Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

In our weekly Shanghai/Shenzhen Connect Ideas series, we aim to highlight key stocks and sectors which the mainland investors traded via the northbound Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. In this insight, we will have an overview of the weekly inflows into the A-share market via Shanghai/Shenzhen connect, top inflow and top three outflow stocks. We will also cover inflows and holdings by sectors, after which we will highlight top five inflows and outflows on a relative basis for large-cap and mid-cap stocks: stocks with a market capitalization above $5 bn, and those between $1 bn and $5 bn. In this insight, we will highlight inflows into <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd" target="_blank" data-smartkarma-citation="entities:27092:1" rel="noopener">WuXi AppTec Co Ltd (603259 CH)</a>, as well as outflows from <a href="https://www.smartkarma.com/entities/gree-electric-appliances-inc-of-zhuhai" target="_blank" data-smartkarma-citation="entities:7622:1" rel="noopener">Gree Electric Appliances (000651 CH)</a> and <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a>.

In our weekly Shanghai/Shenzhen Connect Ideas series, we aim to highlight key stocks and sectors which the mainland investors traded via the northbound Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas.  In this insight, we will have an overview of the weekly inflows into the A-share market via Shanghai/Shenzhen connect, top inflow and top three outflow stocks. We will also cover inflows and holdings by sectors, after which we will highlight top five inflows and outflows on a relative basis for large-cap and mid-cap stocks: stocks with a market capitalization above $5 bn, and those between $1 bn and $5 bn.  In this insight, we will highlight inflows into WuXi AppTec Co Ltd (603259 CH), as well as outflows from Gree Electric Appliances (000651 CH) and China Tourism Group Duty Free Corp Ltd (601888 CH).

SH/​​SZ Connect Flows: Wuxi Apptec, Gree, China Tourism

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Tourism Group Duty Free Corp Ltd / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> pre-announced its FY20 result with a 55.1% YoY growth in recurrent earnings to Rmb5.94bn, beating market expectation by significant magnitude. The strong result is driven by a 3.3pp expansion in operating margin, supported by good sales of high-margin products; and we believe the market should welcome this set of encouraging result.As for FY21, CTG Duty Free will benefit from the government's support of domestic consumption, improved portfolio of premium brand names and the slow recovery of outbound overseas travel appetite. While the Chinese New Year sales may be negatively affected by the resurgence of local COVID-19 cases, we expect full-year effect of the new Hainan duty free policies will help lift bottom line with an impressive earnings growth of over 80%.

China Tourism Group Duty Free Corp Ltd (601888 CH) pre-announced its FY20 result with a 55.1% YoY growth in recurrent earnings to Rmb5.94bn, beating market expectation by significant magnitude. The strong result is driven by a 3.3pp expansion in operating margin, supported by good sales of high-margin products; and we believe the market should welcome this set of encouraging result.As for FY21, CTG Duty Free will benefit from the government's support of domestic consumption, improved portfolio of premium brand names and the slow recovery of outbound overseas travel appetite. While the Chinese New Year sales may be negatively affected by the resurgence of local COVID-19 cases, we expect full-year effect of the new Hainan duty free policies will help lift bottom line with an impressive earnings growth of over 80%.

CTG Duty Free Corp (601888 CH): Beating Market Expectations on Pre-Announced FY20 Result

Shanghai International Airport / Equity Bottom-Up

The announcement by <a href="https://www.smartkarma.com/entities/shanghai-international-airport-co-ltd" target="_blank" data-smartkarma-citation="entities:6511:1" rel="noopener">Shanghai International Airport (600009 CH)</a> of a loss of between Rmb1.2-1.3bn for FY20 will disappoint the market due to the significant QoQ deterioration, in our view. While weaker domestic traffic and limited recovery of international traffic are reasons, the less favourable duty free agreement reached with Sunrise duty free, a subsidiary of <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a>, has further added to the loss in last year.Based on the current pace of international traffic recovery, we believe SIAC will be difficult to achieve the required traffic for the minimum guarantee rental in the next two years, and this will have a negative effect on its bottom line. Since 2020, share price of SIAC has outperformed <a href="https://www.smartkarma.com/entities/guangzhou-baiyun-international-airport" target="_blank" data-smartkarma-citation="entities:10819:1" rel="noopener">Guangzhou Baiyun International Airport (600004 CH)</a> by over 20pp. With SIAC's new agreement and GBIA's stronger FY20 result, we believe there is room for SIAC to give back some of such outperformance in the near term.

The announcement by Shanghai International Airport (600009 CH) of a loss of between Rmb1.2-1.3bn for FY20 will disappoint the market due to the significant QoQ deterioration, in our view. While weaker domestic traffic and limited recovery of international traffic are reasons, the less favourable duty free agreement reached with Sunrise duty free, a subsidiary of China Tourism Group Duty Free Corp Ltd (601888 CH), has further added to the loss in last year.Based on the current pace of international traffic recovery, we believe SIAC will be difficult to achieve the required traffic for the minimum guarantee rental in the next two years, and this will have a negative effect on its bottom line. Since 2020, share price of SIAC has outperformed Guangzhou Baiyun International Airport (600004 CH) by over 20pp. With SIAC's new agreement and GBIA's stronger FY20 result, we believe there is room for SIAC to give back some of such outperformance in the near term.

