In today’s briefing:
- Ping An A/H Premium: Blow Out Could Lead to Sharp Reversal
- A/H Premium Tracker (To 19 Jan 2024): Hs Shellacked Vs As. Near Multi-Year High Average AH Premia
- Mainland Connect NORTHBOUND Flows (To 19 Jan 2024): BIG Net Sells, Again, Before National Team Buys
- CSI300 Index Rebalance Preview: A Dozen Changes for June
- HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts
- Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield
- Lonking (3339 HK): A Yield Play?
- Gushengtang (2273.HK) – Some New Business Updates and Positive Performance Forecasts
Ping An A/H Premium: Blow Out Could Lead to Sharp Reversal
- Ping An Insurance (601318 CH) trades at a 40% premium to Ping An Insurance (2318 HK). The premium has blown out the last week and there could be a reversal.
- The difference in Ping An’s AH premium versus the HSAHP Index has shrunk to its narrowest level in the last 10 years.
- Shareholding in Ping An Insurance Group of (601318 CH) via Northbound Connect has dropped and shareholding in Ping An Insurance (H) (2318 HK) via Southbound Connect has increased steadily.
A/H Premium Tracker (To 19 Jan 2024): Hs Shellacked Vs As. Near Multi-Year High Average AH Premia
- The New/Better 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. But that didn’t help.
- SOUTHBOUND flows were bigly positive and NORTHBOUND flows a large net sell. Nevertheless AH Premia had their best week in ages as HK large caps, mid-caps, small-caps got shellacked.
- Now at new 52wk wides on A premia. Now within 3% of 5+ year highs.
Mainland Connect NORTHBOUND Flows (To 19 Jan 2024): BIG Net Sells, Again, Before National Team Buys
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net SELL RMB 23.5bn of A-shares on strong average activity. Big net selling on Weds. National Team stepped in Thurs. NORTHBOUND stepped in to sell Friday.
- Renewables were a bit more mixed this week but still a net sell by NORTHBOUND. It is not clear what stops persistent net selling.
CSI300 Index Rebalance Preview: A Dozen Changes for June
- With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
- There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.
HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts
- An ugly week for HK stocks but SOUTHBOUND flows showed decent net buying at HK$14.7bn on the week. High-Div SOEs continue to be in favour.
- What appears to have been strong net selling on the mainland combined with CBBC unwinds in Hong Kong related to mainland-linked stocks caused HK to have a baaaaad week.
- The separately published AH Monitor highlights a Really Tough Week. Hs got KILLED vs their A-share counterparts as CBBCs sold the HK names and National Team bought A-shares.
Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield
- Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY.
- Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share.
- The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).
Lonking (3339 HK): A Yield Play?
- While the 2H23 result of Lonking Holdings (3339 HK) may disappoint due to a plunge in sales volume, it is a yield play given the high historical payout ratio.
- Assuming a DPS of HK$0.10 for FY23-25 as in FY22, yielding 8.3%, the total dividend will amount to Rmb1.2bn. This only equals 22% of its net cash (including short-term investments).
- Its controlling shareholders bought 7.3m shares since 27 Dec, raising the stake by 0.13pp to 56.2%, demonstrating their positive view on the share’s value and long-term outlook.
Gushengtang (2273.HK) – Some New Business Updates and Positive Performance Forecasts
- 23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.
- In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&A.
- Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.
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