HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The 72.5% decline in <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC International (1308 HK)</a>'s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  </li>
<li>Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.</li>
<li>Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.</li>
</ul>


The 72.5% decline in SITC International (1308 HK)'s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.  
Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.


SITC International (1308 HK): Bidding Farewell to the Trough

Orient Overseas (International) / Equity Bottom-Up

<ul>
<li>The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. <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> is a beneficiary.</li>
<li>There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. </li>
<li>OOIL's net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. </li>
</ul>


The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
OOIL's net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 


Orient Overseas Intl (316 HK): Is It Time for a Reversal?

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton 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 3Q2026 Shanghai/Shenzhen northbound Connect flows with our data engine as the exchange changed the rule to only disclose north bound position once a quarter.</li>
<li>We estimate that the outflows in 3Q2026 were US$12,576 million and holdings were US$386 billion.</li>
<li>We highlight flows for CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING, ZHONGJI INNOLIGHT, CMB, WUXI APPTEC, PING AN INSURANCE, MIDEA.</li>
</ul>


We analyze the 3Q2026 Shanghai/Shenzhen northbound Connect flows with our data engine as the exchange changed the rule to only disclose north bound position once a quarter.
We estimate that the outflows in 3Q2026 were US$12,576 million and holdings were US$386 billion.
We highlight flows for CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING, ZHONGJI INNOLIGHT, CMB, WUXI APPTEC, PING AN INSURANCE, MIDEA.


Northbound Flows (3Q2026): CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 9th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Xiaomi (1810 HK), J&amp;T Express (1519 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Bidu (9888 HK), Xiaomi (1810 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 9th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Xiaomi (1810 HK), J&amp;T Express (1519 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Bidu (9888 HK), Xiaomi (1810 HK).


Hong Kong Buybacks Weekly (Oct 9th): Tencent, Xiaomi, J&T Express

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The Hang Seng Index is the main benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to formulaically predict index changes.</li>
<li>In this insight, we take a look at a group of names with reasonably high likelihood of getting added/deleted during the next review in December 2026.</li>
<li>The results are expected to be confirmed publicly on 20th November 2026.</li>
</ul>


The Hang Seng Index is the main benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to formulaically predict index changes.
In this insight, we take a look at a group of names with reasonably high likelihood of getting added/deleted during the next review in December 2026.
The results are expected to be confirmed publicly on 20th November 2026.


Quiddity Leaderboard Hang Seng Index Dec26: Z.AI, COSCO, 3SBIO Among Our Top Picks

China

COSCO SHIPPING Holdings Co., Ltd. offers shipping services. The Company provides container shipping, terminal operation, bulk shipping, and container leasing services. COSCO SHIPPING Holdings conducts businesses worldwide.

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COSCO SHIPPING Holdings (601919 CH)

SITC International (1308 HK): Bidding Farewell to the Trough

SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

Osbert Tang, CFA

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...

Osbert Tang, CFA

Northbound Flows (3Q2026): CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING

We analyzed Northbound connect data for 3Q2026 and highlight flows for CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING,...

Ke Yan, CFA, FRM

Hong Kong Buybacks Weekly (Oct 9th): Tencent, Xiaomi, J&T Express

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Tencent (700 HK),...

Ke Yan, CFA, FRM

Quiddity Leaderboard Hang Seng Index Dec26: Z.AI, COSCO, 3SBIO Among Our Top Picks

We have presented our top 10 picks for addition for HSI in Dec26. In the last 5 rebalances, at least one name has been added from our top 10 picks...

Janaghan Jeyakumar, CFA

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52-week Range

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SITC International (1308 HK): Bidding Farewell to the Trough

​SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

Osbert Tang, CFA

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

​SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...

Osbert Tang, CFA

Northbound Flows (3Q2026): CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING

We analyzed Northbound connect data for 3Q2026 and highlight flows for CATL, EOPTOLINK TECHNOLOGY, NAURA TECHNOLOGY, WEICHAI POWER, ZIJIN MINING,...

Ke Yan, CFA, FRM

Hong Kong Buybacks Weekly (Oct 9th): Tencent, Xiaomi, J&T Express

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Tencent (700 HK),...

Ke Yan, CFA, FRM

Quiddity Leaderboard Hang Seng Index Dec26: Z.AI, COSCO, 3SBIO Among Our Top Picks

We have presented our top 10 picks for addition for HSI in Dec26. In the last 5 rebalances, at least one name has been added from our top 10 picks...

Janaghan Jeyakumar, CFA

SITC's disappointing FY23 earnings decline may be already priced in. With sequentially higher freight rates, there is a potential for a rebound in...

SCFI surged 25% due to the Red Sea crisis, benefiting OOIL, suggesting consensus forecasts are too bearish. It is attractive at 0.7x P/B and 8%...