Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Equity Bottom-Up

<ul><li>Although the apparel industry struggles in 1H23 due to high interest rates and high Inventory levels, Crystal’s results were largely in line with our forecast with revenue decreased by 18.7% y/y to US$1.0bn and attributable net profit slightly dropped by 2.3% y/y to US$73.6mn.</li><li>All business segments, except for sweater, recorded a y/y decrease in revenue during 1H23.</li><li>However, with the improved production efficiency and strict control in operating expenses, GPM / NPM improved by 0.6ppt / 1.2ppt y/y. </li></ul>

Although the apparel industry struggles in 1H23 due to high interest rates and high Inventory levels, Crystal’s results were largely in line with our forecast with revenue decreased by 18.7% y/y to US$1.0bn and attributable net profit slightly dropped by 2.3% y/y to US$73.6mn.All business segments, except for sweater, recorded a y/y decrease in revenue during 1H23.However, with the improved production efficiency and strict control in operating expenses, GPM / NPM improved by 0.6ppt / 1.2ppt y/y. 

Crystal Int. - Margin Expansion with Sales Rebound in 2H23

<ul><li>Thanks to the recovery in consumer demand led to strong orders from its brand customers, Crystal Int’l’s 2022 results were largely in line with our forecast with revenue of US$2.49bn (+6.4%) and NP of US$172.7mn (+5.9%).</li><li>Revenue growth in the sportswear and outdoor apparel category was the most significant, thanks to the ongoing support from its major sportswear brand customers.</li><li>A final dividend of 11.8 HK cents was declared, combined with the interim payout, full-yr dividend stood at 16.8 HK cents, translating into a payout ratio of 35% (2021: 31%).</li></ul>

Thanks to the recovery in consumer demand led to strong orders from its brand customers, Crystal Int’l’s 2022 results were largely in line with our forecast with revenue of US$2.49bn (+6.4%) and NP of US$172.7mn (+5.9%).Revenue growth in the sportswear and outdoor apparel category was the most significant, thanks to the ongoing support from its major sportswear brand customers.A final dividend of 11.8 HK cents was declared, combined with the interim payout, full-yr dividend stood at 16.8 HK cents, translating into a payout ratio of 35% (2021: 31%).

Crystal International (2232 HK) - 2022 Results In-Line with Attractive Yield

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In this weeks recap, we look at:<ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul>There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>.

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

Orient Overseas International / Event-Driven

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect <a href="https://www.smartkarma.com/entities/brii-biosciences" target="_blank" data-smartkarma-citation="entities:33014:1" rel="noopener">Brii Biosciences (2137 HK)</a>, <a href="https://www.smartkarma.com/entities/helen-s-international-holdings" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holdings (9869 HK)</a>, <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>, <a href="https://www.smartkarma.com/entities/keymed-biosciences-inc" target="_blank" data-smartkarma-citation="entities:33011:1" rel="noopener">Keymed Biosciences Inc (2162 HK)</a> and <a href="https://www.smartkarma.com/entities/sce-intelligent-commercial-management" target="_blank" data-smartkarma-citation="entities:33500:1" rel="noopener">SCE Intelligent Commercial Management (606 HK)</a> to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.<div>Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.</div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect Brii Biosciences (2137 HK), Helen's International Holdings (9869 HK), Medlive Technology (2192 HK), Keymed Biosciences Inc (2162 HK) and SCE Intelligent Commercial Management (606 HK) to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

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.

<a href="https://www.smartkarma.com/entities/li-fung-ltd" target="_blank" data-smartkarma-citation="entities:6290:1" rel="noopener">Li &amp; Fung Ltd (494 HK)</a> is a 114-year-old global merchandise supply chain manager. On 20 March, it announced a privatisation bid of HK$1.25 per scheme share from the Fung family and GLP, a logistics warehouse operator and investor. The scheme document was released today with the IFA considering that the terms of the proposal, the scheme and founder arrangement are fair and reasonable. The court meeting and SGM are scheduled for 12 May.<div class="content-highlight">The fate of the proposal rests on how Silchester, with a 10.0% stake, casts its vote. Calling the Silchester vote is difficult. Since the announcement of the bid, the gross spread has narrowed from 33% to 15% (at the last close), as the market views a Silchester acceptance more likely. From a trading perspective, we would sell at the current levels with a view of adding around HK$0.95 per share. </div>

Li &amp; Fung Ltd (494 HK) is a 114-year-old global merchandise supply chain manager. On 20 March, it announced a privatisation bid of HK$1.25 per scheme share from the Fung family and GLP, a logistics warehouse operator and investor. The scheme document was released today with the IFA considering that the terms of the proposal, the scheme and founder arrangement are fair and reasonable. The court meeting and SGM are scheduled for 12 May.The fate of the proposal rests on how Silchester, with a 10.0% stake, casts its vote. Calling the Silchester vote is difficult. Since the announcement of the bid, the gross spread has narrowed from 33% to 15% (at the last close), as the market views a Silchester acceptance more likely. From a trading perspective, we would sell at the current levels with a view of adding around HK$0.95 per share. 

Li & Fung Scheme Document, Silchester's Vote

Hong Kong

Crystal International Group Limited manufactures apparels. The Company produces casual clothes, jeans, personal under wears, sweaters, sports garments, and other products. Crystal International Group markets its products in Hong Kong.

Crystal International (2232 HK)

Crystal Int. - Margin Expansion with Sales Rebound in 2H23

Although the apparel industry struggles in 1H23 due to high interest rates and high Inventory levels, Crystal’s results were largely in line with...

Quam Securities