Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.</li>
<li>China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.</li>
<li>Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.</li>
</ul>


China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.
China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.
Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.


Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

Analyst

Steve Zhou, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/west-china-cement-ltd" target="_blank" data-smartkarma-citation="entities:9423:1" rel="noopener">West China Cement (2233 HK)</a> is a cement company based in Western China.  Sales volume in Africa in 2023 was 2.6 million tons, up 117% from 1.2 million tons in 2022. </li>
<li>The company has 2 million tons of cement capacity in Mozambique, 1.5 million tons in Congo, and 1.3 million tons in Ethiopia.  </li>
<li>The company is trading at 4x 2024E PE.  I believe the risk reward is quite high here. </li>
</ul>



West China Cement (2233 HK) is a cement company based in Western China.  Sales volume in Africa in 2023 was 2.6 million tons, up 117% from 1.2 million tons in 2022. 
The company has 2 million tons of cement capacity in Mozambique, 1.5 million tons in Congo, and 1.3 million tons in Ethiopia.  
The company is trading at 4x 2024E PE.  I believe the risk reward is quite high here. 


West China Cement (2233 HK):  African Cement Play At 4x 2024E PE

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a> disclosed a Cayman scheme privatisation offer from <a href="https://www.smartkarma.com/entities/asia-cement-corp" target="_blank" data-smartkarma-citation="entities:15350:1" rel="noopener">Asia Cement (1102 TT)</a> at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close. </li>
<li>The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.</li>
<li>While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. </li>
</ul>



Asia Cement China (743 HK) disclosed a Cayman scheme privatisation offer from Asia Cement (1102 TT) at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close. 
The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. 


Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a> entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. Bloomberg reports that <a href="https://www.smartkarma.com/entities/asia-cement-corp" target="_blank" data-smartkarma-citation="entities:15350:1" rel="noopener">Asia Cement (1102 TT)</a> is considering a buyout. </li>
<li>Privatisation interest is unsurprising, as ACC’s EV has been negative since 6 July 2022 due to headwinds from the weak Chinese property sector and uncertainty about cash use.</li>
<li>An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per share.</li>
</ul>



Asia Cement China (743 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. Bloomberg reports that Asia Cement (1102 TT) is considering a buyout. 
Privatisation interest is unsurprising, as ACC’s EV has been negative since 6 July 2022 due to headwinds from the weak Chinese property sector and uncertainty about cash use.
An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per share.


Asia Cement China (743 HK): Privatisation by Asia Cement?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.</li>
<li>SOUTHBOUND's consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.</li>
<li>HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.</li>
</ul>


The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND's consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.
HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.


A/H Premium Tracker (To 26 Apr 2024):  Best Week in a LONG Time for Hs Vs As - Time To Get Long H/A

China

Anhui Conch Cement Company Limited manufactures cement products. The Company produces silicate cements, slag silicate cements, composite silicate cements, cement clinkers, and other products. Anhui Conch Cement Cement markets its products throughout China and worldwide.

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Anhui Conch Cement (600585 CH)

Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

Sinopec Engineering and China State Construction have entered short term corrections while CRC has broken its downtrend in the near term. Yum...

David Mudd

West China Cement (2233 HK): African Cement Play At 4x 2024E PE

West China Cement (2233 HK) is an African cement play. Sales volume in Africa in 2023 was 2.6 million tons, up 117% yoy. International sales made...

Steve Zhou, CFA

Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

The low-balled offer is final. While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail...

Arun George

Asia Cement China (743 HK): Privatisation by Asia Cement?

An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per...

Arun George

A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As - Time To Get Long H/A

AH Premia have finally turned a corner. Weeks of bouncing back and forth has led to lower premia, especially on average as wider spreads narrow...

Travis Lundy

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