Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Equity Bottom-Up

CSR (1766 HK) has been week lately, following (a) technical selling after the regulator banned stock borrow into the EGM. This completed on Monday (b) Uncertainty regarding the Mexican rail bid.&nbsp; CSR confirmed post market that the cancellation of the Mexican contract will not have a big impact on the company. We would use the recent weakness to ADD exposure. The company gives you leverage to two of our top China themes (SOE reform and targeted FAI), and valuations are back to very compelling levels (sub 15x PE for what will be domestic monopoly in a structurally growing theme, with strong international upside).&nbsp;&nbsp; We expect the stock to continue re-rating post the CNR deal approval/completion

CSR (1766 HK) has been week lately, following (a) technical selling after the regulator banned stock borrow into the EGM. This completed on Monday (b) Uncertainty regarding the Mexican rail bid.&nbsp; CSR confirmed post market that the cancellation of the Mexican contract will not have a big impact on the company. We would use the recent weakness to ADD exposure. The company gives you leverage to two of our top China themes (SOE reform and targeted FAI), and valuations are back to very compelling levels (sub 15x PE for what will be domestic monopoly in a structurally growing theme, with strong international upside).&nbsp;&nbsp; We expect the stock to continue re-rating post the CNR deal approval/completion 

Buy CSR (1766 HK) - Opportunity to ADD due to technical weakeness

CRRC Corp Ltd H

Buy CSR (1766 HK) - Opportunity to ADD due to technical weakeness