HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>With a massive 125% rally YTD, <a href="https://www.smartkarma.com/entities/xinjiang-goldwind-science-technology-h" target="_blank" data-smartkarma-citation="entities:10112:1" rel="noopener">Xinjiang Goldwind Science &amp; Technology (2208 HK)</a> is no longer cheap. Its yield of 3.5% for FY25 cannot stand out as attractive.</li>
<li>Good 9M24 earnings growth is partly due to an extremely low base last year. However, the average bidding price of WTG suppliers is still 50% below that in early 2022. </li>
<li>Net operating cash outflow surged 37.8% YoY, adding pressure to its balance sheet. Its gearing has increased by 7pp over the last nine months.</li>
</ul>


With a massive 125% rally YTD, Xinjiang Goldwind Science &amp; Technology (2208 HK) is no longer cheap. Its yield of 3.5% for FY25 cannot stand out as attractive.
Good 9M24 earnings growth is partly due to an extremely low base last year. However, the average bidding price of WTG suppliers is still 50% below that in early 2022. 
Net operating cash outflow surged 37.8% YoY, adding pressure to its balance sheet. Its gearing has increased by 7pp over the last nine months.


Xinjiang Goldwind (2208 HK): We Should Be More Prudent

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>Hong Kong Alpha portfolio lost 2.9% in November, but has outperformed its benchmark by 4.9% since inception on October 1st.  It has outperformed HSI, HSCI and HSCEI by 9%.</li>
<li>Hong Kong Alpha has generated idiosyncratic returns during the market correction.  The portfolio has no exposure to energy, healthcare and property sectors. </li>
<li>We exit 4 positions at the end of the month and add positions in software, tech components, travel and restaurant sectors.</li>
</ul>


Hong Kong Alpha portfolio lost 2.9% in November, but has outperformed its benchmark by 4.9% since inception on October 1st.  It has outperformed HSI, HSCI and HSCEI by 9%.
Hong Kong Alpha has generated idiosyncratic returns during the market correction.  The portfolio has no exposure to energy, healthcare and property sectors. 
We exit 4 positions at the end of the month and add positions in software, tech components, travel and restaurant sectors.


HONG KONG ALPHA PORTFOLIO (November 2024)

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

Shandong Hi-Speed New Energy Group / Event-Driven

Shandong Hi-Speed New Energy Group (1250 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shandong-hi-speed-new-energy-g" target="_blank" data-smartkarma-citation="entities:6927:1" rel="noopener">Shandong Hi-Speed New Energy G (1250 HK)</a> disclosed a possible mandatory unconditional offer from <a href="https://www.smartkarma.com/entities/shandong-hi-speed-holdings-gro" target="_blank" data-smartkarma-citation="entities:10356:1" rel="noopener">Shandong Hi-Speed Holdings Gro (412 HK)</a> at HK$1.78, a 7.2% premium to the undisturbed price.</li>
<li>The offer is conditional on SDHS completing a sale and purchase agreement (SPA) to acquire CITIC Securities' entire 13.52% stake at HK$1.78 per share.</li>
<li>The key precondition of the SPA is SDHS shareholder approval of an ordinary resolution relating to the SPA and the possible offer. The vote is a formality. </li>
</ul>



Shandong Hi-Speed New Energy G (1250 HK) disclosed a possible mandatory unconditional offer from Shandong Hi-Speed Holdings Gro (412 HK) at HK$1.78, a 7.2% premium to the undisturbed price.
The offer is conditional on SDHS completing a sale and purchase agreement (SPA) to acquire CITIC Securities' entire 13.52% stake at HK$1.78 per share.
The key precondition of the SPA is SDHS shareholder approval of an ordinary resolution relating to the SPA and the possible offer. The vote is a formality. 


Shandong Hi-Speed New Energy (1250 HK): Shandong Hi-Speed Holdings (412 HK) Possible MGO

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shandong-hi-speed-new-energy-g" target="_blank" data-smartkarma-citation="entities:6927:1" rel="noopener">Shandong Hi-Speed New Energy G (1250 HK)</a> entered a trading halt based on the Takeovers and Mergers Code. <a href="https://www.smartkarma.com/entities/shandong-hi-speed-holdings-gro" target="_blank" data-smartkarma-citation="entities:10356:1" rel="noopener">Shandong Hi-Speed Holdings Gro (412 HK)</a> also entered a trading halt. </li>
<li>It is likely that SDHS Group, representing 43.45% of outstanding shares, is seeking to privatise SDHS New Energy through a Cayman scheme. </li>
<li>Beijing Enterprises Group and CITIC Securities hold potentially blocking stakes and are likely seeking to exit. Our best guess is an offer with a 20%- 30% takeover premium.  </li>
</ul>



Shandong Hi-Speed New Energy G (1250 HK) entered a trading halt based on the Takeovers and Mergers Code. Shandong Hi-Speed Holdings Gro (412 HK) also entered a trading halt. 
It is likely that SDHS Group, representing 43.45% of outstanding shares, is seeking to privatise SDHS New Energy through a Cayman scheme. 
Beijing Enterprises Group and CITIC Securities hold potentially blocking stakes and are likely seeking to exit. Our best guess is an offer with a 20%- 30% takeover premium.  


Shandong Hi-Speed New Energy (1250 HK): Privatisation by Shandong Hi-Speed Holdings (412 HK)?

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 95.8% as of Oct 25th.</li>
<li>The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, real estate and offset by utilities, consumer discretionary, financials.</li>
<li>We highlight weekly changes in A-H premium for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.</li>
</ul>


We analyse the changes of A-H premium on 149 stocks over the last week. The average A-H premium was 95.8% as of Oct 25th.
The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, real estate and offset by utilities, consumer discretionary, financials.
We highlight weekly changes in A-H premium for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.


A-H Premium Weekly (Oct 25th):SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE

China

China Longyuan Power Group is a leading power producer primarily engaged in the generation and sale of wind and coal power, alongside other renewable energy projects such as solar, tidal, biomass, and geothermal. The company also manufactures power equipment and provides related consulting, maintenance, and training services. It was founded in 1993 and is headquartered in Beijing, People's Republic of China.

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China Longyuan Power Group (916 HK)

Xinjiang Goldwind (2208 HK): We Should Be More Prudent

Goldwind's impressive YTD rally may not be sustainable as its yield is no longer attractive, with a surge in net operating cash outflow and...

Osbert Tang, CFA

HONG KONG ALPHA PORTFOLIO (November 2024)

Hong Kong Alpha portfolio continues to outperform during the market correction in HK/China stocks. We continue to like the consumer discretionary...

David Mudd

Shandong Hi-Speed New Energy (1250 HK): Shandong Hi-Speed Holdings (412 HK) Possible MGO

The key precondition of the SPA is SDHS shareholder approval of an ordinary resolution relating to the SPA and the possible offer. The vote is a...

Arun George

Shandong Hi-Speed New Energy (1250 HK): Privatisation by Shandong Hi-Speed Holdings (412 HK)?

It is likely that SDHS Group, representing 43.45% of outstanding shares, is seeking to privatise SDHS New Energy through a Cayman scheme.

Arun George

A-H Premium Weekly (Oct 25th):SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE

We analyzed A-H premium changes in the past week and highlight A-H premium changes for SMIC, ZOOMLION, PICC, FDZJ, FLAT GROUP, INNOCARE.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

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