SenseTime Group Inc. (20 HK)
- The stock gained as much as 23% in early trading before closing 7.3% higher. This was the biggest first-day gain since July for any Hong Kong IPO that raised at least $500 million.
- Ever since Beijing started its clampdown efforts over several industries and sectors, Chinese companies that debuted in Hong Kong have seen their shares rise an average of 1% on their first day of trading, according to Bloomberg data.
- Nine firms that have listed this month prior to SenseTime’s debut have seen an average drop of 2.8% in their stocks.
Ascendas REIT (AREIT SP): Big, Bigger, Biggest
- BUY Entry – 2.96 Target – 3.20 Stop Loss – 2.88
- AREIT is among the largest REIT in Singapore by market cap (S$12.5bn), second only to CapitaLand Integrated Commercial Trust (S$13.4bn market cap) It is Singapore’s largest industrial REIT with investments spanning from business parks to industrial facilities. Its assets include 220 properties in Singapore, US, Australia and in the UK. As at end 2020, the REIT had S$15bn in assets. It completed S$973mn of acquisitions in FY2020 and plans an additional S$535mn worth of investments over the next two years.
- Still huge expansion potential. AREIT’s gearing of 37% is well below the 50% regulatory limit, giving the REIT more than S$4bn of acquisition debt headroom. This is important for REITs who can capitalise on size and scale to achieve better DPU vs smaller sized peers, while simultaneously offering diversification within their portfolio.
- The trend is your friend. Despite the pandemic, AREIT achieved 3.7% positive rental reversion in 3Q21, driven by healthy demand in business space, high-specification industrial buildings & data centres and logistics and distribution centres. Singapore’s economy is forecasted to expand by 7% in 2021 and grow by another 3-5% in 2022, according to official forecasts by the Ministry of Trade and Industry.
- Attractive yields and consensus estimates. offers a dividend yield of 5.3%/5.6%/5.8% for FY 2021/22/23F, according to Bloomberg consensus forecasts. Consensus has a target price of S$3.48 compared to its current unit price of S$2.96.
ISDN (ISDN SP): Riding the new year rally
- REITERATE BUY Entry – 0.72 Target –0.85 Stop Loss – 0.66
- ISDN is a leading provider of industrial automation solutions throughout Asia. The company has more than 10,000 customers, and 74 offices spanning key Asian growth markets, and has a 35-year history of innovating alongside the growing technology needs of its customers. Today, ISDN’s solutions power advanced industrial sectors including semiconductors, Industry 4.0 manufacturing, medical devices, aerospace, and clean energy. The group generates around 68% of sales from China.
- Growing productivity. ISDN has continued its strategic buildout by expanding its solutions portfolio to include industrial internet-of-things (IoT) connectivity, deepening advanced engineering, growing industrial systems projects, and advancing software and cloud solutions. Covid-19 and geopolitical tensions have reduced global labour mobility and increased employee health risk, leading to an acceleration in labour automation for the group’s customer base.
- Positive technical and momentum factors. MACD recently formed a bullish crossover while RSI is on an uptrend. ISDN should also benefit from the positive sentiment in the semiconductor sector. Semiconductor stocks are enjoying a broad rally that has pushed the Philadelphia Semiconductor Index to new highs this week.
- Fundamental OUTPERFORM and TP to S$0.85. ISDN currently trades at only 6x forward EV/EBITDA, a significant discount to its international peers who are trading at around 10x EV/EBITDA.
Ganfeng Lithium Co Ltd (1772 HK): Fundamentals upbeat but price oversold
- Buy Entry – 115 Target – 140 Stop Loss – 105
- GANFENG LITHIUM CO., LTD. is a China-based company principally engaged in the research, development, production and sales of deeply processed lithium products. The Company’s main products include lithium compounds, lithium metal and lithium batteries. The Company’s products are mainly used in electrical vehicles, chemicals and pharmaceuticals. The Company distributes its products in the domestic market and to overseas markets.
- Lithium carbonate reached a new high. Lithium carbonate prices in China rose to RMB268,500/tonne as of 29th December. As holiday seasons (from Christmas to Chinese new year) draws near, production is expected to slow down as refinery plants will be gradually under the annual overhaul (7 to 30 days). However, EV companies accelerated to stock up lithium carbonate inventories before the holidays. The strong demand for raw materials for batteries will continue to push prices higher at least till 1Q22.
