In today’s briefing:
- MSCI Nov 2022 SAIR: In-Line; Plus a Few Surprises
- EQD | Tencent (700 HK): Buy Calendar Spreads into Earnings
- BYD Launches Luxury EV Line in Challenge to High-End Foreign Brands
- Haier Smart Home (6690 HK): Opportunity Knocks as Depressed Valuation Cannot Reflect Outlook
- Shanghai Tofflon Science Placement (300171.CH)-Industry Periodicity May Put Valuation Under Pressure
MSCI Nov 2022 SAIR: In-Line; Plus a Few Surprises
- MSCI announced the changes as part of the November SAIR. For Asia Pacific, there are 48 adds and 55 deletes (including one nationality change).
- The deletion of Wharf Holdings (4 HK) is the biggest surprise. The stock should trade weak given the large flow and days of ADV to sell.
- There are listing changes for BeiGene (BGNE US), Li Auto (LI US), Xpeng (XPEV US) and Hutchison China MediTech Ltd (HCM US) to their Hong Kong listed lines.
EQD | Tencent (700 HK): Buy Calendar Spreads into Earnings
- Tencent are due to report earnings next week on Nov 16th
- Implied vols are bid up into the event causing an inverted term structure
- We see an opportunity to buy long calendar spreads to play a reversion in vol surface
BYD Launches Luxury EV Line in Challenge to High-End Foreign Brands
- Chinese carmaker BYD Co. Ltd. has unveiled its first luxury brand of electric vehicles (EV), joining its peers in efforts to impress wealthy domestic buyers
- The launch marks BYD’s latest step into the high-end auto market as it tries to outgrow its image as a manufacturer of mid- to low-end vehicles
- BYD is China’s largest EV and hybrid vehicle manufacturer by sales. In October, its wholesale shipments surpassed 200,000 for the second consecutive month
Haier Smart Home (6690 HK): Opportunity Knocks as Depressed Valuation Cannot Reflect Outlook
- Acceleration in earnings growth at Haier Smart Home Co Ltd (6690 HK) is an encouraging trend. We are happy to see expansion in both gross and operating margin in 3Q22.
- Further channel additions for Casarte and digitalisation efforts will bring positive profitability impact. Meanwhile, we welcome HSH’s increase in engagement of suppliers in product design process.
- Overseas growth has also accelerated in 3Q22 and there are numerous opportunities for HSH to expand its high-end presence and introduce new products in developed country markets.
Shanghai Tofflon Science Placement (300171.CH)-Industry Periodicity May Put Valuation Under Pressure
- We analyzed three main factors to drive high performance growth of Tofflon in recent years, but these factors have become untenable. The remaining opportunity mainly lies in import substitution.
- Every explosive growth of Tofflon benefits from positive industry trend, whose periodicity is obvious. It’s not a good investment opportunity for long run,but a staged investment opportunity in short term.
- Tofflon is in the transition from explosive growth to steady growth. The change in industry demand would suppress valuation system. Buy low and sell high,rather than hold for long time.
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