HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a> stands on a discount of 82.1% to NAV after factoring in the recent market rally, not limiting to its <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> holdings.</li>
<li>Its listed equities may have gained Rmb314m, but the HK$41m market capitalisation growth has not reflected this. The gains on its unlisted investments have not been included yet.  </li>
<li>CNDX is now more likely to have a positive swing in the bottom line in FY25. Its tiny sportswear business has also witnessed a sequential moderation in sales decline. </li>
</ul>



China Dongxiang (3818 HK) stands on a discount of 82.1% to NAV after factoring in the recent market rally, not limiting to its Alibaba Group Holding (9988 HK) holdings.
Its listed equities may have gained Rmb314m, but the HK$41m market capitalisation growth has not reflected this. The gains on its unlisted investments have not been included yet.  
CNDX is now more likely to have a positive swing in the bottom line in FY25. Its tiny sportswear business has also witnessed a sequential moderation in sales decline. 


China Dongxiang (3818 HK): Another Play on the Market Rally

<ul>
<li>The turnaround of sports business at <a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a> is very welcoming. We are glad that sales trend in Oct-Nov is sustained and Phenix brand is well-received.</li>
<li>Reported losses widened as poor market environment enlarged investment losses. However, net cash and investment portfolio are still valued at Rmb8.5bn, or 5.9x its market capitalisation. </li>
<li>CNDX looks comfortably at over 6% full-year dividend yield. Together with just 0.15x P/B, there are enough protections for the downside of the stock.  </li>
</ul>


The turnaround of sports business at China Dongxiang (3818 HK) is very welcoming. We are glad that sales trend in Oct-Nov is sustained and Phenix brand is well-received.
Reported losses widened as poor market environment enlarged investment losses. However, net cash and investment portfolio are still valued at Rmb8.5bn, or 5.9x its market capitalisation. 
CNDX looks comfortably at over 6% full-year dividend yield. Together with just 0.15x P/B, there are enough protections for the downside of the stock.  


China Dongxiang (3818 HK): Turned Around on Sports Business

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

Eternal Beauty Holdings Limited / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/eternal-beauty-holdings-limited" target="_blank" data-smartkarma-citation="entities:43725:1" rel="noopener">Eternal Beauty Holdings </a>(EB) is looking to raise about US$200m in its upcoming Hong Kong IPO.</li>
<li>Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.</li>
<li>In this note, we talk about the not-so-positive aspects of the deal.</li>
</ul>



Eternal Beauty Holdings (EB) is looking to raise about US$200m in its upcoming Hong Kong IPO.
Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.
In this note, we talk about the not-so-positive aspects of the deal.


Eternal Beauty Pre-IPO - The Negatives - Core Offering Hasn’t Been Growing

<ul>
<li>
<a href="https://www.smartkarma.com/entities/eternal-beauty-holdings-limited" target="_blank" data-smartkarma-citation="entities:43725:1" rel="noopener">Eternal Beauty Holdings</a>(EB) is looking to raise about US$200m in its upcoming Hong Kong IPO.</li>
<li>Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.</li>
<li>In this note, we talk about the positive aspects of the deal.</li>
</ul>



Eternal Beauty Holdings(EB) is looking to raise about US$200m in its upcoming Hong Kong IPO.
Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.
In this note, we talk about the positive aspects of the deal.


Eternal Beauty Pre-IPO - The Positives - Expanding Its Brands and Offering

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Pop Mart International Group L / Equity Bottom-Up

<ul>
<li>HSCI index has seen an outperformance of the consumer discretionary sector since the stimulus announcement while materials and energy sectors have lagged.</li>
<li>
<a href="https://www.smartkarma.com/entities/pop-mart-international-group-l" target="_blank" data-smartkarma-citation="entities:29016:1" rel="noopener">Pop Mart International Group L (9992 HK)</a> announced a blow out 3Q24 revenue number with international revenue up by over 400%. DB raised the its target price to $88.
</li>
<li>
<a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a> was maintained a BUY by Huatai, raising its target price to $28.81.   JP Morgan maintained  OVERWEIGHT on <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Technology (9901 HK).</a>
</li>
</ul>


HSCI index has seen an outperformance of the consumer discretionary sector since the stimulus announcement while materials and energy sectors have lagged.

Pop Mart International Group L (9992 HK) announced a blow out 3Q24 revenue number with international revenue up by over 400%. DB raised the its target price to $88.


Citic Securities (H) (6030 HK) was maintained a BUY by Huatai, raising its target price to $28.81.   JP Morgan maintained  OVERWEIGHT on New Oriental Education &amp; Technology (9901 HK).



BUY/SELL/HOLD: Hong Kong Stock Updates (October 30)

China

Topsports International Holdings Limited operates as a sports shoes and apparel retailer. The Company sells sports shoes, sports shirts, and other products. Topsports International Holdings markets its products throughout China.

Topsports International Holdings (6110 HK)

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Topsports International Holdings (6110 HK)

China Dongxiang (3818 HK): Another Play on the Market Rally

China Dongxiang trades at an 82.1% discount to NAV despite the recent HK and China rally, with potential for a positive bottom-line swing in FY25...

Osbert Tang, CFA

China Dongxiang (3818 HK): Turned Around on Sports Business

Along with the encouraging 3Q FY24 (Oct-Dec 2023) sportswear sales - Kappa brand sales up mid 40%–50% YoY, China Dongxiang has benefited from the...

Osbert Tang, CFA

Eternal Beauty Pre-IPO - The Negatives - Core Offering Hasn’t Been Growing

Eternal Beauty Holdings (EB) is looking to raise about US$200m in its upcoming Hong Kong IPO. In this note, we talk about the not-so-positive...

Sumeet Singh

Eternal Beauty Pre-IPO - The Positives - Expanding Its Brands and Offering

Eternal Beauty Holdings(EB) is looking to raise about US$200m in its upcoming Hong Kong IPO. In this note, we talk about the positives aspects of...

Sumeet Singh

BUY/SELL/HOLD: Hong Kong Stock Updates (October 30)

The consumer discretionary sector shows increased momentum in Hong Kong. Pop Mart beat on 3Q revenue with 440% growth in revenue outside China....

David Mudd

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