HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

We consider the plan by <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> to dispose of its 35.7% direct stake in the Meilin Checkpoint Project a strategic move to move forward its earnings and cash flow from the development. Under normal course, it will have to wait for another 2-3 years to realise such gains and cash. In our view, investors should welcome this decision as the move will also cover an earnings gap in FY21 originally left over from FY20 due to a lack of exceptional gain in this year.With a potential capital gain of Rmb2.9bn (HK$3.5bn), SZI is likely to record a historical high net profit for FY21. Moreover, its track record of sharing exceptional gain with investors through special dividends may mean a dividend yield of 12% for FY21 based on the current share price. The enriched financial position will also provide SZI more resources for pursuing logistics expansion, and it has just announced a logistics acquisition in Pingshan, Shenzhen.

We consider the plan by Shenzhen International (152 HK) to dispose of its 35.7% direct stake in the Meilin Checkpoint Project a strategic move to move forward its earnings and cash flow from the development. Under normal course, it will have to wait for another 2-3 years to realise such gains and cash. In our view, investors should welcome this decision as the move will also cover an earnings gap in FY21 originally left over from FY20 due to a lack of exceptional gain in this year.With a potential capital gain of Rmb2.9bn (HK$3.5bn), SZI is likely to record a historical high net profit for FY21. Moreover, its track record of sharing exceptional gain with investors through special dividends may mean a dividend yield of 12% for FY21 based on the current share price. The enriched financial position will also provide SZI more resources for pursuing logistics expansion, and it has just announced a logistics acquisition in Pingshan, Shenzhen.   

Shenzhen Intl (152 HK): Cashing in Future Earnings

We came back with a positive view on <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> after a brief catch-up discussion with the company. For 2H21, we see upside potential in earnings and our takeaways are also encouraging. We see possibility for higher earnings contribution from the Meilin Checkpoint project and logistics business on asset divestment. At just 6x PER, 0.6x P/B (-2 SD below average) and 8.6% dividend yield for FY21, SZI's valuations are attractive relative to the fundamentals.Strategically, the new CEO will foster closer working relations with its parent and affiliates, it is a beneficiary of the Qianhai expansion (as it still has 40% land yet to be developed) and it sees possibility of participation in the booming air cargo terminal business of Air China. We believe the recent share price weakness is a good opportunity for this interesting name in the Greater Bay Area.

We came back with a positive view on Shenzhen International (152 HK) after a brief catch-up discussion with the company. For 2H21, we see upside potential in earnings and our takeaways are also encouraging. We see possibility for higher earnings contribution from the Meilin Checkpoint project and logistics business on asset divestment. At just 6x PER, 0.6x P/B (-2 SD below average) and 8.6% dividend yield for FY21, SZI's valuations are attractive relative to the fundamentals.Strategically, the new CEO will foster closer working relations with its parent and affiliates, it is a beneficiary of the Qianhai expansion (as it still has 40% land yet to be developed) and it sees possibility of participation in the booming air cargo terminal business of Air China. We believe the recent share price weakness is a good opportunity for this interesting name in the Greater Bay Area. 

Shenzhen Intl (152 HK): Positive Highlights from Recent Catch-Up with Company

<ul>
<li>The REIT issuance of the Hangzhou and Guizhou logistics assets of <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> has entered the final stage, reflecting its ability to realise asset values.</li>
<li>We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings. </li>
<li>These assets only accounted for 8% and 5% of SZI's total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.</li>
</ul>


The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings. 
These assets only accounted for 8% and 5% of SZI's total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.


Shenzhen Intl (152 HK): Another Monetisation

<ul>
<li>Poor 1H23 result at <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.</li>
<li>Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.</li>
<li>SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below. </li>
</ul>


Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below. 


Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

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 January 5th.</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 HK Connect flows for China Mobile, and CNOOC.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of January 5th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight HK Connect flows for China Mobile, and CNOOC.


Hong Kong Connect Flows (Jan 5th): China Mobile, CNOOC

Hong Kong

Shenzhen International Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides investment, construction, and operation of logistic infrastructure facilities, as well as offers value-added logistic services. Shenzhen International serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Shenzhen International (152 HK)

Shenzhen Intl (152 HK): Cashing in Future Earnings

The disposal of Meilin Checkpoint Project should be a welcomed move to shift earnings and cash flow ahead. SZI is likely to share with investors...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Positive Highlights from Recent Catch-Up with Company

We believe the takeways from our catch-up with SZE are encouraging, and we see upside potential for earnings in 2H21 to come from both Meilin...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Another Monetisation

REIT issuance of Hangzhou and Guizhou logistics assets is nearing completion, showcasing SZI's ability to unlock asset values. Many of its assets...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

Poor 1H23 results were expected, but there is potential for strong earnings improvement in 2H23. Logistics projects, asset value realisation, and...

Osbert Tang, CFA

Hong Kong Connect Flows (Jan 5th): China Mobile, CNOOC

We analyzed southbound Hong Kong connect flows in the past week and highlight Hong Kong connect flows for China Mobile, CNOOC.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shenzhen Intl (152 HK): Cashing in Future Earnings

The disposal of Meilin Checkpoint Project should be a welcomed move to shift earnings and cash flow ahead. SZI is likely to share with investors...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Positive Highlights from Recent Catch-Up with Company

We believe the takeways from our catch-up with SZE are encouraging, and we see upside potential for earnings in 2H21 to come from both Meilin...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Another Monetisation

REIT issuance of Hangzhou and Guizhou logistics assets is nearing completion, showcasing SZI's ability to unlock asset values. Many of its assets...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

​Poor 1H23 results were expected, but there is potential for strong earnings improvement in 2H23. Logistics projects, asset value realisation, and...

Osbert Tang, CFA

Hong Kong Connect Flows (Jan 5th): China Mobile, CNOOC

We analyzed southbound Hong Kong connect flows in the past week and highlight Hong Kong connect flows for China Mobile, CNOOC.

Ke Yan, CFA, FRM

Poor 1H23 results were expected, but there is potential for strong earnings improvement in 2H23. Logistics projects, asset value realisation, and...