Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/678/original/BANNER-TTOtherDec20_GreyOrange.png?1608575984" class="editor-image img-responsive" data-smartkarma-image-id="179678"></figure></section>We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

We launched this product about a month ago, promising to revisit our suggested pair trades every month or so. Returns on our three pair trade ideas since December 4? Not good, not good at all!If we consider only four of the six names that make up our three suggested pair trades, the portfolio returned a measly +0.2% between December 4 and January 6 (not including costs of trading). However, the two positions that moved hard against us -- which in reality we probably would have been forced to exit due to stop-loss orders -- resulted in a big loss for the portfolio. What happened? Unfortunately, we stepped in front of a surge in momentum in two small-cap names, one on the Long side and one one the Short side. We still believe longer-term trends favor these positions, but in the near-term,  price action simply overwhelmed our investment theses. Despite the substantial paper losses, we're sticking to our guns and keeping the portfolio as-is. We'll be back in a month or so with another update, hopefully with better returns to report.

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/973/original/BANNER-TourDec20.png?1608779882" class="editor-image img-responsive" data-smartkarma-image-id="179973"></figure></section>Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a>.

Outbound Chinese tourism activity remained dormant in November. Macau's recovery slowed, and the appearance of a new variant of the Covid19 virus suggests a potential recovery in Chinese outbound travel may be pushed back until at least the middle of 2021, maybe later. To our surprise, the recovery in domestic Chinese tourism also appears to have lost steam in November. Passenger counts at the three major national airlines fell YoY, and overall activity was well below that of October. Chinese consumers remain cautious towards discretionary travel. We believe Chinese travel demand will recover gradually in 2021, and that the recovery could gain momentum in the second half of the year. Still, the emergence of a new strain of the virus will likely cap outbound travel in the near-term, and it also appears the rebound in domestic demand is moderating. For now, we would avoid pricey travel-related stocks like Trip.com (TCOM US).

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

<ul class="">
<li>Tencent’s games had disappeared on Huawei’s app store for one day.</li>
<li>The State Administration of Market Regulation fined Alibaba, JD.com, and Vipshop RMB500,000 each for “unfair pricing”.</li>
<li>The Ministry of Culture and Tourism announced that it would continue the suspension of cross-border group tour during the vacations of the New Year’s Day and the Chinese New Year.</li>
</ul>


Tencent’s games had disappeared on Huawei’s app store for one day.
The State Administration of Market Regulation fined Alibaba, JD.com, and Vipshop RMB500,000 each for “unfair pricing”.
The Ministry of Culture and Tourism announced that it would continue the suspension of cross-border group tour during the vacations of the New Year’s Day and the Chinese New Year.


China Internet Weekly (4Jan2021): Tencent’s Conflict with Huawei, Authorities’ Ban on New Year Tour

<ul class="">
<li>China housing Sales data has recovered strongly since May. Housing sales area grew by 2 digits yoy in October and November.</li>
<li>KE’s revenue increased by 71% yoy in 3Q20. We are not concerned about the pre-IPO margin decline.</li>
<li>We believe the stock has an upside of 14%~22 for the end of 2021.</li>
</ul>


China housing Sales data has recovered strongly since May. Housing sales area grew by 2 digits yoy in October and November.
KE’s revenue increased by 71% yoy in 3Q20. We are not concerned about the pre-IPO margin decline.
We believe the stock has an upside of 14%~22 for the end of 2021.


KE (BEKE): Riding on Housing Surge in China

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</section>
On December 26th, Beijing’s municipal government responded to a fresh outbreak of Covid19 by ordering residents to stay at home during the upcoming Lunar New Year (LNY) holiday. LNY falls on February 12th next year, barely six weeks from now.  
The bad news out of Beijing highlights an important risk to Chinese travel-related companies: that yet another important holiday period could effectively be lost to Covid19. If the restrictions put in place by local authorities in Beijing extend to other large cities or provinces, it could push back a recovery in Chinese travel demand until Summer 2021 or even Golden Week, in October 2021.
In this note we explain why LNY travel matters, and why we now believe normal levels of LNY travel may again be lost in 2021. We also point to the example of Macau, which continues to see sub-par tourism demand five months after it eased travel restrictions for some Chinese visitors.




On December 26th, Beijing’s municipal government responded to a fresh outbreak of Covid19 by ordering residents to stay at home during the upcoming Lunar New Year (LNY) holiday. LNY falls on February 12th next year, barely six weeks from now.  
The bad news out of Beijing highlights an important risk to Chinese travel-related companies: that yet another important holiday period could effectively be lost to Covid19. If the restrictions put in place by local authorities in Beijing extend to other large cities or provinces, it could push back a recovery in Chinese travel demand until Summer 2021 or even Golden Week, in October 2021.
In this note we explain why LNY travel matters, and why we now believe normal levels of LNY travel may again be lost in 2021. We also point to the example of Macau, which continues to see sub-par tourism demand five months after it eased travel restrictions for some Chinese visitors.

Dreams Deferred: Looks Like Lunar New Year Travel Demand May Be Lost

China

Trip.com Group Ltd. provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services.

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Trip.com (TCOM US)

TRACKING TRAFFIC/Pair Trades Update: 'Want to See a Dead Body?' (January 7 2021)

One month in, our three suggested pair trades have generated returns ranging from "meh" to "You're fired!" In this note we take a look at what went...

Tracking Traffic

TRACKING TRAFFIC/Chinese Tourism: Domestic Recovery Lost Steam in November

It appears the nascent recovery in Chinese domestic tourism activity began to stall in November. Outbound travel activity remains dormant, and even...

Tracking Traffic

China Internet Weekly (4Jan2021): Tencent’s Conflict with Huawei, Authorities’ Ban on New Year Tour

Tencent’s games had disappeared on Huawei’s app store for one day. The authorities fined BABA, JD, VIPS for “unfair pricing”. The authorities...

Ming Lu

KE (BEKE): Riding on Housing Surge in China

China housing Sales data has recovered strongly since May. We are not concerned about KE's pre-IPO margin decline. We believe the stock has an...

Ming Lu

Dreams Deferred: Looks Like Lunar New Year Travel Demand May Be Lost

We now believe there is a better than even chance that much of the Chinese travel demand normally associated with LNY will be lost in 2021.

Tracking Traffic

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