HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.</li>
<li>
<a href="https://www.smartkarma.com/entities/luk-fook-holdings-intl-ltd" target="_blank" data-smartkarma-citation="entities:19054:1" rel="noopener">Luk Fook Holdings (590 HK)</a> is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International (178 HK)</a> is the cosmetics play.</li>
<li>Property investors including <a href="https://www.smartkarma.com/entities/wharf-holdings-ltd" target="_blank" data-smartkarma-citation="entities:51:1" rel="noopener">Wharf Holdings (4 HK)</a> and <a href="https://www.smartkarma.com/entities/hysan-development-co" target="_blank" data-smartkarma-citation="entities:14169:1" rel="noopener">Hysan Development Co (14 HK)</a> will gain from the shopping malls in major tourist areas in Hong Kong.</li>
</ul>


There is an increasing likelihood that the duty-free quota of mainland tourists visiting Hong Kong will rise to Rmb30,000 from Rmb5,000. This will benefit many retail-related sectors.

Luk Fook Holdings (590 HK) is the best play among jewellery retailers given it has 65% of revenue from Hong Kong. Sa Sa International (178 HK) is the cosmetics play.
Property investors including Wharf Holdings (4 HK) and Hysan Development Co (14 HK) will gain from the shopping malls in major tourist areas in Hong Kong.


Increasing HK Duty Free Quota: The Beneficaries

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/soundwill-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19318:1" rel="noopener">Soundwill Holdings (878 HK)</a> announced a privatisation offer from the Foo Family, the largest shareholder, at HK$8.50 (HK$7.50 cash + HK$1.00 special dividend), a 62.8% premium to the undisturbed price.</li>
<li>Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No disinterested shareholder holds a blocking stake.</li>
<li>While the offer is light compared to peer multiples, it is attractive compared to historical trading ranges. A low AGM minority participation rate facilitates the vote. </li>
</ul>



Soundwill Holdings (878 HK) announced a privatisation offer from the Foo Family, the largest shareholder, at HK$8.50 (HK$7.50 cash + HK$1.00 special dividend), a 62.8% premium to the undisturbed price.
Key conditions include approval by at least 75% of independent shareholders (&lt;10% of independent shareholders rejection) and a headcount test. No disinterested shareholder holds a blocking stake.
While the offer is light compared to peer multiples, it is attractive compared to historical trading ranges. A low AGM minority participation rate facilitates the vote. 


Soundwill Holdings (878 HK): Foo Family’s Offer at HK$8.50

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. </li>
<li>That would be That is Special Stamp Duty, Buyer's Stamp Duty, New Residential Stamp Duty. "Measures no longer necessary given the current economic and market conditions."</li>
<li>This should cause people to get excited short-term about property developers.</li>
</ul>


RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
That would be That is Special Stamp Duty, Buyer's Stamp Duty, New Residential Stamp Duty. "Measures no longer necessary given the current economic and market conditions."
This should cause people to get excited short-term about property developers.


Hong Kong To Scrap All "Spicy Measures" (Property Cooling Measures)

Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>We are turning bearish on Hang Lung Properties.   Given China’s economic slowdown, we think luxury spending in China will take longer than expected</li>
<li>In addition, the property slowdown and housing prices decline will lead to a negative wealth effect, which will further impact luxury consumption</li>
<li>If RMB is to strengthen, more Chinese will travel to spend overseas.  HLP P/B valuation is almost historical low, but can stay cheap as a “value trap”</li>
</ul>


We are turning bearish on Hang Lung Properties.   Given China’s economic slowdown, we think luxury spending in China will take longer than expected
In addition, the property slowdown and housing prices decline will lead to a negative wealth effect, which will further impact luxury consumption
If RMB is to strengthen, more Chinese will travel to spend overseas.  HLP P/B valuation is almost historical low, but can stay cheap as a “value trap”


