In today’s briefing:
- HK Connect SOUTHBOUND Flows (To 8Dec23); CNOOC & China Mobile Both Now To The Buy Side, Tencent Not
- A/H Premium Tracker (To 8 Dec 23): H Down Vs A, Again, Despite SOUTHBOUND Buying; Pharmas Weak
- REPT BATTERO (0666 HK): Index Inclusion Possibility & Timelines
- Trip.com (TCOM US, 9961 HK): Revenue 30% Above Pre-COVID Level
- SHEIN Versus Amazon: Our Online Shopping Adventure In Pursuit Of Ultra-Cheap Holiday Deals
- Mainland Connect NORTHBOUND Flows (To 8 Dec 23): Net Sales Again on Midea and Wuliangye Yibin
- EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Soft Landing
- China Consumption Weekly (11 Dec 2023): BYD, NIO, Meituan, Alibaba, Tencent
- Shenzhen Intl (152 HK): Another Monetisation
- Shijiazhuang Yiling Pharmaceutical (002603.CH) – Valuation Rebound Is Worth Looking Forward To
HK Connect SOUTHBOUND Flows (To 8Dec23); CNOOC & China Mobile Both Now To The Buy Side, Tencent Not
- SOUTHBOUND flows showing reversion tendencies continues for a second or third week after weeks of momentum.
- SOUTHBOUND saw HK$11.2bn of INFLOWS on the week, a chunk of which was net buys on HK-listed ETFs, but Hs underperformed their A counterparts in the H/A pairs once again.
- High-Div SOEs again saw action. This time with both CNOOC Ltd (883 HK)andChina Mobile (941 HK) seeing strong net buying as a percentage of volume. Tech was sold.
A/H Premium Tracker (To 8 Dec 23): H Down Vs A, Again, Despite SOUTHBOUND Buying; Pharmas Weak
- The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- Hs with H/A pairs under-perform their As on average by 70+bp. Liquid HK H/A Pairs saw H/As -66bp. H/A Pair intracorrelation is down but it feels like liquidation.
- SOUTHBOUND and NORTHBOUND flows were buys, and sells, respectively, but Hs have had two bad weeks in a row, and high premia A/H pairs have seen premia rise significantly.
REPT BATTERO (0666 HK): Index Inclusion Possibility & Timelines
- REPT BATTERO Energy (1998104D CH) is looking to raise up to HK$2.39bn (US$306m) in its IPO by selling 116.07m shares at HK$20.6/share, valuing the company at HK$46.9bn (US$6bn).
- The H-share market cap is a lot lower at HK$6.33bn (US$811m) since most of the pre-IPO shares will remain as Domestic Unlisted Shares.
- The stock will be eligible for HSCI inclusion in March but will need to trade higher than the upper end of the IPO range to be added to the index.
Trip.com (TCOM US, 9961 HK): Revenue 30% Above Pre-COVID Level
- Travelers increased by 75% YoY and traveling spending increased by 144% YoY in China in 9M2023.
- TCOM’s total revenue rose by 31% in 3Q23 over 3Q19 before COVID.
- We conclude an upside of 33% and a price target of US$43.70.
SHEIN Versus Amazon: Our Online Shopping Adventure In Pursuit Of Ultra-Cheap Holiday Deals
- We set out to compare prices & the “retail experience” at AMZN, SHEIN
- Selecting comparable items, we looked at landed costs, transit times, returns
- SHEIN’s value proposition is obvious; will consumers accept its drawbacks, too?
Mainland Connect NORTHBOUND Flows (To 8 Dec 23): Net Sales Again on Midea and Wuliangye Yibin
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts to play with.
- Last week saw NORTHBOUND net sell RMB 5.8bn of A-sharesin higher-than-normal activity.
- Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start).
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Soft Landing
- Weekly summary of vol changes and moves across Global Markets
- Analysing ATM volatility and skew changes over the last 5 days
- We suggest a few trades to take advantage of the implied vol surfaces
China Consumption Weekly (11 Dec 2023): BYD, NIO, Meituan, Alibaba, Tencent
- BYD offers a reward up to RMB5 million for reporting defamation.
- NIO denied further layoff after releasing the 3Q23 results with both revenue and loss increasing significantly.
- Meituan’s GMV of live broadcasting food delivery reached RMB2 billion.
Shenzhen Intl (152 HK): Another Monetisation
- The REIT issuance of the Hangzhou and Guizhou logistics assets of Shenzhen International (152 HK) has entered the final stage, reflecting its ability to realise asset values.
- We estimate SZI may book gain of around Rmb300m in 2H23, or more likely 1H24, and this will support good HoH and YoY rebound in its earnings.
- These assets only accounted for 8% and 5% of SZI’s total portfolio area and value, respectively, suggesting there is still immense room for capital gain from its remaining assets.
Shijiazhuang Yiling Pharmaceutical (002603.CH) – Valuation Rebound Is Worth Looking Forward To
- Now that the pandemic has passed, Yiling’s performance has to face a sharp decline due to the high base before, but in our view, the situation is not so bad.
- According to the management,sales of cardiovascular and cerebrovascular products would gradually increase to make up for the sales decline of Lianhua Qingwen, which would still be higher than pre-pandemic level.
- About 15-20% performance growth is still reachable in the future. PE of 20-30 is a reasonable range for Yiling. Being included in CSI 300 Index helps to improve the liquidity.
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