Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

AviChina Industry & Technology H / Event-Driven

<ul>
<li>Down 18% in the past month, fundamentals for <strong><a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a></strong>, one of China's leading aviation/defense plays, still appear demanding.</li>
<li>Preceding my comments on AviChina are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Down 18% in the past month, fundamentals for AviChina Industry &amp; Technology H (2357 HK), one of China's leading aviation/defense plays, still appear demanding.
Preceding my comments on AviChina are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: AviChina (2357 HK) Coming Up "Cheap"

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of CSI 100 in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on Industrial Bank, Satellite Chemical, Zhejiang Nhu, Zhongjin Gold, Wus Printed Circuit (Kunshan), Longi Green, Tcl Zhonghuan, Cambricon Technologies.</li>
</ul>


We analysed the earning revision of component stocks of CSI 100 in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on Industrial Bank, Satellite Chemical, Zhejiang Nhu, Zhongjin Gold, Wus Printed Circuit (Kunshan), Longi Green, Tcl Zhonghuan, Cambricon Technologies.


CSI 100 Index Earning Revision (Jun): Industrial Bank, Satellite Chemical, Zhejiang Nhu

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

AviChina Industry & Technology H / Equity Bottom-Up

<ul>
<li>The share price of <a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> has picked up in Mar, and it will continue to chase the HSI and HSCEI, in our view.</li>
<li>At 54.1%, AviChina's discount to its A-share holdings has narrowed 4.2pp YTD, but is still behind the 6.2pp contraction for overall H-A shares. There is more room to catch up.</li>
<li>The increase in defense spending, advancement in domestic commercial aviation and development of the low-altitude economy are major potential drivers.</li>
</ul>


The share price of AviChina Industry &amp; Technology H (2357 HK) has picked up in Mar, and it will continue to chase the HSI and HSCEI, in our view.
At 54.1%, AviChina's discount to its A-share holdings has narrowed 4.2pp YTD, but is still behind the 6.2pp contraction for overall H-A shares. There is more room to catch up.
The increase in defense spending, advancement in domestic commercial aviation and development of the low-altitude economy are major potential drivers.


AviChina Industry (2357 HK): The Discount to Narrow

<ul>
<li>Given its holdings in four A-share subsidiaries, <a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a> will benefit from the surge in their share prices as mainland markets re-open.</li>
<li>These A-share all lagged benchmark Indices YTD. Avichina's holdings in them are already valued at 2.23x its own market capitalisation. </li>
<li>The historical discount range is 51-70% and currently stands at 55%, suggesting AviChina's share price has not yet excessively priced in the post-Golden Week rally.</li>
</ul>


Given its holdings in four A-share subsidiaries, AviChina Industry &amp; Technology H (2357 HK) will benefit from the surge in their share prices as mainland markets re-open.
These A-share all lagged benchmark Indices YTD. Avichina's holdings in them are already valued at 2.23x its own market capitalisation. 
The historical discount range is 51-70% and currently stands at 55%, suggesting AviChina's share price has not yet excessively priced in the post-Golden Week rally.


AviChina Industry (2357 HK): Excellent Exposure to A-Share Surge

<ul>
<li>
<a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a>'s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. </li>
<li>Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.</li>
<li>The stock's 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.</li>
</ul>



AviChina Industry &amp; Technology H (2357 HK)'s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. 
Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
The stock's 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.


AviChina Industry (2357 HK): Better Look Forward

China

Jonhon Optronic Technology Co., Ltd manufactures electronic connectors. The Company produces circular electrical connectors, rectangular electrical connectors, filter electrical connectors, and other products. Jonhon Optronic Technology markets its products across worldwide.

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Jonhon Optronic Technology (002179 CH)

StubWorld: AviChina (2357 HK) Coming Up "Cheap"

Ongoing geopolitical tensions tend to lead to increased defense spending. All told, there should be trickle down benefits to AviChina. I like...

David Blennerhassett

CSI 100 Index Earning Revision (Jun): Industrial Bank, Satellite Chemical, Zhejiang Nhu

We analyzed CSI 100's consensus for Jun 2025 and highlighted changes of EPS in Industrial Bank (601166 CH), Satellite Chemical (002648 CH),...

Ke Yan, CFA, FRM

AviChina Industry (2357 HK): The Discount to Narrow

AviChina's share price is on the rise and is expected to continue tracking the HSI and HSCEI, driven by narrower discounts to A-share holdings and...

Osbert Tang, CFA

AviChina Industry (2357 HK): Better Look Forward

AviChina's FY23 earnings growth is affected by dilution and restatement, while its A-share subsidiaries see strong growth. The stock trades at a...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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StubWorld: AviChina (2357 HK) Coming Up "Cheap"

Ongoing geopolitical tensions tend to lead to increased defense spending. All told, there should be trickle down benefits to AviChina. I like...

David Blennerhassett

CSI 100 Index Earning Revision (Jun): Industrial Bank, Satellite Chemical, Zhejiang Nhu

We analyzed CSI 100's consensus for Jun 2025 and highlighted changes of EPS in Industrial Bank (601166 CH), Satellite Chemical (002648 CH),...

Ke Yan, CFA, FRM

AviChina Industry (2357 HK): The Discount to Narrow

​AviChina's share price is on the rise and is expected to continue tracking the HSI and HSCEI, driven by narrower discounts to A-share holdings and...

Osbert Tang, CFA

AviChina Industry (2357 HK): Excellent Exposure to A-Share Surge

​AviChina is poised to benefit from a surge in A-share subsidiaries' share prices as mainland markets re-open, with the attributable value of its...

Osbert Tang, CFA

AviChina Industry (2357 HK): Better Look Forward

​AviChina's FY23 earnings growth is affected by dilution and restatement, while its A-share subsidiaries see strong growth. The stock trades at a...

Osbert Tang, CFA

AviChina's share price is on the rise and is expected to continue tracking the HSI and HSCEI, driven by narrower discounts to A-share holdings and...

AviChina is poised to benefit from a surge in A-share subsidiaries' share prices as mainland markets re-open, with the attributable value of its...

AviChina's FY23 earnings growth is affected by dilution and restatement, while its A-share subsidiaries see strong growth. The stock trades at a...