monthly Container Shipping Tracker: Price Momentum Softens | CMP-ZIM L/S Pair Idea (November 2024)
HSCEI Index Rebalance: PICC P&C (2328 HK) Replaces Longfor (960 HK)
- PICC Property & Casualty H (2328 HK) will replace Longfor Properties (960 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 6 December.
- Estimated one-way turnover is 2.68% resulting in a round-trip trade of HK$2.84bn (US$365m). The final capping will use the close of trading on 3 December.
- There could be a move higher in PICC Property & Casualty over the next few days while any selling in Longfor Properties will be a covering opportunity for the shorts.
[PDD Holdings (PDD US, BUY, TP US$146) TP Change]: C3Q24: Painful Reversal of Its Merchant Squeeze
- PDD reported C3Q24 top line, non-GAAP EBIT and non-GAAP net income (2.6%), (12.4%) and (6.3%) vs. cons., and (3.4%)
- PDD is easing its appeasement of China-platform merchants, positive for profitability,but its transition to the semi-consignment model will likely continue as it tries to improve merchandise selection and logistics quality
- We reiterate BUY as PDD is undervalued at 8.1x CY2025 P/E, but we cut its TP to US$ 146 to reflect slower growth amid increasing overseas investment.
HSCI Index Rebalance: Midea (300 HK) And Black Sesame (2533 HK) Added
- Midea Group (300 HK) and Black Sesame International Holding (2533 HK) will be added to the Hang Seng Composite Index (HSCI) after the close on 6 December.
- Midea Group (300 HK) is already in Southbound Stock Connect while Black Sesame International Holding (2533 HK) will be added from the open on 9 December.
- There is a huge lock-up expiry for Black Sesame International Holding (2533 HK) in February while the lock-up for Midea Group (300 HK) cornerstone investors ends in March.
Weekly Deals Digest (24 Nov) – SF Holding, FineToday, KEPCO, Seven & I, Kadokawa, HKBN, Arcadium
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: S.F. Holding (6936 HK) H Share listing,FineToday Holdings Co Ltd (289A JP) IPO, Kansai Electric Power (9503 JP)‘s US$3.5 billion placement.
- Event-Driven developments: Seven & I Holdings (3382 JP), Kadokawa Dwango (9468 JP), Integrated Design & Engineering Holdings (9161 JP), HKBN Ltd (1310 HK), Arcadium Lithium (LTM AU).
Tuya Inc – Growth Trajectory to Accelerate Following 13% Stake Purchase by 65 Equity Partners
- Temasek-Backed 65 Equity Partners bought 13% stake in Tuya, implying a total investment of US$100 million (or S$134M).
- The fund’s mandate is to support high-growth, mid-cap companies seeking a listing on the Singapore Exchange (SGX).
- The listing will benefit Tuya by providing easy access to capital. Tuya will be able to use stock as a currency to fund its expansion plans in Southeast Asia.
[KE Holdings Inc. (BEKE US, BUY, TP US$25) TP Change]: C3Q24 Review: C4Q24 Rebound but What’s Next?
- Beike (BEKE) reported C3Q24 revenue in-line with our estimate and consensus but non-GAAP operating profit 26%/25% below, mainly due to higher commission rebate and agent salaries;
- Strong rebound in home transaction volumes in October and November, led to our C4Q24 revenue 16% above consensus. But the rebound needs more stimulus to sustain;
- We maintain the stock as BUY and raise TP to US$25 to reflect the near term rebound and steady market share gains.
Monthly Container Shipping Tracker: Price Momentum Softens | CMP-ZIM L/S Pair Idea (November 2024)
- Price momentum softened dramatically in October, mirroring steep declines in H221, FY22
- We believe price momentum, rather than earnings, drives medium-term share performance
- Reaction to ZIM’s stellar Q324 results & guidance raise suggests more downside ahead
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