HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<ul>
<li>While <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 result is at the low end of the positive profit alert range, its 2H24 net profit has still grown by 22.7%. </li>
<li>Better outlook at <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> and margin improvement for logistics hubs will drive FY25. Upside will come from further gains at South China Logistics Park. </li>
<li>SZI's valuations of 5.9x PER, 8.4% yield, and 0.5x P/B for FY25F are attractive. As more deals are sealed to realise its asset value, its P/B discount will narrow.</li>
</ul>


While Shenzhen International (152 HK)'s FY24 result is at the low end of the positive profit alert range, its 2H24 net profit has still grown by 22.7%. 
Better outlook at Shenzhen Expressway (548 HK) and margin improvement for logistics hubs will drive FY25. Upside will come from further gains at South China Logistics Park. 
SZI's valuations of 5.9x PER, 8.4% yield, and 0.5x P/B for FY25F are attractive. As more deals are sealed to realise its asset value, its P/B discount will narrow.


Shenzhen Intl (152 HK): Delivered as Promised

<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> has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.</li>
<li>The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.</li>
<li>The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.</li>
</ul>



Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.
The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.


Shenzhen Intl (152 HK): A Big Step Forward

Thematic (Sector/Industry)

<ul>
<li>There are 26 companies with dividend yields of over 9% in FY25 based on consensus forecasts. With the slowdown in the US rate cut, they look attractive this year.</li>
<li>The top 5 are <a href="https://www.smartkarma.com/entities/china-new-university" target="_blank" data-smartkarma-citation="entities:23626:1" rel="noopener">China New Higher Education (2001 HK)</a>, <a href="https://www.smartkarma.com/entities/greentown-management-holdings" target="_blank" data-smartkarma-citation="entities:28895:1" rel="noopener">GreenTown Management (9979 HK)</a>, <a href="https://www.smartkarma.com/entities/lever-style-corporation" target="_blank" data-smartkarma-citation="entities:35760:1" rel="noopener">Lever Style (1346 HK)</a>, <a href="https://www.smartkarma.com/entities/paradise-entertainment-ltd" target="_blank" data-smartkarma-citation="entities:3437:1" rel="noopener">Paradise Entertainment (1180 HK)</a>, and <a href="https://www.smartkarma.com/entities/pacific-textiles-holdings" target="_blank" data-smartkarma-citation="entities:12638:1" rel="noopener">Pacific Textiles (1382 HK)</a>. </li>
<li>Key risks are their small-cap nature, potential issues with corporate governance, and low earnings quality when compared with banks and telcos.</li>
</ul>


There are 26 companies with dividend yields of over 9% in FY25 based on consensus forecasts. With the slowdown in the US rate cut, they look attractive this year.
The top 5 are China New Higher Education (2001 HK), GreenTown Management (9979 HK), Lever Style (1346 HK), Paradise Entertainment (1180 HK), and Pacific Textiles (1382 HK). 
Key risks are their small-cap nature, potential issues with corporate governance, and low earnings quality when compared with banks and telcos.


China Strategy: What Are Some Other High Dividend Yield Options?

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Extending my point about more demanding transportation frameworks going forward (see <a href="https://www.smartkarma.com/insights/comfortdelgro-fy16-results-an-era-where-competition-hits-a-higher-gear" target="_blank" data-smartkarma-citation="insights:8719">ComfortDelGro FY16 Results: An Era Where Competition Hits a Higher Gear</a> ), the recent fire-bomb attack on Hong Kong’s MTR that left 19 injured signals increasing costs for transport operators. This article presents another reason why investors should sell MTR Corp, on top of points already provided by fellow insight provider Sameer Taneja in an earlier piece <a href="https://www.smartkarma.com/insights/mtr-66-hk-conviction-sell-thesis" target="_blank" data-smartkarma-citation="insights:7982">MTR (66 HK): Conviction Sell Thesis</a><h2>Security Costs to</h2>…

Extending my point about more demanding transportation frameworks going forward (see ComfortDelGro FY16 Results: An Era Where Competition Hits a Higher Gear ), the recent fire-bomb attack on Hong Kong’s MTR that left 19 injured signals increasing costs for transport operators. This article presents another reason why investors should sell MTR Corp, on top of points already provided by fellow insight provider Sameer Taneja in an earlier piece MTR (66 HK): Conviction Sell ThesisSecurity Costs to…

66 HK and SBUS SP: Attack on HK Metro Signals Increases in Transport Operators' Costs

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Reasonable port valuation supports M&amp;A activities<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/443/original/ports5.JPG?1454570524" class="editor-image img-responsive" data-smartkarma-image-id="5443"></figure>Note: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0x Source: Bloomberg, DMER<figure class="editor-figure"><img src="https://static-prod.smartkarma.com/images/media/000/005/444/original/ports6.JPG?1454570793" class="editor-image img-responsive" data-smartkarma-image-id="5444"></figure> Source: Company, DMER• As the global trade growth moderates, we expect significant volatility to persist in the year ahead. Port companies with sturdy balance sheet will be favoured over growth companies. Debt servicing ratio is expected to trend lower on higher interest and faltering earnings. Therefore, we look for terminal operators with…

Reasonable port valuation supports M&amp;A activitiesNote: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0x Source: Bloomberg, DMER Source: Company, DMER• As the global trade growth moderates, we expect significant volatility to persist in the year ahead. Port companies with sturdy balance sheet will be favoured over growth companies. Debt servicing ratio is expected to trend lower on higher interest and faltering earnings. Therefore, we look for terminal operators with…

Global Port Operators - Reasonable Valuation Supports M&A Activities

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)

Shenzhen Intl (152 HK): Delivered as Promised

Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Big Step Forward

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

China Strategy: What Are Some Other High Dividend Yield Options?

Lever Style, one of the top 5 high yield stocks, has issued a positive profit alert with US$16.4-17.4m for FY24, or 5-12% YoY growth. Given the...

Osbert Tang, CFA

66 HK and SBUS SP: Attack on HK Metro Signals Increases in Transport Operators' Costs

Extending my point about more demanding transportation frameworks going forward (see ComfortDelGro FY16 Results: An Era Where Competition Hits a...

Valerie Law, CFA

Global Port Operators - Reasonable Valuation Supports M&A Activities

Reasonable port valuation supports M&A activitiesNote: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0xSource:...

Drewry Maritime Financial Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Shenzhen Intl (152 HK): Delivered as Promised

​Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Big Step Forward

​Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

China Strategy: What Are Some Other High Dividend Yield Options?

Lever Style, one of the top 5 high yield stocks, has issued a positive profit alert with US$16.4-17.4m for FY24, or 5-12% YoY growth. Given the...

Osbert Tang, CFA

66 HK and SBUS SP: Attack on HK Metro Signals Increases in Transport Operators' Costs

Extending my point about more demanding transportation frameworks going forward (see ComfortDelGro FY16 Results: An Era Where Competition Hits a...

Valerie Law, CFA

Global Port Operators - Reasonable Valuation Supports M&A Activities

Reasonable port valuation supports M&A activitiesNote: Market-weighted EV/EBITDA ticked higher from FY14 level of 14.8x to 15.0xSource:...

Drewry Maritime Financial Research

Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...