Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>SOUTHBOUND gross trading activity still high. Net buying very strong. 7 names traded more than US$1bn. Last week I said tech would continue to be bought. It was.</li>
<li>The trend continues to net sales of ETFs and high div SOEs. Net buying is very, very broad-based. <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong (2800 HK)</a> is batted around like crazy.</li>
<li>I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don't compete in the US.</li>
</ul>


SOUTHBOUND gross trading activity still high. Net buying very strong. 7 names traded more than US$1bn. Last week I said tech would continue to be bought. It was.
The trend continues to net sales of ETFs and high div SOEs. Net buying is very, very broad-based. Tracker Fund of Hong Kong (2800 HK) is batted around like crazy.
I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don't compete in the US.


HK Connect SOUTHBOUND Flows (To 15 Nov 2024); Tech Bought, High-Div SOEs Sold or Ignored, Again

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>ZTE released 3Q24 results. 3Q revenue was RMB27.6bn, down 3.9% YoY and 13.6% QoQ. GPM was 40.4% in 3Q24 (vs. 39.0%/44.6% in 2Q24/3Q23).</li><li>NP was RMB2.2bn, down 8.2% YoY and 27.3% QoQ. The decline was mainly due to lower telecom spending in China (~5% decrease in domestic telcos’ capex in 2024) and the delayed progress in ZTE’s AI servers.</li><li>Looking forward, we expect the company’s overall growth to be flat this year and grow 8.2% in 2025E, driven by double-digit growth in overseas carrier/consumer/enterprise &amp; gov’t segments, partially offset by domestic telecom weakness.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE released 3Q24 results. 3Q revenue was RMB27.6bn, down 3.9% YoY and 13.6% QoQ. GPM was 40.4% in 3Q24 (vs. 39.0%/44.6% in 2Q24/3Q23).NP was RMB2.2bn, down 8.2% YoY and 27.3% QoQ. The decline was mainly due to lower telecom spending in China (~5% decrease in domestic telcos’ capex in 2024) and the delayed progress in ZTE’s AI servers.Looking forward, we expect the company’s overall growth to be flat this year and grow 8.2% in 2025E, driven by double-digit growth in overseas carrier/consumer/enterprise &amp; gov’t segments, partially offset by domestic telecom weakness.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE (763 HK) - Stable GPM Despite Domestic Telecom Headwinds

Thematic (Sector/Industry)

<ul><li>China’s stock markets (both A/H shares) have soared recently on government stimulus policies.</li><li>Per Reuters, Chinese stocks recorded their biggest single-day gains since 2008, with highest turnover (domestic A-share) on 30 Sep.</li><li>As of 2 Oct 2024, HSI and CSI 300 have surged 32.2% and 18.5% YTD, respectively, currently ranking as top performing indices globally. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China’s stock markets (both A/H shares) have soared recently on government stimulus policies.Per Reuters, Chinese stocks recorded their biggest single-day gains since 2008, with highest turnover (domestic A-share) on 30 Sep.As of 2 Oct 2024, HSI and CSI 300 have surged 32.2% and 18.5% YTD, respectively, currently ranking as top performing indices globally. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Semiconductors - Sector Valuation Revisit After Recent Rally; Potential Rerating Opportunities Ahead

Global TMT Analyst, Ex-PM, 30 years experience

Neil Campling

<ul>
<li>SAMR would draw out review process for too long for a deal to be approved</li>
<li>Intel faces an existential crisis and even the new Foundry division has issues</li>
<li>A theoretical deal would have little financial synergy and destroy Qualcomm's gross margins</li>
</ul>


SAMR would draw out review process for too long for a deal to be approved
Intel faces an existential crisis and even the new Foundry division has issues
A theoretical deal would have little financial synergy and destroy Qualcomm's gross margins


Tech M&A: Qualcomm for Intel? No Chance. Here's Why.

