In today’s briefing:
- Henlius (2696 HK): This Should Trade Tighter. Get Involved
- Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows
- Quiddity Leaderboard STAR 50/100 Mar25: Multiple Changes, Large Flows; High-Impact Trade Idea
- CPMC (906 HK): Tendering Now Open
- Bloks Group IPO: Just a Traditional Toy Company in Red Ocean Market
- BOC Aviation (2588 HK): Lease Rate Surge to Boost Earnings; Undervalued Stock with 4.5% Div Yield
- Temu Suffers First Big Setback as Vietnam Suspends Its Operations
- BUY/SELL/HOLD: Hong Kong Stock Updates (December 13)
- Huawei to Spin off Smart Car Business Unit to Yinwang by Jan. 1
- UBTech Robotics US$1.9bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity
Henlius (2696 HK): This Should Trade Tighter. Get Involved
- After the China Traditional Chinese Medicine (570 HK) fiasco back in October, Hong Kong M&As have received some welcome Xmas cheer of late.
- Small-Cap CM Hi-Tech (2115 HK) secured reg approvals in record time. Then CPMC (906 HK)‘s pre-cons were satisfied on 13th December. Now Shanghai Henlius (2696 HK)‘s pre-cons are also fulfilled.
- Henlius’ spread narrowed after securing NDRC approval on the 22nd Nov; and again after fulfilling pre-cons this week. A 3.1% gross spread is okay. This is done. Get involved.
Quiddity Leaderboard CSI 300/500 Jun 25: ~US$5.9bn Collective One-Way Flows
- CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
- In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
- Currently, we see 6 ADDs/DELs for the CSI 300 index and 50 ADDs/DELs for the CSI 500 index.
Quiddity Leaderboard STAR 50/100 Mar25: Multiple Changes, Large Flows; High-Impact Trade Idea
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
- In this insight, we look at the potential ADDs/DELs for the STAR50/STAR100 indices for the March 2025 index rebal event and suggest a high impact trade idea.
CPMC (906 HK): Tendering Now Open
- At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
- The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
- I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.
Bloks Group IPO: Just a Traditional Toy Company in Red Ocean Market
- Bloks Group, founded in 2014, is China’s top assembly character toy company, targetting primiary school students.
- Bloks faces competition from multiple domestic competitors in a slow growing market. The company’s aggressive market expanison in the past 2 years has come at a significant cost .
- The IPO valuation may be high, considering the industry’s low barriers to entry and the company’s unstainable growth.
BOC Aviation (2588 HK): Lease Rate Surge to Boost Earnings; Undervalued Stock with 4.5% Div Yield
- Global aviation supply continues to suffer from various supply chain disruptions, driving up lease rates and aircraft values and benefiting aircraft lessors, such as BOC Aviation (BOCA)
- Although BOCA’s interim results were disappointing due to delayed aircraft deliveries, I expect its momentum to recover in 2025, driven by incoming aircraft and lower interest costs.
- Stock is trading at 0.9x PB, nearing its historical trough of 0.8x, and offering a decent 5% dividend yield.
Temu Suffers First Big Setback as Vietnam Suspends Its Operations
- Temu, the Chinese cross-border e-commerce platform owned by PDD Holdings Inc. has suffered its first major setback since launching in 2022 after Vietnam banned its operations citing regulatory non-compliance only two months after it entered the market.
- Temu was ordered by the Ministry of Industry and Trade to stop using the Vietnamese language on its website and app, to notify customers that its e-commerce registration was under review, and to halt all marketing activities in the country, according to a report by Vietnam News Agency on Dec.
- The suspension is Temu’s first since expanding into more than 80 countries around the world.
BUY/SELL/HOLD: Hong Kong Stock Updates (December 13)
- The H share market continues to be the top performing market in Asia in 2024. The HSCEI has outperformed all Asian markets on a USD basis.
- China Longyuan Power (916 HK) was rated a BUY at JP Morgan with the company hosting a roadshow to discuss its future growth strategy.
- China Resources Beverage (2460 HK) was initiated as a BUY at CMB International as the company rapidly expands into the ready-to-drink category with teas and sports drinks.
Huawei to Spin off Smart Car Business Unit to Yinwang by Jan. 1
- The tech giant Huawei Technologies Co. Ltd is to complete the spinoff of its intelligent automotive business unit to become an independent company, Shenzhen Yinwang Intelligent Technology Co.
Huawei’s aim is to solidify its position as a leading smart vehicle supplier amid industry challenges and expanding partnerships.
Founded in 2019, Huawei’s car business unit originally said it would not make cars itself, but focus on supplying automotive components, particularly autonomous driving systems, through its Huawei Inside (HI) model.
UBTech Robotics US$1.9bn Lockup Expiry – Needs Some Selling to Improve Its Liquidity
- UBTech Robotics (9880 HK) was listed in Hong Kong on 29th Dec 2023 after it raised US$130m. Its one-year lockup will expire on 28th Dec 2024.
- UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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