Shanghai International Airport (600009 CH): Dragged by Unfavourable Duty Free Agreement

The approvals of more players in the Hainan duty free market at end-2020 is likely to pose challenge to <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> only in the long term, given the weaker relative competitiveness of the new entrants, CTG Duty Free's established strengths and the sustained positive growth in the overall market. Despite so, we see a trend of rise in competition in China's duty free industry, which is a threat that it cannot overlook in the long run.With the Dec (up to 28th) duty free sales value maintained a solid growth of over 150% YoY, the sustained market growth will offer CTG Duty Free a near-term buffer to competition. The low base in 1H20 as well as the limited appetite of overseas travel due to new coronavirus strains will continue to be positive factors for the company at least in the next six months.

The approvals of more players in the Hainan duty free market at end-2020 is likely to pose challenge to China Tourism Group Duty Free Corp Ltd (601888 CH) only in the long term, given the weaker relative competitiveness of the new entrants, CTG Duty Free's established strengths and the sustained positive growth in the overall market. Despite so, we see a trend of rise in competition in China's duty free industry, which is a threat that it cannot overlook in the long run.With the Dec (up to 28th) duty free sales value maintained a solid growth of over 150% YoY, the sustained market growth will offer CTG Duty Free a near-term buffer to competition. The low base in 1H20 as well as the limited appetite of overseas travel due to new coronavirus strains will continue to be positive factors for the company at least in the next six months.

CTG Duty Free Corp (601888 CH): Facing More Competition in a Rapidly Growing Market

China Travel International Investment Hong Kong / Equity Bottom-Up

China Travel International Investment Hong Kong

We think <a href="https://www.smartkarma.com/entities/china-travel-intl-inv-hk" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel Intl Inv Hk (308 HK)</a> (CTII) is an interesting name misunderstood, overlooked and under-researched by the market. As such, this will potentially provide promising upside return given its undemanding valuation relative to the travel agency and package tour peers. CTII is not a travel agency and instead it is a major operator of tourist attractions in China that is well positioned to benefit from the recovery of the domestic travel market. Trading at just 0.4x P/B and with net cash equals to 36% of current share price, CTII is also a potential candidate for privatisation by its ultimate parent China Tourism Group.

We think China Travel Intl Inv Hk (308 HK) (CTII) is an interesting name misunderstood, overlooked and under-researched by the market. As such, this will potentially provide promising upside return given its undemanding valuation relative to the travel agency and package tour peers. CTII is not a travel agency and instead it is a major operator of tourist attractions in China that is well positioned to benefit from the recovery of the domestic travel market. Trading at just 0.4x P/B and with net cash equals to 36% of current share price, CTII is also a potential candidate for privatisation by its ultimate parent China Tourism Group.   

China Travel Intl Inv (308 HK): Recovery Play Overlooked by the Market + Privatisation Possibility

China

China Tourism Group Duty Free Corporation Limited engages in sales of duty free goods and tax goods. The Company sells tobacco, wine and spirits, perfume, cosmetics, fashion and accessories, watches, jewelry, food, luggage products,and other products. China Tourism Group Duty Free also engages in investment and development of tourism destination commercial complexes.

China Tourism Group Duty Free Corp Ltd (601888 CH)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Tourism Group Duty Free Corp Ltd (601888 CH)

SH/SZ Connect Flows: Wuxi Apptec, Gree, China Tourism

We highlight inflows into WuXi AppTec Co Ltd (603259 CH), as well as outflows from Gree Electric Appliances (000651 CH) and China Tourism Group...

Ke Yan, CFA, FRM

CTG Duty Free Corp (601888 CH): Beating Market Expectations on Pre-Announced FY20 Result

Strong FY20 result with good margin expansion should lead to market earnings forecast upgrades. The first full-year impact of new Hainan duty free...

Osbert Tang, CFA

Shanghai International Airport (600009 CH): Dragged by Unfavourable Duty Free Agreement

We see SIAC's FY20 unencouraging, mostly due to the unfavourable duty free agreement reached which will erode its profitability. It is possibly...

Osbert Tang, CFA

CTG Duty Free Corp (601888 CH): Facing More Competition in a Rapidly Growing Market

New players to Hainan duty free market will not bring near-term impact to CTG Duty Free's leadership, but can be long-term challenges. However,...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): Recovery Play Overlooked by the Market + Privatisation Possibility

China Travel Intl Inv is an interesting recovery play yet to be full appreciated by the market. Its depressed valuation and exposure to the...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

SH/​​SZ Connect Flows: Wuxi Apptec, Gree, China Tourism

We highlight inflows into WuXi AppTec Co Ltd (603259 CH), as well as outflows from Gree Electric Appliances (000651 CH) and China Tourism Group...

Ke Yan, CFA, FRM

CTG Duty Free Corp (601888 CH): Beating Market Expectations on Pre-Announced FY20 Result

Strong FY20 result with good margin expansion should lead to market earnings forecast upgrades. The first full-year impact of new Hainan duty free...

Osbert Tang, CFA

Shanghai International Airport (600009 CH): Dragged by Unfavourable Duty Free Agreement

We see SIAC's FY20 unencouraging, mostly due to the unfavourable duty free agreement reached which will erode its profitability. It is possibly...

Osbert Tang, CFA

CTG Duty Free Corp (601888 CH): Facing More Competition in a Rapidly Growing Market

New players to Hainan duty free market will not bring near-term impact to CTG Duty Free's leadership, but can be long-term challenges. However,...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): Recovery Play Overlooked by the Market + Privatisation Possibility

China Travel Intl Inv is an interesting recovery play yet to be full appreciated by the market. Its depressed valuation and exposure to the...

Osbert Tang, CFA

SH/SZ Connect Flows: Wuxi Apptec, Gree, China Tourism