HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> is less exposed to China's real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.</li>
<li>We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. </li>
<li>More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   </li>
</ul>



Haier Smart Home (6690 HK) is less exposed to China's real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.
We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. 
More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   


<ul>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a> revealed that domestic sales are performing well in the "Double-11" festival and overseas sales have outperformed peers in Black Friday.</li>
<li>The high-end brand Casarte has maintained good market shares in refrigerators, drum washing machines and air-conditioners. Overseas market also saw positive upgrade demand. </li>
<li>Its digitalisation strategy has enhanced customers' shopping experience and increased repurchases. HSH has also achieved improvements in overall efficiency through such efforts.</li>
</ul>



Haier Smart Home Co Ltd (6690 HK) revealed that domestic sales are performing well in the "Double-11" festival and overseas sales have outperformed peers in Black Friday.
The high-end brand Casarte has maintained good market shares in refrigerators, drum washing machines and air-conditioners. Overseas market also saw positive upgrade demand. 
Its digitalisation strategy has enhanced customers' shopping experience and increased repurchases. HSH has also achieved improvements in overall efficiency through such efforts.


Haier Smart Home (6690 HK): Further Updates from Management

<ul>
<li>Besides as nationalistic consumption play, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.</li>
<li>The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH's business in 4M22 while it will also reap benefits from Rmb depreciation.</li>
<li>The government's support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. </li>
</ul>


Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH's business in 4M22 while it will also reap benefits from Rmb depreciation.
The government's support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. 


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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a>'s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. </li>
<li>With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business' 9% earnings yield is attractive. </li>
<li>The transaction will extend HSH's application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. </li>
</ul>



Haier Smart Home (6690 HK)'s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. 
With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business' 9% earnings yield is attractive. 
The transaction will extend HSH's application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. 


Haier Smart Home (6690 HK): Further Expansion of Footprint

China

Vesync Co Ltd develops smart home platform that connect air quality, health monitoring, kitchen, lighting, and outlet systems.The Company helps users to manage home, save energy, and bring remote items within handheld reach.

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Vesync (2148 HK)

Haier Smart Home (6690 HK): Stays Smart

Haier Smart Home is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Further Updates from Management

Sales have performed well in "Double-11" festival and Black Friday. Overseas markets have seen positive upgrade demand and digitalisation has...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Smart Moves

Haier Smart Home has seen good refrigerators/freezers sales amid the lockdowns and it will also benefit from Rmb depreciation and the government's...

Osbert Tang, CFA

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

Haier Smart Home (6690 HK): Further Expansion of Footprint

Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Haier Smart Home (6690 HK): Stays Smart

​Haier Smart Home is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Further Updates from Management

Sales have performed well in "Double-11" festival and Black Friday. Overseas markets have seen positive upgrade demand and digitalisation has...

Osbert Tang, CFA

Haier Smart Home (6690 HK): Smart Moves

Haier Smart Home has seen good refrigerators/freezers sales amid the lockdowns and it will also benefit from Rmb depreciation and the government's...

Osbert Tang, CFA

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

Haier Smart Home (6690 HK): Further Expansion of Footprint

​Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...

Osbert Tang, CFA

Haier Smart Home is less exposed to real estate market than expected. Digitalisation and efficiency improvements are driving margin; and...

Haier Smart Home's acquisition of Carrier's commercial refrigeration business is financially beneficial and strategically advantageous, expanding...