Daily Brief Thematic (Sector/Industry): Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings and more

In today’s briefing:

Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings
Evergrande Reports Narrowing Differences in Debt Restructuring Talks
Our Three Best Calls in 2022: Review and Outlook for 2023

Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings

Our macro analysis concludes a 60%.40% weighting of stocks in favor of ASEAN picks.
Central reason: Lingering mixed signals on China covid policies remaining unclear.
Pent up demand will eventually break through as travel bans ease,but timing is key to make choices on Macau centric stocks.

Debt-laden developer China Evergrande Group said disagreements are narrowing among parties involved in discussions of its offshore debt restructuring plan as talks continue to push toward a consensus.
China Evergrande, which defaulted on its first offshore bond a year ago, failed to deliver a restructuring plan it had promised by the end of July.
In its most recent update on the negotiations Tuesday, the company said there is still great uncertainty on repayment given the company’s massive debts and challenging business situation.

Our positive calls on Fu Shou Yuan (1448 HK) and Air China Ltd (753 HK) and negative call on Conch Environment (587 HK) have generated the best wins in 2022.
These calls achieved returns of 56.8%, 34.2% and 43.5%, respectively, which we think are remarkable given the losses of 16.3% for HSI and 19.3% for HSCEI YTD.
In 2023, we expect Fu Shou Yuan continue to do well and Conch Environment to remain under pressure. It may be prudent to take some profit on Air China.

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