- Overseas expansion approved. Recently, the board approved the acquisition of 50% equity interest in Netherlands SPV Company by GFL International Co., Limited, a wholly-owned subsidiary of the Company at a price of US$130 million with its own funds. The exploitation licence of Goulamina Spodumene Mine Project will be transferred to Netherlands SPV company. Ganfeng is considering the 2nd phase expansion of the Goulamina Spodumene Mine Project. The production capacity of the project will increase by 75% from 2.3 million tons to 4 million tons per annum; the production capacity of spodumene concentrate will also increase accordingly, compared to about 450,000 tons per annum, placing Goulamina Spodumene Mine Project among the largest producers globally.
- Updated market consensus of the EPS growth in FY22/23 is 55.8%/24.6% YoY respectively, which translates to 25.4x/20.4x forward PE. Current PER is 43.3x. Bloomberg consensus average 12-month target price is HK$205.46.
Lithium carbonate prices
China International Capital Corp Ltd (3908 HK): Benefitting from a new wave of dual listings
- REITERATE Buy Entry – 20.5 Target – 23.5 Stop Loss – 19.5
- China International Capital Corp Ltd is a China-based company mainly provides investment banking services to domestic and overseas enterprises, institutions and individuals. The Company mainly operates its businesses through six segments. The Investment Banking segment mainly provides equity financing, debt and structured financing and financial consulting services for enterprises and institutions. The Stock segment mainly provides comprehensive financial services for stock business to professional investors. The Fixed Income segment mainly provides interest rate and foreign exchange, credit business, securitization business, derivatives and futures business. The Investment Management segment is mainly engaged in asset management business, fund management business and private equity investment fund business. The Wealth Management segment mainly provides wealth management products and services. The Research segment mainly provides research services to customers.
- Monetary easing in China. The People’s Bank of China reduced most banks’ reserve requirement ratio by 0.5 percentage point on December 15th, releasing RMB1.2tn (US$188bn) of liquidity. Meanwhile, the central bank also cut one -year loan prime rate for the first time in almost two years by 50bps on December 20th. It is viewed as some relief for the property sector. However, the central government will not compromise once property prices resurge again. Hence, the curb on the property market will continue. The easing measures are more like a seasonally tactical tweak on the macro economy as liquidity is usually tight at the end of the year. Liquidity injection will benefit the equity market to some extent as the authorities still restrict fund flows to the property market.
- A wave of dual listing in Hong Kong in 2022. Recently, US-listed Chinese stocks were sold off due to concerns over the VIE-based structure. Meanwhile, Didi Chuxing (DIDI US) announced it will delist from the US market and list in Hong Kong. These events could trigger another wave of dual listings in Hong Kong. CICC, as one of the largest investment banks in China could have more underwriting businesses. Furthermore, other Chinese unicorn companies are expected to choose Hong Kong as the primary listing location.
- Updated market consensus of the EPS growth in FY22/23 are 18.9%/21.1% YoY respectively, which translates to 7.3x/6.1x forward PE. Current PER is 8.8x. Bloomberg consensus average 12-month target price is HK$26.54.
Top Sector Gainers
|Internet Retail||+1.9%||U.S.-Listed Chinese Stocks Post Biggest One-Day Surge Since 2008|
|Precious Metals||+1.8%||Gold Price Forecast: XAU/USD key levels to watch heading into 2022 – Confluence Detector|
|Casinos/Gaming||+1.2%||MGM & Caesars Stock: Nevada Casinos Scored Big in November|
Top Sector Losers
|Oil & Gas Production||-1.3%||U.S. oil production set to increase further in 2022, energy expert Dan Yergin says|
|Semiconductors||-1.0%||Samsung, Micron warn China’s Xi’an lockdown could affect memory chip manufacturing|
|Homebuilding||-0.9%||Sales of newly built homes tank as affordability hits buyers|
- Alibaba (BABA US) shares jumped 9.7% yesterday, after a Bloomberg report said that the company is “weighing options” to dispose of its 30% stake in Weibo, and may sell its Weibo shares to a “state-owned firm”.
- Biogen (BIIB US). Samsung reportedly denied rumors from a South Korean newspaper that the group was in talks of acquiring the drumaker. Biogen shares, which surged 9.5% on Wednesday, plummeted 7.1% yesterday to close at $240.
