The spin-off of T-Head has brought no re-rating from Hong Kong stocks—only question marks. Alibaba fell 4.92% to HK$95.65 in morning trading, with turnover of HK$6.049 billion, making it the biggest drag on the Hang Seng Index, which fell 1.17%.
It’s not that the spin-off is worthless; it’s that no one dares to put a price on it first. Morgan Stanley puts T-Head’s valuation in a range of US$28 billion to US$83 billion, with the upper end nearly three times the lower. BofA says submitting the listing application is a positive catalyst, but with revenue, regulatory matters and terms still unresolved, it won’t assign a value in its sum-of-the-parts valuation yet. Its projected contribution to computing power has risen from just over 10% to 40%–50%, and it expects shipments of around 700,000 units in 2027—but none of that has materialized yet.
For the same story, A-shares are buying into equipment orders—Cambricon was still up 9.83% at midday—while Hong Kong stocks are selling the parent-company re-rating story. I’m not buying into that narrative just yet: the valuation anchor won’t be there until the terms are finalized, the hearing is completed, and T-Head’s revenue is disclosed separately. If the sell-off spreads to the entire Hang Seng Tech Index, it won’t be about pricing the spin-off; it’ll mean tech stocks are being sold across the board.
It’s not that the spin-off is worthless; it’s that no one dares to put a price on it first. Morgan Stanley puts T-Head’s valuation in a range of US$28 billion to US$83 billion, with the upper end nearly three times the lower. BofA says submitting the listing application is a positive catalyst, but with revenue, regulatory matters and terms still unresolved, it won’t assign a value in its sum-of-the-parts valuation yet. Its projected contribution to computing power has risen from just over 10% to 40%–50%, and it expects shipments of around 700,000 units in 2027—but none of that has materialized yet.
For the same story, A-shares are buying into equipment orders—Cambricon was still up 9.83% at midday—while Hong Kong stocks are selling the parent-company re-rating story. I’m not buying into that narrative just yet: the valuation anchor won’t be there until the terms are finalized, the hearing is completed, and T-Head’s revenue is disclosed separately. If the sell-off spreads to the entire Hang Seng Tech Index, it won’t be about pricing the spin-off; it’ll mean tech stocks are being sold across the board.