Turning Bearish: Hang Lung Properties Going Through a Perfect Storm

<ul>
<li>Our "Buy the Worst" strategy made a strong comeback in 2025, outperforming the HSI by 11.1pp YTD, reversing the losses in the last two years.</li>
<li>For 2026, the strategy will hold <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (9618 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy (2319 HK)</a>.  </li>
<li>The position in <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy (2319 HK)</a> may be replaced by <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education (9901 HK)</a> or <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a>, depending on their closing prices on 31 Dec. </li>
</ul>


Our "Buy the Worst" strategy made a strong comeback in 2025, outperforming the HSI by 11.1pp YTD, reversing the losses in the last two years.
For 2026, the strategy will hold Meituan (3690 HK), Li Auto (2015 HK), BYD Electronics (285 HK), JD.com (9618 HK), and China Mengniu Dairy (2319 HK).  
The position in China Mengniu Dairy (2319 HK) may be replaced by New Oriental Education (9901 HK) or Zhongsheng Group (881 HK), depending on their closing prices on 31 Dec. 


"Buy the Worst" HSI Strategy: A Fruitful 2025, Our Picks for 2026

Hong Kong

Hang Lung Properties is a leading property developer and investor with a diverse portfolio in Hong Kong and Mainland China. The company specializes in developing, selling, and leasing premium commercial complexes, including shopping malls and office premises, as well as residential properties. It was incorporated in 1949 and is headquartered in Central, Hong Kong.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hang Lung Properties (101 HK)

Increasing HK Duty Free Quota: The Beneficaries

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

Soundwill Holdings (878 HK): Foo Family’s Offer at HK$8.50

While the offer is light compared to peer multiples, it is attractive compared to historical trading ranges. A low AGM minority participation rate...

Arun George

Hong Kong To Scrap All "Spicy Measures" (Property Cooling Measures)

HK Finance Secretary has introduced the 2024-2025 Budget. All "spicy measures" (property cooling measures) are now lifted. This should push the...

Travis Lundy

Turning Bearish: Hang Lung Properties Going Through a Perfect Storm

We think HLP is facing a perfect storm with China's economic slowdown, weaker luxury spending, and negative wealth effect from home price decline. ...

Jacob Cheng

"Buy the Worst" HSI Strategy: A Fruitful 2025, Our Picks for 2026

The "Buy the Worst" strategy outperformed the HSI by 11.1pp YTD in 2025. For 2026, it will hold Meituan, Li Auto, BYD Electronics, JD.com, and...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Increasing HK Duty Free Quota: The Beneficaries

​Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

Osbert Tang, CFA

Soundwill Holdings (878 HK): Foo Family’s Offer at HK$8.50

While the offer is light compared to peer multiples, it is attractive compared to historical trading ranges. A low AGM minority participation rate...

Arun George

Hong Kong To Scrap All "Spicy Measures" (Property Cooling Measures)

HK Finance Secretary has introduced the 2024-2025 Budget. All "spicy measures" (property cooling measures) are now lifted. This should push the...

Travis Lundy

Turning Bearish: Hang Lung Properties Going Through a Perfect Storm

We think HLP is facing a perfect storm with China's economic slowdown, weaker luxury spending, and negative wealth effect from home price decline. ...

Jacob Cheng

"Buy the Worst" HSI Strategy: A Fruitful 2025, Our Picks for 2026

​The "Buy the Worst" strategy outperformed the HSI by 11.1pp YTD in 2025. For 2026, it will hold Meituan, Li Auto, BYD Electronics, JD.com, and...

Osbert Tang, CFA

Potential increase in duty-free quota for mainland visitors to Hong Kong to benefit retail sectors, with Luk Fook as the top jewellery play, Sa Sa...

The "Buy the Worst" strategy outperformed the HSI by 11.1pp YTD in 2025. For 2026, it will hold Meituan, Li Auto, BYD Electronics, JD.com, and...