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In today’s briefing:
- FXI Rebalance: Three Buys. Three Sells
- Stella International: A Beneficiary of Reshoring
- Plover Bay 1523 HK: Solid FY23 Performance and Dividends, Rerating on the Cards
- Pacific Basin (2343 HK): An Upturn in the Making
- Agile Group – ESG Report – Lucror Analytics
- Monthly Chinese Express Tracker | Industry ASP Fell to Record Low Last Month | (February 2024)
- Pre-IPO TYK Medicines – Survival Risk Is Imminent, with Limited Highlights in the Pipeline
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FXI Rebalance: Three Buys. Three Sells
- Yankuang Energy, CGN Power and China Coal Energy are buys, China Resources Beer, China Vanke and Wuxi Biologics are sells for the iShares China Large-Cap (FXI) (FXI US) in March.
- Shorts have been spiking in China Vanke (2202 HK) while there has been covering in Yankuang Energy (1171 HK), China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK).
- There has been an increase in cumulative excess volume on all the adds and deletes over the last few months. There could be more over the next week.
Stella International: A Beneficiary of Reshoring
- Vietnam now accounts for more than 50% of production replacing China
- China production is less than 25% of overall capacity in 2023
- Reshoring and production of higher end “Athleisure” shoes is increasing margins for Stella International (1836 HK)
Plover Bay 1523 HK: Solid FY23 Performance and Dividends, Rerating on the Cards
- Plover Bay Technologies (1523 HK) reported an 8.5%/ 24YoY increase in revenue/profits (%). Profits increased due to a net margin expansion of 370 bps to 29.8%.
- The company had positive news in January when Peplink announced that it had agreed with SpaceX’s Starlink to become an authorized technology provider using Peplink SD-WAN routers.
- Trading at 11x/10x PE FY23/FY24e, with an 8.2% trailing dividend yield and ~60% ROE, this is another growth/dividend gem worth exploring.
Pacific Basin (2343 HK): An Upturn in the Making
- Pacific Basin Shipping (2343 HK) has a weaker-than-expected 2H23, but we are glad that its unit cost has come down. Also, FY24F and FY25F should be years of recovery.
- Current spot rates as indicated by BDI are significantly higher than 1H23 and YTD average, suggesting an upside for realised rates in the rest of this year.
- Supply pressure will be alleviated by the issues at Panama and Suez Canals, while China may be a factor in YoY demand improvement. Net gearing of 2% is light.
Agile Group – ESG Report – Lucror Analytics
Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Agile Group’s ESG as “Adequate”. The company’s Environmental and Social scores are “Adequate”, while Governance is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.
Monthly Chinese Express Tracker | Industry ASP Fell to Record Low Last Month | (February 2024)
- Industry ASP declined -15.5% Y/Y in January to just 8.36 CNY, a record low
- Despite strong volume (+85% Y/Y) some firms have likely turned unprofitable
- International parcel growth strong; SF still avoiding worst of domestic price wars
Pre-IPO TYK Medicines – Survival Risk Is Imminent, with Limited Highlights in the Pipeline
- Among core/key products, TY-302 and TY-2136b have to face fierce competition, with R&D progress lagging behind competing products.TY-9591 for brain metastases from NSCLC could be a breakthrough point for TYK.
- There would be a long time for the first product to generate revenue, but TYK is cash shortage.So, the survival risk is high. Such companies are less attractive to investors.
- Valuation of TYK after six rounds of financing was RMB3.08 billion. However, considering the weak sentiment and concerns on pipeline, valuation of TYK after IPO could fall below this level.