HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>1H25 earnings of our coverage are generally weaker than expected, with a 5.9% growth; for 2H25, the consensus forecasts point to a further slowdown to 4%. </li>
<li>The Chinese airlines, <a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group (2727 HK)</a>, <a href="https://www.smartkarma.com/entities/sany-heavy-equipment-intl" target="_blank" data-smartkarma-citation="entities:11104:1" rel="noopener">Sany Heavy Equipment (631 HK)</a>, and <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 International Investment (308 HK)</a> exhibit the best YoY growth in 2H25. </li>
<li>Container shipping and trade-related companies like <a href="https://www.smartkarma.com/entities/china-cosco-holdings-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">COSCO Shipping Holdings (1919 HK)</a>, and <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> are expected to see earnings plunge in 2H25.</li>
</ul>


1H25 earnings of our coverage are generally weaker than expected, with a 5.9% growth; for 2H25, the consensus forecasts point to a further slowdown to 4%. 
The Chinese airlines, Shanghai Electric Group (2727 HK), Sany Heavy Equipment (631 HK), and China Travel International Investment (308 HK) exhibit the best YoY growth in 2H25. 
Container shipping and trade-related companies like COSCO Shipping Holdings (1919 HK), and Orient Overseas International (316 HK) are expected to see earnings plunge in 2H25.


China Strategy: 1H25 Roundup and Implications for 2H25

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

Rikki Malik

<ul>
<li>Oil’s positive reaction to bearish news was a signal to go long.</li>
<li>Regardless of the outcome of the current fighting between Israel and Iran, oil has likely bottomed.</li>
<li>We add oil and related equities to the inflation basket</li>
</ul>


Oil’s positive reaction to bearish news was a signal to go long.
Regardless of the outcome of the current fighting between Israel and Iran, oil has likely bottomed.
We add oil and related equities to the inflation basket


Tactical Trading -Oil Joins the Commodity Rally

<ul>
<li>On average, companies under our coverage are forecast to see a 47.3% YoY growth in net profit in 1Q25. Their results should be a pointer for the outlook in 2025. </li>
<li>Good results are expected at <a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group (2727 HK)</a>, <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement (914 HK)</a>, <a href="https://www.smartkarma.com/entities/china-cosco-holdings-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">COSCO Shipping Hldgs (1919 HK)</a>, <a href="https://www.smartkarma.com/entities/air-china-ltd-h" target="_blank" data-smartkarma-citation="entities:8239:1" rel="noopener">Air China Ltd (753 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">CNBM (3323 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 HK)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com Group (9961 HK)</a>, <a href="https://www.smartkarma.com/entities/xinhua-winshare-publishing-media-co-ltd" target="_blank" data-smartkarma-citation="entities:15072:1" rel="noopener">Xinhua Winshare (811 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>, and <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> will see weaker 1Q25.</li>
</ul>


On average, companies under our coverage are forecast to see a 47.3% YoY growth in net profit in 1Q25. Their results should be a pointer for the outlook in 2025. 
Good results are expected at Shanghai Electric Group (2727 HK), Anhui Conch Cement (914 HK), COSCO Shipping Hldgs (1919 HK), Air China Ltd (753 HK), and CNBM (3323 HK). 

Shenzhen Expressway (548 HK), Trip.com Group (9961 HK), Xinhua Winshare (811 HK), Cosco Shipping Energy Transp. (1138 HK), and China Longyuan Power (916 HK) will see weaker 1Q25.


