HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

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Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/cpmc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10427:1" rel="noopener">CPMC Holdings (906 HK)</a> has staged another set of good result with net profit grew 36.5% YoY and 20.6% HoH to a record of Rmb249.4m. It is encouraging to see that, even with sharp rise in raw material prices, its gross margin has just contracted marginally and gross profit still rose 20.1% YoY. We think this demonstrated the solid underlying product demand and its ability to pass on a significant portion of higher costs.</p><p>In the post-result call, management looks to be very optimistic about 2H21, expecting good HoH recovery in margin. The ramp up in production capacity, further price hikes and solid structural demand growth are key drivers. We think CPMC will be able to achieve an ROE of 10% by FY22, and with record profit for next two years, its current 0.76x 12-month forward P/B is clearly not sufficient in reflecting its improvement in profitability over the horizon.  </p>

CPMC Holdings (906 HK) has staged another set of good result with net profit grew 36.5% YoY and 20.6% HoH to a record of Rmb249.4m. It is encouraging to see that, even with sharp rise in raw material prices, its gross margin has just contracted marginally and gross profit still rose 20.1% YoY. We think this demonstrated the solid underlying product demand and its ability to pass on a significant portion of higher costs.In the post-result call, management looks to be very optimistic about 2H21, expecting good HoH recovery in margin. The ramp up in production capacity, further price hikes and solid structural demand growth are key drivers. We think CPMC will be able to achieve an ROE of 10% by FY22, and with record profit for next two years, its current 0.76x 12-month forward P/B is clearly not sufficient in reflecting its improvement in profitability over the horizon.  

CPMC Holdings (906 HK): Healthy 1H21 Despite Rising Cost, Highlights from Post-Result Call