In today’s briefing:
- Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
- Kingsoft Cloud HK Listing: Significant Upside in the Medium Term
- Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- Jinxin Fertility Co Ltd (1951.HK) – Hard to Achieve Performance Reversal in 2023
Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
- The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
- Shareholders who tender will be paid within 7 business days.
- An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.
Kingsoft Cloud HK Listing: Significant Upside in the Medium Term
- Kingsoft Cloud (KC US) shares will begin trading on the Main Board of the HKEx on Friday, 30th December by way of an introduction.
- The company’s competitive pricing strategy to onboard customers has impacted its profitability, however, KC has begun to shift focus on profitability by raising prices in the medium term.
- Raising prices in the medium term will likely support KC’s profitability and we have valued the company using potential price hikes to non-key customers.
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang
- Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
- The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
- Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.
Jinxin Fertility Co Ltd (1951.HK) – Hard to Achieve Performance Reversal in 2023
- We have seen some positive policies released in China to support assisted reproduction. However, domestic policy support is more of a short-term catalyst and would not fundamentally change Jinxin’s prospects.
- The number of assisted reproductive centers in China is close to supply-demand equilibrium. It’s hard to support Jinxin’s valuation expansion by relying on China market. The breakthrough point is internationalization.
- Jinxin’s 2023 performance wouldn’t rebound largely. Investors could do short-term trade based on positive news/policy related to ARS in China.There’s no signal to support the complete reversal of share price.
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