In today’s briefing:
- China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won
- A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- Hyundai Motor India IPO: The Good, The Bad and The Valuation. Not for Quick Gain Seekers
- Tri Pointe Homes Inc.: Enhanced Geographic Diversification
- Costco Wholesale Corporation: Its Cost Structure & Membership Model Enabling Its Stability & Expansion! – Major Drivers
- Quiddity Leaderboard SSE50/180 Dec 24: Multiple Changes to Expectations; US$2.2bn One-Way
- Duplicate of Newell Brands: A Solid Strategic Business Unit Performance and Innovation Implementation Drives Our Optimism!! – Major Drivers
China Resources Beverage (2460 HK) IPO: Index Inclusions & Stock Connect in 2025
- China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
- Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
- Index inclusions will commence with the HSCI in March 2025 – that will also result in Stock Connect inclusion. The next index inclusion will take place in June.
HK Connect SOUTHBOUND Flows (To 14 Oct 2024); A HUGE 5td; Net Flows Strong but BABA Dominant
- SOUTHBOUND was a net buyer the last five trading days (from before GW to 14 Oct). HUGE gross flows. Decent net flows. Very big in few names (BABA included).
- The Guotai Junnan/Haitong merger pushed H-share brokers hard, but SB wasn’t buying. They bought Alibaba Group Holding (9988 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Xiaomi Corp (1810 HK).
- Things may settle down a little bit as the fiscal policy announcements are out of the way, but I expect the trend is still your friend (until it bends).
Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- Anta top line outperformed competitors, both overseas and domestic brands, in China.
- We believe all margins will be stable and EPS will rise by 41% in 2024.
- However, we believe Anta is overvalued at the current price.
FCP Capital Sends a Proposal to KT&G to Buy Korea Ginseng Corp for 1.9 Trillion Won
- On 14 October, FCP Capital sent a proposal to KT&G to purchase Korea Ginseng Corp for 1.9 trillion won.
- Although KT&G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&G.
- The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&G revealed as the intrinsic value of Korea Ginseng Corp.
A/H Premium Tracker (To 14 Oct 2024): AH Premia Drop Sharply; High Premia May Contract More
- A big “week” of 5 trading days from 30 Sep to 14 Oct, inclusive. Average AH premia dropped a lot. Liquid AH premia dropped less. Brokers are big winners.
- Average AH volatility is super high. Intracorrelation of spreads quite low. Lots of room to market-make wide spreads/high premia. High premia may continue to contract on speculation.
- Sharply differing onshore and offshore opinion regarding the nature and vibe of Chinese stimulus will lead to interesting dispersion. Identify the trend, then market make around it.
Hyundai Motor India IPO: The Good, The Bad and The Valuation. Not for Quick Gain Seekers
- Hyundai Motor India (HMIL) ‘s USD 3 billion+ IPO opens today, 15th October, at 10:00 am IST. The bidding will remain open until 4:30 pm IST on 17th October.
- Near-Term Outlook: Limited Short-Term Gain Potential. While Hyundai is likely to outperform Maruti Suzuki given the valuation discount, it may underperform the broader sector in the near term.
- Long-Term Opportunity: For investors with a longer-term horizon, Hyundai presents a relatively low-risk opportunity. Its established brand and world-class manufacturing facilities offer the potential for steady, long-term growth.
Tri Pointe Homes Inc.: Enhanced Geographic Diversification
- Tri Pointe Homes delivered a robust performance in the second quarter of 2024, showcasing an adept response to current market conditions and strategic planning.
- The company reported a substantial increase in home deliveries, up by 45%, leading to significant revenue growth.
- Home sales revenue rose to $1.1 billion, marking a 38% upsurge from the previous year, primarily driven by increased community counts and optimized cycle times.
Costco Wholesale Corporation: Its Cost Structure & Membership Model Enabling Its Stability & Expansion! – Major Drivers
- Costco Wholesale Corporation’s fourth-quarter financial performance for fiscal year 2024 highlighted a neutral set of results that reflect both commendable operational successes and ongoing challenges.
- Comparing the results with the same period last year, Costco showed an increase in net income, with the figure reaching $2.354 billion, translating to $5.29 per diluted share.
- This is a notable rise from $2.16 billion, or $4.86 per diluted share, the year before, accounting for a 9% increase.
Quiddity Leaderboard SSE50/180 Dec 24: Multiple Changes to Expectations; US$2.2bn One-Way
- SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
- While our SSE 50 expected ADDs/DELs list remains unchanged, there have been multiple changes to our SSE 180 expected ADDs/DELs list.
Duplicate of Newell Brands: A Solid Strategic Business Unit Performance and Innovation Implementation Drives Our Optimism!! – Major Drivers
- Newell Brands recently disclosed its financial results for the second quarter of 2024, rendering a complex yet instructively mixed picture of its current status and future prospects.
- The company presented some laudable improvements but also faces significant challenges that could affect its growth trajectory and investment outlook.
- On the positive side, Newell Brands reported results that exceeded their initial expectations with core sales, gross margins, operating margins, and Earnings per Share (EPS) all performing at the high end or beyond their forecasts.
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