In today’s briefing:
- Weiqiao Textile (2698 HK): Pre-Conditional Privatisation Offer at HK$3.50
- A/H Premium Tracker (To 1 Dec 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold
- Fenbi (2469 HK): Beneficiary Of A Weak Job Market In China
- Weiqiao Textile (2698 HK)’s Pre-Conditional Merger By Absorption
- HK Connect SOUTHBOUND Flows (To 1 Dec 23); Meituan Dip-Buyings Leads Inflows; CNOOC Vs 941 on SOEs
- Starting to Glitter (Luk Fook Holdings 590.HK)
- China Consumption Weekly (4 Dec 2023): PDD, Alibaba, AliHealth, Great Wall Motor, ByteDance
- Seven & I Ventures Down Under with 7-Eleven Australia Acquisition
- NPN X PRX Discount Update + Key Takeaways H1 FY24 Results
- REPT BATTERO Energy Pre-IPO – PHIP Updates – Leaning on ESS
Weiqiao Textile (2698 HK): Pre-Conditional Privatisation Offer at HK$3.50
- Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation offer from Weiqiao Chuangye at HK$3.50 per H Share, a 104.7% premium to the undisturbed price.
- The pre-condition of regulatory approvals from the NDRC, MOC and SAFE. The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection).
- The offer price is final. Despite the premium, the offer is struck materially below net cash. Nevertheless, the irrevocable from the largest H Shareholder should help the offer get up.
A/H Premium Tracker (To 1 Dec 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold
- The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- Hs with H/A pairs under-perform their As on average by 220+bp. Liquid HK H/A Pairs saw H/As -244bp. H/A Pair intracorrelation is up and A premia continue to trend better.
- SOUTHBOUND and NORTHBOUND were net buys overall but Hs had a VERY BAD WEEK vs their A-Shares where pairs were concerned.
Fenbi (2469 HK): Beneficiary Of A Weak Job Market In China
- According to China state media reports, a record number of more than 3 million people attended China’s annual civil service exam last weekend, up from 2.6 million last year.
- A civil servant job is viewed in China as highly stable. In the current weak macro environment where youth unemployment is high, job security is increasingly vital.
- The company now trades at 18x forward earnings, with around 30% expected earnings growth.
Weiqiao Textile (2698 HK)’s Pre-Conditional Merger By Absorption
- After shares were suspended on the 27 November, Weiqiao Textile Co (2698 HK) has now announced a pre-conditional privatisation at HK$3.50 per H-share.
- This Offer, from its parent, is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
- The Offer Price is a premium to last close is a hefty 104.68%. and around a six-year high. This is done.
HK Connect SOUTHBOUND Flows (To 1 Dec 23); Meituan Dip-Buyings Leads Inflows; CNOOC Vs 941 on SOEs
- SOUTHBOUND flows the last several weeks clearly indicated a momentum move. The top net sells were all down. The top buys were all up. This week saw reversion.
- SOUTHBOUND saw net buys of HK$3.5bn this week, breaking a nascent sell streak. Meituan dip-buying Wednesday to Friday was worth the entire net buy.
- High-Div SOEs remain mixed. CNOOC (883) saw decent net buying, and China Mobile saw decent net selling. Again.
Starting to Glitter (Luk Fook Holdings 590.HK)
- Stock price starting to recognise the increase in Chinese demand for Gold.
- Helped by a bottoming and a revival in Hong Kong retail sales and tourist arrivals.
- SPDR Gold Shares (GLD US) close to a new all time high
China Consumption Weekly (4 Dec 2023): PDD, Alibaba, AliHealth, Great Wall Motor, ByteDance
- PDD’s market cap has exceeded Alibaba’s due to PDD’s overseas performance and price sensitive consumers.
- Great Wall Motor plans to enter eight countries in Europe to bypass the investigation on Chinese export subsidies.
- ByteDance plans to close its game subsidy and, 2,000 employees may lose their jobs.
Seven & I Ventures Down Under with 7-Eleven Australia Acquisition
- Seven & I Holdings (3382 JP) announced last week that it had agreed to buy the 7-Eleven convenience store chain in Australia for A$1.71bn ($1.1bn).
- The acquisition may not immediately impact Seven & I’s stock price like Speedway did, given its smaller scale, lack of synergies, and less favorable macroeconomic conditions.
- The main positive takeaway from this news is that the acquisition price for 7-Eleven Australia is not as extravagant as the amount Seven & I paid for the Speedway acquisition.
NPN X PRX Discount Update + Key Takeaways H1 FY24 Results
- Naspers and Prosus reported H1 FY24 results last week Wednesday before the open.
- No major surprises, all three discounts closed slightly lower. We see room for further narrowing as the consolidated ecommerce businesses approach profitability ahead of the initial target.
- Prosus is still trading below the value of its Tencent stake.
REPT BATTERO Energy Pre-IPO – PHIP Updates – Leaning on ESS
- REPT BATTERO Energy (REPT HK) is now looking to raise around US$300m in its upcoming Hong Kong IPO, down from the US$1bn it was aiming for earlier.
- REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
- We have looked at the company’s past performance in our previous note. In this note, we talk about its PHIP updates.
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