Equity Research in HK and Mainland China

Li Tang

Highly experienced sell-side analyst with more than ten years of experience in the field of China’s in-depth policy-driven macro research in China (Beijing) .
Covering in equity research in HK and Mainland market mainly real estate, construction,steel sector.
The Ideas generation based on an analysis of China’s future direction and policy decisions fundamental analysis on sector impact, market drivers, timing and scale, combined with quantitative analysis.

Thoughts on Amazon –What Does Its Valuation Tells Us?

Netflix & Amazon Expand in Korea – Not a Coincidence

Okja: The Fight Between Netflix Vs. CJ CGV

Thematic (Sector/Industry)

Macau Equity real estate investment trusts (reits) / Thematic (Sector/Industry)

China Overseas Land & Investment (688 HK)

On 30 April 2020, The China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission jointly issued the circular to begin the pilot program of real estate investment trusts (REITs).The programme shows Chinese authorities are accelerating exploring potential REITs frameworks that suit the country's national development goals.The pilot programme will allow China's mutual funds to issue public REITs that can be bought and sold like stocks on the country's exchanges. China's REIT market could potentially be worth more than 12 trillion yuan, surpassing the U.S, if legal and tax barriers were removed according to a report released by Peking University's Guanghua School of Managemen.Overall, the circular is a just draft document summarised programme requirements, financing restrictions, and distribution methods. The circular has not yet released core details of the pilot programme such as tax treatment, but still, we can simply outline the characteristics of the potential pilot products.<ul>
<li>The product should meet the requirement that requires 80%  of total investment in a single infrastructure ABS (asset-backed securities ), own and operate income-producing real estate and  managed by mutual funds.</li>
<li>The REITs must distribute at least 90% of its taxable income to shareholders annually in the form of dividends.</li>
</ul>There is still not clear which companies will be the first to list.The expectation is that the sponsors will be state-owned enterprises such as  <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd" target="_blank" data-smartkarma-citation="entities:26076:1" rel="noopener">China Vanke (000002 CH)</a>, <a href="https://www.smartkarma.com/entities/poly-real-estate-group-co-ltd" target="_blank" data-smartkarma-citation="entities:8203:1" rel="noopener">Poly Real Estate Group Co., (600048 CH)</a>, <a href="https://www.smartkarma.com/entities/china-overseas-land-invest" target="_blank" data-smartkarma-citation="entities:419:1" rel="noopener">China Overseas Land &amp; Investment Ltd (688 HK)</a> .

On 30 April 2020, The China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission jointly issued the circular to begin the pilot program of real estate investment trusts (REITs).The programme shows Chinese authorities are accelerating exploring potential REITs frameworks that suit the country's national development goals.The pilot programme will allow China's mutual funds to issue public REITs that can be bought and sold like stocks on the country's exchanges. China's REIT market could potentially be worth more than 12 trillion yuan, surpassing the U.S, if legal and tax barriers were removed according to a report released by Peking University's Guanghua School of Managemen.Overall, the circular is a just draft document summarised programme requirements, financing restrictions, and distribution methods. The circular has not yet released core details of the pilot programme such as tax treatment, but still, we can simply outline the characteristics of the potential pilot products.
The product should meet the requirement that requires 80%  of total investment in a single infrastructure ABS (asset-backed securities ), own and operate income-producing real estate and  managed by mutual funds.
The REITs must distribute at least 90% of its taxable income to shareholders annually in the form of dividends.
There is still not clear which companies will be the first to list.The expectation is that the sponsors will be state-owned enterprises such as  China Vanke (000002 CH), Poly Real Estate Group Co., (600048 CH), China Overseas Land &amp; Investment Ltd (688 HK) . 

Poly Real Estate Group Co., Ltd (600048 CH)

China Real Estate: China Might Finally Be Getting Its Own REITs