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In today’s briefing:
- Quiddity Leaderboard CSI 300/500 Jun 24: SHORTs Down 11% Vs Index Since Mid-Feb; Change the Hedge
- Quiddity Leaderboard SSE50/180 Jun 24: Past Trades Successful but Time to Unwind Some
- China TCM (570.HK) – Latest Updates on Privatization and the Potential Merger with Taiji Group
- China Pair Trade Idea: Long Air China (753 HK), Short CSA (1055 HK)
- Morning Views Asia: Tata Motors ADR, Xiaomi Corp
- TAL Education Group: Initiation Of Coverage – What Is Its Real Business Strategy And What Is The Impact Of AI On Its Business? – Major Drivers
- Morning Views Asia: Pakuwon Jati, Sunny Optical Technology Group
- Kayou Pre-IPO – The Negatives – Unexplained 9M23 Slump
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Quiddity Leaderboard CSI 300/500 Jun 24: SHORTs Down 11% Vs Index Since Mid-Feb; Change the Hedge
- CSI 300 represents the 300 largest stocks by marketcap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500. There is subjectivity.
- Here we look at potential ADDs/DELs for the CSI 300/500 rebalance in June 2024. With 93% of time passed, I expect 11 changes for CSI300, 50 for CSI 500.
- Some names have changed since my last insight, but the long/short trades recommended eight weeks ago gained 11.26% since. We make small changes this time.
Quiddity Leaderboard SSE50/180 Jun 24: Past Trades Successful but Time to Unwind Some
- 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 our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
- According to my estimates, the SSE 50 expected ADDs and DELs could see US$1.7bn index buying and US$828mn index selling respectively (leaving nearly $900mm of funding sales to do).
China TCM (570.HK) – Latest Updates on Privatization and the Potential Merger with Taiji Group
- Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.
- The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.
- We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.
China Pair Trade Idea: Long Air China (753 HK), Short CSA (1055 HK)
- Air China Ltd (H) (753 HK) had 15.4% interest-bearing debt denominated in USD, vs. 21.3% for China Southern Airlines (1055 HK), making it less exposed to Rmb depreciation.
- Recovery of international traffic and routes will help to lower unit costs. Air China’s unit costs for FY23 were Rmb4.0445, whereas CSA’s were only Rmb3.2000.
- There is more upside for Air China’s load factor which was down 7.8pp YoY in FY23, compared with -4.7pp for CSA.
Morning Views Asia: Tata Motors ADR, Xiaomi Corp
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
TAL Education Group: Initiation Of Coverage – What Is Its Real Business Strategy And What Is The Impact Of AI On Its Business? – Major Drivers
- TAL Education Group (TAL) reported net revenues of USD 373.5 million for its third quarter fiscal year 2024, exhibiting an increase of 60.5% and 63.7% in U.S. dollar and RMB terms.
- Despite the impressive revenue growth, profitability remained a concern with non-GAAP loss from operations and non-GAAP net loss attributable to TAL amounting to USD 10.2 million and USD 1.9 million, respectively.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Morning Views Asia: Pakuwon Jati, Sunny Optical Technology Group
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
Kayou Pre-IPO – The Negatives – Unexplained 9M23 Slump
- Kayou is looking to raise up to US$500m in its upcoming HK IPO.
- Kayou is a Chinese pan-entertainment product retailer of toys, with trading cards in particular as its core product.
- In this note, we talk about the not-so-positive aspects of the deal.