In today’s briefing:
- JD.com (JD US): Improved Shareholder Return Is Key
- China Vanke: Should Investors Be Worried?
- Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector
- Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng
- Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely
- Fu Shou Yuan (1448 HK): Proposing a Special Dividend
- Shanghai REFIRE Group Pre-IPO Tearsheet
- HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating
- Vinda (3331 HK): Offer Now Open
- SITC International (1308 HK): Bidding Farewell to the Trough
JD.com (JD US): Improved Shareholder Return Is Key
- JD.com Inc (ADR) (JD US) reported a set of better-than-expected 4Q23 results yesterday, as the ADR rose 16% last night in US trading session.
- The improvement in net profit margin showed that being more price competitive did not lead to lower margins.
- I believe the key takeaway, aside from the resilient 4Q23 results and solid 2024 outlook, is the much improved shareholder return measures.
China Vanke: Should Investors Be Worried?
- China Vanke has caused jitters as it was reported to be closely watched by some insurers as it seeks to rollover some of its debt with insurers.
- It is reported that it has sufficient funding to repay its bond due on March 11th and is lining up a HK$1.5 billion syndication loan.
- Vanke warrants close monitoring as there is no sign of turning in its reducing contract sales, deteriorating cash position, shrinking financing ability.
Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector
- The Smartkarma Corporate Webinar | Sasseur REIT: A Glimpse into China’s Outlet Industry on Feb 29 explored the Oulet sector with Sasseur REIT, a Singapore REIT focused on China Outlets.
- Sasseur REIT is 57.85% owned by the Sasseur Group operating China outlets since 2008, with 4 outlets in 3 major Tier-2 cities currently in the REIT, with room for expansion.
- Sasseur REIT is a play on China consumption and outlet operations. 2023 EMA rental income +10.7% Y/Y. The 9.1% dividend yield stands out, at a relatively low aggregate leverage.
Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng
- The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
- In this insight, we take a look at the rankings of potential ADDs and potential DELs for the June 2024 index rebal event.
- While there are no expected ADDs/DELs for HSTECH in June 2024, some index members like Li Auto (2015 HK), Meituan (3690 HK), and XPeng (9868 HK) could experience capping flows.
Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in June 2024.
- Based on the current data, I see two low-conviction ADDs and two low-conviction DELs.
Fu Shou Yuan (1448 HK): Proposing a Special Dividend
- Fu Shou Yuan (1448 HK) is likely to declare a special dividend in its FY23 result announcement as indicated in its board meeting notification.
- Net cash at end-1H23 amounted to 14.5% of its current share price, providing room for imagination of the amount of special dividends.
- Besides raising its yield, returning excess cash should raise its ROE. This will also demonstrate the management’s confidence on the outlook and its financial position.
Shanghai REFIRE Group Pre-IPO Tearsheet
- Shanghai REFIRE Group (SRG) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunner for the deal is CICC.
- SRG designs, develops, manufactures, and sells hydrogen fuel cell systems, hydrogen production systems, and related components, as well as provides fuel cell engineering and technical services.
- According to Frost & Sullivan (F&S), it ranked first in the hydrogen fuel cell system market in China, with a market share of 25.9%.
HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating
- Markets continue to be extremely bearish on HK/China, we look at the latest property market fundamentals and macro indicators, as well as company updates of our top picks
- In the latest budget, the HK government just announced to scrap all spicy measures on property market and eased mortgage policy
- With government support, we view the bottom of physical market is near. For further re-rating, we need interest rate to go down, as well as resumed fund flows.
Vinda (3331 HK): Offer Now Open
- PRC regulatory approvals were satisfied on the 4th March for the Tanoto family’s HK$23.50 pre-conditional Offer for Vinda International (3331 HK).
- The Circular has been dispatched, and the Offer is now open for acceptances.
- With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto’s 7.69% direct stake), this should turn unconditional on or before the 19th March
SITC International (1308 HK): Bidding Farewell to the Trough
- The 72.5% decline in SITC International (1308 HK)‘s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.
- Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
- Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.
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