HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

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<a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> posted weak 1H FY22 result with a 18.6% contraction in core profit, driven primarily by lower new connections and weaker dollar margin for gas sales. </li>
<li>Full-Year guidance on new connections has revised to 3m (vs. 5m) and dollar margin will further contract by HK$0.04-0.06/cu.m. in 2H FY22. Progress on LPG Smart MicroGrid has slowed. </li>
<li>The Shiyan gas explosion looks to have a more long-lasting effect than expected. Also, the need to divert management attention to safety enforcement also weighed on China Gas.</li>
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China Gas Holdings (384 HK) posted weak 1H FY22 result with a 18.6% contraction in core profit, driven primarily by lower new connections and weaker dollar margin for gas sales. 
Full-Year guidance on new connections has revised to 3m (vs. 5m) and dollar margin will further contract by HK$0.04-0.06/cu.m. in 2H FY22. Progress on LPG Smart MicroGrid has slowed. 
The Shiyan gas explosion looks to have a more long-lasting effect than expected. Also, the need to divert management attention to safety enforcement also weighed on China Gas.


China Gas Holdings (384 HK): Post-Result Call Takeaways, Looks like Not yet Reached the Bottom

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Event-Driven

<p>For our next Webinar, we're excited to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a>, who will cover the upcoming rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> as it pushes towards its target of 80 index members by mid-2022.</p>
<h3>The webinar will be hosted on Wednesday, 17 November 2021, 17:00 SGT/HKT.</h3>
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<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=85212464246" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
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<p>Brian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse, and BNP Paribas.</p>
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For our next Webinar, we're excited to welcome back Insight Provider Brian Freitas, who will cover the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX) as it pushes towards its target of 80 index members by mid-2022.
The webinar will be hosted on Wednesday, 17 November 2021, 17:00 SGT/HKT.



Register for the Webinar here




Brian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse, and BNP Paribas.


Smartkarma Webinar | Potential Inclusions to the Hang Seng Index (HSI INDEX)

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>Hang Seng Indexes will announce the results of the December 2021 review of the Hang Seng Family of Indexes on 19 November. The constituent changes will be effective after the close of trading on 3 December.</p><p>The review period for the December rebalance ended on 30 September and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>.</p><p>With Hang Seng Indexes looking to get up to 80 <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> members by mid-2022, there could be 20 inclusions over the next 3 index rebalances.</p><p>As of the close on 3 November, index turnover is 1.3% from capping and other changes to the current index constituents. That gives the index committee a lot of room to add some big stocks to the index without increasing the turnover to levels seen at the last two rebalances in June and September.</p><p>We identify 12 stocks that could be added to the index based on market coverage and the impact of recent regulatory changes. Of the 12 stocks, 8 are higher probability changes and 4 are lower probability.</p><p>All 12 inclusions will result in a one-way turnover of 6.37% while the inclusion of the 8 high probability changes will result in a one-way turnover of 4.98%.</p><p>There is large short interest on most of the stocks and index inclusion could set off a round of short covering and could drive the stocks higher.</p>

Hang Seng Indexes will announce the results of the December 2021 review of the Hang Seng Family of Indexes on 19 November. The constituent changes will be effective after the close of trading on 3 December.The review period for the December rebalance ended on 30 September and stocks that have at least 3 month of trading history by the review meeting date are eligible for inclusion in the Hong Kong Hang Seng Index (HSI INDEX).With Hang Seng Indexes looking to get up to 80 Hong Kong Hang Seng Index (HSI INDEX) members by mid-2022, there could be 20 inclusions over the next 3 index rebalances.As of the close on 3 November, index turnover is 1.3% from capping and other changes to the current index constituents. That gives the index committee a lot of room to add some big stocks to the index without increasing the turnover to levels seen at the last two rebalances in June and September.We identify 12 stocks that could be added to the index based on market coverage and the impact of recent regulatory changes. Of the 12 stocks, 8 are higher probability changes and 4 are lower probability.All 12 inclusions will result in a one-way turnover of 6.37% while the inclusion of the 8 high probability changes will result in a one-way turnover of 4.98%.There is large short interest on most of the stocks and index inclusion could set off a round of short covering and could drive the stocks higher.

Hang Seng Index Rebalance Preview: The Road to 80 Constituents

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

<p>Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 29.</p><p>In the past 7 days, the top 3 companies that repurchased the most shares from the market were China Gas Holdings Limited (384 HK) (HKD 91.4 million worth of buybacks), Hopson Development Holdings Limited (754 HK) (HKD 84.2 million worth of buybacks), Sihuan Pharmaceutical Holdings Group Ltd. (460 HK) (HKD 57.2 million worth of buybacks).</p>

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 29.In the past 7 days, the top 3 companies that repurchased the most shares from the market were China Gas Holdings Limited (384 HK) (HKD 91.4 million worth of buybacks), Hopson Development Holdings Limited (754 HK) (HKD 84.2 million worth of buybacks), Sihuan Pharmaceutical Holdings Group Ltd. (460 HK) (HKD 57.2 million worth of buybacks).

Hong Kong Buybacks: China Gas, Hopson, Sihuan

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>The last time I wrote about <a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a> was in early June 2021 when I discussed the little extra trick one might use to maximise dividend payout. It worked. But I was bullish.</p><p>At that time, my conclusion was...</p><blockquote><p>I am still VERY bullish on Kunlun Energy vs a basket of the three listed HK peers, and at this point, a dollar-neutral position is probably appropriate. </p></blockquote><p>The stock was a little wishy-washy the day the Special Dividend went ex- - for whatever reason I do not know - then rallied sharply but since 4 June, though the stock itself rallied 30% from that post ex-div rally to early September, the sharp rise in gas input costs caused the shares to fall back to their post-div rally point last week. However the stock has continued to outperform peers - outperforming a basket of three liquid HK-listed city gas peers by 37.9% since I last wrote (the dots). </p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/339/original/Screenshot+2021-10-25+at+6.55.32+PM.png?1635159349" class="editor-image img-responsive" data-smartkarma-image-id="237339"></figure></section><p>But despite that performance... </p></section><p>I am still VERY bullish on Kunlun Energy vs a basket of the three listed HK peers, and at this point, EITHER a dollar-neutral position OR an outright long is appropriate. </p><p>More below the fold. </p>

The last time I wrote about Kunlun Energy (135 HK) was in early June 2021 when I discussed the little extra trick one might use to maximise dividend payout. It worked. But I was bullish.At that time, my conclusion was...I am still VERY bullish on Kunlun Energy vs a basket of the three listed HK peers, and at this point, a dollar-neutral position is probably appropriate. The stock was a little wishy-washy the day the Special Dividend went ex- - for whatever reason I do not know - then rallied sharply but since 4 June, though the stock itself rallied 30% from that post ex-div rally to early September, the sharp rise in gas input costs caused the shares to fall back to their post-div rally point last week. However the stock has continued to outperform peers - outperforming a basket of three liquid HK-listed city gas peers by 37.9% since I last wrote (the dots). But despite that performance... I am still VERY bullish on Kunlun Energy vs a basket of the three listed HK peers, and at this point, EITHER a dollar-neutral position OR an outright long is appropriate. More below the fold. 

Kunlun Energy - People Still Don't Get It So Gas It Up Some More

Hong Kong

China Gas Holdings Ltd. invests in, operates and manages natural gas distribution pipelines.  The Company distributes and sells natural gas to residential, commercial and industrial users, and bottles and sells compressed natural gas.  China Gas also constructs and operates gas stations.

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China Gas Holdings (384 HK)