HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Despite an overwhelming response and a 26-30% surge in the grey market, at 8.3x FY26 PER,  <a href="https://www.smartkarma.com/entities/chuangxin-industries" target="_blank" data-smartkarma-citation="entities:45636:1" rel="noopener">Chuangxin Industries (2788 HK)</a>'s IPO price does not generate much excitement for us. </li>
<li>Heavy reliance on connected transactions with the controlling shareholder, pressure on margins in the future, and a highly leveraged balance sheet are concerns. </li>
<li>We do not think it justifies trading at a premium to peers, hence, limited upside from now. The small free float, however, will increase the share price volatility.</li>
</ul>


Despite an overwhelming response and a 26-30% surge in the grey market, at 8.3x FY26 PER,  Chuangxin Industries (2788 HK)'s IPO price does not generate much excitement for us. 
Heavy reliance on connected transactions with the controlling shareholder, pressure on margins in the future, and a highly leveraged balance sheet are concerns. 
We do not think it justifies trading at a premium to peers, hence, limited upside from now. The small free float, however, will increase the share price volatility.


Chuangxin Industries (2788 HK): It Doesn't Pay to Be Aggressive

Equity Capital Markets

CNGR Advanced Material / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cngr-advanced-material-co-ltd-47ff2856-4dc1-492a-8394-03d69de02ce4" target="_blank" data-smartkarma-citation="entities:45994:1" rel="noopener">CNGR Advanced Material (2579 HK)</a>'s IPO price was fixed at the low end at HK$34.00. However, valuation is inexpensive, and initial price weakness is a long-term opportunity.</li>
<li>Three groups of close peers, including nickel-related companies, mining companies, and lithium/battery companies, trade on average FY26F PER of 21x, vs. CNGR's 12.5x.</li>
<li>By parking it with the steepest HA discount of its peers (26.2%), CNGR will be valued at HK$40.07, as its IPO price implies a massive 37.4% discount.</li>
</ul>



CNGR Advanced Material (2579 HK)'s IPO price was fixed at the low end at HK$34.00. However, valuation is inexpensive, and initial price weakness is a long-term opportunity.
Three groups of close peers, including nickel-related companies, mining companies, and lithium/battery companies, trade on average FY26F PER of 21x, vs. CNGR's 12.5x.
By parking it with the steepest HA discount of its peers (26.2%), CNGR will be valued at HK$40.07, as its IPO price implies a massive 37.4% discount.


CNGR Advanced Material (2579 HK): Opportunity Is Out There

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 157 stocks over the last week. The average A-H premium was 62.2% as of Oct 31st.</li>
<li>The average A-H premium changed by 2.3ppt week-on-week, led by consumer discretionary, information technology, financials and offset by real estate.</li>
<li>We highlight weekly changes in A-H premium for Sinotrans, Jiangxi Copper, Everbright Securities, Guangzhou Automobile.</li>
</ul>


We analyse the changes of A-H premium on 157 stocks over the last week. The average A-H premium was 62.2% as of Oct 31st.
The average A-H premium changed by 2.3ppt week-on-week, led by consumer discretionary, information technology, financials and offset by real estate.
We highlight weekly changes in A-H premium for Sinotrans, Jiangxi Copper, Everbright Securities, Guangzhou Automobile.


A-H Premium Weekly (Oct 31st): Sinotrans, Jiangxi Copper, Everbright Securities

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 24th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics, China Mobile, Meituan, SMIC, Laopu Gold.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 24th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics, China Mobile, Meituan, SMIC, Laopu Gold.


HK Connect Flows Weekly (Oct 24th): Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Oct 10th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period.</li>
<li>We highlight short changes in Bidu, Hua Hong Semiconductor, Pop Mart Intl, Hang Seng Bank, Xiaomi.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Oct 10th.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short changes in Bidu, Hua Hong Semiconductor, Pop Mart Intl, Hang Seng Bank, Xiaomi.


HK Short Interest Weekly: Bidu, Hua Hong Semiconductor, Pop Mart Intl, Hang Seng Bank, Xiaomi

China

Jiangxi Copper is China's largest integrated copper producer, involved in the exploration, mining, smelting, and refining of copper. The company also produces gold, silver, lead, zinc, rare metals, and sulfuric acid, and engages in trade, financial services, and logistics. It was founded in 1979 and is headquartered in Nanchang, Jiangxi Province, China.

Price Gauge
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Jiangxi Copper (358 HK)

Chuangxin Industries (2788 HK): It Doesn't Pay to Be Aggressive

Chuangxin's IPO fails to excite despite a grey market surge, with concerns over connected transactions, margin pressure, and leverage. Limited...

Osbert Tang, CFA

CNGR Advanced Material (2579 HK): Opportunity Is Out There

CNGR Advanced Material's IPO price fixed at low end due to lukewarm response, but valuation seen as inexpensive compared to close peers in nickel,...

Osbert Tang, CFA

A-H Premium Weekly (Oct 31st): Sinotrans, Jiangxi Copper, Everbright Securities

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Sinotrans, Jiangxi Copper, Everbright Securities, Guangzhou...

Ke Yan, CFA, FRM

HK Connect Flows Weekly (Oct 24th): Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics,...

Ke Yan, CFA, FRM

HK Short Interest Weekly: Bidu, Hua Hong Semiconductor, Pop Mart Intl, Hang Seng Bank, Xiaomi

We analyzed the latest HK SFC report for aggregate short position as of Oct 10th and highlight short interest changes in Bidu, Hua Hong...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Chuangxin Industries (2788 HK): It Doesn't Pay to Be Aggressive

​Chuangxin's IPO fails to excite despite a grey market surge, with concerns over connected transactions, margin pressure, and leverage. Limited...

Osbert Tang, CFA

CNGR Advanced Material (2579 HK): Opportunity Is Out There

​CNGR Advanced Material's IPO price fixed at low end due to lukewarm response, but valuation seen as inexpensive compared to close peers in nickel,...

Osbert Tang, CFA

A-H Premium Weekly (Oct 31st): Sinotrans, Jiangxi Copper, Everbright Securities

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Sinotrans, Jiangxi Copper, Everbright Securities, Guangzhou...

Ke Yan, CFA, FRM

HK Connect Flows Weekly (Oct 24th): Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Alibaba, CNOOC, Pop Mart Intl, Duality Biotherapeutics,...

Ke Yan, CFA, FRM

HK Short Interest Weekly: Bidu, Hua Hong Semiconductor, Pop Mart Intl, Hang Seng Bank, Xiaomi

We analyzed the latest HK SFC report for aggregate short position as of Oct 10th and highlight short interest changes in Bidu, Hua Hong...

Ke Yan, CFA, FRM

Chuangxin's IPO fails to excite despite a grey market surge, with concerns over connected transactions, margin pressure, and leverage. Limited...

CNGR Advanced Material's IPO price fixed at low end due to lukewarm response, but valuation seen as inexpensive compared to close peers in nickel,...