In today’s briefing:
- Tomson Group (258 HK): The Next Rivera
- Huitongda (汇通达) IPO Trading – Subscription Rates and Cornerstone Quality Leaves Much to Be Desired
- CATL Considers Building More Factories Outside China, Including U.S.
- China Southern Airlines (1055 HK): A Tough Start
- BOC HK Launches $ Bond; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Asia HY Trade Book – February 2022 – Lucror Analytics
Tomson Group (258 HK): The Next Rivera
- At 0.3x price to book, PRC property play Tomson (258 HK) is cheap.
- It is even cheaper when factoring in its net cash worth 90% of the market cap.
- And it might continue to trade cheaply if not for the fact the controlling family recently privatised a connected company of Tomson’s.
Huitongda (汇通达) IPO Trading – Subscription Rates and Cornerstone Quality Leaves Much to Be Desired
- Huitongda (9878 HK) raised around US$285m in its Hong Kong IPO.
- Overall, we are not comfortable with paying a premium valuation for HTD given its small scale of operations in a highly competitive and fragmented market.
- In this note, we will look at the trading dynamics and current valuation.
CATL Considers Building More Factories Outside China, Including U.S.
- The world’s largest electric-vehicle battery maker Contemporary Amperex Technology Co. Ltd. (CATL) has announced that it’s considering building more factories overseas
- The news came as CATL (300750.SZ +0.72%), based in East China’s Fujian province, has been trying to ease investor concerns about the recent sell-off of its stock
- The statement also disclosed that the company has been talking with U.S. clients about the possibility of building production lines in the country to bring supplies of CATL products closer to home
China Southern Airlines (1055 HK): A Tough Start
- While China Southern Airlines (1055 HK) saw passenger traffic up 17.3% in Jan, this is at the expense of higher capacity, leading to a 1.8pp YoY passenger load contraction.
- Its cargo traffic underperformed both CEA and Air China with a YoY decline; and this is disappointing in a period of time where airfreight rate is at record-breaking level.
- We see reduced local travel demand, higher operating costs, weaker cargo business, pressure on yield and higher base of comparison key challenges in 2022, and prefer Air China Ltd (753 HK).
BOC HK Launches $ Bond; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
S&P and Nasdaq were near flat on Wednesday, after rallying up 1.6% and 2.5% on Tuesday. Most sectors were in the green, led by Energy and Materials and Industrials, up over 0.5% each. The US 10Y Treasury yield was flat at 2.03%. European markets were marginally lower with the DAX, CAC and FTSE down 0.3%, 0.2% and 0.1% each. Brazil’s Bovespa closed 0.3% higher. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI closed 1.2% higher. Asian markets have opened broadly higher with Shanghai, HSI and STI up 0.4%, 0.3% and 0.4% respectively, while Nikkei was down 0.2%. US IG CDS spreads were 0.2bp tighter and HY CDS spreads were 4.9bp tighter. EU Main CDS spreads were 0.05bp wider and Crossover CDS spreads were 0.8bp tighter. Asia ex-Japan CDS spreads were 1.6bp wider.
Asia HY Trade Book – February 2022 – Lucror Analytics
The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.
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