Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout). </li>
<li>China MeiDong Auto (1268 HK) 's integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now. </li>
<li>The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company. </li>
</ul>



China MeiDong Auto (1268 HK) presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout). 
China MeiDong Auto (1268 HK) 's integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now. 
The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company. 


Meidong: Insights from Call with the Management for H1 2022

Analyst

Steve

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.  </li>
<li>Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.  </li>
<li>However, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> currently employs the best long-term strategy amidst industry transformation.  Suggest to keep a close eye on the name. </li>
</ul>



China MeiDong Auto (1268 HK) announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.  
Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.  
However, Zhongsheng Group (881 HK) currently employs the best long-term strategy amidst industry transformation.  Suggest to keep a close eye on the name. 


Zhongsheng Group (881 HK):  Could Be A Winner In The Long Run, But No Short-Term Visibility

Eva Precision Industrial Holdings / Equity Bottom-Up

<ul>
<li>After rallying a fair bit at the beginning of 2023, we have seen sharp pullbacks in <a href="https://www.smartkarma.com/entities/eva-precision-industrial-holdings-ltd" target="_blank" data-smartkarma-citation="entities:17511:1" rel="noopener">Eva Precision Industrial Holdings (838 HK)</a> and <a href="https://www.smartkarma.com/entities/china-meidong-auto-holdings-limited" target="_blank" data-smartkarma-citation="entities:10795:1" rel="noopener">China MeiDong Auto (1268 HK)</a> share prices.</li>
<li>We believe the price cuts highlighted by <a href="https://www.smartkarma.com/profiles/victoria-li-37be10a4-61ab-4f2c-8657-201b7837050d" target="_blank" data-smartkarma-citation="accounts:780" rel="noopener">Victoria Li</a> in her insight <a href="https://www.smartkarma.com/insights/china-auto-ice-price-war-triggered-by-dongfeng-jv-players-under-pressure" target="_blank" data-smartkarma-citation="insights:97517" rel="noopener">China Auto: ICE Price War Triggered by Dongfeng, JV Players Under Pressure</a> are a significant cause. </li>
<li>While we like both stocks and they are cheap, we feel both companies will face short to medium-term pain in their businesses and share prices as the saga unfolds.</li>
</ul>


After rallying a fair bit at the beginning of 2023, we have seen sharp pullbacks in Eva Precision Industrial Holdings (838 HK) and China MeiDong Auto (1268 HK) share prices.
We believe the price cuts highlighted by Victoria Li in her insight China Auto: ICE Price War Triggered by Dongfeng, JV Players Under Pressure are a significant cause. 
While we like both stocks and they are cheap, we feel both companies will face short to medium-term pain in their businesses and share prices as the saga unfolds.


Thoughts On The Recent Pullbacks in Meidong and EVA

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.</li>
<li>We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

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

China Meidong Auto Holdings Limited is an automobile dealership and maintenance group in China.

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China MeiDong Auto (1268 HK)

Meidong: Insights from Call with the Management for H1 2022

China MeiDong Auto presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a...

Sameer Taneja

Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility

Meidong profit warning. Luxury auto dealer's business model in China is facing major uncertainties, with no visibility in the near term.

Steve

Thoughts On The Recent Pullbacks in Meidong and EVA

Price cuts in the China auto sector are forcing downgrades and share prices to retrace. We understand there will be short/medium-term pain but EVA...

Sameer Taneja

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

There could be 78 changes for the HSCI in March. That could result in 57 changes to the Southbound Stock Connect list and also have implications...

Brian Freitas

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

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52-week Range

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