HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

China Tourism Group Duty Free Corp Ltd / Equity Capital Markets

<ul>
<li>At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp (601888 CH)</a> is not attractive enough. </li>
<li>2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.</li>
<li>Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.</li>
</ul>


At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of China Tourism Group Duty Free Corp (601888 CH) is not attractive enough. 
2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.
Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.


CTG Duty Free (601888 CH) H-Share IPO: 2Q22/Outlook Updates and Valuation Views

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Phu Nhuan Jewelry Jsc (PNJ VN) is the number one jewelry company in Vietnam. </li>
<li>The company is benefiting from several key catalysts including reduced social distancing measures resulting in higher store visits and sales, hedge against rising inflation, and pent up demand for jewelry. </li>
<li>The combination of higher expected earnings this year along with stable recent prices have resulted in more attractive valuations for the company.</li>
</ul>


Phu Nhuan Jewelry Jsc (PNJ VN) is the number one jewelry company in Vietnam. 
The company is benefiting from several key catalysts including reduced social distancing measures resulting in higher store visits and sales, hedge against rising inflation, and pent up demand for jewelry. 
The combination of higher expected earnings this year along with stable recent prices have resulted in more attractive valuations for the company.


Vietnam Consumer Discretionary - Phu Nhuan Jewelry: Hedge Against Rising Inflation Rates

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>Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.</li>
<li>We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.</li>
<li>There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.</li>
</ul>


Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.
There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.


HSI Index Rebalance Preview: Finding the Balance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. </li>
<li>While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.</li>
<li>We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. </li>
</ul>



China Tourism Group Duty Free Corp Ltd (601888 CH) has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. 
While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.
We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. 


CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener"><strong>Giordano International (709 HK)</strong></a> was suspended this morning pursuant to Hong Kong's Takeovers Code. </li>
<li>The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook? </li>
<li>And just for some (possible) added excitement, David Webb holds 5.1%. </li>
</ul>



Giordano International (709 HK) was suspended this morning pursuant to Hong Kong's Takeovers Code. 
The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook? 
And just for some (possible) added excitement, David Webb holds 5.1%. 


Giordano (709 HK): Cheng Family Offer Or Cashing Out?

Hong Kong

Chow Tai Fook Jewellery Group Limited retails jewelry.  The Company sells rings, necklaces, earrings, pendants, bracelets, and small statues.  Chow Tai Fook Jewellery operates retail stores in China, Hong Kong, Macau, Taiwan, Malaysia, and Singapore.

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Chow Tai Fook Jewellery (1929 HK)

Vietnam Consumer Discretionary - Phu Nhuan Jewelry: Hedge Against Rising Inflation Rates

Phu Nhuan Jewelry is the number one jewelry company in Vietnam. The company is benefiting from several key catalysts including pent-up demand for...

Douglas Kim

HSI Index Rebalance Preview: Finding the Balance

There could be up to 5 inclusions as Hang Seng works its way up to 80 index members. We highlight the probable inclusions and find that some of...

Brian Freitas

Giordano (709 HK): Cheng Family Offer Or Cashing Out?

Shares are currently suspended, so there is nothing to be done yet. IF a firm Offer unfolds from Cheng Yu Tung family, I expect a punchy premium.

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

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CTG Duty Free (601888 CH) H-Share IPO: 2Q22/Outlook Updates and Valuation Views

We consider the indicated price range not attractive enough given current macroenvironment, market volatility and earnings uncertainty. Risk-return...

Osbert Tang, CFA

Vietnam Consumer Discretionary - Phu Nhuan Jewelry: Hedge Against Rising Inflation Rates

Phu Nhuan Jewelry is the number one jewelry company in Vietnam. The company is benefiting from several key catalysts including pent-up demand for...

Douglas Kim

HSI Index Rebalance Preview: Finding the Balance

There could be up to 5 inclusions as Hang Seng works its way up to 80 index members. We highlight the probable inclusions and find that some of...

Brian Freitas

CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

CDFC re-activated its H-share IPO by refreshing its Application Proof. If the issue details are unchanged, it is less attractive than previously...

Osbert Tang, CFA

Giordano (709 HK): Cheng Family Offer Or Cashing Out?

Shares are currently suspended, so there is nothing to be done yet. IF a firm Offer unfolds from Cheng Yu Tung family, I expect a punchy premium.

David Blennerhassett