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$Tencent Holdings(HK|00700)$

$Hang Seng ETF()$ Seven Wolves () Investment Value Analysis Report

1. Core Highlights and Positive Factors

Excellent securities investment capabilities, high-quality investment portfolio with high performance growth expected in the third quarter: The company's 2025 semi-annual report shows that its trading financial assets reached 1.956 billion yuan, and the total financial assets scale is nearly 2.4 billion yuan. The investment targets are all leaders in various industries, such as Tencent Holdings, Ping An, Kweichow Moutai, CATL, etc., which proves the company's sound and critical investment vision.

The potential gains in the third quarter are huge: as of September 30, its core holding Tencent Holdings (00700.HK) has risen by approximately 34% since June 30. A simple calculation shows that just one investment from Tencent Holdings may bring a floating profit of more than 100 million to the company in the third quarter. If the average growth rate of its entire investment portfolio reaches 15%-20%, the securities investment part is expected to contribute 300-450 million yuan in fair value changes in the third quarter, which will greatly offset the weakness of the main business and promote a substantial year-on-year increase in net profit in the third quarter.

Institutionalization of investment strategy: The company decided to continue to use no more than 2 billion yuan of idle self-owned funds for securities investment, indicating that it regards this part of the income as an important strategic means to smooth performance fluctuations and increase return on assets.

Repurchasing shares with real money demonstrates confidence in future development. From July 2024 to May 2025, the company repurchased 31.04 million shares for a total of 173 million yuan, with an average repurchase price of approximately 5.57 yuan per share. Positive signal: Based on the current stock price of 8.03 yuan, this repurchase has brought the company a book income of approximately 76 million yuan. More importantly, large-scale repurchases directly reflect that management believes that the company is undervalued and is willing to use real money to boost market confidence and reward shareholders.

The "Valuation Enhancement Plan" clearly states that asset injection expectations are worthy of attention. In view of the long-term "net loss" situation, the company released the "2025 Valuation Enhancement Plan" in February 2025, which clearly regards "actively seeking M&A and reorganization opportunities" and "injecting high-quality assets through M&A and reorganization" as one of the core measures.

Analysis on the possibility of asset injection: Is the Septwolves Group going public as a whole? Less likely. The assets of the group are highly related to the main business of the listed company, and involve complex related transactions, making the operation difficult. Qianhai Reinsurance backdoor listing? This is a very imaginative point of view. Septwolves holds a 10.5% stake in Qianhai Reinsurance. If Qianhai Reinsurance has an independent IPO plan, the revaluation of its equity value will directly benefit the Septwolves. However, "backdoor" itself is a major and unprecedented matter and involves great uncertainty. It is necessary to pay close attention to the capital operation dynamics of Qianhai Reinsurance.

Injection of other assets under the group? The likelihood is higher. The group may inject some high-quality assets (such as new consumer brands, technology consumer assets) that can create synergies with the listed company's business into the listed company to quickly improve the revenue and profit structure. This is the most logical and regulatory-oriented path. Forward-looking equity investment fund layout, grasping the pulse of the new economy. Through its subsidiaries, the company has participated in the investment of Suzhou Yuexiang Equity Investment Fund (an LP together with Bubble Mart) and Suzhou Kuanyu Equity Investment Fund (cooperating with Tencent, Sunshine Insurance, etc.). These funds focus on Internet platforms, new consumption, technology consumption and other fields.

This shows that Septwolves is not simply "stock trading", but is making forward-looking strategic investments, indirectly deploying high-growth companies such as Beijing Shenzhen Technology (microscale industrial simulation platform) and Wuhu Youpai (pet economy), and is expected to share new economic dividends in the future.

2. Main business challenges and transformation efforts

Realistic dilemma: The main clothing industry is indeed facing challenges. In the first half of 2025, revenue fell by 5.93%, and non-net profits plummeted by 61.35%, reflecting the pressure of fierce competition in the industry and aging brands. Transformation measures: The company is actively promoting the "Jacket Expert" brand renewal strategy, signing new spokespersons, and trying to integrate Quanzhou's local cultural elements into the design, aiming to attract young consumer groups. However, the transformation effect needs to be observed over a long period of time.

3. Valuation analysis

Significantly undervalued: As of September 30, 2025, the company's closing price was 8.03 yuan, lower than the latest net assets per share of 9.316 yuan, and the price-to-book ratio (PB) was approximately 0.86, which was in a "net-breaking" state. Margin of Safety: The current stock price provides a high margin of safety. The company's value actually consists of two parts: 1. The main clothing business (although growth is sluggish but cash flow is stable); 2. A huge financial asset investment portfolio (high quality and increasing in value). The market has clearly given low scores to its main business and largely ignored the value of its investment assets.

4. Comprehensive Conclusions and Outlook

Septwolves is a company that is at a critical juncture of "revaluation". The core of its investment value lies in:

The short-term catalyst is clear: a surge in third-quarter results due to large gains in securities investment is a high-probability event, which may become a direct catalyst for rising stock prices. The mid-term outlook is clear: the company's share buybacks and clear "valuation improvement plan" will continue to provide support for the stock price. The market will expect it to make substantial moves in terms of mergers, acquisitions, restructuring or asset injections. There are bright spots in the long-term layout: the layout of technology and new consumer fields through equity investment funds has laid the seeds for the company's long-term development.

Risk warning:

The recovery of the main business was less than expected. Large fluctuations in the securities market affect the stability of investment returns. There is uncertainty in capital operations such as asset injection.

5. Operation suggestions

Based on the above analysis, Septwolves currently has a high investment performance-price ratio.

For value investors: The current "net-breaking" stock price provides a good margin of safety, suitable for bargain hunting and waiting for value to return. For trend investors: you can focus on the release window of the third quarter performance forecast, as expectations of high short-term performance growth may bring trading opportunities.

All in all, the Seven Wolves are using the method of “investing to support their families” to gain time and space for the “transformation of their main business”. Its strong investment capabilities, active market value management attitude and potential capital operation expectations together constitute its core investment logic under the current stock price.