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.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/ane-logistics" target="_blank" data-smartkarma-citation="entities:34119:1" rel="noopener">ANE Logistics (1292621D CH)</a> operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch.ANE passed its HKEx listing committee hearing and will start pre-marketing to raise up to $500 million, according to press reports. ANE’s shareholders include Centurium, <a href="https://www.smartkarma.com/entities/carlyle-group-inc" target="_blank" data-smartkarma-citation="entities:33402:1" rel="noopener">Carlyle Group Inc (CG US)</a>, CDH, CPE, <a href="https://www.smartkarma.com/entities/nws-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3350:1" rel="noopener">Nws Holdings (659 HK)</a>, Ping An, <a href="https://www.smartkarma.com/entities/goldman-sachs-group-inc" target="_blank" data-smartkarma-citation="entities:785:1" rel="noopener">Goldman Sachs Group (GS US)</a> and <a href="https://www.smartkarma.com/entities/inner-mongolia-yili-indus-a" target="_blank" data-smartkarma-citation="entities:3220:1" rel="noopener">Inner Mongolia Yili Industrial Group (A) (600887 CH)</a>.<div class="content-highlight">ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. On balance, we think that ANE’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. </div>

ANE Logistics (1292621D CH) operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch.ANE passed its HKEx listing committee hearing and will start pre-marketing to raise up to $500 million, according to press reports. ANE’s shareholders include Centurium, Carlyle Group Inc (CG US), CDH, CPE, Nws Holdings (659 HK), Ping An, Goldman Sachs Group (GS US) and Inner Mongolia Yili Industrial Group (A) (600887 CH).ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. On balance, we think that ANE’s fundamentals are solid and the IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. 

ANE Logistics IPO Initiation: Home Delivery

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> delivered another set of good result with the report of a 77.9% YoY increase in net profit for 1H21, which is at the higher end of the indicated range in its positive profit alert. For 2Q21 only, recurring profit also grew a healthy 17.4% YoY and 36.5% QoQ, with the international express JV DHL-Sinotrans witnessing the best momentum. Meanwhile, financial position remained solid with a light gearing of just 10.5%.We expect a slower 2H21, partly due to a higher base in last year. However, we still see FY21 earnings to surge 45% YoY, thanks to China's sustained trade growth, new customer gains, network expansion, continued product enhancement and e-commerce market growth. Our projected ROE of 12.2% for FY21 well suggested that its 0.51x P/B inexpensive. This argument is further supported by a PER of 4.5x only and an attractive dividend yield of 7.0%.

Sinotrans (598 HK) delivered another set of good result with the report of a 77.9% YoY increase in net profit for 1H21, which is at the higher end of the indicated range in its positive profit alert. For 2Q21 only, recurring profit also grew a healthy 17.4% YoY and 36.5% QoQ, with the international express JV DHL-Sinotrans witnessing the best momentum. Meanwhile, financial position remained solid with a light gearing of just 10.5%.We expect a slower 2H21, partly due to a higher base in last year. However, we still see FY21 earnings to surge 45% YoY, thanks to China's sustained trade growth, new customer gains, network expansion, continued product enhancement and e-commerce market growth. Our projected ROE of 12.2% for FY21 well suggested that its 0.51x P/B inexpensive. This argument is further supported by a PER of 4.5x only and an attractive dividend yield of 7.0%. 

Thematic (Sector/Industry)

With the Hang Seng Index pulled back by 8.6% from its recent high in late-Jun, we take a look on our universe to identify the key opportunities and risks in our coverage.  In our view, the three stocks that look attractive after the recent market retreat are: 1.) <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a>, 2.) <a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a> and <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>. On average, they are off 9.8% from the recent peak.The three stocks to avoid are: 1.) <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)</a>, 2.) <a href="https://www.smartkarma.com/entities/beijing-capital-international-airport-bcia" target="_blank" data-smartkarma-citation="entities:10626:1" rel="noopener">Beijing Capital International Airport (BCIA) (694 HK)</a> and 3.) <a href="https://www.smartkarma.com/entities/china-maple-leaf-educational" target="_blank" data-smartkarma-citation="entities:78:1" rel="noopener">China Maple Leaf Educational Systems (1317 HK)</a>. They have declined an average of 20.2% from their peak, and despite the low valuations, fundamentals remain unappealing.

With the Hang Seng Index pulled back by 8.6% from its recent high in late-Jun, we take a look on our universe to identify the key opportunities and risks in our coverage.  In our view, the three stocks that look attractive after the recent market retreat are: 1.) Sinotrans (598 HK), 2.) Kunlun Energy (135 HK) and Shenzhen International (152 HK). On average, they are off 9.8% from the recent peak.The three stocks to avoid are: 1.) Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK), 2.) Beijing Capital International Airport (BCIA) (694 HK) and 3.) China Maple Leaf Educational Systems (1317 HK). They have declined an average of 20.2% from their peak, and despite the low valuations, fundamentals remain unappealing.  

