HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Bosideng International Holdings / Equity Bottom-Up

<ul>
<li>Amid the challenging market, <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a>'s 15% growth in 1H FY23 profit is decent. Excluding impairments, operating profit would have grown by 31.3%.</li>
<li>It expects FY23 gross margin to expand and further store optimisation to enhance operating margin. The introduction of highly successful ultralight down jackets is an added driver.</li>
<li>With 32% increase in online branded apparel sales, the channel will be Bosideng's key growth impetus. For "double-11", sales have outperformed peers significantly, showcasing its product strengths.</li>
</ul>


Amid the challenging market, Bosideng International Holdings (3998 HK)'s 15% growth in 1H FY23 profit is decent. Excluding impairments, operating profit would have grown by 31.3%.
It expects FY23 gross margin to expand and further store optimisation to enhance operating margin. The introduction of highly successful ultralight down jackets is an added driver.
With 32% increase in online branded apparel sales, the channel will be Bosideng's key growth impetus. For "double-11", sales have outperformed peers significantly, showcasing its product strengths.


Bosideng (3998 HK): Decent Result Distorted by Impairment Losses

Thematic (Sector/Industry)

<ul>
<li>More policy measures will be rolled out by the Chinese government to support domestic consumption in 2022; and the growing nationalistic trend will benefit leading domestic brands. </li>
<li>Within the consumer discretionary sector, we identify <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> and <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> as the prime beneficiaries of this trend.</li>
<li>All of them are leaders in their respective sub-segment, have exemplary competitive edges against foreign players and are investing heavily in technology and distribution to solidify their moats. </li>
</ul>


More policy measures will be rolled out by the Chinese government to support domestic consumption in 2022; and the growing nationalistic trend will benefit leading domestic brands. 
Within the consumer discretionary sector, we identify Anta Sports Products (2020 HK), Bosideng International Holdings (3998 HK) and Haier Smart Home (6690 HK) as the prime beneficiaries of this trend.
All of them are leaders in their respective sub-segment, have exemplary competitive edges against foreign players and are investing heavily in technology and distribution to solidify their moats. 


China Consumer Discretionary: Beneficiaries of The Nationalistic Trend

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> has another solid 1H, with net profit surging 23% and DPS rose 20%. At 11.3x PER for FY25F, the valuation is not stretched.</li>
<li>The gross margin for branded down apparel has hit the lowest 1H level since 1H FY22, however. Similarly, its OEM management gross margin has come down.</li>
<li>Operating cash outflow rose to Rmb3.5bn, compared with Rmb585m a year ago, and inventory days leaped 29 days. Revenue and profit for ladieswear have plunged.   </li>
</ul>



Bosideng International Holdings (3998 HK) has another solid 1H, with net profit surging 23% and DPS rose 20%. At 11.3x PER for FY25F, the valuation is not stretched.
The gross margin for branded down apparel has hit the lowest 1H level since 1H FY22, however. Similarly, its OEM management gross margin has come down.
Operating cash outflow rose to Rmb3.5bn, compared with Rmb585m a year ago, and inventory days leaped 29 days. Revenue and profit for ladieswear have plunged.   


Bosideng (3998 HK): Good Results, yet There Are Concerns

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jnby-design-ltd" target="_blank" data-smartkarma-citation="entities:23642:1" rel="noopener">JNBY Design Ltd (3306 HK)</a> is successful in capturing China's niche designer fashion segment. Its FY24 net profit surged 36.4%, despite the challenging retail market.</li>
<li>Gross margin reached a record high of 67.3% in 2H24 on higher purchases from loyal members. Operating cash flow surged 70.7% YoY, affirming its status as a cash cow.</li>
<li>Including special dividends, FY24 payout ratio was 95%. At 75% ordinary payout for FY25, it sits on a 10.9% yield. Net cash equals 22% of the share price.</li>
</ul>



JNBY Design Ltd (3306 HK) is successful in capturing China's niche designer fashion segment. Its FY24 net profit surged 36.4%, despite the challenging retail market.
Gross margin reached a record high of 67.3% in 2H24 on higher purchases from loyal members. Operating cash flow surged 70.7% YoY, affirming its status as a cash cow.
Including special dividends, FY24 payout ratio was 95%. At 75% ordinary payout for FY25, it sits on a 10.9% yield. Net cash equals 22% of the share price.


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

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 19th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for ICBC (1398 HK), China Hongqiao (1378 HK).</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 19th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for ICBC (1398 HK), China Hongqiao (1378 HK).


Hong Kong Connect Flows (Jul 19th): ICBC, China Hongqiao

China

EEKA Fashion Holdings Limited engages in apparel design and development businesses. The Company produces high-fashion women's apparel products. EEKA Fashion Holdings sells products through domestic department stores and shopping centers.

Price Gauge
52-week Range	0.00 - 0.00
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EEKA Fashion Holdings (3709 HK)

Bosideng (3998 HK): Decent Result Distorted by Impairment Losses

Bosideng actually has a decent 1H FY23 result and gross margin should expand for full-year FY23. Its efforts on store optimisation, new product...

Osbert Tang, CFA

China Consumer Discretionary: Beneficiaries of The Nationalistic Trend

We identify Anta Sports, Bosideng and Haier Smart Home as the beneficiaries of rising nationalistic trend of China's consumer discretionary sector...

Osbert Tang, CFA

Bosideng (3998 HK): Good Results, yet There Are Concerns

Bosideng reports strong 1H FY25 results with net profit up 23% and DPS rising 20%, but faces challenges with declining margins and rising...

Osbert Tang, CFA

JNBY Design (3306 HK): A Cash Cow

JNBY excels in China's niche designer fashion market, with FY24 net profit up 36.4% despite retail challenges. High gross margin and strong cash...

Osbert Tang, CFA

Hong Kong Connect Flows (Jul 19th): ICBC, China Hongqiao

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for ICBC (1398 HK), China Hongqiao (1378 HK).

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Bosideng (3998 HK): Decent Result Distorted by Impairment Losses

Bosideng actually has a decent 1H FY23 result and gross margin should expand for full-year FY23. Its efforts on store optimisation, new product...

Osbert Tang, CFA

China Consumer Discretionary: Beneficiaries of The Nationalistic Trend

We identify Anta Sports, Bosideng and Haier Smart Home as the beneficiaries of rising nationalistic trend of China's consumer discretionary sector...

Osbert Tang, CFA

Bosideng (3998 HK): Good Results, yet There Are Concerns

​Bosideng reports strong 1H FY25 results with net profit up 23% and DPS rising 20%, but faces challenges with declining margins and rising...

Osbert Tang, CFA

JNBY Design (3306 HK): A Cash Cow

​JNBY excels in China's niche designer fashion market, with FY24 net profit up 36.4% despite retail challenges. High gross margin and strong cash...

Osbert Tang, CFA

Hong Kong Connect Flows (Jul 19th): ICBC, China Hongqiao

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for ICBC (1398 HK), China Hongqiao (1378 HK).

Ke Yan, CFA, FRM

Bosideng reports strong 1H FY25 results with net profit up 23% and DPS rising 20%, but faces challenges with declining margins and rising...

JNBY excels in China's niche designer fashion market, with FY24 net profit up 36.4% despite retail challenges. High gross margin and strong cash...