![](https://wp-static.smartkarma.com/../assets/uploaded/2023/01/DailyBriefChinaTencentChinaInternetInvestmentFinanceHoldingsHutchmedChinaLtdandmore.jpg)
In today’s briefing:
- Tencent (700.HK): Valuing Wechat Channels
- China Internet Investment (810 HK): 98% Downside
- Hutchmed China Ltd (13.HK/HCM.US) – The $1.13B Eye-Catching Deal with Takeda and the New Outlook
Tencent (700.HK): Valuing Wechat Channels
- Recent developments highlighted the strategic significance of Wechat Channels (微信视频号) that Tencent’s management attached to the company’s future.
- Counter-Intuitively, while backing of the social giant saves Wechat Channels’ efforts for traffic acquisition, it also limits the product’s potential to develop into a content ecosystem rivaling Douyin.
- Our base case values the product at $29 billion, or 6% of Tencent’s market cap as of January 20th.
China Internet Investment (810 HK): 98% Downside
- Bubble-Stock China Internet Investment Finance Holdings (810 HK) (CIIFH) was suspended on the 10 January pursuant to the Hong Kong Code on Takeovers and Mergers.
- It has now announced a possible voluntary conditional takeover. No price was mentioned and terms remain indeterminate.
- CIIFH, which invests primarily in listed Hong Kong securities, is trading at an eye-watering 59.5x NAV. 98% downside from here is conceivable.
Hutchmed China Ltd (13.HK/HCM.US) – The $1.13B Eye-Catching Deal with Takeda and the New Outlook
- HUTCHMED entered into an exclusive license agreement with Takeda- HUTCHMED will receive up to US$1.13 billion including US$400 million upfront, the third highest upfront among China’s TOP 10 license-out deals.
- Even if fruquintinib may probably not become a blockbuster product in the future, HUTCHMED still gets a decent upfront to relieve its cash flow pressure and an internationalization admission ticket.
- Hutchmed China Ltd (13 HK) is undervalued based on our sales forecast. After savolitinib has been included in the updated NRDL, this year’s performance growth is worth looking forward to.
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