HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Cosco Shipping Energy Transportation Co. Ltd. (H) / Equity Bottom-Up

Cosco Shipping Energy Transportation Co. Ltd. (H)

<ul>
<li>
<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 Transportation (1138 HK)</a> rallied 12.5% in the last two trading days after issuing a FY22 positive profit alert, but we are concerned that momentum is peaking. </li>
<li>Its P/B of 0.92x is 4SD above average since 2016, more than sufficient to reflect rebound in FY23-24F profitability. Meanwhile, VLCC rate has plunged 80% in the last 3 months.  </li>
<li>We believe CSET is already midway in the upcycle which normally lasts for 2-3 years. With high 4Q22 profit difficult to sustain for long, there is downside risk on earnings.  </li>
</ul>



Cosco Shipping Energy Transportation (1138 HK) rallied 12.5% in the last two trading days after issuing a FY22 positive profit alert, but we are concerned that momentum is peaking. 
Its P/B of 0.92x is 4SD above average since 2016, more than sufficient to reflect rebound in FY23-24F profitability. Meanwhile, VLCC rate has plunged 80% in the last 3 months.  
We believe CSET is already midway in the upcycle which normally lasts for 2-3 years. With high 4Q22 profit difficult to sustain for long, there is downside risk on earnings.  


COSCO Shipping Energy (1138 HK): Beware of Momentum Peaking

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Cosco Shipping Energy Transportation Co. Ltd. (H) / Event-Driven

<ul>
<li>Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. </li>
<li>Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.</li>
<li>H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.</li>
</ul>


Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB continues to buy tech. 
Stocks in HK and mainland markets bounced a bit this week as Scott Bessent named incoming Treasury Secretary and tariff talk diverges from China. Non-economic China policy matters more near-term.
H/A Pairs were surprisingly un-volatile on the week. There are a fair number of wider spreads. Non-bank financials AH Premia remain at the low end of their 52-week range.


A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

<ul>
<li>Speculative liquidation of crude oil positions opens up an opportunity</li>
<li>A seasonally strong period for crude tanker rates coming up</li>
<li>Company option scheme for senior management approved. Strike above current price</li>
</ul>


Speculative liquidation of crude oil positions opens up an opportunity
A seasonally strong period for crude tanker rates coming up
Company option scheme for senior management approved. Strike above current price


Cosco Shipping Energy Transportation - Capitulation in Oil and Related Equities Almost Complete?

Cosco Shipping Development / Event-Driven

<ul>
<li>AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> now 5% through. CATL 10% through will help.</li>
<li>It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.</li>
<li>The data tables below update on a daily basis in the <a href="https://www.smartkarma.com/tools" target="_blank" rel="noopener">Tools</a> section of Smartkarma. The <strong><a href="https://www.smartkarma.com/tools/quiddity/south-flow-monitor" target="_blank" rel="noopener">SOUTHBOUND Flow Monitor</a></strong> and <strong><a href="https://www.smartkarma.com/tools/quiddity/ah-shares-monitor" target="_blank" rel="noopener">AH Monitor</a></strong> are both there free for SK readers.</li>
</ul>


AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) now 5% through. CATL 10% through will help.
It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.
The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.


A/H Premium Tracker (To 23 May 2025):  AH Premia Contract, H Premia Names Perform Best; Batteries!

Cross Asset Strategy

<ul>
<li>There is a chance for a correction in the HK markets as latecomers to the party get nervous</li>
<li>All the signs are pointing to a continuation of this bull market as government support measures continue to roll out.</li>
<li>Don’t get bucked off that bull by a short-term correction!</li>
</ul>


There is a chance for a correction in the HK markets as latecomers to the party get nervous
All the signs are pointing to a continuation of this bull market as government support measures continue to roll out.
Don’t get bucked off that bull by a short-term correction!


China

COSCO SHIPPING Energy Transportation Co., Ltd. offers marine shipping services. The Company provides refined oil transportation, crude oil transportation, and other services. COSCO SHIPPING Energy Transportation also ships iron ores, dry bulks, coal, and other products.

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK)

COSCO Shipping Energy (1138 HK): Beware of Momentum Peaking

CSET's stretched P/B of 0.92x (4SD above average) has well reflected expectation of strong profit recovery. With VLCC rate collapsed in the last 3...

Osbert Tang, CFA

A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

AH Premia were basically flat this week. Non-bank financials remain at the lowest average premia levels in a year but others are mixed.

Travis Lundy

A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!

AH Premia contract again. Interestingly, the best performing tranche of discount was stocks where Hs trade at a premium to As. BYD squeezed. CATL a...

Travis Lundy

Don’t Let the Bull Throw You Off!

HK markets may see a correction due to nervous latecomers, but signs point to a continued bull market with government support measures in place...

Rikki Malik

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

COSCO Shipping Energy (1138 HK): Beware of Momentum Peaking

CSET's stretched P/B of 0.92x (4SD above average) has well reflected expectation of strong profit recovery. With VLCC rate collapsed in the last 3...

Osbert Tang, CFA

A/H Premium Tracker (To 29 Nov 2024): AH Premia Flat, Volumes Low; Premia Should Fall More

AH Premia were basically flat this week. Non-bank financials remain at the lowest average premia levels in a year but others are mixed.

Travis Lundy

Cosco Shipping Energy Transportation - Capitulation in Oil and Related Equities Almost Complete?

Although this piece timed the bottom to the day, there is more upside. It is still a laggard as it is "only" up ~40% from a depressed price....

Rikki Malik

A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!

AH Premia contract again. Interestingly, the best performing tranche of discount was stocks where Hs trade at a premium to As. BYD squeezed. CATL a...

Travis Lundy

Don’t Let the Bull Throw You Off!

​HK markets may see a correction due to nervous latecomers, but signs point to a continued bull market with government support measures in place...

Rikki Malik

HK markets may see a correction due to nervous latecomers, but signs point to a continued bull market with government support measures in place...