Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Thematic (Sector/Industry)

The Week that Was in Greater China @Smartkarma features important insights on China, Macau, Hong Kong and Taiwan published here during the previous week. This is a collaborative report written on a rotating basis by <a href="https://www.smartkarma.com/profiles/803" target="_blank" data-smartkarma-citation="accounts:803">Valerie Law, CFA</a>, <a href="https://www.smartkarma.com/profiles/820" target="_blank" data-smartkarma-citation="accounts:820">Scott Laprise/ 乐天虎</a>, <a href="https://www.smartkarma.com/profiles/9" target="_blank" data-smartkarma-citation="accounts:9">Ke Yan, CFA, FRM</a> and <a href="https://www.smartkarma.com/profiles/605" target="_blank" data-smartkarma-citation="accounts:605">Daniel Hellberg</a>. If you're interested in joining the group that produces this weekly roundup, please contact one of us directly.<h2>Sector and Company Insights</h2><a href="https://www.smartkarma.com/profiles/803" target="_blank" data-smartkarma-citation="accounts:803">Valerie Law, CFA</a>, published an update on Chinese private school…

The Week that Was in Greater China @Smartkarma features important insights on China, Macau, Hong Kong and Taiwan published here during the previous week. This is a collaborative report written on a rotating basis by Valerie Law, CFA, Scott Laprise/ 乐天虎, Ke Yan, CFA, FRM and Daniel Hellberg. If you're interested in joining the group that produces this weekly roundup, please contact one of us directly.Sector and Company InsightsValerie Law, CFA, published an update on Chinese private school…

The Week that Was in Greater China@Smartkarma - IPhone 8, Chinese Tourism, Auto Sales & More!

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Maintain BUY. We are of the view that Meidong’s high inventory turnover and superb cost control capabilities which have resulted in healthy cash flow, could help it survive longer, as dealers’ profit recovery in China may take some time.</li><li>We believe Porsche dealers in China have probably bottomed out.</li><li>In-line operating loss of RMB1mn. Meidong’s new-car sales volume rose 8% YoY in 1H25, higher than our prior forecast, especially for Porsche and BMW.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Maintain BUY. We are of the view that Meidong’s high inventory turnover and superb cost control capabilities which have resulted in healthy cash flow, could help it survive longer, as dealers’ profit recovery in China may take some time.We believe Porsche dealers in China have probably bottomed out.In-line operating loss of RMB1mn. Meidong’s new-car sales volume rose 8% YoY in 1H25, higher than our prior forecast, especially for Porsche and BMW.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Meidong Auto (1268 HK) - Resilient Profit, Cash Flow; Porsche to Bottom Out?

<ul><li>Maintain BUY. Meidong’s 2H24 result was a mixed bag with many moving parts including impairment, deferred tax changes, and forex loss. After-sales revenue growth, SG&amp;A expense control and free cash flow growth are the bright spots amid a largely in-line core profit.</li><li>We revise up our FY25E net profit forecast by 21% to RMB494mn despite a new-car GPM miss in 2H24.</li><li>We are of the view that high inventory turnover could still play an important role when car prices keep going down, which could be overlooked by some investors.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Maintain BUY. Meidong’s 2H24 result was a mixed bag with many moving parts including impairment, deferred tax changes, and forex loss. After-sales revenue growth, SG&amp;A expense control and free cash flow growth are the bright spots amid a largely in-line core profit.We revise up our FY25E net profit forecast by 21% to RMB494mn despite a new-car GPM miss in 2H24.We are of the view that high inventory turnover could still play an important role when car prices keep going down, which could be overlooked by some investors.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Meidong Auto (1268 HK) - High Inventory Turnover Strategy Still Working Now

<ul><li>Maintain BUY. We project Meidong’s 2H24E core earnings to be largely stable HoH, as profit improvement from BMW and Lexus may be offset by Porsche.</li><li>We believe the impairment risks have been rising more significantly in 2H24E given Porsche’s worsening profit.</li><li>On the other hand, lower amortization burden could lift its earnings in the future, should the company book a large impairment loss on intangible assets in 2H24E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Maintain BUY. We project Meidong’s 2H24E core earnings to be largely stable HoH, as profit improvement from BMW and Lexus may be offset by Porsche.We believe the impairment risks have been rising more significantly in 2H24E given Porsche’s worsening profit.On the other hand, lower amortization burden could lift its earnings in the future, should the company book a large impairment loss on intangible assets in 2H24E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Meidong Auto (1268 HK) - Stable Operating Profit with Rising Impairment Risk

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.</li>
<li>There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

China

China MeiDong Auto is a multi-franchise automobile dealership group operating in the People's Republic of China, focusing on luxury and mid-to-high-end brands such as Porsche, BMW, Lexus, and Toyota. The company's core activities include the sale of new passenger cars and spare parts, along with comprehensive after-sales services, value-added services, and used vehicle trading. Founded in 2003, its headquarters are located in Dongguan, China.

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China MeiDong Auto (1268 HK)

The Week that Was in Greater China@Smartkarma - IPhone 8, Chinese Tourism, Auto Sales & More!

The Week that Was in Greater China @Smartkarma features important insights on China, Macau, Hong Kong and Taiwan published here during the previous...

Daniel Hellberg

Meidong Auto (1268 HK) - Resilient Profit, Cash Flow; Porsche to Bottom Out?

Maintain BUY. We are of the view that Meidong’s high inventory turnover and superb cost control capabilities which have resulted in healthy cash...

CMB International

Meidong Auto (1268 HK) - High Inventory Turnover Strategy Still Working Now

We are of the view that high inventory turnover could still play an important role when car prices keep going down, which could be overlooked by...

CMB International

Meidong Auto (1268 HK) - Stable Operating Profit with Rising Impairment Risk

Maintain BUY. We project Meidong’s 2H24E core earnings to be largely stable HoH, as profit improvement from BMW and Lexus may be offset by Porsche.

CMB International

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

There could be 89 changes for the HSCI in March. That could result in 73 changes to the Southbound Stock Connect list and also have implications...

Brian Freitas

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