HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>On average, companies under our coverage are forecast to see a 47.3% YoY growth in net profit in 1Q25. Their results should be a pointer for the outlook in 2025. </li>
<li>Good results are expected at <a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group (2727 HK)</a>, <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a>, <a href="https://www.smartkarma.com/entities/china-cosco-holdings-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">COSCO Shipping Hldgs (1919 HK)</a>, <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (753 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">CNBM (3323 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 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/xinhua-winshare-publishing-media-co-ltd" target="_blank" data-smartkarma-citation="entities:15072:1" rel="noopener">Xinhua Winshare (811 HK)</a>, <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transp. (1138 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> will see weaker 1Q25.</li>
</ul>


On average, companies under our coverage are forecast to see a 47.3% YoY growth in net profit in 1Q25. Their results should be a pointer for the outlook in 2025. 
Good results are expected at Shanghai Electric Group (2727 HK), Anhui Conch Cement (914 HK), COSCO Shipping Hldgs (1919 HK), Air China Ltd (753 HK), and CNBM (3323 HK). 

Shenzhen Expressway (548 HK), Trip.com Group (9961 HK), Xinhua Winshare (811 HK), Cosco Shipping Energy Transp. (1138 HK), and China Longyuan Power (916 HK) will see weaker 1Q25.


China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>As expected, a SAMR investigation depressed top-line growth and profitability in Q226 </li>
<li>Management offered no forward guidance on earnings call, but hinted at headwinds to come</li>
<li>We believe it may take a few quarters for Trip.com to regain momentum</li>
</ul>


As expected, a SAMR investigation depressed top-line growth and profitability in Q226 
Management offered no forward guidance on earnings call, but hinted at headwinds to come
We believe it may take a few quarters for Trip.com to regain momentum


Trip.com Q226 Results | Slow Top-Line & Adj EBITDA Met Low Expectations | No Quick Fix, in Our View

<ul>
<li>Trip.com will finally report Q2 results after the US close on Tuesday, September 15</li>
<li>Earlier investigation, now concluded, was likely a drag on growth &amp; earnings in period</li>
<li>Management commentary could indicate pace of recovery from Trip.com's latest stumble</li>
</ul>


Trip.com will finally report Q2 results after the US close on Tuesday, September 15
Earlier investigation, now concluded, was likely a drag on growth &amp; earnings in period
Management commentary could indicate pace of recovery from Trip.com's latest stumble


Trip.com Q226 Earnings Preview | Impact of Investigation | Accommodation Segment | Q3 Guidance Key

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK) </a>will suffer from a higher USD rate as Trump's massive deportation plan raises inflation.  High-cash companies will better position, however.</li>
<li>The surge in tariffs on US imports of goods from China will further accelerate supply chain diversification, boosting intra-Asia trade and driving <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC (883 HK)</a> may gain from a slowdown in the green transition in the US as oil prices are supported. <a href="https://www.smartkarma.com/entities/meitu-inc" target="_blank" data-smartkarma-citation="entities:23573:1" rel="noopener">Meitu Inc (1357 HK)</a>, given its crypto investments, will benefit. </li>
</ul>



China Southern Airlines (1055 HK) will suffer from a higher USD rate as Trump's massive deportation plan raises inflation.  High-cash companies will better position, however.
The surge in tariffs on US imports of goods from China will further accelerate supply chain diversification, boosting intra-Asia trade and driving SITC International (1308 HK). 

CNOOC (883 HK) may gain from a slowdown in the green transition in the US as oil prices are supported. Meitu Inc (1357 HK), given its crypto investments, will benefit. 


China & HK Strategy: Some Stocks for Trump Trade

<ul>
<li>All three Chinese airlines trimmed their losses in 1H24, suggesting a pick-up in sector fundamentals. However, their 2Q24 bottom line displayed different trends.</li>
<li>
<a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (H) (753 HK)</a> is performing the best, with QoQ improvement in both reported and recurring losses (reduction by 41.7% and 7.4%, respectively).</li>
<li>
<a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, however, dipped back into red in 2Q24 after making a profit in 1Q24. With Air China underperforming YTD, there is room to revenge in 2H24.</li>
</ul>


All three Chinese airlines trimmed their losses in 1H24, suggesting a pick-up in sector fundamentals. However, their 2Q24 bottom line displayed different trends.

Air China Ltd (H) (753 HK) is performing the best, with QoQ improvement in both reported and recurring losses (reduction by 41.7% and 7.4%, respectively).

China Southern Airlines (1055 HK), however, dipped back into red in 2Q24 after making a profit in 1Q24. With Air China underperforming YTD, there is room to revenge in 2H24.


China

China Eastern Airlines is a major Chinese airline providing domestic, regional, and international passenger flight services, along with air cargo, logistics, and ancillary services such as aircraft maintenance and in-flight catering. Headquartered in Shanghai, China, it was founded in 1988.

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China Eastern Airlines (670 HK)

China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

Earnings for the companies under our coverage are expected to grow by 47.3% in 1Q25, with Shanghai Electric Group, Anhui Conch, COSCO Shipping...

Osbert Tang, CFA

Trip.com Q226 Results | Slow Top-Line & Adj EBITDA Met Low Expectations | No Quick Fix, in Our View

Trip.com reported Q226 results that mostly met lowered expectations after SAMR's investigation into the platform's anti-competitive practices. We...

Tracking Traffic

Trip.com Q226 Earnings Preview | Impact of Investigation | Accommodation Segment | Q3 Guidance Key

Trip.com will finally report Q2 results on Tuesday evening (US time). Expectations for Q2 are low but forward guidance could indicate how quickly...

Tracking Traffic

China & HK Strategy: Some Stocks for Trump Trade

A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...

Osbert Tang, CFA

Chinese Airlines: Diverging Performance

Chinese airlines are the key beneficiaries of stronger Rmb as US rates drop, driven primarily by their high gearing and significant USD borrowings....

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

Earnings for the companies under our coverage are expected to grow by 47.3% in 1Q25, with Shanghai Electric Group, Anhui Conch, COSCO Shipping...

Osbert Tang, CFA

Trip.com Q226 Results | Slow Top-Line & Adj EBITDA Met Low Expectations | No Quick Fix, in Our View

Trip.com reported Q226 results that mostly met lowered expectations after SAMR's investigation into the platform's anti-competitive practices. We...

Tracking Traffic

Trip.com Q226 Earnings Preview | Impact of Investigation | Accommodation Segment | Q3 Guidance Key

Trip.com will finally report Q2 results on Tuesday evening (US time). Expectations for Q2 are low but forward guidance could indicate how quickly...

Tracking Traffic

China & HK Strategy: Some Stocks for Trump Trade

​A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...

Osbert Tang, CFA

Chinese Airlines: Diverging Performance

Chinese airlines are the key beneficiaries of stronger Rmb as US rates drop, driven primarily by their high gearing and significant USD borrowings....

Osbert Tang, CFA

A higher USD rate due to Trump's deportation plan will impact CSA. Tariff surge on US imports from China will boost SITC. CNOOC may benefit from...