In today’s briefing:
- Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)
- Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed
- China Airports: Beijing Capital Airport Offers Best Risk/Return Payoff
- Tencent/Netease: Approval Rotation to Netease in Feb
- [Li Auto Inc. (LI US, BUY, TP US$52) TP Change]: What Can Go Wrong & Go Right in LI Becoming BYD #2
- Alibaba Group Holdings: EM Fund Positioning Update
- Sinotrans (598.HK), a Shining Example of SOE Reform
- Pre-IPO Hangzhou Jiuyuan Gene Engineering – Old Pipelines Are Difficult to Bring New Breakthroughs
Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)
- RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect.
- That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
- This should cause people to get excited short-term about property developers.
Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed
- Hong Kong residential property prices declined 7% in 2023 and are down >20% from the 2021 peak in 2021. The average price of offices also declined ~7% in 2023.
- Scrapping property cooling measures, such as the special stamp duty applied to homes resold within 24 months, have been rumoured, to push up housing prices.
- In today’s annual budget, we got those. And then some.
China Airports: Beijing Capital Airport Offers Best Risk/Return Payoff
- Recent newsflow and company results suggest China outbound travel is on track to recover to pre-pandemic level by the end of this year.
- China airports have different exposures to outbound travel, which largely determines the scale of their duty-free shopping business and earnings upside amidst this recovery cycle.
- Beijing Capital Airport offers best risk/return profile among listed China airports in our view as current valuation does not fully capture even a conservative scenario of recovery in outbound travel.
Tencent/Netease: Approval Rotation to Netease in Feb
- China announced game approval for the Feb batch. The number of games approved remained at a higher level than 2023.
- The pace of China game approval appears to be accelerating, to the same level as pre-tightening.
- Netease gets one game approved but we don’t see that the acceleration of game approval benefits big names proportionally.
[Li Auto Inc. (LI US, BUY, TP US$52) TP Change]: What Can Go Wrong & Go Right in LI Becoming BYD #2
- LI Auto reported C4Q23 top line, non-GAAP operating profit and GAAP net income (6.2%), 13% and 81% vs. our estimates and 4.9%, 52% and 102% vs. consensus.
- We believe LI can beat our delivery estimate on exports, but can also miss the consensus on gross margins if its 2024 volume target is met by sedans;
- We raise our TP by US$5 to US$52 and reiterate BUY.
Alibaba Group Holdings: EM Fund Positioning Update
- Despite average weights falling from over 6% in 2020 to under 2% today, 73% of EM funds remain invested in Alibaba.
- The make up of the investor base has changed, with a rotation between high growth investors (out) and Value investors (in).
- Of the 73% of current holders, the core portfolio weight range sits between 1.5% and 3%, with the most bullish topping out at 5%+
Sinotrans (598.HK), a Shining Example of SOE Reform
- A Profit-Oriented State Owned Enterprise that is walking the walk.
- Management incentives are aligned with shareholders, a rarity in China.
- Plenty of upside remains despite the market outperformance to date
Pre-IPO Hangzhou Jiuyuan Gene Engineering – Old Pipelines Are Difficult to Bring New Breakthroughs
- Jiuyuan is not a typical innovative pharmaceutical enterprise with cutting-edge technology. The current seemingly good revenue/profit performance is actually based on some old products from over a decade ago.
- The risk of VBP could lead to a significant decrease in profit margins at any time. The cyclical changes in heparin industry would put more pressure on Jiuyuan’s performance.
- As Jiuyuan has not yet demonstrated superior clinical data in Jikeqin for overweight/obesity indication, together with fierce competition, we are cautious about the performance in GLP-1s pipeline at this stage.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
