Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Thematic (Sector/Industry)

<p>This post is a follow-up to discuss potential follow-on impacts of Hutchison Whampoa's restructuring on the Watson's retail segment. With a deal for O2 in the works, a Watson's listing or sale could be a source of permanent funding for this transaction. As an entity with its own currency, Watson's could accelerate its expansion program. The same is true if a retailer with global ambitions buys control.</p>

This post is a follow-up to discuss potential follow-on impacts of Hutchison Whampoa's restructuring on the Watson's retail segment. With a deal for O2 in the works, a Watson's listing or sale could be a source of permanent funding for this transaction. As an entity with its own currency, Watson's could accelerate its expansion program. The same is true if a retailer with global ambitions buys control.

Hutchison Whampoa Restructuring: Next Move for Watson's? Part Two

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a>'s FY24 net profit will range at HK$2.8-3.1bn (53-63% growth YoY), boosted by a HK$2.3bn gain from South China Logistics Park Transformation.</li>
<li>Extrapolating this gain to the whole land plot will generate a profit of HK$11.4bn, or 66% of the current market capitalisation. The stock is significantly undervalued at 0.49x P/B. </li>
<li>At an assumed 50% payout ratio, SZI's yield is at 9%. Moreover, with stable profit expected for FY25 and FY26, the yield will be maintained for the next two years.</li>
</ul>



Shenzhen International (152 HK)'s FY24 net profit will range at HK$2.8-3.1bn (53-63% growth YoY), boosted by a HK$2.3bn gain from South China Logistics Park Transformation.
Extrapolating this gain to the whole land plot will generate a profit of HK$11.4bn, or 66% of the current market capitalisation. The stock is significantly undervalued at 0.49x P/B. 
At an assumed 50% payout ratio, SZI's yield is at 9%. Moreover, with stable profit expected for FY25 and FY26, the yield will be maintained for the next two years.


Shenzhen Intl (152 HK): Good News from Positive Profit Alert

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> reported 1H24 net profit of HK$653m. While toll road and other segments are under pressure, the logistics segment has benefited from REIT issuance.</li>
<li>In 2H24, it may book profit from the initial land appreciation gain from the South China Logistics Park transformation and profit from the 50%-owned Yicheng Zhenwanyue.</li>
<li>SZI seeks to realise the value of its assets. At 0.4x P/B or 1SD below the 5-year average, the stock, with a 7.5% yield, is deeply undervalued. </li>
</ul>



Shenzhen International (152 HK) reported 1H24 net profit of HK$653m. While toll road and other segments are under pressure, the logistics segment has benefited from REIT issuance.
In 2H24, it may book profit from the initial land appreciation gain from the South China Logistics Park transformation and profit from the 50%-owned Yicheng Zhenwanyue.
SZI seeks to realise the value of its assets. At 0.4x P/B or 1SD below the 5-year average, the stock, with a 7.5% yield, is deeply undervalued. 


Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  </li>
<li>Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.</li>
<li>Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.</li>
</ul>



Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.


Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

<ul>
<li>Given Shenzhen Airlines is already in negative equity, <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> will not record any of its losses in 2H22, making a big HoH swing in its impact.</li>
<li>The injections of Hangzhou and Hefei logistics projects will be completed by end-FY22, bringing in one-off gains. Jul-Aug toll revenue of <a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 HK)</a> has also recovered vs. 1H22.</li>
<li>While there will not be profit at logistics parks transformation business in 2H22, Qianhai Phase II has completed pre-sale in Sep, bring in potentially Rmb3bn to be booked in FY23.</li>
</ul>


Given Shenzhen Airlines is already in negative equity, Shenzhen International (152 HK) will not record any of its losses in 2H22, making a big HoH swing in its impact.
The injections of Hangzhou and Hefei logistics projects will be completed by end-FY22, bringing in one-off gains. Jul-Aug toll revenue of Shenzhen Expressway (548 HK) has also recovered vs. 1H22.
While there will not be profit at logistics parks transformation business in 2H22, Qianhai Phase II has completed pre-sale in Sep, bring in potentially Rmb3bn to be booked in FY23.


Shenzhen Intl (152 HK): Updates on Latest Developments

Hong Kong

Shenzhen Investment Holdings Bay Area Development is primarily engaged in the expressway business, focusing on infrastructure and related businesses, as well as land development and utilization within the Guangdong-Hong Kong-Macao Greater Bay Area. Its key projects include the Guangzhou-Shenzhen Superhighway and Guangzhou-Zhuhai West Superhighway. The company was incorporated in the Cayman Islands in 2003 and is headquartered in Wan Chai, Hong Kong.

Shenzhen Investment Holdings Bay Area Development (737 HK)

Shenzhen Investment Holdings Bay Area Development

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Shenzhen Investment Holdings Bay Area Development (737 HK)

Hutchison Whampoa Restructuring: Next Move for Watson's? Part Two

This post is a follow-up to discuss potential follow-on impacts of Hutchison Whampoa's restructuring on the Watson's retail segment. With a deal...

Kemp Dolliver, CFA

Shenzhen Intl (152 HK): Good News from Positive Profit Alert

Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Updates on Latest Developments

We find positive developments which point to HoH improvement in 2H22 earnings. Recovery of toll roads, lessening of loss burden in Shenzhen...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hutchison Whampoa Restructuring: Next Move for Watson's? Part Two

This post is a follow-up to discuss potential follow-on impacts of Hutchison Whampoa's restructuring on the Watson's retail segment. With a deal...

Kemp Dolliver, CFA

Shenzhen Intl (152 HK): Good News from Positive Profit Alert

​Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Topping Positive Profit Alert Range

​Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Updates on Latest Developments

We find positive developments which point to HoH improvement in 2H22 earnings. Recovery of toll roads, lessening of loss burden in Shenzhen...

Osbert Tang, CFA

Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...

Shenzhen Intl reports a 1H24 net profit of HK$653m, topping the positive profit alert, and the logistics segment has benefited from REIT issuance....