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

<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

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 146 stocks over the last week. The average A-H premium was 103.3% as of Jun 21st.</li>
<li>The average A-H premium changed by -1.5ppt week-on-week, led by real estate, communication services, consumer staples and offset by utilities, information technology.</li>
<li>We highlight weekly changes in A-H premium for China Tourism, Shenhua, China Telecom, CNOOC, Hua Hong Semi, YOFC, Huadian.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 103.3% as of Jun 21st.
The average A-H premium changed by -1.5ppt week-on-week, led by real estate, communication services, consumer staples and offset by utilities, information technology.
We highlight weekly changes in A-H premium for China Tourism, Shenhua, China Telecom, CNOOC, Hua Hong Semi, YOFC, Huadian.


A-H Premium Weekly (Jun 21st): China Tourism, Shenhua, China Telecom, CNOOC, Hua Hong Semi, YOFC

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 105.3% as of Jun 14th.</li>
<li>The average A-H premium changed by 1.6ppt week-on-week, led by consumer discretionary, information technology, financials and offset by consumer staples, utilities, real estate.</li>
<li>We highlight weekly changes in A-H premium for  China Tourism, CGN Power, Huadian Power, Hua Hong Semi, Huaneng Power.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 105.3% as of Jun 14th.
The average A-H premium changed by 1.6ppt week-on-week, led by consumer discretionary, information technology, financials and offset by consumer staples, utilities, real estate.
We highlight weekly changes in A-H premium for  China Tourism, CGN Power, Huadian Power, Hua Hong Semi, Huaneng Power.


A-H Premium Weekly (Jun 14th): China Tourism, CGN Power, Huadian Power, Hua Hong Semi, Huaneng Power

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 103.8% as of Jun 7th.</li>
<li>The average A-H premium changed by -4.8ppt week-on-week, led by consumer staples, information technology, utilities and offset by consumer discretionary.</li>
<li>We highlight weekly changes in A-H premium for PetroChina, Huadian, Hua Hong Semi, Junshi, GWM.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 103.8% as of Jun 7th.
The average A-H premium changed by -4.8ppt week-on-week, led by consumer staples, information technology, utilities and offset by consumer discretionary.
We highlight weekly changes in A-H premium for PetroChina, Huadian, Hua Hong Semi, Junshi, GWM.


A-H Premium Weekly (Jun 7th): PetroChina, Huadian, Hua Hong Semi, Junshi, GWM

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.

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Xinhua Winshare (811 HK)