Three Stocks Look Attractive and Three to Avoid Amid the Sell-Off

<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> issued a positive profit alert on 7 Jul which indicates its 1H21 recurring net profit will reach Rmb1.744-1.961bn. In other words, recurring profit growth will be between 60% and 80% YoY in the period. More importantly, looking at just 2Q21, the growth will range at 7.1%-31.1%, or 19.1% based on the midpoint of the guidance. In our view, this is a decent set of result which will be reported by end-Aug.Share price of Sinotrans has retreated by 15% from its peak in early-Jun due to concerns on the slowdown in new export orders in China and high base for comparison going into 2H21. However, the retreat has returned valuations back to very undemanding levels of 6.2x PER, 0.61x P/B and 5.2% dividend yield for FY21. Even with a projected net cash of Rmb0.48/share (or HK$0.51, 16% of current share price), we still looking at a healthy ROE of 9.8% for the year.

Sinotrans (598 HK) issued a positive profit alert on 7 Jul which indicates its 1H21 recurring net profit will reach Rmb1.744-1.961bn. In other words, recurring profit growth will be between 60% and 80% YoY in the period. More importantly, looking at just 2Q21, the growth will range at 7.1%-31.1%, or 19.1% based on the midpoint of the guidance. In our view, this is a decent set of result which will be reported by end-Aug.Share price of Sinotrans has retreated by 15% from its peak in early-Jun due to concerns on the slowdown in new export orders in China and high base for comparison going into 2H21. However, the retreat has returned valuations back to very undemanding levels of 6.2x PER, 0.61x P/B and 5.2% dividend yield for FY21. Even with a projected net cash of Rmb0.48/share (or HK$0.51, 16% of current share price), we still looking at a healthy ROE of 9.8% for the year.

Sinotrans (598 HK): Positive Profit Alert for 1H21

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) POTUS Executive Order: Updated List of Chinese Stocks to Be Deleted by Major Indices2) Kanzhun IPO3) Angelalign IPO 4) China: Allows Families to Have Three Children5) HYBE Rights Offering6) China Infrastructure REITs7) Aihuishou IPO8) Full Truck Alliance IPO9) Enjin IPO10) Xpeng: Positive Momentum Back11) Tesla China Losing Market Share12) CStone Pharma (2616.HK) - Time for a Revaluation13) JD Health Lock-Up Expiration14) Passive Money Tracking KOSPI15) SK IE Tech KOSPI 200 Fast-Entry16) DL Holdings with Recent Tender’s Increased Shares: Index Treatment 17) WH Group (288 HK)

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK/China, and the Korean stock markets. The top topics are below:1) POTUS Executive Order: Updated List of Chinese Stocks to Be Deleted by Major Indices2) Kanzhun IPO3) Angelalign IPO 4) China: Allows Families to Have Three Children5) HYBE Rights Offering6) China Infrastructure REITs7) Aihuishou IPO8) Full Truck Alliance IPO9) Enjin IPO10) Xpeng: Positive Momentum Back11) Tesla China Losing Market Share12) CStone Pharma (2616.HK) - Time for a Revaluation13) JD Health Lock-Up Expiration14) Passive Money Tracking KOSPI15) SK IE Tech KOSPI 200 Fast-Entry16) DL Holdings with Recent Tender’s Increased Shares: Index Treatment 17) WH Group (288 HK)

Smartkarma North Asia Weekly: POTUS Order, Kanzhun, Angelalign, & 3 Children Policy in China

China

Sinotrans Limited provides integrated logistics services with core service of sea, air, rail and road freight forwarding, express services and shipping agency services.  The Company also provides support services of storage and terminal services, trucking and marine transportation services.

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Sinotrans (598 HK)

ANE Logistics IPO Initiation: Home Delivery

ANE will start pre-marketing an HKEx IPO to raise up to $500 m. We think that ANE’s fundamentals are solid and the IPO is worth a look for...

Arun George

Sinotrans (598 HK): A Rock Solid 1H21

1H21 is a solid result, and despite a slower 2H21 on hgher base, the full-year growth of Sinotrans will still be very decent. We think that all...

Osbert Tang, CFA

Three Stocks Look Attractive and Three to Avoid Amid the Sell-Off

We think the three stocks that look attractive after the recent market retreat are: 1.) Sinotrans (598 HK), 2.) Kunlun Energy (135 HK) and Shenzhen...

Osbert Tang, CFA

Sinotrans (598 HK): Positive Profit Alert for 1H21

Sinotrans' solid 2Q21 result should ease concern about slowdown in business momentum. We think the recent retreat in share price has returned the...

Osbert Tang, CFA

Smartkarma North Asia Weekly: POTUS Order, Kanzhun, Angelalign, & 3 Children Policy in China

In this edition of the Smartkarma North Asia Weekly, it summarizes some of the top insights on Smartkarma in the past week covering Japan, HK...

Douglas Kim

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