In today’s briefing:
- HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- Keep IPO Valuation Analysis: The Minimum Offer Price Looks Attractive. Trading Debut: July 12, 2023
- CSI300 Index Rebalance Preview: Early Look at Potential Changes in December
- Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder
- J&T Global Express Pre-IPO, Part 1: Chinese Express Operation | ‘Haven’t We Met Somewhere Before?’
- Bosideng (3998 HK): Outlook Stays Promising
HSCI Index Rebalance Preview and Stock Connect: The Final List for September
- There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
- We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
- There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.
Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
- 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 – 111 Inc (YI US), United Malt Group Ltd (UMG AU), Chindata Group (CD US), ENM Holdings (128 HK), Tesserent Ltd (TNT AU), Poly Culture.
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Musgrave Minerals (MGV AU), Metro Pacific Investments Co (MPI PM), Kenedix Residential Investment (3278 JP).
Keep IPO Valuation Analysis: The Minimum Offer Price Looks Attractive. Trading Debut: July 12, 2023
- Keep Inc., the largest online fitness platform in China, set terms for HK IPO and plans to raise ~HK$667M at the high end of the range at HK$61.46/share.
- CICC is leading the offering and Keep Inc (KEEP HK) will trade under the stock code “3650”. The company offers ~10.8M shares at a price range of HK$28.92-HK$61.46.
- The low end of the range implies an IPO valuation of HK$15B, which looks attractive and is equal to the last round valuation of ~$2B that was led by SoftBank.
CSI300 Index Rebalance Preview: Early Look at Potential Changes in December
- Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
- We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
- The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.
Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stock mentioned in this regular insight is Red Star Macalline Group Corp (1528 HK).
J&T Global Express Pre-IPO, Part 1: Chinese Express Operation | ‘Haven’t We Met Somewhere Before?’
- In this insight we look at the development of J&T’s China business over the past few years, including J&T’s purchase of Best Inc’s express operation in late 2021
- We also compare J&T’s Chinese operation to five listed Chinese express companies in terms of scale, market position, financial performance, and relationships with e-comm platforms
- Finally, we present a framework for the valuation of J&T’s China business, and offer a list of questions we would ask management as the company prepares for its IPO
Bosideng (3998 HK): Outlook Stays Promising
- While having a slow FY23, Bosideng International Holdings (3998 HK) is well-positioned to capture the rebound in down apparel sales growth as pent-up demand is released.
- We also expect a recovery in margin, further improvement in channel efficiency and operating leverage from cost control will add to earnings momentum.
- Management expects revenue growth will at least sustain at the rate in the last 5 years. The stock’s valuations are cheap when compared with growth outlook and global peers.
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