HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a> showed encouraging QoQ improvements in profit trend, margins, new orders, and operating cash flow in 3Q24, though reported profit was still down in 9M24.</li>
<li>Cost control has contributed to 4.6pp QoQ gross margin expansion. Meanwhile, new order growth has accelerated to 63.8% YoY, from just a teens level in 1Q24 and 2Q24.</li>
<li>Our estimate suggests that backlog is enough to cover 1.9x its annual revenue, enhancing visibility. Its PER, dividend yield and P/B are all standing on attractive levels.</li>
</ul>



Dongfang Electric (1072 HK) showed encouraging QoQ improvements in profit trend, margins, new orders, and operating cash flow in 3Q24, though reported profit was still down in 9M24.
Cost control has contributed to 4.6pp QoQ gross margin expansion. Meanwhile, new order growth has accelerated to 63.8% YoY, from just a teens level in 1Q24 and 2Q24.
Our estimate suggests that backlog is enough to cover 1.9x its annual revenue, enhancing visibility. Its PER, dividend yield and P/B are all standing on attractive levels.


Dongfang Electric (1072 HK): Good Sequential Improvement Masked

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 analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 98.6% as of Nov 1st.</li>
<li>The average A-H premium changed by 2.7ppt week-on-week, led by utilities, information technology, materials.</li>
<li>We highlight weekly changes in A-H premium for Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO.</li>
</ul>


We analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 98.6% as of Nov 1st.
The average A-H premium changed by 2.7ppt week-on-week, led by utilities, information technology, materials.
We highlight weekly changes in A-H premium for Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO.


A-H Premium Weekly (Nov 1st):Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outflows, and holding by mainland investors.</li>
<li>We highlight inflows into Alibaba, Xiaomi, SMIC, Geely, CCB and outflows from Meituan.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight inflows into Alibaba, Xiaomi, SMIC, Geely, CCB and outflows from Meituan.


Hong Kong Connect Flows (October): $12 Bn Inflows

<ul>
<li>We analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 95.8% as of Oct 25th.</li>
<li>The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, real estate and offset by utilities, consumer discretionary, financials.</li>
<li>We highlight weekly changes in A-H premium for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.</li>
</ul>


We analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 95.8% as of Oct 25th.
The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, real estate and offset by utilities, consumer discretionary, financials.
We highlight weekly changes in A-H premium for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.


A-H Premium Weekly (Oct 25th):SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>Hong Kong markets continue to outperform globally this year with short selling declining and mainland buying increasing.  These trends should accelerate going into next year.</li>
<li>
<a href="https://www.smartkarma.com/entities/sun-art-retail-group-ltd" target="_blank" data-smartkarma-citation="entities:401:1" rel="noopener">Sun Art Retail (6808 HK)</a>resumed trading after announcing that the company is entertaining one or more potential acquisition plans for the company.  The company also announced strong 1H25 earnings.
</li>
<li>
<a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group Company (2727 HK) </a>announce a buyback plan for 10% of A and H shares outstanding.  The company also announced the acquisition of the China Fanuc robotics business.
</li>
</ul>


Hong Kong markets continue to outperform globally this year with short selling declining and mainland buying increasing.  These trends should accelerate going into next year.

Sun Art Retail (6808 HK)resumed trading after announcing that the company is entertaining one or more potential acquisition plans for the company.  The company also announced strong 1H25 earnings.


Shanghai Electric Group Company (2727 HK) announce a buyback plan for 10% of A and H shares outstanding.  The company also announced the acquisition of the China Fanuc robotics business.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 22)

China

Shanghai Electric Group Company Limited manufactures power generation equipment. The Company produces and sells thermal generator set, nuclear power units, wind power equipment, power transmission and distribution equipment, and other products. Shanghai Electric Group also manufactures environmental protection equipment.

Shanghai Electric Group Company (601727 CH)

Price Gauge
52-week Range	0.00 - 0.00
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Shanghai Electric Group Company (601727 CH)

Dongfang Electric (1072 HK): Good Sequential Improvement Masked

DEC shows positive QoQ improvements in profit trend, margins, new orders, and cash flow in 3Q24, despite a reported profit decline in 9M24. Order...

Osbert Tang, CFA

A-H Premium Weekly (Nov 1st):Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO.

Ke Yan, CFA, FRM

Hong Kong Connect Flows (October): $12 Bn Inflows

We analyzed the Hong Kong Connect Scheme for October and highlighted flows for Alibaba, Xiaomi, SMIC, Geely, CCB, and Meituan.

Ke Yan, CFA, FRM

A-H Premium Weekly (Oct 25th):SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE

We analyzed A-H premium changes in the past week and highlight A-H premium changes for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.

Ke Yan, CFA, FRM

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 22)

HK out-perform global peers with short selling abating and mainland buying increasing. Sun Art resumed trading as it entertains potential buyout...

David Mudd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Dongfang Electric (1072 HK): Good Sequential Improvement Masked

​DEC shows positive QoQ improvements in profit trend, margins, new orders, and cash flow in 3Q24, despite a reported profit decline in 9M24. Order...

Osbert Tang, CFA

A-H Premium Weekly (Nov 1st):Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Chalco, ZOOMLION, FDZJ, FLAT GROUP, RemeGen, CanSinoBIO.

Ke Yan, CFA, FRM

Hong Kong Connect Flows (October): $12 Bn Inflows

We analyzed the Hong Kong Connect Scheme for October and highlighted flows for Alibaba, Xiaomi, SMIC, Geely, CCB, and Meituan.

Ke Yan, CFA, FRM

A-H Premium Weekly (Oct 25th):SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE

We analyzed A-H premium changes in the past week and highlight A-H premium changes for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.

Ke Yan, CFA, FRM

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (October 22)

HK out-perform global peers with short selling abating and mainland buying increasing. Sun Art resumed trading as it entertains potential buyout...

David Mudd

DEC shows positive QoQ improvements in profit trend, margins, new orders, and cash flow in 3Q24, despite a reported profit decline in 9M24. Order...