HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Communications Construction / Equity Bottom-Up

<ul>
<li>
<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> maintained healthy earnings growth at 10% in 1Q24, ahead of the consensus expectation of 7.3% for full-year FY24.</li>
<li>A 0.2pp gross margin expansion and positive swing in credit and asset impairments are the drivers, though higher finance costs have offset some of their benefits.</li>
<li>1Q24 new contracts were up 10.8%, and we estimate backlog equals 4.5x FY24F revenue. Despite YTD outperformance, it is still cheap at 2.4x PER and 0.2x P/B.</li>
</ul>



China Communications Construction (1800 HK) maintained healthy earnings growth at 10% in 1Q24, ahead of the consensus expectation of 7.3% for full-year FY24.
A 0.2pp gross margin expansion and positive swing in credit and asset impairments are the drivers, though higher finance costs have offset some of their benefits.
1Q24 new contracts were up 10.8%, and we estimate backlog equals 4.5x FY24F revenue. Despite YTD outperformance, it is still cheap at 2.4x PER and 0.2x P/B.


China Comm Const (1800 HK): Continue to Deliver

<ul>
<li>
<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> believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas. </li>
<li>Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.</li>
<li>Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.</li>
</ul>



China Communications Construction (1800 HK) believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas. 
Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.
Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.


China Comm Const (1800 HK): A Nice Surprise

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.</li>
<li>Hs with H/A pairs <em>under</em>-perform their As on average. H/A Pair intracorrelation is up and A premia continue to trend better.</li>
<li>SOUTHBOUND and NORTHBOUND were net sells overall. Everybody sold tech.</li>
</ul>


The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
Hs with H/A pairs under-perform their As on average. H/A Pair intracorrelation is up and A premia continue to trend better.
SOUTHBOUND and NORTHBOUND were net sells overall. Everybody sold tech.


A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

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

Index Rebalance

Hygon Information Technology C / Index Rebalance

<ul>
<li>With the review period complete, we see 9 stocks in inclusion zone and 10 in deletion zone. However, there can be a maximum of 5 changes at a review.</li>
<li>We estimate a one-way turnover of 4.7% at the December rebalance leading to a one-way trade of CNY 3.86bn. Index arb balances could increase the impact on the stocks.</li>
<li>Apart from being added to the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index</a>, <a href="https://www.smartkarma.com/entities/hygon-information-technology-c" target="_blank" data-smartkarma-citation="entities:36366:1" rel="noopener">Hygon Information Technology (688041 CH)</a> could also be added to other local/global indices over the next few weeks and months.</li>
</ul>


With the review period complete, we see 9 stocks in inclusion zone and 10 in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 4.7% at the December rebalance leading to a one-way trade of CNY 3.86bn. Index arb balances could increase the impact on the stocks.
Apart from being added to the SSE50 Index, Hygon Information Technology (688041 CH) could also be added to other local/global indices over the next few weeks and months.


SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<ul><li>About 50 Chinese state-owned companies are trying to bolster investor confidence by rolling out share buybacks or plans by big stockholders to expand their holdings after a series of other measures to prop up the stock market fell short.</li><li>China’s benchmark CSI 300 Index has dropped more than 6% this year, despite supportive government policies that included halving the stamp duty on stock trades and lowering the minimum ratio for stock purchases through margin financing in August.</li><li>The index gained 0.35% Tuesday.</li></ul>

About 50 Chinese state-owned companies are trying to bolster investor confidence by rolling out share buybacks or plans by big stockholders to expand their holdings after a series of other measures to prop up the stock market fell short.China’s benchmark CSI 300 Index has dropped more than 6% this year, despite supportive government policies that included halving the stamp duty on stock trades and lowering the minimum ratio for stock purchases through margin financing in August.The index gained 0.35% Tuesday.

State-Owned Companies Buy Back Shares to Boost Investor Confidence 

China

China Railway Construction Corporation Ltd is a full service construction company.  The Company's services include construction operations, survey design and consulting. China Railway also has manufacturing operations, real estate operations, and logistics. The Company specializes in railway construction.

China Railway Construction Corp (1186 HK)

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

China Railway Construction Corp (1186 HK)

China Comm Const (1800 HK): Continue to Deliver

Gross margin expansion and reversal of impairments are drivers behind CCCC's 10% earnings growth in 1Q24, ahead of consensus forecast. We estimate...

Osbert Tang, CFA

China Comm Const (1800 HK): A Nice Surprise

CCCC expects faster new contract and revenue growth for FY24, driven by strategic industries and overseas markets. With a strong contract backlog...

Osbert Tang, CFA

A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

The Quiddity A/H Premium tracker (an H/A discount version is also available (and I like that one better)). Hs underperform As. Tech is worst....

Travis Lundy

SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out

There should be 5 index changes in Dec. Hygon has been outperforming with inflows from multiple passive inflows expected in the next month. Adds...

Brian Freitas

State-Owned Companies Buy Back Shares to Boost Investor Confidence

About 50 Chinese state-owned companies are trying to bolster investor confidence by rolling out share buybacks or plans by big stockholders to...

Caixin Global

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Comm Const (1800 HK): Continue to Deliver

​Gross margin expansion and reversal of impairments are drivers behind CCCC's 10% earnings growth in 1Q24, ahead of consensus forecast. We estimate...

Osbert Tang, CFA

China Comm Const (1800 HK): A Nice Surprise

CCCC expects faster new contract and revenue growth for FY24, driven by strategic industries and overseas markets. With a strong contract backlog...

Osbert Tang, CFA

A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

The Quiddity A/H Premium tracker (an H/A discount version is also available (and I like that one better)). Hs underperform As. Tech is worst....

Travis Lundy

SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out

There should be 5 index changes in Dec. Hygon has been outperforming with inflows from multiple passive inflows expected in the next month. Adds...

Brian Freitas

State-Owned Companies Buy Back Shares to Boost Investor Confidence

About 50 Chinese state-owned companies are trying to bolster investor confidence by rolling out share buybacks or plans by big stockholders to...

Caixin Global

Gross margin expansion and reversal of impairments are drivers behind CCCC's 10% earnings growth in 1Q24, ahead of consensus forecast. We estimate...