HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>A partial disposal of Club Med is positive for <a href="https://www.smartkarma.com/entities/fosun-tourism-group" target="_blank" data-smartkarma-citation="entities:27439:1" rel="noopener">Fosun Tourism (1992 HK)</a>. The market is speculating <a href="https://www.smartkarma.com/entities/capitaland-investment-ltd-sing" target="_blank" data-smartkarma-citation="entities:33774:1" rel="noopener">CapitaLand Investment /Sing (CLI SP)</a> is paying EUR500m for a 20-30% stake.</li>
<li>Club Med generated 91.7% of its 1H24 operating profit. The rumoured valuation will boost its value by HK$6.9/share, 1.2x of the share price if true.</li>
<li>We see reasons for such disposal, and if happens, this will align the stock's valuation to international peers - 26.2x for FY24, vs. its 11.3x currently.</li>
</ul>


A partial disposal of Club Med is positive for Fosun Tourism (1992 HK). The market is speculating CapitaLand Investment /Sing (CLI SP) is paying EUR500m for a 20-30% stake.
Club Med generated 91.7% of its 1H24 operating profit. The rumoured valuation will boost its value by HK$6.9/share, 1.2x of the share price if true.
We see reasons for such disposal, and if happens, this will align the stock's valuation to international peers - 26.2x for FY24, vs. its 11.3x currently.


Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Although the tech sector in Hong Kong has surged over the last couple of weeks there appears to be minimal short covering in US-listed China tech names.</li>
<li>The performance of the "Magnificent 5" China tech names has led the rally as we outlined in <a href="https://www.smartkarma.com/insights/hong-kong-the-glass-is-half-full-time-to-buy-beta" target="_blank" data-smartkarma-citation="insights:134396" rel="noopener">Hong Kong: The Glass Is Half Full, Time to BUY Beta</a> .</li>
<li>The combination of of large outstanding short positions and a significant underweight of HK/China in international funds will lead to further upside in the tech sector.</li>
</ul>


Although the tech sector in Hong Kong has surged over the last couple of weeks there appears to be minimal short covering in US-listed China tech names.
The performance of the "Magnificent 5" China tech names has led the rally as we outlined in Hong Kong: The Glass Is Half Full, Time to BUY Beta .
The combination of of large outstanding short positions and a significant underweight of HK/China in international funds will lead to further upside in the tech sector.


External reports (aggregated public sources), Value Investors Club

Value Investors Club (VIC)

External reports (aggregated public sources)

Value Investors Club

<ul><li>Hotel rooms in China decreased by 5.4% compared to the previous year</li><li>H World has maintained its position as a leading hotel operator in China with a diverse portfolio of brands</li><li>Founder Qi Ji's strong track record in the hospitality industry has contributed to H World's success in navigating challenges and growing its presence in the industry.</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Hotel rooms in China decreased by 5.4% compared to the previous yearH World has maintained its position as a leading hotel operator in China with a diverse portfolio of brandsFounder Qi Ji's strong track record in the hospitality industry has contributed to H World's success in navigating challenges and growing its presence in the industry.This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

H World Group Limited (HTHT) - Thursday, Feb 8, 2024

Tongcheng Travel Holdings  / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> has a solid FY23 and 4Q23 with massive net profit recovery. Earnings momentum for FY24 and FY25 look to stay impressive.</li>
<li>FY23 is a record year of profit, demonstrating its ability to gain market share after COVID-19 disruption. Further volume growth will lead to better operating leverage.</li>
<li>Net cash reached Rmb2.3bn, up 90.4% YoY, showcasing its cash-generating ability. The first-time dividend payout also reflected management's confidence on the outlook.</li>
</ul>



Tongcheng Travel Holdings (780 HK) has a solid FY23 and 4Q23 with massive net profit recovery. Earnings momentum for FY24 and FY25 look to stay impressive.
FY23 is a record year of profit, demonstrating its ability to gain market share after COVID-19 disruption. Further volume growth will lead to better operating leverage.
Net cash reached Rmb2.3bn, up 90.4% YoY, showcasing its cash-generating ability. The first-time dividend payout also reflected management's confidence on the outlook.


Tongcheng Travel (780 HK): Riding the High Tide

China Travel International Investment Hong Kong / Equity Bottom-Up

China Travel International Investment Hong Kong

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel International Investment Hong Kong (308 HK)</a> has an impressive 2024 CNY with the volume and revenue of its tourist attractions increased by 46% to 123% YoY.</li>
<li>Relative to 2019 CNY, most businesses have fully recovered. 1H23 earnings is the highest since 1H20 and the market may have underestimated 2H23, providing upside surprise potential. </li>
<li>The share price is still some 30% below the peak in late-2021 when earnings have yet to recover. Also, its net cash now equals 19% of the share price. </li>
</ul>



China Travel International Investment Hong Kong (308 HK) has an impressive 2024 CNY with the volume and revenue of its tourist attractions increased by 46% to 123% YoY.
Relative to 2019 CNY, most businesses have fully recovered. 1H23 earnings is the highest since 1H20 and the market may have underestimated 2H23, providing upside surprise potential. 
The share price is still some 30% below the peak in late-2021 when earnings have yet to recover. Also, its net cash now equals 19% of the share price. 


China Travel Intl Inv (308 HK): A Laggard that Sets to Catch Up

China

H World Group Limited is a hotel operator and franchisor. The Company provides hotel leasing, directly hotel operation, and co-development services. H World Group serves customers worldwide.

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H World Group (1179 HK)

Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

Fosun Tourism remains suspended, and we are awaiting an announcement. Speculation is that it involves privatisation by its parent, Fosun Intl....

Osbert Tang, CFA

HK/China: THE BIG SHORT (SQUEEZE)

Even though HK/China tech names have surged, short positions have not covered. The large underweight position in HK/China by international funds...

David Mudd

H World Group Limited (HTHT) - Thursday, Feb 8, 2024

Founder Qi Ji's strong track record in the hospitality industry has contributed to H World's success in navigating challenges and growing its...

Value Investors Club (VIC)

Tongcheng Travel (780 HK): Riding the High Tide

According to www.fliggy.com, outbound travel bookings during the 5-day Labour Day holiday have doubled this year. This was achieved on a high base...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): A Laggard that Sets to Catch Up

CTII shows tourist attractions volume and revenue growth in 2024 CNY, with the potential for upside surprise. We believe it is unjustified that...

Osbert Tang, CFA

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Fosun Tourism (1992 HK): Is Club Med Disposal Happening?

Fosun Tourism remains suspended, and we are awaiting an announcement. Speculation is that it involves privatisation by its parent, Fosun Intl....

Osbert Tang, CFA

HK/China: THE BIG SHORT (SQUEEZE)

Even though HK/China tech names have surged, short positions have not covered. The large underweight position in HK/China by international funds...

David Mudd

H World Group Limited (HTHT) - Thursday, Feb 8, 2024

Founder Qi Ji's strong track record in the hospitality industry has contributed to H World's success in navigating challenges and growing its...

Value Investors Club (VIC)

Tongcheng Travel (780 HK): Riding the High Tide

According to www.fliggy.com, outbound travel bookings during the 5-day Labour Day holiday have doubled this year. This was achieved on a high base...

Osbert Tang, CFA

China Travel Intl Inv (308 HK): A Laggard that Sets to Catch Up

​CTII shows tourist attractions volume and revenue growth in 2024 CNY, with the potential for upside surprise. We believe it is unjustified that...

Osbert Tang, CFA

CTII shows tourist attractions volume and revenue growth in 2024 CNY, with the potential for upside surprise. We believe it is unjustified that...