HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Communications Construction / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> has a fruitful 1H21 as reflected by impressive new contract growth and profit recovery. Driven by the strength at the domestic market, overall new contract addition reached Rmb685.1bn, a good 28.5% YoY growth. Such pace is the fastest when compared with the annual growth rate since FY15, and this solid project pipeline will translate into positive profit momentum over the next three years.CCCC has also issued positive profit alert for 1H21, guiding for between 109.70% and 139.01% YoY growth in net profit. For 2Q21 standalone, the YoY growth should reach an even higher 1.4-2.1x. We see limited regulatory risks for CCCC given the infrastructure construction industry landscape and its centrally-owned SOE status. In our view, its ROE of 6.9% for FY21F and 7.5% for FY22F highly justify a re-rating in its P/B multiple which currently stands at 0.19x on a 12-month forward basis.

China Communications Construction (1800 HK) has a fruitful 1H21 as reflected by impressive new contract growth and profit recovery. Driven by the strength at the domestic market, overall new contract addition reached Rmb685.1bn, a good 28.5% YoY growth. Such pace is the fastest when compared with the annual growth rate since FY15, and this solid project pipeline will translate into positive profit momentum over the next three years.CCCC has also issued positive profit alert for 1H21, guiding for between 109.70% and 139.01% YoY growth in net profit. For 2Q21 standalone, the YoY growth should reach an even higher 1.4-2.1x. We see limited regulatory risks for CCCC given the infrastructure construction industry landscape and its centrally-owned SOE status. In our view, its ROE of 6.9% for FY21F and 7.5% for FY22F highly justify a re-rating in its P/B multiple which currently stands at 0.19x on a 12-month forward basis. 

China Comm Const (1800 HK): Well Placed for an Upturn

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 147 stocks over the last week. The average A-H premium was 132.0% as of Apr 19th.</li>
<li>The average A-H premium changed by 2.7ppt week-on-week, led by consumer staples, financials, materials and offset by communication services, energy.</li>
<li>We highlight weekly changes in A-H premium for Fosun Pharma, China Southern Air, CICC, Ganfeng Lithium, Joinn Lab.</li>
</ul>


We analyse the changes of A-H premium on 147 stocks over the last week. The average A-H premium was 132.0% as of Apr 19th.
The average A-H premium changed by 2.7ppt week-on-week, led by consumer staples, financials, materials and offset by communication services, energy.
We highlight weekly changes in A-H premium for Fosun Pharma, China Southern Air, CICC, Ganfeng Lithium, Joinn Lab.


A-H Premium Weekly (Apr 19th): Fosun Pharma, China Southern Air, CICC, Ganfeng Lithium, Joinn Lab

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.4% as of Apr 12th.</li>
<li>The average A-H premium changed by -9.4ppt week-on-week, led by health care, utilities, information technology and offset by consumer staples.</li>
<li>We highlight weekly changes in A-H premium for GWM, Beigene, Cansino, First Tractor.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.4% as of Apr 12th.
The average A-H premium changed by -9.4ppt week-on-week, led by health care, utilities, information technology and offset by consumer staples.
We highlight weekly changes in A-H premium for GWM, Beigene, Cansino, First Tractor.


A-H Premium Weekly (Apr 12th): GWM, Beigene, Cansino, First Tractor

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Hollysys Automation Technologies / Event-Driven

<ul>
<li>Dazheng (without Recco) has returned with <a href="https://www.businesswire.com/news/home/20231224144642/en/Buyer-Consortium-Led-by-Dazheng-Group-Announces-Enhanced-All-Cash-Proposal-of-US29.00-Per-Share-to-Acquire-Hollysys" target="_blank" rel="noopener">a revised US$29.00 offer</a> for <a href="https://www.smartkarma.com/entities/hollysys-automation-technologies" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technologies (HOLI US)</a>, 9.4% higher than Ascendent Capital’s US$26.50 binding offer.</li>
<li>While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.</li>
<li>Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng's offer.  </li>
</ul>


Dazheng (without Recco) has returned with a revised US$29.00 offer for Hollysys Automation Technologies (HOLI US), 9.4% higher than Ascendent Capital’s US$26.50 binding offer.
While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.
Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng's offer.  


Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Shanghai Junshi Biosciences  / Event-Driven

<ul>
<li>The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.</li>
<li>SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished. </li>
<li>
Time to go long Hs vs As for the new year at 52wk wide discounts. 3 Short H/A pairs now switched to long. 3 new pairs long this week. </li>
</ul>


The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished. 

Time to go long Hs vs As for the new year at 52wk wide discounts. 3 Short H/A pairs now switched to long. 3 new pairs long this week. 


A/H Premium Tracker (To 15 Dec 23): Time To Go Long Hs Vs As.

China

CRRC Corporation Limited manufactures rolling stock products. The Company produces locomotives, passenger carriages, freight wagons, vehicles key components, and other products. CRRC also provides vehicle repairing, investment management, and other services.

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CRRC Corp Ltd A (601766 CH)

China Comm Const (1800 HK): Well Placed for an Upturn

Good new contract value momentum and positive profit alert are both encouraging to CCCC. We believe its valuations are undemandiing at just 0.19x P...

Osbert Tang, CFA

A-H Premium Weekly (Apr 19th): Fosun Pharma, China Southern Air, CICC, Ganfeng Lithium, Joinn Lab

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Fosun Pharma, China Southern Air, CICC, Ganfeng Lithium,...

Ke Yan, CFA, FRM

A-H Premium Weekly (Apr 12th): GWM, Beigene, Cansino, First Tractor

We analyzed A-H premium changes in the past week and highlight A-H premium changes for GWM, Beigene, Cansino, First Tractor.

Ke Yan, CFA, FRM

Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

While higher, the Board has the basis not to deem Dazheng’s proposal superior. However, due to the risk that shareholders vote down its offer,...

Arun George

A/H Premium Tracker (To 15 Dec 23): Time To Go Long Hs Vs As.

A/H Premiums reached their highest average (arithmetic - not the HS Index) in a year on Monday. And then turned. Overseas liquidation feels...

Travis Lundy

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