HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.</li>
<li>
<a href="https://www.smartkarma.com/entities/luk-fook-holdings-intl-ltd" target="_blank" data-smartkarma-citation="entities:19054:1" rel="noopener">Luk Fook Holdings (590 HK)</a> is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International (178 HK)</a> is the cosmetics play.</li>
<li>Property investors including <a href="https://www.smartkarma.com/entities/wharf-holdings-ltd" target="_blank" data-smartkarma-citation="entities:51:1" rel="noopener">Wharf Holdings (4 HK)</a> and <a href="https://www.smartkarma.com/entities/hysan-development-co" target="_blank" data-smartkarma-citation="entities:14169:1" rel="noopener">Hysan Development Co (14 HK)</a> will gain from the shopping malls in major tourist areas in Hong Kong.</li>
</ul>


There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.

Luk Fook Holdings (590 HK) is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. Sa Sa International (178 HK) is the cosmetics play.
Property investors including Wharf Holdings (4 HK) and Hysan Development Co (14 HK) will gain from the shopping malls in major tourist areas in Hong Kong.


Increasing HK Duty Free Quota: The Beneficaries

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>ETF flows showed subdued activity during the week although the Southbound Connect platform had a minor outflow.</li>
<li>
<a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a> both had positive news sentiment helping their share prices rally on better earnings announcements.
</li>
<li>
<a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> announced a major asset impairment write-down sending its stock to historic lows.  <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">China Tourism Group Duty Free (1880 HK)</a> disappointed on 2Q24 sales and profits.
</li>
</ul>


ETF flows showed subdued activity during the week although the Southbound Connect platform had a minor outflow.

Great Wall Motor (2333 HK) and China Feihe (6186 HK) both had positive news sentiment helping their share prices rally on better earnings announcements.


New World Development (17 HK) announced a major asset impairment write-down sending its stock to historic lows.  China Tourism Group Duty Free (1880 HK) disappointed on 2Q24 sales and profits.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)

<ul>
<li>China ETF flows were steady for the week, however Southbound Connect flows were negative for the first time since February.</li>
<li><a href="https://www.smartkarma.com/entities/prada-s-p-a" target="_blank" data-smartkarma-citation="entities:889:1" rel="noopener">Prada S.P.A. (1913 HK)</a>  shares standout in the luxury brand sector as Miu Miu sales surged.  <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a> slightly beat estimates but still have BioSecure Act overhang.</li>
<li>Property development firms <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/wharf-holdings-ltd" target="_blank" data-smartkarma-citation="entities:51:1" rel="noopener">Wharf Holdings (4 HK)</a> were hurt by poor results, while <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Techn (9901 HK)</a> saw earnings miss estimates.</li>
</ul>


China ETF flows were steady for the week, however Southbound Connect flows were negative for the first time since February.
Prada S.P.A. (1913 HK)  shares standout in the luxury brand sector as Miu Miu sales surged.  WuXi AppTec (2359 HK) slightly beat estimates but still have BioSecure Act overhang.
Property development firms Hang Lung Properties (101 HK) and Wharf Holdings (4 HK) were hurt by poor results, while New Oriental Education &amp; Techn (9901 HK) saw earnings miss estimates.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>When property advisors (JLL, Knight Frank, CBRE etc) debate the bottom of Hong Kong's office/retail market, such commentary is often infused with cautious optimism. </li>
<li>And for good reason, as vacancies increase, and rents soften.</li>
<li>Recent press articles and anecdotal evidence suggests market uncertainty lingers, prompting  landlords to (further) assess their stance on rents.</li>
</ul>


When property advisors (JLL, Knight Frank, CBRE etc) debate the bottom of Hong Kong's office/retail market, such commentary is often infused with cautious optimism. 
And for good reason, as vacancies increase, and rents soften.
Recent press articles and anecdotal evidence suggests market uncertainty lingers, prompting  landlords to (further) assess their stance on rents.


Hong Kong Property: In Need Of A Good Story

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>In its final results on 30 January, the <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> board declared a final dividend of HK$0.60 per share, which can be paid in cash or by scrip.</li>
<li>The Chan family's share of outstanding shares has steadily increased from 53.15% in 2013 to 61.89%. The scrip dividend could increase the family to 63.57% of post-dividend outstanding shares. </li>
<li>The Chan family have plenty of headroom to chip away at minorities before breaching the 25% public float requirements. HPL’s valuation is undemanding, but a privatisation offer is unlikely.</li>
</ul>


In its final results on 30 January, the Hang Lung Properties (101 HK) board declared a final dividend of HK$0.60 per share, which can be paid in cash or by scrip.
The Chan family's share of outstanding shares has steadily increased from 53.15% in 2013 to 61.89%. The scrip dividend could increase the family to 63.57% of post-dividend outstanding shares. 
The Chan family have plenty of headroom to chip away at minorities before breaching the 25% public float requirements. HPL’s valuation is undemanding, but a privatisation offer is unlikely.


Hang Lung Properties (101 HK): Scrip Div Helps the Family to Chip Away at Minorities

Hong Kong

Hysan Development Company Limited, through its subsidiaries, invests in real estate.  The Company's properties include commercial rental and luxury residential buildings in Hong Kong.  The Company also invests in treasuries.

Price Gauge
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Hysan Development Co (14 HK)

Increasing HK Duty Free Quota: The Beneficaries

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)

China Feihe beat estmates for 2Q with higher profits and GW Motor substantially increased international sales of EV's. NWD will take a large asset...

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2)

Southbound Connect flows were negative for the first week since February. Prada benefited from a weak JPY and Wuxi AppTec beat estimates. HK...

David Mudd

Hong Kong Property: In Need Of A Good Story

Upgrading and flight-to-quality in the office space has the affect of lifting occupancy in new projects; however such activity largely foreshadows...

David Blennerhassett

Hang Lung Properties (101 HK): Scrip Div Helps the Family to Chip Away at Minorities

The Chan family have plenty of headroom to chip away at minorities before breaching the 25% public float requirements. HPL’s valuation is...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Increasing HK Duty Free Quota: The Beneficaries

​Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)

China Feihe beat estmates for 2Q with higher profits and GW Motor substantially increased international sales of EV's. NWD will take a large asset...

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2)

Southbound Connect flows were negative for the first week since February. Prada benefited from a weak JPY and Wuxi AppTec beat estimates. HK...

David Mudd

Hong Kong Property: In Need Of A Good Story

Upgrading and flight-to-quality in the office space has the affect of lifting occupancy in new projects; however such activity largely foreshadows...

David Blennerhassett

Hang Lung Properties (101 HK): Scrip Div Helps the Family to Chip Away at Minorities

The Chan family have plenty of headroom to chip away at minorities before breaching the 25% public float requirements. HPL’s valuation is...

Arun George

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...