Analyst

Steve

Equity Bottom-Up

<ul>
<li>According to public news two days ago, COFCO Group is rumored to be a potential suitor for Alibaba’s 78% stake in <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>. </li>
<li>Alibaba wants to eventually get rid of the Sun Art stake, especially after Alibaba’s management change in late 2023.  </li>
<li>Given limited downside, I believe it is worth a bet on the uncertain timeline but certain intention of the eventual divestiture of Sun Art by Alibaba.</li>
</ul>


According to public news two days ago, COFCO Group is rumored to be a potential suitor for Alibaba’s 78% stake in Sun Art Retail (6808 HK). 
Alibaba wants to eventually get rid of the Sun Art stake, especially after Alibaba’s management change in late 2023.  
Given limited downside, I believe it is worth a bet on the uncertain timeline but certain intention of the eventual divestiture of Sun Art by Alibaba.


Sun Art (6808 HK):  Potential Divestiture By Alibaba Worth A Bet

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>The H share market continues to be the top performing market in Asia in 2024.  The HSCEI has outperformed all Asian markets on a USD basis.
</li>
<li>
<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> was rated a BUY at JP Morgan with the company hosting a roadshow to discuss its future growth strategy. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-beverage" target="_blank" data-smartkarma-citation="entities:41984:1" rel="noopener">China Resources Beverage (2460 HK)</a> was initiated as a BUY at CMB International as the company rapidly expands into the ready-to-drink category with teas and sports drinks.
</li>
</ul>


The H share market continues to be the top performing market in Asia in 2024.  The HSCEI has outperformed all Asian markets on a USD basis.


China Longyuan Power (916 HK) was rated a BUY at JP Morgan with the company hosting a roadshow to discuss its future growth strategy. 


China Resources Beverage (2460 HK) was initiated as a BUY at CMB International as the company rapidly expands into the ready-to-drink category with teas and sports drinks.



BUY/SELL/HOLD: Hong Kong Stock Updates (December 13)

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.


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Reuters this afternoon carried an <a href="https://www.reuters.com/markets/deals/exclusive-tencent-plans-divest-24-bln-meituan-stake-sources-2022-08-16/" target="_blank" rel="noopener">article</a> that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> was seeking to divest "US$24bn" (17%) of $78bn market cap delivery company <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> by year-end to mollify domestic regulators.</li>
<li>Tencent would seek to launch a share sale within 2022 "if market conditions are favourable." Meituan shares tanked 9%, immediately.</li>
<li>The article suggests disposal via block sale (faster than negotiating with a private buyer), odd given Tencent's Q1 2022 experience with the JD.com unwind. But it leads to BIG flows.</li>
</ul>


Reuters this afternoon carried an article that Tencent (700 HK) was seeking to divest "US$24bn" (17%) of $78bn market cap delivery company Meituan (3690 HK) by year-end to mollify domestic regulators.
Tencent would seek to launch a share sale within 2022 "if market conditions are favourable." Meituan shares tanked 9%, immediately.
The article suggests disposal via block sale (faster than negotiating with a private buyer), odd given Tencent's Q1 2022 experience with the JD.com unwind. But it leads to BIG flows.


Tencent (700 HK) To Divest Meituan (3690 HK) - Impact and Index Implications

<ul>
<li>Hong Kong Alpha portfolio lost 2.9% in November, but has outperformed its benchmark by 4.9% since inception on October 1st.  It has outperformed HSI, HSCI and HSCEI by 9%.</li>
<li>Hong Kong Alpha has generated idiosyncratic returns during the market correction.  The portfolio has no exposure to energy, healthcare and property sectors. </li>
<li>We exit 4 positions at the end of the month and add positions in software, tech components, travel and restaurant sectors.</li>
</ul>


Hong Kong Alpha portfolio lost 2.9% in November, but has outperformed its benchmark by 4.9% since inception on October 1st.  It has outperformed HSI, HSCI and HSCEI by 9%.
Hong Kong Alpha has generated idiosyncratic returns during the market correction.  The portfolio has no exposure to energy, healthcare and property sectors. 
We exit 4 positions at the end of the month and add positions in software, tech components, travel and restaurant sectors.


HONG KONG ALPHA PORTFOLIO (November 2024)

Hong Kong

Sun Art Retail Group Ltd. operates hypermarkets.  The Company retails food and offers amenities such as restaurants, automated teller machines, pharmacies and dry cleaners.

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Sun Art Retail (6808 HK)

Sun Art (6808 HK): Potential Divestiture By Alibaba Worth A Bet

The company just announced a change in CEO - Mr. Lin Xiaohai has resigned as CEO and executive director of the company. He is replaced by Mr. Shen...

Steve

BUY/SELL/HOLD: Hong Kong Stock Updates (December 13)

H shares have outperformed all Asian markets this year on a USD basis. Longyuan Power continues to expand its offshore capacity & overseas...

David Mudd

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

Tencent (700 HK) To Divest Meituan (3690 HK) - Impact and Index Implications

Tencent is said to be looking at a $20bn block sale of its stake in Meituan (3690 HK) by year end. That's a big block. Maybe a repeat of JD.com?...

Travis Lundy

HONG KONG ALPHA PORTFOLIO (November 2024)

Hong Kong Alpha portfolio continues to outperform during the market correction in HK/China stocks. We continue to like the consumer discretionary...

David Mudd

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