In today’s briefing:
- Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
- HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- Greatview Aseptic Packaging (468.HK) Update – Newjf’s Offer Should Be Prioritized
- China Consumption Weekly (6 Jan 2025): Alibaba, BYD, Tencent Music, JD.com, Mixue
- Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades
- Bloks Group IPO – Outgrowing Its Peers, Decent Valuation
- Water Oasis (1161 HK): Discouraging Dividend, Value Intact
- MINISO (9896 HK): From Blind Boxes to ACG Hits—Growth Magic Continues in 2025!
Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), ESR Group (1821 HK), Goldlion Holdings (533 HK).
- Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
- There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
- Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.
Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
- Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Get Nice Financial Group Ltd (1469 HK), Greatview Aseptic Packaging (468 HK), Macromill, Inc (3978 JP), Avjennings Ltd (AVJ AU).
HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- SOUTHBOUND gross trading activity was quite light the last two weeks of the year. Non-SB trading of HK was even lighter. Net buying was strong.
- Net buying on tech was VERY big but not on Alibaba Group Holding (BABA US) (small positive) or Meituan (3690 HK) (largest outflow).
- Financials and High Div SOEs are back on the menu. SOUTHBOUND has been a Very Big Percentage of traded volume.
Greatview Aseptic Packaging (468.HK) Update – Newjf’s Offer Should Be Prioritized
- All Pre-Conditions of Newjf’s Offer have been satisfied. Based on Offer Document, the latest date for posting of the Response Document is Jan.7, 2025. First Closing Date is Jan.21, 2025.
- Newjf will make every effort to complete the acquisition and regain the control of international business so as to protect shareholders’ interests.So, the logic behind the deal is very solid.
- Mengniu’s attitude could be positive. A higher management offer seems more out of reach because the management lacks sincerity. We advise investors not to walk away from Newjf’s Offer easily.
China Consumption Weekly (6 Jan 2025): Alibaba, BYD, Tencent Music, JD.com, Mixue
- Alibaba’s Freshippo remained profitable and double-digit growth in the past nine months.
- Brazil labor authorities are investigating BYD’s construction site for “slave-like condition”.
- Tencent Music will compensate MCSC (Music Copyright Society of China) for the unauthorized usage of music copy rights.
Hang Seng (HSI Index) – This Butterfly Gives You Wings: Popular Option Strategies and Top Trades
- This Insight analyzes Hang Seng Index (HSI INDEX) tailor-made option strategies over the last five trading days, providing strategy analysis, trends, highlights, and volatility context.
- Despite the holidays and generally low volume, last week saw some interesting strategies traded.
- The highest premium earned was for a January ’25 Butterfly. The largest trade was a January ’25 Bull Call Spread, reflecting the popularity of long volatility strategies and spreads.
Bloks Group IPO – Outgrowing Its Peers, Decent Valuation
- Bloks Group (1850960D CH) is looking to raise US$187m in its Hong Kong IPO.
- Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
- In our previous notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison and discuss our thoughts on valuation.
Water Oasis (1161 HK): Discouraging Dividend, Value Intact
- Water Oasis (1161 HK) skimped on its final dividend and paid only 2 HK cents (compared to our expectation of ~5 HK cents), sending its share prices down 14% post results.
- Insider buying after the results helped steady the shares, but we see that buying after the declaration of dividends as sending a wrong signal to some minority shareholders.
- There is immense value, trading at 4.4x PE and 0.3x EV-EBITDA, with 485 mn HKD net cash (~90% of the market cap), but we need increased dividends to crystallize it.
MINISO (9896 HK): From Blind Boxes to ACG Hits—Growth Magic Continues in 2025!
- MINISO Group Holding (9896 HK) has surged 34% since announcing strong 9M24 results, backed by robust revenue growth, in end November, 2024.
- With strong growth prospects, the stock could scale further in 2025, driven by rapid store expansion, blind box toys, ACG goods, and collaborations with top IPs like Harry Potter.
- MINISO’s evolution from a value retailer into a lifestyle brand with trademarked IP goods, innovative blind boxes, and creative retail formats enhances its competitive edge and drives growth.
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