In today’s briefing:
- SciClone Pharma (6600 HK): Scheme Vote on 19 June
- EQD | Hang Seng Down: How Low Can the Pullback Go?
- [PDD Holdings (PDD US,BUY,TP US$172) TP Change]:Squeezing Supplier Base for Its Own Benefit,Globally
- [Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI
SciClone Pharma (6600 HK): Scheme Vote on 19 June
- Sciclone Pharmaceuticals (6600 HK)‘s scheme document is out, and the court meeting is scheduled for 19 June. The IFA considers the HK$18.80 per share offer fair and reasonable.
- The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- This is a done deal. At the last close and for the 12 July payment, the gross and annualised spread is 2.2% and 17.3%, respectively.
EQD | Hang Seng Down: How Low Can the Pullback Go?
- The Hang Seng Index has been rallying for 3 weeks but then last week the rise was halted and the index gave up a good chunk of the gains.
- It seems the index has become quite volatile but this week it could go up again, or otherwise next week, the reversal is imminent given its oversold condition.
- It’s hard to predict if the rally can continue after the bounce, the index seems a bit long-term overbought, albeit short-term oversold. A contradiction, but that is the situation now.
[PDD Holdings (PDD US,BUY,TP US$172) TP Change]:Squeezing Supplier Base for Its Own Benefit,Globally
- PDD reported C1Q24 top-line, non-GAAP EBIT, and non-GAAP net income 1.3%, 67.0%, and 80.0% vs. our estimate, and 13.9%, 82.0%, and 94.7% vs. consensus, respectively;
- Temu unit economics improvement drove the 1Q beat. Per order outlay on marketing and fulfilment declined 20-25% qoq, we estimate;
- PDD continues to effectively squeeze merchants for its benefit,while also benefiting from weak consumer sentiment in China and overseas. We maintain BUY,and raise TP to US$172, implying 12.3x CY24 PE.
[Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI
- Kuaishou reported C1Q24 revenue, IFRS OP, and IFRS Net income inline, 58%, and 78% vs. our estimates; and inline, 67% and 86% vs. consensus
- Company suggested contribution of Generative AI (GAI) to the growth of the advertising business to be substantial;
- We reiterate our BUY rating and raised target price to HK$83, implying 17x PE in 2025.
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