External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>HTD delivered FY23 results with solid earnings growth (+42% YoY) despite soft top line (+0.4% YoY).</li><li>For FY24E, mgmt. emphasized secular earnings growth and margin enhancement with aggressive cost control and operating leverage.</li><li>As such, we modelled stable YoY revenue growth in FY24E, but earnings would surge 28% YoY (with GPM up to 3.5%, +0.2ppts YoY). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HTD delivered FY23 results with solid earnings growth (+42% YoY) despite soft top line (+0.4% YoY).For FY24E, mgmt. emphasized secular earnings growth and margin enhancement with aggressive cost control and operating leverage.As such, we modelled stable YoY revenue growth in FY24E, but earnings would surge 28% YoY (with GPM up to 3.5%, +0.2ppts YoY). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Huitongda Network (9878 HK) - Focusing on Earnings Growth

<ul><li>HTD delivered mixed 1H23 results with upbeat margin. Rev +6.6% YoY, 6.2% below consensus, while adj. net profit +20% YoY, in line with consensus.</li><li>We modeled rev +12.9% YoY in FY23E, in which 2H23E rev would accelerate to +19.5% YoY.</li><li>Consumer electronics and vehicles continue to be the main drivers, on supply chain expansion and low product penetration in low-tier cities. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HTD delivered mixed 1H23 results with upbeat margin. Rev +6.6% YoY, 6.2% below consensus, while adj. net profit +20% YoY, in line with consensus.We modeled rev +12.9% YoY in FY23E, in which 2H23E rev would accelerate to +19.5% YoY.Consumer electronics and vehicles continue to be the main drivers, on supply chain expansion and low product penetration in low-tier cities. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Huitongda Network (9878 HK) – Looking into Recovery in 2H23E

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>We expect Huitongda (HTD) 1H23 revenue in-line with consensus, and non-IFRS NI 15.6% lower than consensus. </li>
<li>The lower bottom-line is due to 1) product mix change result in lower gross margin; 2) higher impairment loss from account receivables due to its SME focused model.</li>
<li>We maintain the stock as SELL. We raise TP by HK$2.5 to HK$20.5 to factor in the upward revision of NI from downsizing of minority interest.</li>
</ul>


We expect Huitongda (HTD) 1H23 revenue in-line with consensus, and non-IFRS NI 15.6% lower than consensus. 
The lower bottom-line is due to 1) product mix change result in lower gross margin; 2) higher impairment loss from account receivables due to its SME focused model.
We maintain the stock as SELL. We raise TP by HK$2.5 to HK$20.5 to factor in the upward revision of NI from downsizing of minority interest.


[Huitongda (9878 HK, SELL, TP HK$20.5) TP Change]: Downsizing Minority Interest Drive up Earnings

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>The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.</li>
<li>There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.</li>
<li>Capping will result in passives buying <a href="https://www.smartkarma.com/entities/kuaishou-technology" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a> while selling <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>.</li>
</ul>


The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.
There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Capping will result in passives buying Kuaishou Technology (1024 HK) and JD.com (9618 HK) while selling Meituan (3690 HK) and Tencent (700 HK).


Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

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 June 7th.</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 China Mobile, Tencent, BOC, China Hongqiao, Yankuang Energy.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 7th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for China Mobile, Tencent, BOC, China Hongqiao, Yankuang Energy.


Hong Kong Connect Flows (Jun 7th): China Mobile, Tencent, BOC, China Hongqiao, Yankuang Energy

China

Jianxin Mining Co., Ltd. produces and trades non-ferrous minerals (excluding precious metals), PCs, Servers, network equipments, computer softwares, building materials and other related products.

Jiangsu Guotai International Group Guomao Co., Ltd. operates an import and export business. The company exports textile products, apparel, mechanical and electrical products, light-industry products, chemical products and other general merchandise. The company also provides labor services to foreign countries.

CMST Development Co Ltd provides warehousing, storage, and transportation servic es. The Company also sells merchandise and invests in the real estate industry.

Changlin Co., Ltd. manufactures and markets machinery and equipment for a variety of industries including forestry, construction, mining, and environmental protection industries.

