HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Shenzhen Zhaowei Machinery & Electronics / Equity Capital Markets

Shenzhen Zhaowei Machinery & Electronics (2692 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-zhaowei-machinery-a" target="_blank" data-smartkarma-citation="entities:46000:1" rel="noopener">Shenzhen Zhaowei Machinery (2692 HK)</a>'s IPO does not look attractive, as valuations are not cheap relative to peers, despite a steep 45.6% discount to A-share. </li>
<li>At the maximum IPO price of HK$73.68, Zhaowei will trade on a PER of 50.1x for FY26F and 40.8x for FY27F. Global peers are, on average, just 16.9x.</li>
<li>Even if we park its HA discount alongside its close peer, <a href="https://www.smartkarma.com/entities/zhejiang-sanhua-intelligent-controls-co-ltd" target="_blank" data-smartkarma-citation="entities:45277:1" rel="noopener">Zhejiang Sanhua Intelligent Controls (2050 HK)</a>, it will only mean 6.5% upside from the IPO price.</li>
</ul>



Shenzhen Zhaowei Machinery (2692 HK)'s IPO does not look attractive, as valuations are not cheap relative to peers, despite a steep 45.6% discount to A-share. 
At the maximum IPO price of HK$73.68, Zhaowei will trade on a PER of 50.1x for FY26F and 40.8x for FY27F. Global peers are, on average, just 16.9x.
Even if we park its HA discount alongside its close peer, Zhejiang Sanhua Intelligent Controls (2050 HK), it will only mean 6.5% upside from the IPO price.


Shenzhen Zhaowei (2692 HK) IPO: Limited Near-Term Upside

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>As per media reports <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial institutions.</li>
<li>In our prior series of notes, we had looked at the cross-shareholding across a swathe of companies, the largest of which was Toyota Motors.</li>
<li>In this note, we take a quick look at the possible shareholding unwind.</li>
</ul>


As per media reports Toyota Motor (7203 JP) (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial institutions.
In our prior series of notes, we had looked at the cross-shareholding across a swathe of companies, the largest of which was Toyota Motors.
In this note, we take a quick look at the possible shareholding unwind.


Aequitas: Toyota Motors Cross-Shareholding - Possible US$19bn Unwind, Might Not Be Soon

Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

<ul>
<li>Re-Rating delivered; stock now reflects spot copper (~$11.5k) and sustained mid-teens ROE, limiting multiple-led upside.</li>
<li>Non-Resource platforms (leasing, agri) are stabilizing earnings; further upside depends on faster platform scaling and capital returns.</li>
<li>Fair value ~¥4,550 on spot EPS; Hold bias with asymmetric downside if copper or FX turns.</li>
</ul>


Re-Rating delivered; stock now reflects spot copper (~$11.5k) and sustained mid-teens ROE, limiting multiple-led upside.
Non-Resource platforms (leasing, agri) are stabilizing earnings; further upside depends on faster platform scaling and capital returns.
Fair value ~¥4,550 on spot EPS; Hold bias with asymmetric downside if copper or FX turns.


Marubeni (8002 JP): Re-Rating Done, Spot Copper Priced In

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>On 14 November, media outlets reported that Sapphireterra has <a href="https://img1.wsimg.com/blobby/go/e7ddad68-3d70-4201-b3f3-16f665298127/downloads/055ae6dd-96a9-457f-baab-01eafcc12759/STC%20IS%20Press%20Release%202025-11-05%20E%20FINAL.pdf?ver=1763150335833" target="_blank" rel="noopener">sent a letter</a> to the <a href="https://www.smartkarma.com/entities/itochu-shokuhin-co-ltd" target="_blank" data-smartkarma-citation="entities:14985:1" rel="noopener">Itochu Shokuhin (2692 JP)</a> Board suggesting two strategic alternatives to improve shareholder returns. </li>
<li>Sapphireterra has suggested that <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> privatise Itochu-Shokuhin at JPY14,000, a 50.5% takeover premium. Due to the shareholder structure, Itochu does not need to be this generous.</li>
<li>Sapphireterra has also alternatively suggested JPY7,000 special dividend. The strong YTD share performance suggests no pressing need for the Board to act on this proposal. </li>
</ul>


On 14 November, media outlets reported that Sapphireterra has sent a letter to the Itochu Shokuhin (2692 JP) Board suggesting two strategic alternatives to improve shareholder returns. 
Sapphireterra has suggested that Itochu Corp (8001 JP) privatise Itochu-Shokuhin at JPY14,000, a 50.5% takeover premium. Due to the shareholder structure, Itochu does not need to be this generous.
Sapphireterra has also alternatively suggested JPY7,000 special dividend. The strong YTD share performance suggests no pressing need for the Board to act on this proposal. 


