Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Cafe De Coral Holdings / Equity Bottom-Up

<ul>
<li>Hong Kong's hospitality industry has endured three years of upheaval, first with the democracy protestors in 2019, which slowed inbound, followed by the onset of Covid in early 2020.</li>
<li>Beginning today, 21 April, the Government commenced the relaxation of most social distancing measures, to be eased over three phases.</li>
<li>This evolving dynamic is welcome, yet the progress and recovery for many operators may be gradual.</li>
</ul>


Hong Kong's hospitality industry has endured three years of upheaval, first with the democracy protestors in 2019, which slowed inbound, followed by the onset of Covid in early 2020.
Beginning today, 21 April, the Government commenced the relaxation of most social distancing measures, to be eased over three phases.
This evolving dynamic is welcome, yet the progress and recovery for many operators may be gradual.


Hong Kong F&B: Stock Screening As Social-Distancing Curbs Ease

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The sharp surge in Omicron-driven local cases has driven more stringent measures by local governments. On ground in Shanghai, we see more tightened measures being implemented over the weekend. </li>
<li>The measures will reduce a lot of foot traffic and lower discretionary spending appetite in Mar, and this will negatively weigh on many 1Q22 results to be announced in late-Apr. </li>
<li>We advocate a long staples, short discretionary strategy in the near term. Also, travel sector will be hit, and on net-net basis, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> looks to be a loser.</li>
</ul>


The sharp surge in Omicron-driven local cases has driven more stringent measures by local governments. On ground in Shanghai, we see more tightened measures being implemented over the weekend. 
The measures will reduce a lot of foot traffic and lower discretionary spending appetite in Mar, and this will negatively weigh on many 1Q22 results to be announced in late-Apr. 
We advocate a long staples, short discretionary strategy in the near term. Also, travel sector will be hit, and on net-net basis, Meituan (3690 HK) looks to be a loser.


China on the Ground: Escalating Measures to Combat Omicron and What Stocks Are Impacted?

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a>  is an HK and China play on the instant noodle that is a highly preferred necessity during the lockdown.</li>
<li>Wheat is a major raw material for noodles and the Russian invasion of Ukraine has driven the wheat price higher. </li>
<li>So far, Nissin Food Co's share price has held up and outperformed Hang Seng but <a href="https://www.smartkarma.com/entities/indofood-cbp-sukses-makmur-tbk" target="_blank" data-smartkarma-citation="entities:17651:1" rel="noopener">Indofood CBP Sukses (ICBP IJ)</a> could provide a reference. Short.</li>
</ul>



Nissin Foods (1475 HK)  is an HK and China play on the instant noodle that is a highly preferred necessity during the lockdown.
Wheat is a major raw material for noodles and the Russian invasion of Ukraine has driven the wheat price higher. 
So far, Nissin Food Co's share price has held up and outperformed Hang Seng but Indofood CBP Sukses (ICBP IJ) could provide a reference. Short.


Nissin Food Co (1475): Wheat Price Increase Erodes Margin

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 19 based on HKEx daily reports.</li>
<li>In the past 7 days, top 3 companies that repurchased the most shares from the market were China Medical System (867.HK), Kangji Medical (9997.HK), Nissin Foods (1475.HK).</li>
<li>In the past 30 days, top 3 companies that repurchased the most shares from the market were China Gas (384.HK), Sihuan Pharmaceutical (460.HK), Fosun International (656.HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 19 based on HKEx daily reports.
In the past 7 days, top 3 companies that repurchased the most shares from the market were China Medical System (867.HK), Kangji Medical (9997.HK), Nissin Foods (1475.HK).
In the past 30 days, top 3 companies that repurchased the most shares from the market were China Gas (384.HK), Sihuan Pharmaceutical (460.HK), Fosun International (656.HK).


Hong Kong Buybacks: China Medical System, Kangji, Nissin Foods

<a href="https://www.smartkarma.com/entities/yihai-int-l-holding-ltd" target="_blank" data-smartkarma-citation="entities:22803:1" rel="noopener">Yihai Int’L Holding (1579 HK)</a> was trading at par with <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to <a href="https://www.smartkarma.com/entities/nissin-foods-co-ltd" target="_blank" data-smartkarma-citation="entities:26062:1" rel="noopener">Nissin Foods (1475 HK)</a> although Yihai's share price is still massively underperforming Nissin Food Holdings'.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/131/original/image_48603681281635075064982.png?1635075064" class="editor-image img-responsive" data-smartkarma-image-id="237131"></figure>
<div class="content-remarks">
source: Reuters
</div>

