HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The recent pullback in the share price of <a href="https://www.smartkarma.com/entities/xinhua-winshare-publishing-media-co-ltd" target="_blank" data-smartkarma-citation="entities:15072:1" rel="noopener">Xinhua Winshare (811 HK)</a> is overdone, and it is now on attractive 4.5x PER, 6.7% yield, and 0.46x P/B. </li>
<li>It has minimal exposure to economic slowdown and global geopolitical tension. There is solid revenue growth and margin expansion in 1H23, and demand is totally domestic and resilient.</li>
<li>Net cash amounted to 109% of its share price and this has not yet included Rmb2.2bn of equity investment on hand. Still, it is expected to generate ROE of 12%.</li>
</ul>


The recent pullback in the share price of Xinhua Winshare (811 HK) is overdone, and it is now on attractive 4.5x PER, 6.7% yield, and 0.46x P/B. 
It has minimal exposure to economic slowdown and global geopolitical tension. There is solid revenue growth and margin expansion in 1H23, and demand is totally domestic and resilient.
Net cash amounted to 109% of its share price and this has not yet included Rmb2.2bn of equity investment on hand. Still, it is expected to generate ROE of 12%.


Xinhua Winshare (811 HK): Still the Place to Be

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 100.8% as of Dec 20th.</li>
<li>The average A-H premium changed by 0.3ppt week-on-week, led by health care, financials, information technology and offset by real estate, consumer staples, industrials.</li>
<li>We highlight weekly changes in A-H premium for BeiGene, Chalco, ZOOMLION, MA STEEL, ZTE, CCCC.</li>
</ul>


We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 100.8% as of Dec 20th.
The average A-H premium changed by 0.3ppt week-on-week, led by health care, financials, information technology and offset by real estate, consumer staples, industrials.
We highlight weekly changes in A-H premium for BeiGene, Chalco, ZOOMLION, MA STEEL, ZTE, CCCC.


A-H Premium Weekly (Dec 20th):BeiGene, Chalco, ZOOMLION, MA STEEL, ZTE, CCCC

<ul>
<li>
<a href="https://www.smartkarma.com/entities/xinhua-winshare-publishing-media-co-ltd" target="_blank" data-smartkarma-citation="entities:15072:1" rel="noopener">Xinhua Winshare (811 HK)</a>'s 4.4% YoY decline in recurring profit in 1H24 is due to a 6.6x increase in taxation. Its pre-tax profit has still increased 5.8%.  </li>
<li>We expect XW to maintain its textbook franchise and overall gross margin to stay stable. Growth in general book publication and distribution will supplement the textbook business.</li>
<li>Net cash equals 70% of the share price, while its listed equity investments had appreciated 3.6x. It stands on a 5% dividend yield but this is a potential upside.</li>
</ul>



Xinhua Winshare (811 HK)'s 4.4% YoY decline in recurring profit in 1H24 is due to a 6.6x increase in taxation. Its pre-tax profit has still increased 5.8%.  
We expect XW to maintain its textbook franchise and overall gross margin to stay stable. Growth in general book publication and distribution will supplement the textbook business.
Net cash equals 70% of the share price, while its listed equity investments had appreciated 3.6x. It stands on a 5% dividend yield but this is a potential upside.


Xinhua Winshare (811 HK): Unmatched Strengths

<ul>
<li>Despite solid outperformance, share price of <a href="https://www.smartkarma.com/entities/xinhua-winshare-publishing-media-co-ltd" target="_blank" data-smartkarma-citation="entities:15072:1" rel="noopener">Xinhua Winshare (811 HK)</a> is more than 100% covered by net cash of Rmb7.6bn. DPS has also risen uninterruptedly in the last 3 years. </li>
<li>1Q23 result demonstrated operating resilience as recurring profit soared 48.5%. Its franchise in textbook publication and distribution stayed well protected, securing profitability outlook.</li>
<li>We like XW's boring businesses in the current depressed market. It trades on 4.5x PER with secured 6.6% dividend yield. The HA discount has widened to 10pp deeper than average. </li>
</ul>


Despite solid outperformance, share price of Xinhua Winshare (811 HK) is more than 100% covered by net cash of Rmb7.6bn. DPS has also risen uninterruptedly in the last 3 years. 
1Q23 result demonstrated operating resilience as recurring profit soared 48.5%. Its franchise in textbook publication and distribution stayed well protected, securing profitability outlook.
We like XW's boring businesses in the current depressed market. It trades on 4.5x PER with secured 6.6% dividend yield. The HA discount has widened to 10pp deeper than average. 


Xinhua Winshare (811 HK): We Love the Boredom

<ul>
<li>We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 101.0% as of Dec 13th.</li>
<li>The average A-H premium changed by -1.9ppt week-on-week, led by consumer staples, consumer discretionary, industrials and offset by real estate.</li>
<li>We highlight weekly changes in A-H premium for ZOOMLION, QDP, BeiGene, INNOCARE, TEC, MA STEEL, AIR CHINA.</li>
</ul>


We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 101.0% as of Dec 13th.
The average A-H premium changed by -1.9ppt week-on-week, led by consumer staples, consumer discretionary, industrials and offset by real estate.
We highlight weekly changes in A-H premium for ZOOMLION, QDP, BeiGene, INNOCARE, TEC, MA STEEL, AIR CHINA.


A-H Premium Weekly (Dec 13th):ZOOMLION, QDP, BeiGene, INNOCARE, TEC, MA STEEL, AIR CHINA

China

Xinhua Winshare Publishing and Media Company Ltd. retails and distributes books and offers services.  The Company operates a chain of retail bookstores, distributes textbooks and supplementary materials, and provides ancillary support and services to book publishers.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Xinhua Winshare (811 HK)