In today’s briefing:
- Tencent: Possible Record Fine for Anti-Money Laundering
- Softbank – That ¥4000 Mark Is Getting Close…
- Alibaba: Rumoured Layoffs Could Be a Sign of The Company Running Out of Funding Sources
- BE Energy (1250 HK): Not A Take-Out, More A China Shandong Hi-Speed Bail Out
- GlobalWafers (6488.TT): Under Current Ukraine Crisis, We Have to Admit the Volatility Is Very High.
- HKEx (388.HK): Aftermath of Epic Short Squeeze of Nickel Future
- Donki Back with a Plan at Home and Overseas
- Korea Drops Quarantine Requirements Vs. Yoon Suk-Yeol’s Hard Line Stance on North Korea
- China Everbright Environment (257 HK): Sell-Down Unwarranted Given Positive Prospects
- Aeon Mall: Experiential Shift Will Get Footfall Back in Japanese Malls
Tencent: Possible Record Fine for Anti-Money Laundering
- Wall Street Journal (WSJ) reported yesterday that Tencent (700 HK) is facing a possible record fine for violating anti-money laundering regulations in China.
- People’s Bank of China has found that WeChat Pay had allowed transfer and laundering of funds with illicit transactions which violates the country’s anti-money laundering regulations.
- Tencent’s shares dropped further 10.3% to HK$331 per share from HK$369 per share during yesterday’s trade following the above report.
Softbank – That ¥4000 Mark Is Getting Close…
- When Softbank announced its strange buyback in November we wondered aloud whether buyback maximums of ¥1trn and 250m meant Softbank foresaw a ¥4,000 share price in its future.
- With the stock price now having jauntily sashayed down to ¥4,265 it is a question why they aren’t more aggressive with their buyback.
- A question that may be answered by all the cash raising measures that Softbank is engaged in perhaps?
Alibaba: Rumoured Layoffs Could Be a Sign of The Company Running Out of Funding Sources
- Over the last two days on Weibo there was a lot of noise regarding massive layoffs at Chinese tech giants such as Alibaba Group (BABA US) and Tencent (700 HK).
- Local news outlet “Yilanshangye”, called that Alibaba’s community group buying platform MMC is planning to release around 20% of its employees, with several business lines already finalising their layoff lists.
- With investor appetite for growth companies changing rapidly over the last few months, it seems Alibaba Group (9988 HK) could be struggling to finance several of its loss-making ventures.
BE Energy (1250 HK): Not A Take-Out, More A China Shandong Hi-Speed Bail Out
- China Shandong Hi-Speed Financial Group (412 HK) (CSFG) has entered into a subscription agreement with Beijing Enterprises Clean Energy Grp (1250 HK) (BECE).
- Subscription shares total 43.45% of BECE on a diluted basis. The subscription price is HK$0.096/share, a 7.69% discount to last close
- A mandatory takeover would be triggered at completion of this agreement, provided a whitewash waiver is not granted.
GlobalWafers (6488.TT): Under Current Ukraine Crisis, We Have to Admit the Volatility Is Very High.
- Under current Ukraine crisis, we have to admit the volatility is very high. Not only the GlobalWafers, but the other semiconductor names are stumbled as well.
- Although 4Q21 revenue is NT$15.8bn, the highest record in GlobalWafers’ history, but the termination fee on Siltronic deal was €15mn, which was consuming NT$3.5 for GlobalWafers’ net EPS.
- GlobalWafers keeps NT$100bn, ~US$3.6bn, for the expansion in next couple of years, which covers investments across Asia, Europe and the United States spanning both brownfield and greenfield projects.
HKEx (388.HK): Aftermath of Epic Short Squeeze of Nickel Future
- LME Nickel future trading will be resumed on March 16 after its epic price surge before halting; the focus will be on safe reopen as more restrictions will be applied
- The trading suspension benefits Chinese billionaire behind Nickel short position, who has secured bank lending in past few days. The angry parties are mainly hedge fund and financial investors.
- We remain bullish on HKEX (388 HK) with the view that China economy will likely rebound in 2022, which will drive the rebound of IPO activities and trading volume.
Donki Back with a Plan at Home and Overseas
- Pan Pacific International Holdings (7532 JP) is Japan’s largest discount retailer but also a major GMS operator.
- It is on track to achieve consolidated sales around ¥1.87 trillion by the end of the year, 85% of this in Japan despite the lack of inbound tourists.
- PPI also has a great retail proposition in Asia which is proving popular. The long-term outlook at home and overseas looks solid.
Korea Drops Quarantine Requirements Vs. Yoon Suk-Yeol’s Hard Line Stance on North Korea
- In this insight, we discuss two major issues impacting the Korean hotels, travel, duty free shops, cosmetics, leisure, & casino related companies.
- First is that the South Korean government announced that it will drop quarantine requirement for international arrivals from 21 March.
- Second is the potential ramifications of Yoon Suk-Yeol (newly elected South Korean President) who has a relatively hard line stance on North Korea.
China Everbright Environment (257 HK): Sell-Down Unwarranted Given Positive Prospects
- Share price was off 23% in the last two days, yet we think China Everbright Environment (257 HK) has posted a set of healthy result, though somewhat behind expectations.
- Good new project momentum, further increase in operation revenue and collection of national subsidies are key factors backing earnings growth and improvement in cash flow over the next 2 years.
- Longer term, management stays bullish on the industry growth opportunities. Its 14.5% ROE and mid-teens earnings growth both suggest the stock’s 3.3x PER, 0.45x P/B and 9.4% yield inexpensive.
Aeon Mall: Experiential Shift Will Get Footfall Back in Japanese Malls
- Japan has seen a large drop off in new mall developments in recent years.
- This is partly due to a dwindling supply of viable locations but also because of competition from e-commerce.
- To make malls more relevant, Aeon Mall is shifting to a more localised approach with a broader range of services.
Related tickers: Tencent (0700.HK), Softbank Group (9984.T), Beijing Enterprises Clean Energy Grp (1250.HK), Globalwafers (6488.TWO), HKEX (0388.HK), Pan Pacific International Holdings (7532.T), Hana Tour Service (039130.KS), China Everbright Environment (0257.HK), AEON Mall (8905.T)
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