China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

<ul>
<li>CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  </li>
<li>Chinese banks dominated the list with below-book A-shares. <a href="https://www.smartkarma.com/entities/china-everbright-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:16221:1" rel="noopener">China Everbright Bank (6818 HK)</a>, <a href="https://www.smartkarma.com/entities/china-citic-bank-corp-ltd-ea6c25fd-4b20-45cb-a4a6-df7a60136f03" target="_blank" data-smartkarma-citation="entities:653:1" rel="noopener">China Citic Bank H (998 HK)</a>, and <a href="https://www.smartkarma.com/entities/industrial-and-commercial-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a> are the prime beneficiaries.</li>
<li>Infrastructure construction companies <a href="https://www.smartkarma.com/entities/china-railway-construction-corp-limited" target="_blank" data-smartkarma-citation="entities:263:1" rel="noopener">China Railway Cons Corp (1186 HK)</a>, <a href="https://www.smartkarma.com/entities/china-railway-group-ltd-h" target="_blank" data-smartkarma-citation="entities:264:1" rel="noopener">China Railway Group H (390 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Comm Cons (1800 HK)</a> are also well-positioned to gain.</li>
</ul>


CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  
Chinese banks dominated the list with below-book A-shares. China Everbright Bank (6818 HK), China Citic Bank H (998 HK), and ICBC (H) (1398 HK) are the prime beneficiaries.
Infrastructure construction companies China Railway Cons Corp (1186 HK), China Railway Group H (390 HK), and China Comm Cons (1800 HK) are also well-positioned to gain.


China & HK Strategy: Names to Watch for Market Value Management

China

COSCO SHIPPING Energy Transportation is a specialized company primarily engaged in the global shipment of energy, including crude oil, refined oil products, liquefied natural gas (LNG), and liquefied petroleum gas (LPG). It also provides vessel chartering and shipping agency services. The company is headquartered in Shanghai, China, and was established in 2016.

COSCO SHIPPING Energy Transportation (1138 HK)

Price Gauge
52-week Range	0.00 - 0.00
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Dividend (Yield)	0.00

COSCO SHIPPING Energy Transportation (1138 HK)

China Strategy: 1H25 Roundup and Implications for 2H25

1H25 earnings weaker than expected with 5.9% growth; 2H25 forecasts show further slowdown to 4%. Chinese airlines and trade-related companies...

Osbert Tang, CFA

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

The companies under our coverage are expected to report 16.8% earnings growth for 1H25, with 2Q25 accelerating to 30.8%. Top performers include...

Osbert Tang, CFA

Tactical Trading -Oil Joins the Commodity Rally

Oil joins the commodity rally and has likely bottommed regardless of the outcome in the current Israel/Iran fighting. OIl related equities are now...

Rikki Malik

China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

Earnings for the companies under our coverage are expected to grow by 47.3% in 1Q25, with Shanghai Electric Group, Anhui Conch, COSCO Shipping...

Osbert Tang, CFA

China & HK Strategy: Names to Watch for Market Value Management

SASAC issued "Several opinions on improving and strengthening the market value management of listed companies controlled by central enterprises"...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Strategy: 1H25 Roundup and Implications for 2H25

​1H25 earnings weaker than expected with 5.9% growth; 2H25 forecasts show further slowdown to 4%. Chinese airlines and trade-related companies...

Osbert Tang, CFA

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

The companies under our coverage are expected to report 16.8% earnings growth for 1H25, with 2Q25 accelerating to 30.8%. Top performers include...

Osbert Tang, CFA

Tactical Trading -Oil Joins the Commodity Rally

Oil joins the commodity rally and has likely bottommed regardless of the outcome in the current Israel/Iran fighting. OIl related equities are now...

Rikki Malik

China & HK Strategy: 1Q25 Preview - The Good, the Bad, and the Ugly

Earnings for the companies under our coverage are expected to grow by 47.3% in 1Q25, with Shanghai Electric Group, Anhui Conch, COSCO Shipping...

Osbert Tang, CFA

China & HK Strategy: Names to Watch for Market Value Management

SASAC issued "Several opinions on improving and strengthening the market value management of listed companies controlled by central enterprises"...

Osbert Tang, CFA

1H25 earnings weaker than expected with 5.9% growth; 2H25 forecasts show further slowdown to 4%. Chinese airlines and trade-related companies...