Yihai Int’L Holding (1579 HK) was trading at par with Haidilao (6862 HK) although the former has previously been the market’s darling due to its less capital intensive and higher-margin business. But the fall during COVID was worse for Yihai compared to Haidialo as investors rushed to cash out their unrealized profit, ignoring the fact that Yihai’s previously smaller business in providing ready-to-eat food products which is essentially what the market wanted at that time, has grown bigger, and has become the differentiator during the difficult period hence maintaining respectable earnings multiples compared to Haidilao whose earnings multiple has gone through to the roof. Only recently, post the vaccine discovery, Haidilao’s earnings multiple normalized but it is still trading at almost twice as much of Yihai (92 to 50).
On a YTD basis, however, both share prices have been heavily correlated although 1) Haidilao’s revenue growth slowed considerably, 2) Yihai’s diversification away from being Haidilao’s supplier have shown result and 3) the earnings multiples differences are still persistent although it has narrowed. This begs to question that shouldn’t Yihai’s share price trading higher than Haidilao?
Yihai's share price is currently highly correlated to Haidilao although its business has become less and less correlated to the former and has pivoted away from providing condiments to Haidilao to manufacture ready-to-eat food products hence the business nature is more similar to Nissin Foods (1475 HK) although Yihai's share price is still massively underperforming Nissin Food Holdings'.


source: Reuters


Yihai International (1579): Diversified Away from Haidilao

Hong Kong

Nissin Foods Company Limited ("Nissin Foods”, together with its subsidiaries, the “Group”; Stock code: 1475) is a renowned food company in Hong Kong and Mainland China, with a diversified portfolio of well-known and highly popular brands, primarily focusing on the premium instant noodle segment. The Group officially established its presence in Hong Kong in 1984 and is the largest instant noodle company in Hong Kong. The Group primarily manufactures and sells instant noodles, high-quality frozen food products, including frozen dim sum and frozen noodles, and also sells and distributes other food and beverage products, including retort pouches, snacks, mineral water, sauce and vegetable products under its two core corporate brands, namely “NISSIN (日清)” and “DOLL (公仔)” together with a diversified portfolio of iconic household premium brands. The Group’s five flagship product brands, namely “Cup Noodles (合味道)”, “Demae Iccho (出前一丁)”, “Doll Instant Noodle (公仔麵)”, “Doll Dim Sum (公仔點心)” and “Fuku (福)” are also among the most popular choices in their respective food product categories in Hong Kong. In the Mainland China market, the Group has introduced technology innovation through the “ECO Cup” concept and primarily focuses its sales efforts in first- and second-tier cities. In addition, Nissin Foods operates business in other Asian regions including Vietnam, Taiwan and Korea markets. 

Nissin Foods is currently a constituent of five Hang Seng Indexes, namely: Hang Seng Composite Index, Hang Seng Composite SmallCap Index, Hang Seng Composite Industry Index - Consumer Staples, Hang Seng SCHK Consumption Index and Hang Seng SCHK Consumer Staples Index. Nissin Foods is eligible for trading under Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect. For more information, please visit www.nissingroup.com.hk.

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Nissin Foods (1475 HK)

China on the Ground: Escalating Measures to Combat Omicron and What Stocks Are Impacted?

Omicron combating measures have been stepped up over the weekend and this will make a dent on the Mar operations of many companies. This will be...

Osbert Tang, CFA

Nissin Food Co (1475): Wheat Price Increase Erodes Margin

The increase in the revenues may not able to cover the loss from the increase in raw material cost. ICBP share price is a tell-tale sign. Nissin...

Henry Soediarko

Hong Kong Buybacks: China Medical System, Kangji, Nissin Foods

We highlight the top 3 companies that repurchased the most shares in HK were China Medical System Holdings Limited (867 HK), Kangji Medical (9997...

Ke Yan, CFA, FRM

Yihai International (1579): Diversified Away from Haidilao

Mispriced Yihai Intl - share price highly correlated with Haidilao although it has diversified away by growing its ready-to-eat food business that...

Henry Soediarko

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Hong Kong F&B: Stock Screening As Social-Distancing Curbs Ease

I'm inclined to pursue pure-restaurant outlet/venue companies, as oppsed to those with hotel operations, the latter of which remains highly...

David Blennerhassett

China on the Ground: Escalating Measures to Combat Omicron and What Stocks Are Impacted?

Omicron combating measures have been stepped up over the weekend and this will make a dent on the Mar operations of many companies. This will be...

Osbert Tang, CFA

Nissin Food Co (1475): Wheat Price Increase Erodes Margin

The increase in the revenues may not able to cover the loss from the increase in raw material cost. ICBP share price is a tell-tale sign. Nissin...

Henry Soediarko

Hong Kong Buybacks: China Medical System, Kangji, Nissin Foods

We highlight the top 3 companies that repurchased the most shares in HK were China Medical System Holdings Limited (867 HK), Kangji Medical (9997...

Ke Yan, CFA, FRM

Yihai International (1579): Diversified Away from Haidilao

Mispriced Yihai Intl - share price highly correlated with Haidilao although it has diversified away by growing its ready-to-eat food business that...

Henry Soediarko