<ul><li>ZTE’s announced 1H24 results. Revenue increased by 2.9% YoY to RMB62.5bn, while net profit grew by 4.8% YoY to RMB5.7bn in 1H24.</li><li>Despite the headwinds from declining capex of domestic telcos for ZTE’s carrier business, non-carrier businesses managed to grew double-digits (14.3% and 56.1% YoY growth in consumer and gov’t/enterprise segments).</li><li>On a quarterly basis, Q2 revenue increased by 1.1% YoY / 4.4% QoQ, while net profit increased by 5.7% YoY / 9.1% QoQ. GPM declined sequentially to 39%, mainly due to unfavorable product mix (i.e., lower contribution from high-margin carrier segment). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE’s announced 1H24 results. Revenue increased by 2.9% YoY to RMB62.5bn, while net profit grew by 4.8% YoY to RMB5.7bn in 1H24.Despite the headwinds from declining capex of domestic telcos for ZTE’s carrier business, non-carrier businesses managed to grew double-digits (14.3% and 56.1% YoY growth in consumer and gov’t/enterprise segments).On a quarterly basis, Q2 revenue increased by 1.1% YoY / 4.4% QoQ, while net profit increased by 5.7% YoY / 9.1% QoQ. GPM declined sequentially to 39%, mainly due to unfavorable product mix (i.e., lower contribution from high-margin carrier segment). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China

ZTE Corporation develops and markets switches, access servers, videoconferencing systems, mobile communication systems, data communication devices, and optical communication devices.  The Company also offers networking solutions for setup, refurbishment and optimization of networks.

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ZTE Corp H (763 HK)

HK Connect SOUTHBOUND Flows (To 15 Nov 2024); Tech Bought, High-Div SOEs Sold or Ignored, Again

SOUTHBOUND continues to be a big net buyer of HK stocks. It is possible investors are looking to cheap tech, possible they are looking to buybacks....

Travis Lundy

ZTE (763 HK) - Stable GPM Despite Domestic Telecom Headwinds

ZTE released 3Q24 results. 3Q revenue was RMB27.6bn, down 3.9% YoY and 13.6% QoQ. GPM was 40.4% in 3Q24 (vs. 39.0%/44.6% in 2Q24/3Q23).

CMB International

Semiconductors - Sector Valuation Revisit After Recent Rally; Potential Rerating Opportunities Ahead

China’s stock markets (both A/H shares) have soared recently on government stimulus policies. Per Reuters, Chinese stocks recorded their biggest...

CMB International

Tech M&A: Qualcomm for Intel? No Chance. Here's Why.

China SAMR's lengthy review process would hinder deal approval, Intel's existential crisis includes issues in new Foundry division, theoretical...

Neil Campling

ZTE (000063 CH) - Mixed 1H24 Results

ZTE’s announced 1H24 results. Revenue increased by 2.9% YoY to RMB62.5bn, while net profit grew by 4.8% YoY to RMB5.7bn in 1H24.

CMB International

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HK Connect SOUTHBOUND Flows (To 15 Nov 2024); Tech Bought, High-Div SOEs Sold or Ignored, Again

SOUTHBOUND continues to be a big net buyer of HK stocks. It is possible investors are looking to cheap tech, possible they are looking to buybacks....

Travis Lundy

ZTE (763 HK) - Stable GPM Despite Domestic Telecom Headwinds

ZTE released 3Q24 results. 3Q revenue was RMB27.6bn, down 3.9% YoY and 13.6% QoQ. GPM was 40.4% in 3Q24 (vs. 39.0%/44.6% in 2Q24/3Q23).

CMB International

Semiconductors - Sector Valuation Revisit After Recent Rally; Potential Rerating Opportunities Ahead

China’s stock markets (both A/H shares) have soared recently on government stimulus policies. Per Reuters, Chinese stocks recorded their biggest...

CMB International

Tech M&A: Qualcomm for Intel? No Chance. Here's Why.

​China SAMR's lengthy review process would hinder deal approval, Intel's existential crisis includes issues in new Foundry division, theoretical...

Neil Campling

ZTE (000063 CH) - Mixed 1H24 Results

ZTE’s announced 1H24 results. Revenue increased by 2.9% YoY to RMB62.5bn, while net profit grew by 4.8% YoY to RMB5.7bn in 1H24.

CMB International

China SAMR's lengthy review process would hinder deal approval, Intel's existential crisis includes issues in new Foundry division, theoretical...