In today’s briefing:
- HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
- L’Occitane (973 HK): Sol De Janeiro Growth Taking Off
- J&T Global Express IPO Trading – Tepid Demand Despite the Team Effort
- WuXi XDC Pre-IPO – Thoughts on Valuation – While TAM Is Uncertain, Sales and PAT Are Set to Double
- EQD | Hang Seng Index WEEKLY Heavily Oversold: It Can Bounce in 2 Weeks
- Oriental Watch: Gone Ex-Dividend, Higher Yield, But Sales Softening in The Short-Term
- GSK Inks Eye-Popping $2B-Plus Pact for Hansoh’s ADC – Is The “New Story” About to Begin?
HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
- There were only 14 new listing on the Main Board of the HKEX (388 HK) in the third quarter. Half of the listings were in the last week of September.
- Of those stocks, only Tuhu Car (9690 HK) and Keep (3650 HK) have a chance of being added to the HSCI in December and then into Southbound Stock Connect.
- Keep Inc (3650 HK) could be added to Stock Connect in early December while Tuhu Car (9690 HK) will have to wait till April for inclusion to the link.
L’Occitane (973 HK): Sol De Janeiro Growth Taking Off
- L’Occitane (973 HK) reported 2QFY24 operational update last night. Sales grew 17% yoy on reported currency, and up 25% yoy on constant currency.
- The bright spot of the release is the growth of Sol de Janeiro, the Brazilian-inspired premium body care brand, which grew 202% yoy in constant currency in the quarter.
- Sol de Janeiro has the highest EBIT margin among the 3 major brands of the company, at 24.6% in FY23, suggesting highly profitable growth.
J&T Global Express IPO Trading – Tepid Demand Despite the Team Effort
- J&T Global Express (1519 HK), a global logistics service provider, raised around US$500m in its Hong Kong IPO.
- As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
- We have looked at the company’s past performance and valuations in our previous notes. In this note, we talk about the trading dynamics.
WuXi XDC Pre-IPO – Thoughts on Valuation – While TAM Is Uncertain, Sales and PAT Are Set to Double
- WuXi XDC Cayman Inc (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 our previous notes we looked at the company’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.
EQD | Hang Seng Index WEEKLY Heavily Oversold: It Can Bounce in 2 Weeks
- The Hang Seng Index closed last week down at 17172.13 (CC=-1), on Wednesday was trading below the Q3 WEEKLY support, very OVERSOLD from a price perspective.
- When this pattern is encountered, usually the index bounces no later than CC=-3, i.e. after this week or the week after the end of next week.
- The next support area to go LONG is 16534 and the index got quite close to it intraday, at the start of this week: the low was 16879.
Oriental Watch: Gone Ex-Dividend, Higher Yield, But Sales Softening in The Short-Term
- Oriental Watch (398 HK) went ex-dividend on the 4th of October. The stock gapped down more than what it paid out and now trades at 6x trailing PE.
- Cash at 1.1 bn HKD is greater than 50% of market capitalization, with a high trailing dividend yield of 16.2% and a rich history of paying chunky dividends.
- We monitor the sales environment for HK/China, which shows a reasonably good pick-up in HK but lackluster for China.
GSK Inks Eye-Popping $2B-Plus Pact for Hansoh’s ADC – Is The “New Story” About to Begin?
- The early-stage clinical data of Hansoh’s B7-H4 ADC showed good potential, thus attracting GSK’s attention. This would allow GSK to re-enhance the layout of ADC pipelines after its previous setbacks.
- However, if future clinical data fail to meet expectation, GSK could return the product to Hansoh. After all, US$85 million upfront is more likely to test the waters for GSK.
- Hansoh is already one step ahead of Hengrui in terms of internationalization. This short-term catalyst would no doubt help lift share prices, but the logic behind the rebound is shaky.
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