In today’s briefing:
- SF Holding HKEx Listing: Peer Comparison and Valuation
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)
- Tuya: Improving Sales Growth and Profit Margins Help to Clench Investment by 65 Equity Partners
- PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- [Xiaomi Inc. (1810 HK, BUY, TP HK$33) Target Price Change]: Good Result, and It Will Only Get Better
- [Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- Saint Bella Pre-IPO: Rapid Growth but Facing Birth-Rate Headwinds
- Pinduoduo: Behind Its Efficiency Edge
- EQD | Hang Seng (HSI) – Analysis of Option Strategies Recently Traded on HKEX
- Lucror Analytics – Morning Views Asia
SF Holding HKEx Listing: Peer Comparison and Valuation
- Chinese logistics service provider SF Holding has filed for a listing on HKEx and seeks to raise HK$6.2bn (US$795m) through the issuance of 170m shares (3.4% of outstanding shares).
- The listing is priced at HK$32.3-36.3 per share, as expected at a 20-29% discount to the last closed price of SF Holding’s A-Shares on 18th November.
- Our valuation analysis suggests that SF Holding’s HK offering is attractive at the lower end of the indicative IPO price range.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (November 21)
- Hong Kong is again trading well below its historical multiple valuation levels after the October/November correction. Mainland investors bought a record amount the day after Trump’s win.
- Kingsoft Corp (3888 HK) reported consensus beating results with its online game segment surging. The company is benefiting from AI upgrades in its office SAAS business.
- Precision Tsugami China (1651 HK) posted blockbuster earnings for its 1H25 as the machine tool sector rebounds on the back of factories upgrading to intelligent manufacturing.
Tuya: Improving Sales Growth and Profit Margins Help to Clench Investment by 65 Equity Partners
- On 18 November, it was announced that 65 Equity Partners (backed by Temasek) will invest US$100 million (S$134 million) for a 13% stake in Tuya Inc (TUYA US).
- Net cash as a percentage of market cap is currently at 92%. Tuya’s sales growth and improvement in operating margin in 1Q-3Q 2024 have also been impressive this year.
- Comps are trading at average EV/EBITDA of 13.7x in 2025 versus 2.3x for for Tuya. If Tuya continues its turnaround, its valuation gap versus its peers could decrease further.
PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- In 3Q24, PDD released strong revenue growth, but a flat margin.
- We believe, in 2025, PDD will continue to focus on growth rather than profit.
- We conclude an upside of 43% and a price target of US$167 for 2025. Buy.
[Xiaomi Inc. (1810 HK, BUY, TP HK$33) Target Price Change]: Good Result, and It Will Only Get Better
- Xiaomi reported CY3Q24 revenue, non-IFRS EBIT and non-IFRS net income 4.7%, 7.8%, and 16.6% vs. consensus.
- C4Q should be even stronger, as (1) appliance subsidy drive IoT revenue and margin improvement, (2) SU7 production output ~doubles
- We reiterate Xiaomi as our TOP BUY idea and raise Xiaomi’s TP to HK$ 33 to reflect the improved profit outlook. Our TP implies 26.6x CY25 P/E.
[Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- TCOM reported C3Q24 revenue 1.4%/1.6% higher than our est./cons., non-GAAP operating income is 12.5%/5.4% higher than our est./cons., mainly due to strong domestic sales and efficient cost control.
- We expect revenue growth to accelerate in 4Q24 and 2025,backed by domestic travel recovery and steady overseas expansion.AI powered cost saving bringing extra leverage in margin is an additional positive.
- We keep the stock as BUY rating and raise TP to US$74/ADS.
Saint Bella Pre-IPO: Rapid Growth but Facing Birth-Rate Headwinds
- Saint Bella (SAINT HK) is looking to raise up to US$200m in its upcoming Hong Kong IPO.
- It operates the second largest and fastest growing postpartum care and recovery service in China, as per Frost & Sullivan. It operates an extensive network of 59 premium postpartum centers.
- In this note, we look at the firm’s past performance.
Pinduoduo: Behind Its Efficiency Edge
- We compared similar growth stage of Alibaba to Pinduoduo, when GMV of both platforms increase from RMB1 trillion to RMB4 trillion, to facilitate better understanding of efficiency edge of Pinduoduo.
- Contrary to consensus, Pinduoduo didn’t do better than Alibaba on OPEX (advertising expenditure in particular), but it did extract much greater value from the ecosystem via significantly higher take-rate.
- The findings highlight how Pinduoduo aggregate user traffic at surprisingly high cost to beef up merchant competition in terms of cost optimization and user acquisition, with Pinduoduo reaping greatest value.
EQD | Hang Seng (HSI) – Analysis of Option Strategies Recently Traded on HKEX
- Hang Seng Index (HSI INDEX) implied volatility fell across the term structure and skew. The skew displays a smile favoring specific option strategies.
- The most traded HKEX traded tailor-made combinations are Call and Put Spreads. Straddles, Strangles and Butterflies have become less popular most recently.
- While three quarters of all strategies take a long volatility position, there is a balance in bullish, bearish, and market-neutral strategies.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke, Gajah Tunggal, ReNew Energy, Adani Green Energy, Bharti Airtel, UPL Limited
- Treasuries fell yesterday, with yields up 1-3 bps across the curve following a soft auction of 20Y notes.
- The yield on the 2Y UST rose 3 bps to 4.32%, while that on the 10Y UST was up 1 bp at 4.41%.
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