HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sichuan-kelun-biotech-biopharm" target="_blank" data-smartkarma-citation="entities:40071:1" rel="noopener">Sichuan Kelun-Biotech Bio (6990 HK)</a>, <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Ind. (669 HK)</a>, <a href="https://www.smartkarma.com/entities/vesync" target="_blank" data-smartkarma-citation="entities:31067:1" rel="noopener">Vesync (2148 HK)</a>, <a href="https://www.smartkarma.com/entities/chervon-holdings-limited" target="_blank" data-smartkarma-citation="entities:35309:1" rel="noopener">Chervon Hldgs (2285 HK)</a>, and <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec (2359 HK)</a> have a very high reliance on the US market.</li>
<li>
<a href="https://www.smartkarma.com/entities/vtech-holdings-ltd" target="_blank" data-smartkarma-citation="entities:18812:1" rel="noopener">Vtech Hldgs (303 HK)</a>, <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a>, and <a href="https://www.smartkarma.com/entities/tcl-multimedia-technology" target="_blank" data-smartkarma-citation="entities:15654:1" rel="noopener">Tcl Multimedia (1070 HK)</a> ranked lower on the list, but consumer cutbacks will have a bigger impact. </li>
<li>The spillover effect of a US recession to other countries will pressurise companies that have low direct exposure, like <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> and <a href="https://www.smartkarma.com/entities/prada-s-p-a" target="_blank" data-smartkarma-citation="entities:889:1" rel="noopener">Prada S.P.A. (1913 HK)</a>.</li>
</ul>



Sichuan Kelun-Biotech Bio (6990 HK), Techtronic Ind. (669 HK), Vesync (2148 HK), Chervon Hldgs (2285 HK), and WuXi AppTec (2359 HK) have a very high reliance on the US market.

Vtech Hldgs (303 HK), Samsonite (1910 HK), Haier Smart Home (6690 HK), and Tcl Multimedia (1070 HK) ranked lower on the list, but consumer cutbacks will have a bigger impact. 
The spillover effect of a US recession to other countries will pressurise companies that have low direct exposure, like Orient Overseas International (316 HK) and Prada S.P.A. (1913 HK).


China & HK Strategy: Who Are the Victims of a US Recession?

Equity Bottom-Up

Singamas Container Holdings / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-international-marine-cntnrs-gp-ltd" target="_blank" data-smartkarma-citation="entities:11752:1" rel="noopener">China International Marine Cntnrs Gp (2039 HK)</a>'s positive profit alert suggested a very solid performance for <a href="https://www.smartkarma.com/entities/singamas-container-holdings" target="_blank" data-smartkarma-citation="entities:13602:1" rel="noopener">Singamas Container Holdings (716 HK)</a> in 4Q24. </li>
<li>Annualising Singamas' 1H24 earnings for the full year will mean a 78% profit surge in 2H24, but this is still conservative - CIMC's 2H24 profit leaped 93x YoY.</li>
<li>Trading on 6x PER, versus CIMC's 10.3x, the stock is cheap. Net cash equals 86% of market capitalisation, potentially providing a yield higher than the 8.8% currently projected.</li>
</ul>



China International Marine Cntnrs Gp (2039 HK)'s positive profit alert suggested a very solid performance for Singamas Container Holdings (716 HK) in 4Q24. 
Annualising Singamas' 1H24 earnings for the full year will mean a 78% profit surge in 2H24, but this is still conservative - CIMC's 2H24 profit leaped 93x YoY.
Trading on 6x PER, versus CIMC's 10.3x, the stock is cheap. Net cash equals 86% of market capitalisation, potentially providing a yield higher than the 8.8% currently projected.


Singamas (716 HK): Further Positive Indications from CIMC Profit Alert

<ul>
<li>Supportive policies from central and local governments on the development of the hydrogen energy industry have boosted the share prices of the sector (up 12.3% YTD).</li>
<li>Inner Mongolia has eased regulations on electrolysis water hydrogen production projects while Shandong has waived hydrogen-powered vehicle tolls on highways. </li>
<li>
<a href="https://www.smartkarma.com/entities/beijing-sinohytec-co-ltd-57df3cd9-bd23-4f74-899b-d589f67fa85f" target="_blank" data-smartkarma-citation="entities:36866:1" rel="noopener">Beijing SinoHytec (2402 HK)</a>, <a href="https://www.smartkarma.com/entities/weichai-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:12508:1" rel="noopener">Weichai Power (2338 HK)</a>, <a href="https://www.smartkarma.com/entities/dongyue-group-ltd" target="_blank" data-smartkarma-citation="entities:20429:1" rel="noopener">Dongyue Group (189 HK)</a>, <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric (3899 HK)</a>, and <a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a> have recorded good progress in hydrogen business.</li>
</ul>


Supportive policies from central and local governments on the development of the hydrogen energy industry have boosted the share prices of the sector (up 12.3% YTD).
Inner Mongolia has eased regulations on electrolysis water hydrogen production projects while Shandong has waived hydrogen-powered vehicle tolls on highways. 

Beijing SinoHytec (2402 HK), Weichai Power (2338 HK), Dongyue Group (189 HK), CIMC Enric (3899 HK), and Dongfang Electric (1072 HK) have recorded good progress in hydrogen business.


China's Hydrogen Economy: Re-Igniting Interests

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a>'s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  </li>
<li>It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.</li>
<li>While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.</li>
</ul>



Dongfang Electric (1072 HK)'s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  
It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.
While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.


Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a>'s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. </li>
<li>Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.</li>
<li>DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.</li>
</ul>



Dongfang Electric (1072 HK)'s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. 
Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.
DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.


Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

Hong Kong

CIMC Enric Holdings Ltd. designs, manufactures, and markets gas equipment.  The Company produces compressors, pressure vessels, gas refueling station trailers, and other gas equipment, as well as transportation equipment such as containers, trailers, tank equipments and airport equipments.

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CIMC Enric Holdings (3899 HK)

China & HK Strategy: Who Are the Victims of a US Recession?

Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...

Osbert Tang, CFA

Singamas (716 HK): Further Positive Indications from CIMC Profit Alert

Singamas announced an FY24 positive profit alert, expecting a net profit of at least US$30m, with 54.3% YoY growth. The key reasons are strong...

Osbert Tang, CFA

China's Hydrogen Economy: Re-Igniting Interests

Sichuan province held "the conference on further promoting the development and promotion of the entire green hydrogen industry chain" in the last...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x. New A-shares issue will dilute EPS but this should lower gearing and is positive...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

After a solid FY22, FY23 will still be impressive. Record new orders and healthy backlog will propel growth. We believe DEC has excellent exposure...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China & HK Strategy: Who Are the Victims of a US Recession?

​Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...

Osbert Tang, CFA

Singamas (716 HK): Further Positive Indications from CIMC Profit Alert

Singamas announced an FY24 positive profit alert, expecting a net profit of at least US$30m, with 54.3% YoY growth. The key reasons are strong...

Osbert Tang, CFA

China's Hydrogen Economy: Re-Igniting Interests

Sichuan province held "the conference on further promoting the development and promotion of the entire green hydrogen industry chain" in the last...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x. New A-shares issue will dilute EPS but this should lower gearing and is positive...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

After a solid FY22, FY23 will still be impressive. Record new orders and healthy backlog will propel growth. We believe DEC has excellent exposure...

Osbert Tang, CFA

Reliance on the US market varies among HK-listed companies, with some having high direct exposure to a recession. Those with low direct exposure...