In today’s briefing:
- Asian Equities: Valuation Mean Reversion – The Winners and Losers
- CK Hutch (1 HK): Still Trading Cheap
- BYD (1211 HK) 2024 Result Preview: Expanding in Domestic Market and 19% Upside Left
- CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions
- AIA Group (1299 HK) Results Day: Expected Price Swings and Dividend Boost
- HSI Outpaces SPX — Structural Break or Head Fake? Strategies for Hedging
- [Baidu, Inc. (BIDU US, SELL, TP US$92.5) TP Change]: What Can Change BIDU from SELL to a BUY?
- Silergy (6147.TT): 1Q25 Outlook Sales: Down QoQ but up QoQ. 2025 Outlook Sales: Up 20-30% YoY.
- Asia Real Estate Tracker (13-Mar-2025): Mitsui AM buys 50% of Tokyo Data Centre for $120M.
- [Kanzhun (BZ US, BUY, TP US$20) TP Change]: Catalysts from Robust Post CNY Hiring and AI Initiative
Asian Equities: Valuation Mean Reversion – The Winners and Losers
- Valuations across Asia are mean reverting – expensive markets derating and the cheap ones rerating. We think this is likely to continue somewhat longer.
- We think HK/China could rerate more; India and Taiwan could derate slightly further. India looks interesting. Valuation range has structurally shifted upwards. But another 5-10% relative valuation correction is warranted.
- Principal stock choices in HK/China, Korea and India pertain to themes of domestic consumption, AI resilience and unloved sectors. Some of the companies have mitigating strategies for the tariff war.
CK Hutch (1 HK): Still Trading Cheap
- To avoid a political landmine, on the 4th March CK Hutchison Holdings (1 HK) announced a deal with Blackrock to offload its entire port ops, including the contentious Panama ports.
- It’s an astute deal selling to a buyer, ostensibly backed by the Trump administration, at the top of the market, knowing global trade could fall under a new tariff regime.
- The risk to the transaction is one of timing. US/Panama approvals are a shoo-in. But it’s a complex deal, which will take time to work through the system.
BYD (1211 HK) 2024 Result Preview: Expanding in Domestic Market and 19% Upside Left
- BYD will release its 2025 annual results on March 24.
- The stock price has risen by 38% since our last buy rating on January 6.
- However, we believe there is still an upside of 19% for the next twelve months.
CSI 1000 Index Rebalance Preview: US$3.7bn Trade; Adds Outperform as ETFs Face Redemptions
- With over 85% of the review period now complete, we forecast 100 changes (the maximum permitted) for the CSI 1000 Index at the close on 13 June.
- We estimate a one-way turnover of 11% at the rebalance resulting in a round-trip trade of CNY26.9bn (US$3.7bn). The Industrials sector could gain the most index spots.
- The forecast adds have outperformed the forecast deletes this calendar year. Part of that can be attributed to the outflows from ETFs tracking the CSI1000 Index.
AIA Group (1299 HK) Results Day: Expected Price Swings and Dividend Boost
- AIA Group (1299 HK) is set to announce its 2024 Annual Results on 14 March 2025, 09:00 am HK Time.
- AIA Group (1299 HK) has historically experienced volatile trading during results days, with a median move of +/- 4.2%, considerably higher than typical daily movements.
- AIA Group Ltd (1299 HK) will announce its final dividend. With a history of increases, a divided raise can be expected.
HSI Outpaces SPX — Structural Break or Head Fake? Strategies for Hedging
- HSI has surged past SPX, but past instances of strong outperformance have often preceded reversals. We examine key historical trends.
- The YTD divergence between HSI and SPX calls into question whether this is another temporary rally or the start of a new trend.
- We highlight some key hedging strategies to manage risk in this evolving market dynamic.
[Baidu, Inc. (BIDU US, SELL, TP US$92.5) TP Change]: What Can Change BIDU from SELL to a BUY?
- We conducted a drill exercise in which BIDU’s search revenue will shrink to 1/3 of its size while its AI cloud
- Our key concern is margin compression as search’s high margin as a result of browser infrastructure and monopolistic status aren’t repeatable in AI;
- We raise the TP from US$80.0 to US$92.5 and maintain SELL.
Silergy (6147.TT): 1Q25 Outlook Sales: Down QoQ but up QoQ. 2025 Outlook Sales: Up 20-30% YoY.
- 2025 outlook Sales: up 20-30% YoY. More certain on China demand recovery. Gradually enters Mass-Production (MP) for Gen 3/4 products. Main growth drivers are consumer and Electric Vehicle.
- Silergy targets for auto sales contributed to reach 15% in 2025.
- Will witness a rebound in 2Q25 for computing and Consumer and auto will also grow QoQ given resumption for production in China.
Asia Real Estate Tracker (13-Mar-2025): Mitsui AM buys 50% of Tokyo Data Centre for $120M.
- Mitsui AM invests $120M in acquiring 50% stake in Greater Tokyo Data Centre, expanding their presence in the region.
- Star Entertainment secures $590M refinancing from Salter Brothers in Australia, providing capital for future growth and development.
- Panel discussion highlights how Australia’s evolving society is shifting focus of Build-to-Rent sector from macro to micro level.
[Kanzhun (BZ US, BUY, TP US$20) TP Change]: Catalysts from Robust Post CNY Hiring and AI Initiative
- Kanzhun Limited (BZ) reported 4Q24 revenue in-line with consensus, and non-GAAP net income beat by 4.0%, thanks to efficient user acquisition,
- Although t`he cash billing collected is weak in 4Q24, post CNY job posting number is a bright spot, leading us to tentatively raise 2025 topline by 2.5%;
- We rise the TP to US$20 and maintain BUY rating to factor in the early trend in hiring recovery and AI initiatives.
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