HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Although the H-share securities companies have retreated significantly from their peaks, there are still "fats" in their share prices in the near term, relative to the market turnover.</li>
<li>
<a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a> looks vulnerable given its high valuations, low H-A share discount, limited correction from its peak, and significant rebound from the trough.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-securities-co-4f5d644c-0051-426f-9706-eaa74b0ba280" target="_blank" data-smartkarma-citation="entities:22738:1" rel="noopener">China Merchants Securities (6099 HK)</a> appears exposed though valuations are not high. It has the best YTD performance and rebound from the trough, and its H-A share discount is light.   </li>
</ul>


Although the H-share securities companies have retreated significantly from their peaks, there are still "fats" in their share prices in the near term, relative to the market turnover.

Citic Securities (H) (6030 HK) looks vulnerable given its high valuations, low H-A share discount, limited correction from its peak, and significant rebound from the trough.

China Merchants Securities (6099 HK) appears exposed though valuations are not high. It has the best YTD performance and rebound from the trough, and its H-A share discount is light.   


China Strategy: Screening the H-Share Securities Companies

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Haitong Securities Co Ltd (H) / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/guotai-junan-securities-co-ltd-5dfaf2c5-76d3-4f34-a77d-118787fd7091" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Junan Securities (2611 HK)</a> and <a href="https://www.smartkarma.com/entities/haitong-securities-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5665:1" rel="noopener">Haitong Securities Co Ltd (H) (6837 HK)</a> all-scrip merger is set at an exchange ratio of 0.62x. </li>
<li>The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds. </li>
<li>The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip. </li>
</ul>



Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x. 
The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds. 
The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip. 


Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

China Galaxy Securities (H) / Event-Driven

<ul>
<li>Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.</li>
<li>It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. </li>
<li>But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.</li>
</ul>


Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse. 
But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.


A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

Haidilao International Holding / Equity Bottom-Up

<ul>
<li>Hong Kong is now the top-performing major world market this year.  With a large valuation disparity, both Hong Kong's and China's markets have more upside potential.</li>
<li>
<a href="https://www.smartkarma.com/entities/haidilao-international-holding" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao International Holding (6862 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> are benefiting from the improvement in consumer sentiment with government stimulus targeting housing payments and consumption.
</li>
<li><a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a> surged in anticipation of increased market trading and IPOs.  Industry consolidation is also part of the improved sentiment.</li>
</ul>


Hong Kong is now the top-performing major world market this year.  With a large valuation disparity, both Hong Kong's and China's markets have more upside potential.

Haidilao International Holding (6862 HK) and Anta Sports Products (2020 HK) are benefiting from the improvement in consumer sentiment with government stimulus targeting housing payments and consumption.

Citic Securities (H) (6030 HK) surged in anticipation of increased market trading and IPOs.  Industry consolidation is also part of the improved sentiment.


The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 27)

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

Rikki Malik

Cross Asset Strategy

<ul>
<li>The fabled  PBoC Put is finally out in the open</li>
<li>Is there a floor under the stock market, if not the property market?</li>
<li>Has the asymetric opportunity now gone with this recent rally?</li>
</ul>


The fabled  PBoC Put is finally out in the open
Is there a floor under the stock market, if not the property market?
Has the asymetric opportunity now gone with this recent rally?


After the Rally. What Next for the Hong Kong Market?

China

China Galaxy Securities Co., Ltd. provides securities services. The Company provides securities underwriting, securities brokerage, securities investment advisory, securities transaction, and other services. China Galaxy Securities provides its services throughout China.

Price Gauge
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China Galaxy Securities (H) (6881 HK)

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal

The share exchange ratio is attractive. Regulatory approvals are a formality. The GJTA/Haitong shareholder vote is low risk. Timing is the key risk.

Arun George

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

China changed everything last week. Or at least it looks like they did. Money everywhere. Stock up. Today is unrelenting. ChiNext Tech from a...

Travis Lundy

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 27)

HSI is the top performing major global index heading into 4Q2024. Haidilao and Anta both benefit from improved sentiment in consumer sector. Citic...

David Mudd

After the Rally. What Next for the Hong Kong Market?

The emergence of the PBoC Put and what to do now that the Hang Seng Index has rallied so fast and hard. Has the boat been missed?

Rikki Malik

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Strategy: Screening the H-Share Securities Companies

​H-share securities companies still have room for corrections despite recent retreats, with Citic Securities and China Merchants Securities looking...

Osbert Tang, CFA

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal

The share exchange ratio is attractive. Regulatory approvals are a formality. The GJTA/Haitong shareholder vote is low risk. Timing is the key risk.

Arun George

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

China changed everything last week. Or at least it looks like they did. Money everywhere. Stock up. Today is unrelenting. ChiNext Tech from a...

Travis Lundy

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 27)

HSI is the top performing major global index heading into 4Q2024. Haidilao and Anta both benefit from improved sentiment in consumer sector. Citic...

David Mudd

After the Rally. What Next for the Hong Kong Market?

The emergence of the PBoC Put and what to do now that the Hang Seng Index has rallied so fast and hard. Has the boat been missed?

Rikki Malik

H-share securities companies still have room for corrections despite recent retreats, with Citic Securities and China Merchants Securities looking...