In today’s briefing:
- Hong Kong Exchanges & Clearing – Negative Jaws
- China Evergrande Group – Drop In The Bucket
- Angelalign Technology (6699.HK) – Uncertain Growth Outlook
Hong Kong Exchanges & Clearing – Negative Jaws
- HKEX reported a weak set of 4Q21 earnings results of HKD 2.7 bn, declining HKD 577 mn (17.7%) linked quarter, driven by the decline in cash ADT and higher costs;
- Derivative activity remained flattish linked quarter with contract volume at 507 thousand – despite the successful launch of the MSCI China A50 Connect (HK A50); and
- With HIBOR set to increase, HKEx is likely to become more reliant on lower quality investment income.
China Evergrande Group – Drop In The Bucket
- In a move to shore up liquidity, but not to repay debt, Evergrande has sold stakes and “right to debt” in four development projects to SOEs at “fire sale” prices;
- Only USD 47.2 bn in liabilities to go Chairman Hui, but didn’t you say less than two weeks ago “no fire sales”?; and
- Municipalities, investors, and CINDA are picking off Evergrande assets on the cheap as well.
Angelalign Technology (6699.HK) – Uncertain Growth Outlook
- Currently, Angelalign could not be compared with Align Technology in many aspects, but Angelalign’s PE/TTM indicates it may have already overdrawn the performance of the next few years.
- The growth outlook of Angelalign has uncertainties. Any deceleration in revenues and profits in any given year is likely to lead to a significant valuation correction.
- High valuation cannot be supported without certainty of growth. Therefore, based on our analysis, our view is that Angelalign could be a short-term trade, but not long-term hold.
Before it’s here, it’s on Smartkarma
