HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.</li>
<li>The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.</li>
<li>The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.</li>
</ul>



Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.
The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.


Shenzhen Intl (152 HK): A Big Step Forward

<ul>
<li>The 1H22 result of <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> is 4% ahead of indicated in profit warning. Key drags are toll roads and Shenzhen Airlines, but their 2H22 outlook is better.</li>
<li>It will see many new logistics projects to commence operations in the next 12-18 months. Also, SZI guided that it will continue to realise underlying asset value through strategic disposals.</li>
<li>We think the toughest time should be behind and expect more positive news on asset gains. The stock is very cheap at 0.41x P/B and 58% discount to appraised NAV. </li>
</ul>


The 1H22 result of Shenzhen International (152 HK) is 4% ahead of indicated in profit warning. Key drags are toll roads and Shenzhen Airlines, but their 2H22 outlook is better.
It will see many new logistics projects to commence operations in the next 12-18 months. Also, SZI guided that it will continue to realise underlying asset value through strategic disposals.
We think the toughest time should be behind and expect more positive news on asset gains. The stock is very cheap at 0.41x P/B and 58% discount to appraised NAV. 


Shenzhen Intl (152 HK): The Toughest Time Should Be over Now

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> reported 1H24 net profit of HK$653m. While toll road and other segments are under pressure, the logistics segment has benefited from REIT issuance.</li>
<li>In 2H24, it may book profit from the initial land appreciation gain from the South China Logistics Park transformation and profit from the 50%-owned Yicheng Zhenwanyue.</li>
<li>SZI seeks to realise the value of its assets. At 0.4x P/B or 1SD below the 5-year average, the stock, with a 7.5% yield, is deeply undervalued. </li>
</ul>



Shenzhen International (152 HK) reported 1H24 net profit of HK$653m. While toll road and other segments are under pressure, the logistics segment has benefited from REIT issuance.
In 2H24, it may book profit from the initial land appreciation gain from the South China Logistics Park transformation and profit from the 50%-owned Yicheng Zhenwanyue.
SZI seeks to realise the value of its assets. At 0.4x P/B or 1SD below the 5-year average, the stock, with a 7.5% yield, is deeply undervalued. 


Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  </li>
<li>Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.</li>
<li>Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.</li>
</ul>



Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.


Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

<ul>
<li>Given Shenzhen Airlines is already in negative equity, <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> will not record any of its losses in 2H22, making a big HoH swing in its impact.</li>
<li>The injections of Hangzhou and Hefei logistics projects will be completed by end-FY22, bringing in one-off gains. Jul-Aug toll revenue of <a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 HK)</a> has also recovered vs. 1H22.</li>
<li>While there will not be profit at logistics parks transformation business in 2H22, Qianhai Phase II has completed pre-sale in Sep, bring in potentially Rmb3bn to be booked in FY23.</li>
</ul>


Given Shenzhen Airlines is already in negative equity, Shenzhen International (152 HK) will not record any of its losses in 2H22, making a big HoH swing in its impact.
The injections of Hangzhou and Hefei logistics projects will be completed by end-FY22, bringing in one-off gains. Jul-Aug toll revenue of Shenzhen Expressway (548 HK) has also recovered vs. 1H22.
While there will not be profit at logistics parks transformation business in 2H22, Qianhai Phase II has completed pre-sale in Sep, bring in potentially Rmb3bn to be booked in FY23.


Shenzhen Intl (152 HK): Updates on Latest Developments

China

Shenzhen Investment Holdings Bay Area Development Company Limited provides infrastructure construction services. The Company provides highway construction, bridge construction, and other related services. Shenzhen Investment Holdings Bay Area Development offers services in China.

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Shenzhen Investment Holdings B (737 HK)

Shenzhen Intl (152 HK): A Big Step Forward

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

Shenzhen Intl (152 HK): The Toughest Time Should Be over Now

1H22 is bad but behind us now. We anticipate sequential earnings improvement in 2H22 as the impact of pandemic fades. SZI will continue to realise...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Updates on Latest Developments

We find positive developments which point to HoH improvement in 2H22 earnings. Recovery of toll roads, lessening of loss burden in Shenzhen...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

P/E

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Shenzhen Intl (152 HK): A Big Step Forward

​Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

Shenzhen Intl (152 HK): The Toughest Time Should Be over Now

1H22 is bad but behind us now. We anticipate sequential earnings improvement in 2H22 as the impact of pandemic fades. SZI will continue to realise...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

​Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Updates on Latest Developments

We find positive developments which point to HoH improvement in 2H22 earnings. Recovery of toll roads, lessening of loss burden in Shenzhen...

Osbert Tang, CFA

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....