HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>1Q25 sales for <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> continue the trend in 4Q24, with ANTA and FILA brands recording a healthy high-single-digit YoY increase.</li>
<li>With the US-China trade war, the negative impact on consumer appetite is uncertain. It is difficult to project the 2Q-4Q25 revenue and margin outlook. </li>
<li>Its associate, <a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a>, has 36% of revenue from the Americas, while the Jack Wolfskin acquisition has limited contribution. Its 50% premium to sector caps upside.  </li>
</ul>


1Q25 sales for Anta Sports Products (2020 HK) continue the trend in 4Q24, with ANTA and FILA brands recording a healthy high-single-digit YoY increase.
With the US-China trade war, the negative impact on consumer appetite is uncertain. It is difficult to project the 2Q-4Q25 revenue and margin outlook. 
Its associate, Amer Sports (AS US), has 36% of revenue from the Americas, while the Jack Wolfskin acquisition has limited contribution. Its 50% premium to sector caps upside.  


Anta Sports (2020 HK): 1Q25 Stable, yet the Margin Remains Our Concern

<ul>
<li>
<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>'s strong FY24 result is masked by one-offs and <a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a>. Without them, its earnings would have declined by an alarming 5.4% in 2H24. </li>
<li>Its ANTA and FILA brands have seen YoY operating profit drop in 2H24, with heavy margin pressure. Their revenue growth has also showed meaningful slowdown sequentially.</li>
<li>The 18.6x PER for FY25 is at a 50% premium to the sector, but the market expectation of 15% growth looks challenging. The YTD rally has opened room for profit-taking.</li>
</ul>



Anta Sports Products (2020 HK)'s strong FY24 result is masked by one-offs and Amer Sports (AS US). Without them, its earnings would have declined by an alarming 5.4% in 2H24. 
Its ANTA and FILA brands have seen YoY operating profit drop in 2H24, with heavy margin pressure. Their revenue growth has also showed meaningful slowdown sequentially.
The 18.6x PER for FY25 is at a 50% premium to the sector, but the market expectation of 15% growth looks challenging. The YTD rally has opened room for profit-taking.


Anta Sports (2020 HK): Need to Exercise Caution

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a>'s share price change has not sufficiently reflected <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>'s movement. Their share price ratio is now at a historical low. </li>
<li>Its SOTP value increased by HK$927m with the surge in its PE, unlisted and fixed-income investment value, but its market capitalisation has gone up by just HK$258m.</li>
<li>Holdings in unlisted assets like Ant Financial and JD Technology (JD Digital) will benefit from the AI bonanza and the better sentiment in the HK IPO market.</li>
</ul>



China Dongxiang (3818 HK)'s share price change has not sufficiently reflected Alibaba Group (9988 HK)'s movement. Their share price ratio is now at a historical low. 
Its SOTP value increased by HK$927m with the surge in its PE, unlisted and fixed-income investment value, but its market capitalisation has gone up by just HK$258m.
Holdings in unlisted assets like Ant Financial and JD Technology (JD Digital) will benefit from the AI bonanza and the better sentiment in the HK IPO market.


China Dongxiang (3818 HK): More than Just BABA

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

CSSC (Hong Kong) Shipping / Equity Bottom-Up

<ul>
<li>Hong Kong and China shares have outperformed most Asian markets over the last year.  In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.</li>
<li>
<a href="https://www.smartkarma.com/entities/cssc-hong-kong-shipping-co-l" target="_blank" data-smartkarma-citation="entities:28068:1" rel="noopener">CSSC (Hong Kong) Shipping Co Ltd (3877 HK)</a> was rated BUY after reporting strong results.  Analysts have a target price of $2.50 on the stock.
</li>
<li><a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.</li>
</ul>


Hong Kong and China shares have outperformed most Asian markets over the last year.  In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.

CSSC (Hong Kong) Shipping Co Ltd (3877 HK) was rated BUY after reporting strong results.  Analysts have a target price of $2.50 on the stock.

Bosideng International Holdings (3998 HK) has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.


BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a> turned around in 1H FY25 as it reported a net profit of Rmb137m, vs. losses of Rmb410m a year ago. Interim DPS increased 92.7% YoY.</li>
<li>Investment gain is the key driver, reaching Rmb171m in the period, compared with losses of Rmb497m previously. Most investment categories contributed positively. </li>
<li>CDNX trades on a 76.9% discount to its SOTP value and a P/B of just 0.22x. Net cash amounted to Rmb3.2bn, or 58.3% more than its market capitalisation. </li>
</ul>



China Dongxiang (3818 HK) turned around in 1H FY25 as it reported a net profit of Rmb137m, vs. losses of Rmb410m a year ago. Interim DPS increased 92.7% YoY.
Investment gain is the key driver, reaching Rmb171m in the period, compared with losses of Rmb497m previously. Most investment categories contributed positively. 
CDNX trades on a 76.9% discount to its SOTP value and a P/B of just 0.22x. Net cash amounted to Rmb3.2bn, or 58.3% more than its market capitalisation. 


China Dongxiang (3818 HK): Investment Gain Remains the Driver

China

361 Degrees International is a leading Chinese sportswear enterprise that manufactures and trades in a wide range of sporting goods, including footwear, apparel, and accessories for adults and children. The company focuses on professional sports functionality and offers products under its 361° core and 361° Kids brand names. It was founded in 2003 and is headquartered in Xiamen, People's Republic of China.

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361 Degrees International (1361 HK)

Anta Sports (2020 HK): 1Q25 Stable, yet the Margin Remains Our Concern

Anta Sports has a healthy 1Q25, but uncertainty looms due to the US-China trade war and Amer Sports' exposure. The Jack Wolfskin acquisition will...

Osbert Tang, CFA

Anta Sports (2020 HK): Need to Exercise Caution

Anta's strong FY24 result was overshadowed by one-offs and Amer's impact, with earnings declining by 5.4% in 2H24. ANTA and FILA brands facing...

Osbert Tang, CFA

China Dongxiang (3818 HK): More than Just BABA

CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

Osbert Tang, CFA

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

HK/China markets have outperformed other Asian markets since the beginning of 2024. In HK the consumer discretionary sector has lost momentum as...

David Mudd

China Dongxiang (3818 HK): Investment Gain Remains the Driver

China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Anta Sports (2020 HK): 1Q25 Stable, yet the Margin Remains Our Concern

​Anta Sports has a healthy 1Q25, but uncertainty looms due to the US-China trade war and Amer Sports' exposure. The Jack Wolfskin acquisition will...

Osbert Tang, CFA

Anta Sports (2020 HK): Need to Exercise Caution

​Anta's strong FY24 result was overshadowed by one-offs and Amer's impact, with earnings declining by 5.4% in 2H24. ANTA and FILA brands facing...

Osbert Tang, CFA

China Dongxiang (3818 HK): More than Just BABA

​CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

Osbert Tang, CFA

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

HK/China markets have outperformed other Asian markets since the beginning of 2024. In HK the consumer discretionary sector has lost momentum as...

David Mudd

China Dongxiang (3818 HK): Investment Gain Remains the Driver

​China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...

Osbert Tang, CFA

Anta Sports has a healthy 1Q25, but uncertainty looms due to the US-China trade war and Amer Sports' exposure. The Jack Wolfskin acquisition will...

Anta's strong FY24 result was overshadowed by one-offs and Amer's impact, with earnings declining by 5.4% in 2H24. ANTA and FILA brands facing...

CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...