HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>, <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a>, <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/tcl-multimedia-technology" target="_blank" data-smartkarma-citation="entities:15654:1" rel="noopener">Tcl Multimedia Technology (1070 HK)</a> are the prime beneficiaries of Trump's tariff exemption.</li>
<li>On average, they have 24.5% of revenue from the US market, and their share price has collapsed 19.8% MTD. They are well set to have a decent rebound.</li>
<li>There will be speculations that more exemptions in other sectors will be granted, and the big losers will see a relief rally. </li>
</ul>



Lenovo (992 HK), AAC Technologies Holdings (2018 HK), BYD Electronics (285 HK), and Tcl Multimedia Technology (1070 HK) are the prime beneficiaries of Trump's tariff exemption.
On average, they have 24.5% of revenue from the US market, and their share price has collapsed 19.8% MTD. They are well set to have a decent rebound.
There will be speculations that more exemptions in other sectors will be granted, and the big losers will see a relief rally. 


China & HK Strategy: Tariff Exemption Beneficiaries

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>The logic behind the tariff is not just a slap in the face for a lot of other nations but also net imports over exports. </li>
<li>Companies benefitting from the globalization will suffer, and the ones with domestic-centric businesses with real assets in proximity may be less hurt. </li>
<li>This could accelerate the forming of new trading bloc that may change the current world order. </li>
</ul>


The logic behind the tariff is not just a slap in the face for a lot of other nations but also net imports over exports. 
Companies benefitting from the globalization will suffer, and the ones with domestic-centric businesses with real assets in proximity may be less hurt. 
This could accelerate the forming of new trading bloc that may change the current world order. 


<ul>
<li>Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.</li>
<li>
<a href="https://www.smartkarma.com/entities/vesync" target="_blank" data-smartkarma-citation="entities:31067:1" rel="noopener">Vesync (2148 HK)</a>, <a href="https://www.smartkarma.com/entities/chervon-holdings-limited" target="_blank" data-smartkarma-citation="entities:35309:1" rel="noopener">Chervon Holdings (2285 HK)</a>, and <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> are more exposed given their significant US sales yet most production is still in China. </li>
<li>While the US generated over 50% of the revenue of <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Industries (669 HK)</a> and <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a>, they are less exposed given their worldwide manufacturing presence. </li>
</ul>


Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.

Vesync (2148 HK), Chervon Holdings (2285 HK), and AAC Technologies Holdings (2018 HK) are more exposed given their significant US sales yet most production is still in China. 
While the US generated over 50% of the revenue of Techtronic Industries (669 HK) and Nexteer Automotive (1316 HK), they are less exposed given their worldwide manufacturing presence. 


China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

<ul>
<li>The YTD rally in the Hong Kong and China markets has made it appealing for highly leveraged and outperforming stocks to make placements to raise fresh equity.</li>
<li>
<a href="https://www.smartkarma.com/entities/gds-holdings-ltd" target="_blank" data-smartkarma-citation="entities:32157:1" rel="noopener">GDS Holdings (9698 HK)</a>, <a href="https://www.smartkarma.com/entities/china-youran-dairy-group-ltd" target="_blank" data-smartkarma-citation="entities:31075:1" rel="noopener">China Youran Dairy Group (9858 HK)</a>, <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-4527fb98-bb5d-4d74-91fe-66f9c0224eb3" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining (1787 HK)</a>, <a href="https://www.smartkarma.com/entities/zhaojin-mining-industry-company-ltd-h" target="_blank" data-smartkarma-citation="entities:4626:1" rel="noopener">Zhaojin Mining Industry (1818 HK)</a>, and <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> are possible candidates.</li>
<li>Four of the top 30 YTD best-performing Hang Seng Composite stocks have made placements in the last three months, raising a total of HK$1.3bn with mixed performance since then.</li>
</ul>


The YTD rally in the Hong Kong and China markets has made it appealing for highly leveraged and outperforming stocks to make placements to raise fresh equity.

GDS Holdings (9698 HK), China Youran Dairy Group (9858 HK), Shandong Gold Mining (1787 HK), Zhaojin Mining Industry (1818 HK), and BYD Electronics (285 HK) are possible candidates.
Four of the top 30 YTD best-performing Hang Seng Composite stocks have made placements in the last three months, raising a total of HK$1.3bn with mixed performance since then.


