In today’s briefing:
- HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- (Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- Shenzhen Intl (152 HK): Realisation of Asset Values
- Didi Global Q324 Results & Two Key Reasons Company May Consider A New Listing in 2025
- S.F. Holding (6936 HK) – Here’s Why Post-IPO Share Price Performance Is So “Boring”
- HK-Listed Apparel & Footwear Screener: Winners and Losers, Picks For 2025
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
- There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
- There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- HK$1.38/Share. That’s the key takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 14.13% discount to undisturbed.
- The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
- Should the SPA complete, an unconditional MGO is triggered. But the question is: why would BABA be cashing out at this price?
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
- The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
Shenzhen Intl (152 HK): Realisation of Asset Values
- The listing of Air China Cargo and progress on the transformation and upgrading of its South China Logistics Park again demonstrated Shenzhen International (152 HK)‘s asset value.
- Its 8.8% stake in Air China Cargo is now valued at HK$10.6bn, or 61% of its market capitalisation, suggesting its other assets are almost free.
- Government approval on the South China Logistics Park transformation Phase I has been obtained, implying potential land value gains to be booked.
Didi Global Q324 Results & Two Key Reasons Company May Consider A New Listing in 2025
- In Q324, Didi grew slowly, but core margin improved significantly on higher “take rate”
- Q324 liquidity position sound, but pace of 2024 investment difficult to sustain
- Two important reasons Didi could list shares in ’25, even if cash needs aren’t urgent
S.F. Holding (6936 HK) – Here’s Why Post-IPO Share Price Performance Is So “Boring”
- The Time-definite express services are actually a double-edged sword for S.F.- Although it helps S.F. establish core competitiveness, such strategy limits the Company’s market share and growth ceiling in China.
- The issue here is that S.F. has encountered growth bottlenecks, but due to its heavy asset model, the only truly suitable solution is internationalization, which however is full of uncertainties.
- S.F. is facing many challenges. The IPO final offer price of HK$34.3 is expensive, which might explain why S.F.’s share price has been a bit “boring” since its listing.
HK-Listed Apparel & Footwear Screener: Winners and Losers, Picks For 2025
- Our stock screen for textile/apparel companies listed in Hong Kong for FY24 summarizes the winners and losers.
- Yue Yuen Industrial Holdings (551 HK) / JNBY Design Ltd (3306 HK) and Stella International (1836 HK) were the three best performers with returns of over 80% YTD.
- We continue to be bullish on JNBY Design Ltd (3306 HK) / Pacific Textiles (1382 HK) and like Nameson Holdings (1982 HK) for its rich dividend yield.
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