HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK) </a>will suffer from a higher USD rate as Trump's massive deportation plan raises inflation.  High-cash companies will better position, however.</li>
<li>The surge in tariffs on US imports of goods from China will further accelerate supply chain diversification, boosting intra-Asia trade and driving <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC (883 HK)</a> may gain from a slowdown in the green transition in the US as oil prices are supported. <a href="https://www.smartkarma.com/entities/meitu-inc" target="_blank" data-smartkarma-citation="entities:23573:1" rel="noopener">Meitu Inc (1357 HK)</a>, given its crypto investments, will benefit. </li>
</ul>



China Southern Airlines (1055 HK) will suffer from a higher USD rate as Trump's massive deportation plan raises inflation.  High-cash companies will better position, however.
The surge in tariffs on US imports of goods from China will further accelerate supply chain diversification, boosting intra-Asia trade and driving SITC International (1308 HK). 

CNOOC (883 HK) may gain from a slowdown in the green transition in the US as oil prices are supported. Meitu Inc (1357 HK), given its crypto investments, will benefit. 


China & HK Strategy: Some Stocks for Trump Trade

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

China Southern Airlines / Equity Bottom-Up

<ul>
<li>Outbound &amp; domestic travel activity continued to recover nicely in August</li>
<li>Initial reports suggest Mid-Autumn Festival travel activity was solid, too</li>
<li>After recent surge, we've cut Trip.com to HOLD; check out airlines instead</li>
</ul>


Outbound &amp; domestic travel activity continued to recover nicely in August
Initial reports suggest Mid-Autumn Festival travel activity was solid, too
After recent surge, we've cut Trip.com to HOLD; check out airlines instead


Monthly Chinese Tourism Tracker: Solid Outbound & Domestic Numbers in August | Cut Trip.com to HOLD

<ul>
<li>All three Chinese airlines trimmed their losses in 1H24, suggesting a pick-up in sector fundamentals. However, their 2Q24 bottom line displayed different trends.</li>
<li>
<a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> is performing the best, with QoQ improvement in both reported and recurring losses (reduction by 41.7% and 7.4%, respectively).</li>
<li>
<a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, however, dipped back into red in 2Q24 after making a profit in 1Q24. With Air China underperforming YTD, there is room to revenge in 2H24.</li>
</ul>


All three Chinese airlines trimmed their losses in 1H24, suggesting a pick-up in sector fundamentals. However, their 2Q24 bottom line displayed different trends.

Air China Ltd (H) (753 HK) is performing the best, with QoQ improvement in both reported and recurring losses (reduction by 41.7% and 7.4%, respectively).

China Southern Airlines (1055 HK), however, dipped back into red in 2Q24 after making a profit in 1Q24. With Air China underperforming YTD, there is room to revenge in 2H24.


<ul>
<li>The companies that suffered exchange losses in FY23 due to Rmb depreciation will now benefit from potential Rmb appreciation in 2H24 and FY25. Meanwhile, gainers will become losers. </li>
<li>The beneficiaries are <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (753 HK)</a>, <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>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, <a href="https://www.smartkarma.com/entities/xinjiang-goldwind-science-technology-h" target="_blank" data-smartkarma-citation="entities:10112:1" rel="noopener">Xinjiang Goldwind (2208 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-eastern-airlines-co-h" target="_blank" data-smartkarma-citation="entities:1079:1" rel="noopener">China Eastern Airlines (670 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>, <a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> may need to book exchange losses (vs. gains in FY23). </li>
</ul>


The companies that suffered exchange losses in FY23 due to Rmb depreciation will now benefit from potential Rmb appreciation in 2H24 and FY25. Meanwhile, gainers will become losers. 
The beneficiaries are Air China Ltd (753 HK), Shenzhen International (152 HK), China Southern Airlines (1055 HK), Xinjiang Goldwind (2208 HK), and China Eastern Airlines (670 HK). 

Fosun Tourism (1992 HK), China East Education (667 HK), and China Communications Construction (1800 HK) may need to book exchange losses (vs. gains in FY23). 


China Strategy: Re-Assessing the Rmb Exchange Impacts

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 analyse the changes of A-H premium on 145 stocks over the last week. The average A-H premium was 111.9% as of Sep 6th.</li>
<li>The average A-H premium changed by 1.3ppt week-on-week, led by communication services, consumer discretionary, information technology and offset by real estate, financials.</li>
<li>We highlight weekly changes in A-H premium for China Tourism, Guotai Junan Securities, Hangzhou Tiger, Shanghai Pharma, GAC Group, Haitong Securities.</li>
</ul>


We analyse the changes of A-H premium on 145 stocks over the last week. The average A-H premium was 111.9% as of Sep 6th.
The average A-H premium changed by 1.3ppt week-on-week, led by communication services, consumer discretionary, information technology and offset by real estate, financials.
We highlight weekly changes in A-H premium for China Tourism, Guotai Junan Securities, Hangzhou Tiger, Shanghai Pharma, GAC Group, Haitong Securities.


A-H Premium Weekly (Sep 6th): China Tourism, Guotai Junan Securities, Tigermed, Shanghai Pharma

China

Air China Limited provides passenger, cargo, and airline-related services in China.  The Company is primarily based in Beijing and a major hub for domestic and international air transportation.  Air China's airline-related services include aircraft maintenance, repair, overhaul service, ground services, and in-flight catering services.

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

Air China Ltd (A) (601111 CH)

China & HK Strategy: Some Stocks for Trump Trade

A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...

Osbert Tang, CFA

Monthly Chinese Tourism Tracker: Solid Outbound & Domestic Numbers in August | Cut Trip.com to HOLD

Chinese travel activity in August continued its gradual recovery, and early reports from the recent Mid Autumn Festival suggest activity remained...

Tracking Traffic

Chinese Airlines: Diverging Performance

Chinese airlines are the key beneficiaries of stronger Rmb as US rates drop, driven primarily by their high gearing and significant USD borrowings....

Osbert Tang, CFA

China Strategy: Re-Assessing the Rmb Exchange Impacts

With the US kick-starting the lower interest rate cycle with a 50bp cut overnight and indicated an expectation of an aggregate further 50bp cut in...

Osbert Tang, CFA

A-H Premium Weekly (Sep 6th): China Tourism, Guotai Junan Securities, Tigermed, Shanghai Pharma

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Tourism, Guotai Junan Securities, Hangzhou Tiger,...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China & HK Strategy: Some Stocks for Trump Trade

​A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...

Osbert Tang, CFA

Monthly Chinese Tourism Tracker: Solid Outbound & Domestic Numbers in August | Cut Trip.com to HOLD

Chinese travel activity in August continued its gradual recovery, and early reports from the recent Mid Autumn Festival suggest activity remained...

Tracking Traffic

Chinese Airlines: Diverging Performance

Chinese airlines are the key beneficiaries of stronger Rmb as US rates drop, driven primarily by their high gearing and significant USD borrowings....

Osbert Tang, CFA

China Strategy: Re-Assessing the Rmb Exchange Impacts

With the US kick-starting the lower interest rate cycle with a 50bp cut overnight and indicated an expectation of an aggregate further 50bp cut in...

Osbert Tang, CFA

A-H Premium Weekly (Sep 6th): China Tourism, Guotai Junan Securities, Tigermed, Shanghai Pharma

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Tourism, Guotai Junan Securities, Hangzhou Tiger,...

Ke Yan, CFA, FRM

A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...