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

Dongzheng Automotive Finance / Event-Driven

<ul>
<li>On 16 April, the Shanghai Financial Court <a href="https://paimai.jd.com/287421325" target="_blank" rel="noopener">published</a> the details for the auction of <a href="https://www.smartkarma.com/entities/china-zhengtong-auto-services" target="_blank" data-smartkarma-citation="entities:17001:1" rel="noopener">China Zhengtong Auto Services Hldg (1728 HK)</a>’s 71.04% stake in <a href="https://www.smartkarma.com/entities/shanghai-dongzheng-automotive-finance-co-ltd" target="_blank" data-smartkarma-citation="entities:27984:1" rel="noopener">Dongzheng Automotive Finance (2718 HK)</a>. </li>
<li>If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.</li>
<li>The base bid implies an MGO price of HK$1.294 per H Share, a 112.1% premium to the last close. The auction will be held from 18 May to 19 May.</li>
</ul>


On 16 April, the Shanghai Financial Court published the details for the auction of China Zhengtong Auto Services Hldg (1728 HK)’s 71.04% stake in Dongzheng Automotive Finance (2718 HK). 
If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.
The base bid implies an MGO price of HK$1.294 per H Share, a 112.1% premium to the last close. The auction will be held from 18 May to 19 May.


Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.
Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. 
BYD also announced that a total of 1500 Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year.
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BYD is added into <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> and <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> at the same time while other names are involved with one or some are two - moving from one to another. 
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BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. 
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Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. 
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China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems and later on issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.
Tesla is mainly a US company but with the growing wealth in China and Tesla's market positioning as the high-end EV, it has managed to gain substantial traction in China and doubled its sales contribution from 20 to 40% by March 2021. 
BYD also announced that a total of 1500 Tang SUVs will be delivered to Norway before the end of the year as the company commits to accelerating its European and global strategies. The initial 100 cars are scheduled for delivery to Norwegian customers in the third quarter of this year.

BYD is added into Hang Seng China Enterprises Index (HSCEI INDEX) and Hong Kong Hang Seng Index (HSI INDEX) at the same time while other names are involved with one or some are two - moving from one to another. 

BYD is trading at 84% PER discount, 83% EV/EBITDA discount, and 73% PBR discount to Tesla while its share price also lagged behind Tesla's in the past 6 months. 

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time to start shorting Tesla and long BYD. 


BYD (1211) Vs Tesla (TSLA): Fight over China

Nexter's share price has moved in tandem with <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> to develop autonomous vehicles although it was denied by the companies yesterday. 
The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, it is time to sell to lock in some profit.

Nexter's share price has moved in tandem with Geely Auto (175 HK) in the past half a year, which particularly have benefited from the rumor that they entered into a partnership with Baidu (BIDU US) to develop autonomous vehicles although it was denied by the companies yesterday. 
The management has repeatedly stated last year that they will make an effort to further grow the business in China but it will take some time and as per the latest interim report in 2020, the revenue from China still has not surpassed the US. Nexter bought a stake in Tactile Mobility, the leading tactile virtual sensing, and data company based in Israel, which will be a key element to win a mandate in autonomous vehicle projects. The stock may see another leg up tomorrow but after a 71% return (prior to today's) in 6 months, it is time to sell to lock in some profit. 

<a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> share price has blown out in the past week, raising the question of whether it is time to sell or hold. 
The company has a pipeline of exciting and futuristic product innovation that will keep its existing customers (conventional automakers) happy while also winning more mandates in the EV industry.   
There will be a slight margin decline in the 2H 2020 from the North American customers but the increasing proportion of Chinese customers should help to plug the gap. The company is still trading on the 49% and 48% discount on PER and EV/EBITDA of its customers respectively.

Nexteer Automotive (1316 HK) share price has blown out in the past week, raising the question of whether it is time to sell or hold. 
The company has a pipeline of exciting and futuristic product innovation that will keep its existing customers (conventional automakers) happy while also winning more mandates in the EV industry.   
There will be a slight margin decline in the 2H 2020 from the North American customers but the increasing proportion of Chinese customers should help to plug the gap. The company is still trading on the 49% and 48% discount on PER and EV/EBITDA of its customers respectively.

Asia gaming and consumer discretionary analyst

Michael Ting

Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a path to recovery for passenger and commercial vehicle sales. The stock has underperformed its peer average by 20% YTD and has become a forgotten stock among investors but at 3x forward P/E along with improving fundamentals, we believe the stock offers a favorable risk/reward at current levels supported by a 7% dividend yield.

Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a path to recovery for passenger and commercial vehicle sales. The stock has underperformed its peer average by 20% YTD and has become a forgotten stock among investors but at 3x forward P/E along with improving fundamentals, we believe the stock offers a favorable risk/reward at current levels supported by a 7% dividend yield.

Dongfeng Motor: The Forgotten Stock with a Favorable Risk/Reward

China

Dongfeng Motor Group Company Limited, through joint ventures, designs, manufactures, and markets diesel engines, light trucks, automobiles, castings, and related spare parts.

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Dongfeng Motor (489 HK)

Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO

The auction of China Zhengtong’s 71.04% stake in Dongzheng will be held from 18 to 19 May. A successful auction will imply an MGO price (at the...

Arun George

BYD (1211) Vs Tesla (TSLA): Fight over China

Given BYD's foray into battery technology has started to yield fruit and Tesla's market share in China may be in danger, it is probably a good time...

Henry Soediarko

Nexteer (1316): Time to Book Some Profit

Nexter's share price has moved in tandem with Geely Auto in the past 6m, which has benefited from the rumor on the partnership with Baidu to...

Henry Soediarko

Nexteer (1316): What to Do Now?

The company's technological advantage has enabled it to have a pipeline of exciting and futuristic innovation that is ready to blow the auto...

Henry Soediarko

Dongfeng Motor: The Forgotten Stock with a Favorable Risk/Reward

Two key highlights of the company's interim results: absolute dividend remains stable despite a 64.5% yoy decline in net profit and DFM is on a...

Michael Ting

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