In today’s briefing:
- Ohayo Japan | Happy 2025.
- China & HK Strategy: Are These Stocks Potential Privatisation Targets?
- Japan Morning Connection: AI Winners Leading Higher to Start the Year
- China Growth Equity Weekly Wrap (1/2025): Xiaomi, JD, BABA, TRIP, ATAT, CATL, BYD, BEKE, Luckin, BZ
- China Internet Weekly Wrap (1/2025): JD, BABA, PDD, SE, CPNG, Meituan, NTES
Ohayo Japan | Happy 2025.
- The Topix ended 2024 up 18%. By comparison, the S&P was up 25% and the Nasdaq up 30%
- Microsoft’s announced a $80 billion in AI data center spending for fiscal 2025
- The Biden administration has blocked Nippon Steel’s $14.9 billion acquisition of US Steel on national security grounds
China & HK Strategy: Are These Stocks Potential Privatisation Targets?
- The cheap valuations of the Hong Kong market have driven an increase in privatisation activities. Stocks with profit, high net cash, and low P/B are likely candidates.
- We discover 29 stocks with net cash more than their market capitalisation while having a P/B of below 0.5x. Many of them are small-cap stocks.
- The cheapest five names are trading on P/B of no more than 0.2x. Also, six stocks have their major shareholders owning a significant 75% stake.
Japan Morning Connection: AI Winners Leading Higher to Start the Year
- Big AI related capex announced for MSFT should help buoy tech to start.
- Room for SPE once deemed as China plays to rebound on sales diversification.
- 2024 was a big year for momentum plays and US stock moves so far seem to point to more of the same.
China Growth Equity Weekly Wrap (1/2025): Xiaomi, JD, BABA, TRIP, ATAT, CATL, BYD, BEKE, Luckin, BZ
- Inclusion of smartphone/tablet/smartwatch to trade-in subsidy will drive high single digit incremental growth for JD and Xiaomi, low single digit incremental growth for Alibaba in 2025;
- New Year’s Day transportation volume down, hotel consumption up, constituting a decent performance for a shorter holiday vs. last year. This bodes well for tourism for Chinese New Year;
- China stepped up its signaling effort to Trump Administration that trade war measures will be retaliated. This week China added LFP battery technology to its own entity list.
China Internet Weekly Wrap (1/2025): JD, BABA, PDD, SE, CPNG, Meituan, NTES
- New and renewed trade-in subsidies on smart phone, tablet and wearables can add low to high single digit growth to major e-commerce platforms. Raising basic pension invites more questions;
- Meituan’s latest anti-fatigue and algorithm change is a way to deflect criticism of its not paying social security for its riders;
- Several games on NetEase received positive feedbacks, paving way for a rebounding 2025.
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