HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Hong Kong and China Gas / Equity Bottom-Up

<ul>
<li>At 5.4% for FY24-26F, <a href="https://www.smartkarma.com/entities/hong-kong-china-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:375:1" rel="noopener">Hong Kong &amp; China Gas (3 HK)</a> has the second-highest dividend yield among its HK utility peers. A lower US rate makes it attractive.</li>
<li>An unchanged interim DPS of HK$0.12 despite a decline in reported net profit suggests the resilience of its dividend stream. Core operating profit has increased 2%.</li>
<li>While gearing has gone up, HKCG still has excellent cash-generating ability (FY23: HK$10.9bn). It has also cut back in capex with a 33% YoY drop for 1H24. </li>
</ul>


At 5.4% for FY24-26F, Hong Kong &amp; China Gas (3 HK) has the second-highest dividend yield among its HK utility peers. A lower US rate makes it attractive.
An unchanged interim DPS of HK$0.12 despite a decline in reported net profit suggests the resilience of its dividend stream. Core operating profit has increased 2%.
While gearing has gone up, HKCG still has excellent cash-generating ability (FY23: HK$10.9bn). It has also cut back in capex with a 33% YoY drop for 1H24. 


HK & China Gas (3 HK): A Yield Play Back in Favour

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

<ul>
<li>Hong Kong utilities have performed well on an absolute basis and even better on a relative basis this year.</li>
<li>We revisit our original call on them from  January 2024</li>
<li>Continued market volatility and future US  interest rate cuts will provide continued support.</li>
</ul>


Hong Kong utilities have performed well on an absolute basis and even better on a relative basis this year.
We revisit our original call on them from  January 2024
Continued market volatility and future US  interest rate cuts will provide continued support.


Revisiting Hong Kong Utilities-Time to Sell?

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of August 2nd.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Tencent, China Petroleum &amp; Chemical Corporation, BOC, Power Assets, HSBC, China Mobile.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of August 2nd.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Tencent, China Petroleum &amp; Chemical Corporation, BOC, Power Assets, HSBC, China Mobile.


Hong Kong Connect Flows (Aug 2nd): Tencent, China Petroleum & Chemical Corporation, Power Assets

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>Low volatility investing has taken the mantle from Dividend yield as the top strategy during July</li>
<li><a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a> and <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 Holding (9988 HK)</a> are rated BUYs as their businesses show improvement.  </li>
<li>
<a href="https://www.smartkarma.com/entities/kingdee-international-sftwr" target="_blank" data-smartkarma-citation="entities:37:1" rel="noopener">Kingdee International Software (268 HK)</a> is seeing a softening in its SME business, however there is  potential to gain market share from foreign ERP companies given the pledged government's policies.
</li>
</ul>


Low volatility investing has taken the mantle from Dividend yield as the top strategy during July
BYD Electronics (285 HK) and Alibaba Group Holding (9988 HK) are rated BUYs as their businesses show improvement.  

Kingdee International Software (268 HK) is seeing a softening in its SME business, however there is  potential to gain market share from foreign ERP companies given the pledged government's policies.



BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  
</li>
<li>
<a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">POWER ASSETS HOLDINGS (6 HK)</a> has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 
</li>
<li>
<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH GROUP (288 HK)</a> has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 
</li>
</ul>



BYD (1211 HK) shares had a breakout relative to the MSCI China index and showing good momentum during the low volume days of summer.  


POWER ASSETS HOLDINGS (6 HK) has shown a breakout relative to MSCI Hong Kong with a defensive business and 5%+ dividend yield. 


WH GROUP (288 HK) has also shown a breakout relative to the MSCI Hong Kong after its announcement of the spinoff of Smithfield Foods in the US. 



Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

Hong Kong

Power Assets Holdings Limited is an investment holding company primarily engaged in energy and utility-related businesses, including the generation, transmission, and distribution of electricity, oil, and gas. The company also invests in renewable energy and energy-from-waste projects across various international markets. It is headquartered in Hong Kong and traces its origins to The Hongkong Electric Company, founded in 1889.

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Power Assets (6 HK)

HK & China Gas (3 HK): A Yield Play Back in Favour

HKCG offers an attractive dividend yield of 5.4% for FY24-26F, backed by its strong cash generation and reduced capex. Lower US interest rates...

Osbert Tang, CFA

Revisiting Hong Kong Utilities-Time to Sell?

Hong Kong utilities have outperformed this year, with future US interest rate cuts expected to provide further support. Revisiting our original...

Rikki Malik

Hong Kong Connect Flows (Aug 2nd): Tencent, China Petroleum & Chemical Corporation, Power Assets

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Tencent, China Petroleum & Chemical Corporation, BOC,...

Ke Yan, CFA, FRM

BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)

Low volatility investing is performing well in July. BYD Electronics has seen better Apple related and NEV sales and Alibaba is increasing some...

David Mudd

Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

BYD Company, Power Assets and WH Group all experienced breakouts during the week. WH Group announced a spin off of its Smithfield Foods business...

David Mudd

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HK & China Gas (3 HK): A Yield Play Back in Favour

HKCG offers an attractive dividend yield of 5.4% for FY24-26F, backed by its strong cash generation and reduced capex. Lower US interest rates...

Osbert Tang, CFA

Revisiting Hong Kong Utilities-Time to Sell?

​Hong Kong utilities have outperformed this year, with future US interest rate cuts expected to provide further support. Revisiting our original...

Rikki Malik

Hong Kong Connect Flows (Aug 2nd): Tencent, China Petroleum & Chemical Corporation, Power Assets

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Tencent, China Petroleum & Chemical Corporation, BOC,...

Ke Yan, CFA, FRM

BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)

Low volatility investing is performing well in July. BYD Electronics has seen better Apple related and NEV sales and Alibaba is increasing some...

David Mudd

Technically Speaking, Breakouts and Breakdowns: HONG KONG (July 24)

BYD Company, Power Assets and WH Group all experienced breakouts during the week. WH Group announced a spin off of its Smithfield Foods business...

David Mudd

Hong Kong utilities have outperformed this year, with future US interest rate cuts expected to provide further support. Revisiting our original...