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In today’s briefing:
- FTSE China A50 Index Rebalance: One Set of Surprises & Large Turnover
- FTSE China 50 Index Rebalance: Three Changes as Index Turnover Soars
- 51job (JOB US)’s Offer Price Back Up To $61
- 51job’s Improved $61 Offer Gets the Board Onside
- Suzhou Zelgen Biopharmaceuticals (688266.CH) – Uncertainty Leads to Inaccurate Prediction on Outlook
- LQD ETF Jumps with Largest 4-Day Rally Since May 2020
- Geek+ Tearsheet – Automating Warehouses
- Morning Views Asia – For Thursday: Country Garden Holdings Co, Lenovo, Vedanta Resources
FTSE China A50 Index Rebalance: One Set of Surprises & Large Turnover
- There are three sets of changes for the FTSE China A50 index at the March rebalance with implementation on 18 March. Two changes were expected while one is a surprise.
- The March rebalance will also see the Foreign Ownership Limits applied to the stocks. Estimated one-way index turnover is 17.39% and will result in a one-way trade of CNY 9,360m.
- As the surprises, we’d keep an eye on China State Construction A (601668 CH) and China Life Insurance (601628 CH) over the next few days.
FTSE China 50 Index Rebalance: Three Changes as Index Turnover Soars
- As expected, Nongfu Spring (9633), China Overseas Land & Investment (688) and XPeng (9868) will replace Geely Auto (175), China Tower (788) and JD Health (6618) in the index.
- The adds, deletes and capping changes will result in one-way turnover estimated at 9.14% and will result in a one-way trade of HK$4,576m.
- Shorts in Nongfu Spring (9633 HK), JD Health (6618 HK) and China Tower (788 HK) have over 10 days of ADV to cover.
51job (JOB US)’s Offer Price Back Up To $61
- Back on the 12 January this year, 51 Job Inc (JOBS US) announced the Offeror had proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
- Yesterday 51job said it has entered into a revised merger agreement at US$61.00/share, a 6.55% bump in terms, but still 22.8% down the initial terms.
- Presumably, the amended proposal still requires no PRC regulatory filing. This transaction appears to be done this time, with completion in the 2Q22.
51job’s Improved $61 Offer Gets the Board Onside
- The consortium has improved the offer price by 6.6% to $61.00 in cash per ADS. The consortium represents 54.9% of the voting rights.
- The Board intends to recommend shareholders vote in favour of the transaction. The transaction is expected to close during the first half of 2022.
- The combination of the improved offer price and the tech shares sell-off improves the chance of meeting the two-thirds shareholder approval threshold. At last close, the gross spread is 7.0%.
Suzhou Zelgen Biopharmaceuticals (688266.CH) – Uncertainty Leads to Inaccurate Prediction on Outlook
- We analyzed Suzhou Zelgen Biopharmaceuticals (688266 CH)’s key products(Donafenib, recombinant human thrombin for topical use, Alkotinib, Jaktinib, etc.). They have to face fierce competition, VBP impact and small market size.
- Through Gensun Biopharma, Zelgen has established the ability to develop advanced tumor immunotherapy drugs. Whether it can continue to launch new products is the key to test Zelgen’s R&D system.
- We are cautious about Zelgen because uncertainties led to inaccurate prediction on market size and outlook.Investors can choose to “catch” a rebound, but Zelgen is far from a complete reversal.
LQD ETF Jumps with Largest 4-Day Rally Since May 2020
Geek+ Tearsheet – Automating Warehouses
- Geek+ is a smart logistics and warehousing robotics developer serving clientele from a number of industry verticals, including, apparel, e-commerce, retail, 3PL, pharmaceutical, manufacturing and automotive (think Amazon Kiva).
- In the latest Series C funding round, the company raised a total of US$200m with the most recent Series C2 round in Jun 2020, raising around US$50m.
- In the CY2H21, there were news reports regarding an IPO that could raise US$500m. Geek+ was considering either going public in the US or in Shanghai’s Nasdaq-style STAR board.
Morning Views Asia – For Thursday: Country Garden Holdings Co, Lenovo, Vedanta Resources
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.
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