Itochu-Shokuhin (2692 JP): Itochu Likely to Shrug off Sapphireterra’s Privatisation Call

<ul>
<li>Earnings Growth: Non-resource engines (Food, FamilyMart, ICT, Textiles) compounding at double-digit rates; mid- to high-single-digit EPS growth outlook.</li>
<li>Valuation: Trades at ~13× FY2026E P/E, in line with peers, offering steady TSR without a valuation premium.</li>
<li>Capital Returns: ¥200/share dividend + ¥150 bn buybacks underpin 40–50% payout; EPS uplift from share reduction.</li>
</ul>


Earnings Growth: Non-resource engines (Food, FamilyMart, ICT, Textiles) compounding at double-digit rates; mid- to high-single-digit EPS growth outlook.
Valuation: Trades at ~13× FY2026E P/E, in line with peers, offering steady TSR without a valuation premium.
Capital Returns: ¥200/share dividend + ¥150 bn buybacks underpin 40–50% payout; EPS uplift from share reduction.


Itochu (8001 JP) — Structural Growth, Fair Valuation, Solid TSR

Japan

Mitsubishi Corporation is a general trading company.  The Company has business groups such as New Business Initiatives, IT & Electronics, Fuels, Metals, Machinery, Chemicals, Living Essentials, and Professional Services.  Mitsubishi diversifies by satellite communications through a joint venture.

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Mitsubishi Corp (8058 JP)

Shenzhen Zhaowei (2692 HK) IPO: Limited Near-Term Upside

Shenzhen Zhaowei Machinery's IPO is not particularly attractive at HK$73.68 due to high valuations compared to peers, despite a significant 45.6%...

Osbert Tang, CFA

Aequitas: Toyota Motors Cross-Shareholding - Possible US$19bn Unwind, Might Not Be Soon

As per media reports Toyota Motor (7203 JP) (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial...

Sumeet Singh

Marubeni (8002 JP): Re-Rating Done, Spot Copper Priced In

Stock has been re-rated to reflect current copper prices and earnings, with potential for further growth depending on platform scaling and capital...

Rahul Jain

Itochu-Shokuhin (2692 JP): Itochu Likely to Shrug off Sapphireterra’s Privatisation Call

Sapphireterra has suggested two proposals (privatisation by Itochu, special divs) to improve shareholder returns. The Board is likely to react to...

Arun George

Itochu (8001 JP) — Structural Growth, Fair Valuation, Solid TSR

Article highlights strong earnings growth in non-resource sectors, steady valuation in line with peers, and significant capital returns through...

Rahul Jain

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52-week Range

Market Cap (USDm)

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Shenzhen Zhaowei (2692 HK) IPO: Limited Near-Term Upside

​Shenzhen Zhaowei Machinery's IPO is not particularly attractive at HK$73.68 due to high valuations compared to peers, despite a significant 45.6%...

Osbert Tang, CFA

Aequitas: Toyota Motors Cross-Shareholding - Possible US$19bn Unwind, Might Not Be Soon

As per media reports Toyota Motor (7203 JP) (TMC) could be planning to unwind some of its US$19bn cross-shareholding by working with financial...

Sumeet Singh

Marubeni (8002 JP): Re-Rating Done, Spot Copper Priced In

​Stock has been re-rated to reflect current copper prices and earnings, with potential for further growth depending on platform scaling and capital...

Rahul Jain

Itochu-Shokuhin (2692 JP): Itochu Likely to Shrug off Sapphireterra’s Privatisation Call

Sapphireterra has suggested two proposals (privatisation by Itochu, special divs) to improve shareholder returns. The Board is likely to react to...

Arun George

Itochu (8001 JP) — Structural Growth, Fair Valuation, Solid TSR

​Article highlights strong earnings growth in non-resource sectors, steady valuation in line with peers, and significant capital returns through...

Rahul Jain

Shenzhen Zhaowei Machinery's IPO is not particularly attractive at HK$73.68 due to high valuations compared to peers, despite a significant 45.6%...

Stock has been re-rated to reflect current copper prices and earnings, with potential for further growth depending on platform scaling and capital...

Article highlights strong earnings growth in non-resource sectors, steady valuation in line with peers, and significant capital returns through...