- Chinese companies listed in the U.S. Futu Holdings (FUTU US), Bilibili (BILI US) and XPeng (XPEV US) shares saw their stock gain 10-13% yesterday after Bloomberg reported that the country’s government would be lowering tax rates as part of an effort to spur economic growth. China’s officials are moving deliberately to encourage a rebound in consumerism among its middle class, which has become an increasingly important piece of the country’s economy.
- Micron Technology (MU US) shares declined 2.4% yesterday after the company said that it foresees the output of some of computer memory hit by the closing of China’s Xi’an tech hub aimed at containing the COVID-19 spread. Micron uses a test and assembly facility in Xi’an. Micron said that it will likely meet most of its customer demand, but new supply arrangements may cause delays, adding that “we are also working with local government officials to identify solutions that will enable us to minimize impact of the situation and maintain operations at the site safely.”
- Hatten Land (HATT SP) shares lost 1.9% yesterday after it responded to the Securities Investors Association (Singapore) that it will only commence crypto mining activities in January 2022 as supply chain disruptions have led to a delay in the delivery of crypto mining rigs. The company added in a filing to SGX that the recent tightening of border control measures due to Covid-19 has also led to a hold-up in the deployment of technical personnel from Singapore to Melaka.
- Koufu Group (KOUFU SP) shares surged another 14.3% yesterday. The major shareholders have proposed to privatise the company at S$0.77 per share in cash through a voluntary conditional offer which values the company at S$426mn. The offer price represents a 15.8% premium to the last traded price of S$0.665.
- Biolidics (BLD SP) shares jumped 6.7% yesterday. The company announced on Wednesday that its wholly-owned subsidiary Biomedics Laboratory has been granted approval to provide microbiology services by the Ministry of Health, which include polymerase chain reaction (PCR) tests.
- Lippo Malls Indonesia Retail Trust (LMRT SP) shares declined 1.8% yesterday after it announced that it was granted waivers relating to its ratio of consolidated net property income to consolidated interest expense under three of its loan facilities.. The loan facilities comprise a $135 million facility agreement dated 9 Nov 2018, a $120 million facility agreement dated 6 Jan 6 2021 and a $30 million committed revolving loan facility agreement dated 18 Aug 2021. LMIR Trust was granted a waiver of the requirement to maintain the ratio of consolidated net property income to consolidated interest expense of not less than 2.5 to 1.
- Jiutian Chemical (JIUC SP) shares extended its gains, adding another 2.7% yesterday in tandem with the rise in Dimethylformamide (DMF) prices. DMF prices in China recently hit a 1-month high of 159,000 per tonne.
Top Sector Gainers
|Advertising||+2.6%||NETJOY (02131.HK) Shr Leaps Over 20% as SENSETIME-W Debuts|
|Securities||+1.86%||CSRC Holds Regulatory Meeting with CICC over Negligence in Handling Lenovo’s Application for STAR Board Listing|
|Textile & Apparels||+1.69%||ANTA SPORTS Declares Spec Interim DPS of 30 Cents to Celebrate 30th Anniversary|
Top Sector Losers
|Leisure & Recreation||-6.71%||Xi’an fights biggest COVID-19 outbreak in a Chinese city this year|
|Agricultural, Poultry & Fishing Production||-1.66%||NA|
|Insurance||-1.39%||China launches NEV-dedicated insurance, leading to increase in NEV premium|
- Chervon Holdings Ltd (2285 HK) shares jumped by 28.44% on its debut trading day. The offering price is HK$43.6. The intraday high was HK$57, and the low was HK$51.
- China Datang Corp Renewable Power Co Ltd (1798 HK). The National Development and Reform Commission issued the plans of wind and solar infrastructure projects based in desert areas. The whole projects involve 19 provinces with a total installed capacity of 97.05GW. The company is currently participating in several projects in inner Mongolia.
- SenseTime Group Inc. (20 HK). Shares went up by 7.27% on its debut trading day. The offering price is HK$385. The intraday high was HK$4.74, and the low was HK$3.90.
- Jinxin Fertility Group Ltd (1951 HK). Shares rebounded from a 52-week low. There was no company specific news. The company announced that it has purchased 5.731mn shares from 21st to 23th December with a total amount of HK$50.14mn.
- Yidu Tech Inc (2158HK). The company previously released its 1H21 interim report. Revenue in 1H21 (April to September) was RMB502mn. Losses attributable to the company shareholders were at RMB441mn.
Trading Dashboard Update: Add China Hongqiao (1378 HK) at HK$8.15
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