In today’s briefing:
- Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- WuXi XDC IPO: Valuation First-Look
- Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
- Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
- WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations
- China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
- Asian Dividend Gems: Yue Yuen Industrial
- Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside
- WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market
- China Vanke (2202 HK): Short Term Trading Opportunity Post Conference Call
Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
- With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
- Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.
WuXi XDC IPO: Valuation First-Look
- WuXi XDC Cayman (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
- We previously discussed the IPO in WuXi XDC IPO: The Bull Case and WuXi XDC IPO: The Bear Case.
- In this note, we present our forecasts and take the first look at WuXi XDC’s potential valuation range.
Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
- Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan.
- In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg.
- The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.
Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
- We believe advertising revenue will grow rapidly and game revenue will accelerate.
- We also believe EPS will decrease YoY due to high “other gains” in 3Q22.
- We expect the stock price will have an upside of 58% for year end 2024.
WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations
- WuXi XDC Cayman (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
- WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
- In this note, we share our updated thoughts on valuation and look at bull/bear scenarios for WXDC’s earnings.
China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
- All major Chinese e-commerce companies set up live broadcasting channels on Bilibili at the beginning of Singles’ Day sales.
- Kuaishou chairman’s resignation will not change the business strategy, as he stepped down from CEO two years ago.
- Baidu begins to sell ChatGPT-like service for CNY49.90 per month.
Asian Dividend Gems: Yue Yuen Industrial
- Yue Yuen has a scalable business model with high dividend yield (6.4%). Its sales and net profit are expected to increase by 9.3% YoY and 55% YoY, respectively in 2024.
- The company is likely to enjoy higher sales and profits in 2024 due to improved footwear inventory destocking cycle, higher sales and profits at its subsidiary Pou Sheng.
- Yue Yuen Industrial is one of the largest footwear and athletic shoe manufacturers in the world. Its major customers include Nike, Adidas, Puma, and Reebok.
Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside
- We believe the financial recovery from 1Q24 will continue in 2Q24.
- We expect the operating margin will improve to 15% in 2Q24 versus 12% in 2Q23.
- Alibaba has an upside of 69% and the target will be HK$143 for the year end 2024. Buy.
WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market
- WuXi XDC, a leading CRDMO focused on the global ADC and bioconjugate market, filed to go public in Hong Kong and plans to raise up to $500M.
- The company is expected to IPO in November or December at the latest. Morgan Stanley, Goldman Sachs, and J.P. Morgan are the lead underwriters. The offering may attract investor interest.
- WuXi Biologics will spin off its ADC business, and WuXi XDC will raise capital through IPO to finance the construction of new facilities in Singapore and expand capacity in China.
China Vanke (2202 HK): Short Term Trading Opportunity Post Conference Call
- China Vanke (H) (2202 HK) saw a major drop in bond and stock prices recently, due to fear of default.
- Yesterday, the company held a conference call, with representatives from Shenzhen SASAC and Shenzhen Metro (major shareholder of Vanke and owned by Shenzhen SASAC) participating in the call.
- The strong support shown by Shenzhen SASAC/Shenzhen Metro represents a good short-term buying opportunity, for both Vanke stock and bonds.
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