China & HK Strategy: Assessing Placement Risks, Who Needs Money?

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>HK Alpha Portfolio returned 13.58% in February and outperformed the benchmark by 7.68%. The portfolio has outperformed Hong Kong indexes by 5.16% to 11.48% since its inception on 10/01/24.</li>
<li>About 50% of the portfolio's excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy, or Utilities.</li>
<li>At month-end we sold <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> , <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a> , <a href="https://www.smartkarma.com/entities/miniso-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:36659:1" rel="noopener">MINISO Group Holding (9896 HK)</a> , and trimmed <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> .</li>
</ul>


HK Alpha Portfolio returned 13.58% in February and outperformed the benchmark by 7.68%. The portfolio has outperformed Hong Kong indexes by 5.16% to 11.48% since its inception on 10/01/24.
About 50% of the portfolio's excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy, or Utilities.
At month-end we sold AAC Technologies Holdings (2018 HK) , Trip.com Group (9961 HK) , MINISO Group Holding (9896 HK) , and trimmed Xiaomi Corp (1810 HK) .


HONG KONG ALPHA PORTFOLIO (February 2025)

China

AAC Technologies is a leading provider of sensory experience solutions for smart devices. The company designs, develops, manufactures, and distributes miniaturized components, including acoustics products, haptic devices, optical lenses, camera modules, and micro electro-mechanical systems (MEMS). It primarily serves the consumer electronics market, with an expanding presence in intelligent vehicles, AR/VR, robotics, and IoT sectors. AAC Technologies was founded in 1993 and is headquartered in Shenzhen, People's Republic of China.

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AAC Technologies (2018 HK)

China & HK Strategy: Tariff Exemption Beneficiaries

Lenovo, AAC Technologies, BYD Electronics, and Tcl Multimedia are set to benefit from Trump's tariff exemption, with potential for a rebound in...

Osbert Tang, CFA

Tariff: New World Order?

Tariffs could shift global trade dynamics, favoring domestic-focused companies and potentially leading to the formation of new trading blocs.

Henry Soediarko

China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

With the Trump administration announcing global reciprocal tariffs, even companies with manufacturing presence in other countries will suffer...

Osbert Tang, CFA

China & HK Strategy: Assessing Placement Risks, Who Needs Money?

Zhaojin Mining Industry (1818 HK) is the first one in our top 5 list to make a placement. The company is placing 140m H-shares at HK$14.08 to raise...

Osbert Tang, CFA

HONG KONG ALPHA PORTFOLIO (February 2025)

HK Alpha portfolio returned 13.6% in February outperforming its benchmark and all HK indexes. Since inception HK Alpha has returned 13.1% with...

David Mudd

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52-week Range

Market Cap (USDm)

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China & HK Strategy: Tariff Exemption Beneficiaries

​Lenovo, AAC Technologies, BYD Electronics, and Tcl Multimedia are set to benefit from Trump's tariff exemption, with potential for a rebound in...

Osbert Tang, CFA

Tariff: New World Order?

​Tariffs could shift global trade dynamics, favoring domestic-focused companies and potentially leading to the formation of new trading blocs.

Henry Soediarko

China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

With the Trump administration announcing global reciprocal tariffs, even companies with manufacturing presence in other countries will suffer...

Osbert Tang, CFA

China & HK Strategy: Assessing Placement Risks, Who Needs Money?

Zhaojin Mining Industry (1818 HK) is the first one in our top 5 list to make a placement. The company is placing 140m H-shares at HK$14.08 to raise...

Osbert Tang, CFA

HONG KONG ALPHA PORTFOLIO (February 2025)

HK Alpha portfolio returned 13.6% in February outperforming its benchmark and all HK indexes. Since inception HK Alpha has returned 13.1% with...

David Mudd

Lenovo, AAC Technologies, BYD Electronics, and Tcl Multimedia are set to benefit from Trump's tariff exemption, with potential for a rebound in...

Tariffs could shift global trade dynamics, favoring domestic-focused companies and potentially leading to the formation of new trading blocs.