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 Capital Markets

<p>We think the 72.7% YoY plunge in gross profit at <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> in 1Q21 reflects that it lacks pricing power, even though it is the largest player in the integrated supply chain logistics services industry. Meanwhile, the express industry witnessed an overall YoY contraction in unit revenue and profitability in 1Q21, continuing a structural declining trend. With a market share of 2.7%, JDL is not expected to see material change in its profitability even if this is doubled as the industry stays fragmented and it will still be susceptible to industry price competition, in our view.</p><p>Instead, we see <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> the beneficiary of JDL's significant capital investment in logistics infrastructure over the near-to-medium term. In fact, there are other more attractive pure logistics options like <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> and <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> which have longer track record, better profitability and higher dividend yield. Fundamentally, we are not a big fan of JDL at its proposed valuations.</p>

We think the 72.7% YoY plunge in gross profit at JD Logistics (JDL HK) in 1Q21 reflects that it lacks pricing power, even though it is the largest player in the integrated supply chain logistics services industry. Meanwhile, the express industry witnessed an overall YoY contraction in unit revenue and profitability in 1Q21, continuing a structural declining trend. With a market share of 2.7%, JDL is not expected to see material change in its profitability even if this is doubled as the industry stays fragmented and it will still be susceptible to industry price competition, in our view.Instead, we see JD.com Inc. (9618 HK) the beneficiary of JDL's significant capital investment in logistics infrastructure over the near-to-medium term. In fact, there are other more attractive pure logistics options like Sinotrans (598 HK) and Kerry Logistics Network (636 HK) which have longer track record, better profitability and higher dividend yield. Fundamentally, we are not a big fan of JDL at its proposed valuations.

JD Logistics IPO: We Play Devil's Advocate