In today’s briefing:
- Tencent Q1 FY24 Results Due, a Look into What Is Priced
- Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July
- Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results
- Another HUGE Ushio (6925) Buyback After A HUGE Buyback Last Year
- Japan – Another Big Round of Passive Selling
- Great Eastern (GE SP): Getting Technical
- Quiddity HSTECH Jun 24 Final Expectations: US$1.6bn One-Way; Li Auto, JD, Xiaomi, Meituan, & Tencent
- Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow
Tencent Q1 FY24 Results Due, a Look into What Is Priced
- Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SAST
- In this note, we unpack what is priced and how Tencent has performed relative to constituents in the HSTECH index since our last update (29 April).
- We also provide an update on how the discounts of Naspers and Prosus have traded.
Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July
- Anticipation grows for increased block deals before July 24th’s pre-announcement rule takes effect, emerging as a key investment focus in the local market.
- The local market expects heightened activity in the three weeks post-May 15th, following first-quarter earnings announcements, a strategic move to mitigate insider trading controversies.
- Local traders eagerly await which companies will capitalize on the post-first-quarter earnings window, with a highly anticipated block deal involving SK Innovation selling a portion of its stake in SKIET.
Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results
- Tencent reported a decent set of results for Q1 FY24. Revenue for the quarter was up 2.8% QoQ and 6.3% YoY, ahead of consensus estimates (2.3% & 5.9%).
- The gross margin came in at 53%, 3 percentage points ahead of consensus, and an increase of 7 percentage points on Q1 FY23.
- The gross margin for the Fintech and Business Services segment, which accounts for 33% of revenue, increased by 12 percentage points to 46% (consensus 42.6%).
Another HUGE Ushio (6925) Buyback After A HUGE Buyback Last Year
- Last year with earnings, Ushio Inc (6925 JP) announced a HUUUGE buyback discussed in HUUUGE Ushio (6925) Buyback. The headline was 17% of shares out. They ended up buying 13.2%.
- Last year the stock popped on the news. Then shares went sideways for months. Then they went up on stable (bad) earnings guidance in H2. Today they beat Q3-updated guidance.
- But today they announced a “new growth strategy” to 2030, and guided to a SHARP (-60%) drop in OP and NP to March 2025, and announced a HUUUGE Buyback. Again.
Japan – Another Big Round of Passive Selling
- There are 15 stocks in Japan that will be sold by passive trackers at the close on 31 May.
- Short interest has been increasing in these stocks over the last few months and there will be covering on implementation date.
- Cumulative excess volume on all stocks has risen in the last couple of months though the pace of the increase has varied.
Great Eastern (GE SP): Getting Technical
- Great Eastern Holdings (GE SP) has consistently traded through OCBC (OCBC SP)‘s Offer terms from the onset.
- OCBC did not declare its S$25.60 cash Offer final. And someone appears to be accumulating a stake to block an Exit/Delisting Offer, presumably towards negotiating a bump in terms.
- But what happens if GE’s free float falls <10% at the close of the Offer and GE is suspended? And OCBC has no intention of restoring the float?
Quiddity HSTECH Jun 24 Final Expectations: US$1.6bn One-Way; Li Auto, JD, Xiaomi, Meituan, & Tencent
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- The final results for the June 2024 index rebal event will be confirmed after market close on Friday 17th May 2024.
- In this insight, we take a look at our latest flow expectations.
Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- The index changes and indicative weights for the June 2024 index rebal event will be announced after market close on Friday 17th May 2024.
- In this insight, we take a look at the potential index changes and our latest flow expectations.
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