Shanghai Waigaoqiao Free Trade Zone Group Co Ltd develops and manages the properties in Waigaoqiao Free Trade Zone in Shanghai's Pudong New Area. The Company develops and leases commercial and residential properties, manages hotel, invests in the goods trading business and provides logistics services.

Zhejiang Huatie Construction Safety Science and Technology Co. Ltd. is a safety equipment rental company. The Company provides a full range of safety gear and equipment for the construction industry.

Minmetals Development Co., Ltd imports and exports metals and minerals. The Company imports rolled steel, ore sand, and steel billets, and exports coke, coal, iron, bolognian stones, and other minerals.  Minmetals Development also provides freight transportation service and manages hotels.

Sinochem International Corporation imports and exports chemical products including plastics, rubber, coke, and other chemicals,  The Company also operates in domestic trading, freight transportation, and warehousing businesses.

Sinochem International Corporation A (600500 CH)

Xiamen ITG Group Corp Ltd operates an import and export business.  The Company exports textiles and non-ferrous metals, and imports crude oil, ferrous metals, and machinery.  Xiamen International also sells real estate properties.

China Meheco Co Ltd operates an import and export business. The Company trades pharmaceutical products, paper making machinery, and aluminum extruders. CNTIC Trading also imports patent technologies and industrial techniques.

HANWA CO., LTD. wholesales, imports, and exports steel products, nonferrous metals, industrial machines, and food products.  The Company also handles chemical products, construction materials, and information equipment.  Hanwa has several subsidiaries and sales bases in the U.S. and around Asia.

INABA DENKI SANGYO CO., LTD. sells electric cables, plumbing products, and electronic equipment.  The Company's products include cables, electric switchboards, lighting equipment, sensors, and ducts.  Inaba Denki Sangyo also provides real estate management and data processing services.

KANEMATSU CORPORATION is a trading company handling textiles, fuel, chemicals, steel and housing construction materials, foodstuffs, and electronic equipment. The Company diversifies by operating a semiconductor-related IT (Information Technology) business.

Distribution Solutions Group, Inc. operates as a specialty distribution company. The Company provides high touch and value-added distribution solutions to the maintenance, repair and operations (MRO), original equipment manufacturer (OEM), and the industrial technologies markets.

Global Industrial Company operates as an an industrial equipment distributor. The Company offers product categories include electrical and lighting, fasteners and hardware, furniture and office, material handling, safety and security, storage and shelving, and metalworking and cutting tools. Global Industrial serves customers in the United States.

MMTC Limited is a diversified company involved in the business of minerals, precious metals, metals, coal and hydro carbons, fertilizers and agro products.

NOW Inc distributes oil drilling equipment across the globe. The Company provides maintenance, repair, and operating supplies for the global energy and industrial markets.

Kaman Corporation and its subsidiaries serve government and commercial markets through its diversified technologies and distribution segments.  The Company provides aircraft manufacturing, design and manufacture of advanced technology products and systems, and advanced technology services.  Kaman also distributes industrial products.

Richelieu Hardware Ltd. imports and distributes specialty products for the kitchen cabinet and furniture markets in Canada.  The Company also manufactures chalkboards and tackboards.  Richelieu's wholly owned subsidiary, Cedan Industries Inc., specializes in the manufacturing of veneer sheets and edgebanding products for the Canadian and export markets.

Russel Metals Inc. distributes steel in North America.  The Company operates through service center distribution, energy sector distribution, and steel import/export.  Russel also processes steel.

Huitongda Network Co., Ltd. develops a sinking market retail industry transaction and service platform. The Company provides supply chain solutions development, deal matching, logistics and after sales supporting, and other services. Huitongda Network provides its services throughout China.

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Huitongda (9878 HK)

Huitongda Network (9878 HK) - Focusing on Earnings Growth

HTD delivered FY23 results with solid earnings growth (+42% YoY) despite soft top line (+0.4% YoY). For FY24E, mgmt. emphasized secular earnings...

CMB International

Huitongda Network (9878 HK) – Looking into Recovery in 2H23E

HTD delivered mixed 1H23 results with upbeat margin. Rev +6.6% YoY, 6.2% below consensus, while adj. net profit +20% YoY, in line with consensus.

CMB International