In today’s briefing:
- Hong Kong CEO & Director Dealings (26 Sept): Kwoks Buying Sun Hung Kai; ED Selling Yantai North
- StubWorld: CK Infra Vs. Power Assets
- Tian Tu Capital IPO – Even with a Wide Price Range, Upside Seems Limited
- Kanzhun (2076 HK): A Monitor of Job Market in China
- The JPEX Debacle Placed Hong Kong’s Ambition to Become a Global Virtual Assets Centre in Doubt
- Gree (000651 CH): Resilient Fundamentals; Rerating Potential In A Low Interest Rate Environment
- Onewo IPO Lock-Up – US$1bn+ Lockup Release, Parent Could Still Sell
- COSCO Shipping Energy (1138 HK): Clearly Over-Optimistic
- Sipai Health Technology (314.HK) – Valuation Has Collapsed, but a Reversal Is Not yet in Sight
- UMP Healthcare 722 HK: Weak Q4 Lead to A Disappointing FY23, Worst Behind Us
Hong Kong CEO & Director Dealings (26 Sept): Kwoks Buying Sun Hung Kai; ED Selling Yantai North
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Yantai North Andre Juice H (2218 HK).
StubWorld: CK Infra Vs. Power Assets
- Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH.
- Preceding my comments on CKI/PAH are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Tian Tu Capital IPO – Even with a Wide Price Range, Upside Seems Limited
- Tian Tu Capital (1390587D CH) is looking to raise up to US$253m in its Hong Kong IPO.
- Tian Tu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
- In this note, we will look at the updates since our last note and share our thoughts on valuation.
Kanzhun (2076 HK): A Monitor of Job Market in China
- Kanzhun or Boss Zhipin, is the largest online recruiting platform for white collar workers.
- Users exceeded servers’ capacity for the third time this year.
- The positive signal is that recruiters began to grow in 2Q23.
The JPEX Debacle Placed Hong Kong’s Ambition to Become a Global Virtual Assets Centre in Doubt
- JPEX may be the biggest financial fraud in Hong Kong’s history, impacting government’s ambition to become a global centre for virtual assets
- SFC appeared to have no direct jurisdiction and powerless in the protection of investors in the JPEX case
- Web 3.0 and Virtual Assets are rapidly evolving, regulators may need to take a more dynamic approach in regulating such activities
Gree (000651 CH): Resilient Fundamentals; Rerating Potential In A Low Interest Rate Environment
- Gree Electric Appliances (000651 CH) trades at the lowest valuation multiple among the three major home appliance companies in China, at 7x forward PE and 7% forward yield.
- Investment case rests on stable earnings growth and high dividend payout and yield, which works well in a low interest rate environment in China.
- Resiliency of earnings for Gree is under-appreciated by the market, making rerating possible.
Onewo IPO Lock-Up – US$1bn+ Lockup Release, Parent Could Still Sell
- Onewo (2602 HK) (OST) had raised around US$730m in its Hong Kong IPO in Sep 2022. Its one-year lockup is set to expire soon.
- OST is a property management service provider in China, primarily owned by China Vanke (H) (2202 HK).
- In this note, we will talk about the lock-up dynamics and updates since our last note.
COSCO Shipping Energy (1138 HK): Clearly Over-Optimistic
- Cosco Shipping Energy Transportation (1138 HK) has rallied sharply on strong earnings recovery, but this is too excessive. We think unrealistic expectation has been built on 2H23 earnings.
- Over the last three months, the spot VLCC rate has collapsed by 90%, indicating a weakened demand outlook. The resilient share price has clearly not yet factored in this movement.
- The recent surge in crude oil is driven by supply, not demand, factors. This has led to a 14% increase in bunker price which will heighten CSET’s fuel bill.
Sipai Health Technology (314.HK) – Valuation Has Collapsed, but a Reversal Is Not yet in Sight
- The reason why there are many doubts about Sipai is that its Specialty Pharmacy Business accounts for dominant proportion of total revenue but is almost difficult to make a profit.
- Sipai’s SMO business revenue will be difficult to grow at scale due to industry characteristics and the Health Insurance Services business is too small to bring substantial changes to performance.
- Sipai’s revenue structure/business model is difficult to improve in the short term. So it’s not surprising if Sipai suffers long-term losses. Its valuation should be lower than that of ClouDr.
UMP Healthcare 722 HK: Weak Q4 Lead to A Disappointing FY23, Worst Behind Us
- UMP Healthcare (722 HK) reported FY23 profits down 26% YoY at 55 mn HKD, impacted by preoperating expenses and an impairment cumulatively of 40 mn HKD.
- A slow Q4 FY23 didn’t help either; revenues came in flat HoH instead of up 10% as our expectations and costs increased resulting in margin compression.
- We believe the worst is behind us. The stock trades at 5.9x FY24 PE, with ~50% of the market cap in cash and an FY24 dividend yield of 8.5%.
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