Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>We compile a list of ten high-yielding/net cash or low-net debt stocks in the apparel/footwear value chain. Just because HK has become a pariah for investors, trailing dividend yields are approaching 6-20%.</li>
<li>We track recent developments of these companies; for given their low valuations any incremental recoveries could spark huge share price returns.</li>
<li>
<a href="https://www.smartkarma.com/entities/crystal-international-group" target="_blank" data-smartkarma-citation="entities:25979:1" rel="noopener">Crystal International (2232 HK)</a>, <a href="https://www.smartkarma.com/entities/stella-international" target="_blank" data-smartkarma-citation="entities:7610:1" rel="noopener">Stella International (1836 HK)</a>, and <a href="https://www.smartkarma.com/entities/yue-yuen-industrial-holdings-limited" target="_blank" data-smartkarma-citation="entities:12281:1" rel="noopener">Yue Yuen Industrial Holdings (551 HK)</a> stand out - they have had positive inflections in their earnings/dividend payouts and capital allocation.</li>
</ul>


We compile a list of ten high-yielding/net cash or low-net debt stocks in the apparel/footwear value chain. Just because HK has become a pariah for investors, trailing dividend yields are approaching 6-20%.
We track recent developments of these companies; for given their low valuations any incremental recoveries could spark huge share price returns.

Crystal International (2232 HK), Stella International (1836 HK), and Yue Yuen Industrial Holdings (551 HK) stand out - they have had positive inflections in their earnings/dividend payouts and capital allocation.


HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market - Attractive Yield & Rapid Expansion Outside China - Sep 2024

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>Vietnam now accounts for more than 50% of production replacing China</li>
<li>China production is less than 25% of overall capacity in 2023</li>
<li>Reshoring and production of higher end "Athleisure" shoes is increasing margins for Stella International (1836 HK) </li>
</ul>


Vietnam now accounts for more than 50% of production replacing China
China production is less than 25% of overall capacity in 2023
Reshoring and production of higher end "Athleisure" shoes is increasing margins for Stella International (1836 HK) 


Stella International: A Beneficiary of Reshoring

<ul>
<li>ETF flows in the Asian region continued their positive momentum during August with Southbound Connect positive again for the week.</li>
<li>
<a href="https://www.smartkarma.com/entities/stella-international" target="_blank" data-smartkarma-citation="entities:7610:1" rel="noopener">Stella International (1836 HK)</a> will increase its dividends and buybacks after positive earnings surprise. <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a> saw a surge in new policies from mainlanders in HK.
</li>
<li>
<a href="https://www.smartkarma.com/entities/lufax-holding-ltd-b751749a-8feb-4b4d-85a7-d99ac0308fe7" target="_blank" data-smartkarma-citation="entities:40067:1" rel="noopener">Lufax Holding (6623 HK)</a> reported an earnings miss with declining loan volume. <a href="https://www.smartkarma.com/entities/yancoal-australia" target="_blank" data-smartkarma-citation="entities:8427:1" rel="noopener">Yancoal Australia (3668 HK)</a> reported a decline of 57% in earnings which was below analysts' estimates.
</li>
</ul>


ETF flows in the Asian region continued their positive momentum during August with Southbound Connect positive again for the week.

Stella International (1836 HK) will increase its dividends and buybacks after positive earnings surprise. AIA Group Ltd (1299 HK) saw a surge in new policies from mainlanders in HK.


Lufax Holding (6623 HK) reported an earnings miss with declining loan volume. Yancoal Australia (3668 HK) reported a decline of 57% in earnings which was below analysts' estimates.



The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 26)

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>We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.</li>
<li>We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.
We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

Shanghai Electric Group Company / Equity Bottom-Up

<ul>
<li>Hong Kong Long-Only portfolio launched on October 1st with objective to generate alpha in the Hong Kong market.</li>
<li>Stocks are chosen from single stock insights as well as sector and weekly publications.</li>
<li>Positions will be adjusted once a month and the cash position will vary based on market conditions.</li>
</ul>


Hong Kong Long-Only portfolio launched on October 1st with objective to generate alpha in the Hong Kong market.
Stocks are chosen from single stock insights as well as sector and weekly publications.
Positions will be adjusted once a month and the cash position will vary based on market conditions.


Hong Kong

Stella International Holdings Limited develops and manufactures footwear products for casual and fashion footwear companies worldwide.

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Stella International (1836 HK)

HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market - Attractive Yield & Rapid Expansion Outside China - Sep 2024

We compile a list of ten high-yielding/net cash or low-net debt stocks in HK's apparel/footwear value chain. HK is a pariah for investors, and...

Sameer Taneja

Stella International: A Beneficiary of Reshoring

Stella's 1H 2024 profit surged by 54% as its cash balance doubles. Margins expanded as revenue increased by 7.5%. The Board approved an increase...

David Mudd

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 26)

ETF flows were again led by China. Stella International reported a surge in earnings and AIA announced new policy growth exceeded expectations....

David Mudd

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September

There could be nearly 80 adds/deletes for the HSCI in September. That will trigger changes to the Southbound Stock Connect list and increase flows...

Brian Freitas

HONG KONG ALPHA PORTFOLIO - Introduction

We have launched a Hong Kong portfolio with the aim to outperform HK indexes and generate alpha. Stocks are chosen from those highlighted in our...

David Mudd

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