HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> are massive laggards YTD.</li>
<li>As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. </li>
</ul>


Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.

Li Auto (2015 HK), Link REIT (823 HK), China Mengniu Dairy Co (2319 HK), Hang Lung Properties (101 HK) and Galaxy Entertainment Group (27 HK) are massive laggards YTD.
As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. 


HK Strategy: Where Are the Short-Term Opportunities?

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 statistics on top repurchases over one week, one month, one quarter and one year periods ended on May 3rd based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Meituan (3690 HK), Hang Seng Bank (11 HK), Swire Pacific (19 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Meituan (3690 HK), Hang Seng Bank (11 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on May 3rd based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Meituan (3690 HK), Hang Seng Bank (11 HK), Swire Pacific (19 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Meituan (3690 HK), Hang Seng Bank (11 HK).


Hong Kong Buybacks Weekly (May 3rd): Meituan, Hang Seng Bank, Swire Pacific

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Apr 26th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Hang Seng Bank (11 HK), Xiaomi (1810 HK), Wuxi Biologics (2269 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Meituan (3690 HK), CK Asset (1113 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Apr 26th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Hang Seng Bank (11 HK), Xiaomi (1810 HK), Wuxi Biologics (2269 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Meituan (3690 HK), CK Asset (1113 HK).


Hong Kong Buybacks Weekly (Apr 26th): Hang Seng Bank, Xiaomi, Wuxi Biologics

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul>
<li>The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.</li>
<li>There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. </li>
<li>Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?</li>
</ul>


The bank's announcement that it expects at least a 30% decline in profit due to impairments is rare, in its clarity, not unexpected in the content.
There may be gaining momentum for banks in Greater China to more clearly show their credit metrics, which given economies there, are not likely to be positive. 
Credit costs to loans have been in decline at this bank, and the surge they are forecasting, is understandable; perhaps partly given developments at China Evergrande?


Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

<ul>
<li>There may be overly optimistic expectations for BOC HK's credit costs, which have been relatively benign for many years. </li>
<li>Worsening economic developments in Hong Kong and China suggest that BOC HK will show a dramatic deterioration in credit metrics in coming interim results. </li>
<li>Loan growth in Hong Kong is now hitting zero and funding cost growth has been extravagant, making for a poor combination to net interest income. </li>
</ul>


There may be overly optimistic expectations for BOC HK's credit costs, which have been relatively benign for many years. 
Worsening economic developments in Hong Kong and China suggest that BOC HK will show a dramatic deterioration in credit metrics in coming interim results. 
Loan growth in Hong Kong is now hitting zero and funding cost growth has been extravagant, making for a poor combination to net interest income. 


BOC HK - Credit Costs Have Flat Lined for Years, a Blow Out in 2H23 or 1H24 Can Be a Shock

Hong Kong

Hang Seng Bank Limited and its subsidiaries provide banking and related financial services.

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Hang Seng Bank (11 HK)

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

Hong Kong Buybacks Weekly (May 3rd): Meituan, Hang Seng Bank, Swire Pacific

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Meituan (3690 HK),...

Ke Yan, CFA, FRM

Hong Kong Buybacks Weekly (Apr 26th): Hang Seng Bank, Xiaomi, Wuxi Biologics

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Hang Seng Bank (11...

Ke Yan, CFA, FRM

Bank of Jiujiang - Rare Announcement Expecting at Least 30% Profit Decline

Bank of Jiujiang announced that its profit would be at least 30% lower for FY23 due to worsening credit metrics. This is incredibly rare to see...

Daniel Tabbush

BOC HK - Credit Costs Have Flat Lined for Years, a Blow Out in 2H23 or 1H24 Can Be a Shock

BOC HK has seen credit costs flat line for some years, possibly making it appear as though this bank does not experience credit cycles. Long term...

Daniel Tabbush

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