HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cofco-meat-holdings" target="_blank" data-smartkarma-citation="entities:22858:1" rel="noopener">Cofco Joycome (1610 HK)</a> is in a good position to benefit from the hog cycle upturn. China's anti-dumping investigation into imported pork from the EU may also disrupt supply.</li>
<li>Its average hog price has increased by 12.7% YTD and by 1.6% YoY for 5M24. Market hog price further surged by 10.4% in the week of 12-Jun from end-May.</li>
<li>Its P/B of 0.78x is inexpensive at 1SD below the 5-year average. Its peers like <a href="https://www.smartkarma.com/entities/muyuan-foodstuff-co-ltd-a" target="_blank" data-smartkarma-citation="entities:3705:1" rel="noopener">Muyuan Foodstuff (002714 CH)</a> and <a href="https://www.smartkarma.com/entities/wens-foodstuff-group-co-ltd" target="_blank" data-smartkarma-citation="entities:22859:1" rel="noopener">Wens Foodstuff Group (300498 CH)</a> are also interesting. </li>
</ul>



Cofco Joycome (1610 HK) is in a good position to benefit from the hog cycle upturn. China's anti-dumping investigation into imported pork from the EU may also disrupt supply.
Its average hog price has increased by 12.7% YTD and by 1.6% YoY for 5M24. Market hog price further surged by 10.4% in the week of 12-Jun from end-May.
Its P/B of 0.78x is inexpensive at 1SD below the 5-year average. Its peers like Muyuan Foodstuff (002714 CH) and Wens Foodstuff Group (300498 CH) are also interesting. 


COFCO Joycome (1610 HK): Brewing a Hog Cycle Upturn?

Thematic (Sector/Industry)

<ul>
<li>The top ten highest-yielding stocks under our coverage have an average yield of 7.4% for FY25F and 7.2% for FY26F, attractive amid the declining interest rate environment.</li>
<li>
<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a>, <a href="https://www.smartkarma.com/entities/anhui-expressway-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5236:1" rel="noopener">Anhui Expressway Co Ltd H (995 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-railway-signal-communication-co-ltd" target="_blank" data-smartkarma-citation="entities:613:1" rel="noopener">China Railway Signal &amp; Communication (3969 HK)</a> are better quality ones with 6-7% average yield.</li>
<li>Chinese airlines are low on yields given they are still loss-making, but they have a good earnings rebound in 2H25, making them suitable for aggressive investors.</li>
</ul>


The top ten highest-yielding stocks under our coverage have an average yield of 7.4% for FY25F and 7.2% for FY26F, attractive amid the declining interest rate environment.

Sinotrans (598 HK), Anhui Expressway Co Ltd H (995 HK), and China Railway Signal &amp; Communication (3969 HK) are better quality ones with 6-7% average yield.
Chinese airlines are low on yields given they are still loss-making, but they have a good earnings rebound in 2H25, making them suitable for aggressive investors.


China & HK Strategy: The High-Yield Playbook

<ul>
<li>For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. </li>
<li>The best growth rates are at <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a>, <a href="https://www.smartkarma.com/entities/china-international-capital-corporation-ltd" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">CICC (3908 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-capital-international-airport-bcia" target="_blank" data-smartkarma-citation="entities:10626:1" rel="noopener">Beijing Capital Intl Airport (694 HK)</a>, <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel (780 HK)</a>, and <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC Intl (1308 HK)</a>. </li>
<li>The worst ones are <a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel Intl (308 HK)</a>, <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transp (1138 HK)</a>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">CTG Duty Free (1880 HK)</a>, and <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin (2343 HK)</a>. </li>
</ul>


For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. 
The best growth rates are at China National Building Material (3323 HK), CICC (3908 HK), Beijing Capital Intl Airport (694 HK), Tongcheng Travel (780 HK), and SITC Intl (1308 HK). 
The worst ones are China Travel Intl (308 HK), Cosco Shipping Energy Transp (1138 HK), China Southern Airlines (1055 HK), CTG Duty Free (1880 HK), and Pacific Basin (2343 HK). 


China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

Asia Pac ECM and Index Rebal, DZT 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 analyze the weekly Hong Kong Connect flows with our data engine for holding position as of April 2nd.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Meituan, BOC, Pop Mart Intl, SMIC, Xiaomi, ICBC, CNOOC, China Life, Alibaba, CK Asset.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of April 2nd.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Meituan, BOC, Pop Mart Intl, SMIC, Xiaomi, ICBC, CNOOC, China Life, Alibaba, CK Asset.


HK Connect Flows Weekly (Apr 2nd): Meituan, BOC, Pop Mart Intl, SMIC, Xiaomi, ICBC, CNOOC

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 27th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Alibaba, Xiaomi, Pop Mart Intl, HSBC, Tencent, Meituan, SMIC, China Life, CHALCO, Zijin Mining.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 27th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, Xiaomi, Pop Mart Intl, HSBC, Tencent, Meituan, SMIC, China Life, CHALCO, Zijin Mining.


HK Connect Flows Weekly (Mar 27th): Alibaba, Xiaomi, Pop Mart Intl, HSBC, Tencent, Meituan, SMIC

China

COFCO Joycome is a fully integrated meat enterprise specializing in feed production, hog breeding and farming, livestock slaughtering, and the production and sale of fresh pork and processed meat products. The company also imports and distributes various meat products, including pork, beef, poultry, and mutton. Headquartered in Beijing, China, the company was founded in 2002.

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COFCO Joycome (1610 HK)