HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Sa Sa International Hldgs / Equity Bottom-Up

<ul>
<li>Market expectation for FY23/24 earnings of <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a> is overly conservative. It achieved HK$110-125m of profit in 1H, and 2H is the normal peak season.</li>
<li>Offline sales in 2Q23/24 recovered to 47.2% of the 2019 level and the rebound in mainland tourist arrivals should boost sales over the next 12 months. </li>
<li>Lower rent costs should allow for higher operating leverage as revenue revives. Its gross margin for 1H23/24 has further expanded and we think this trend can be sustained. </li>
</ul>


Market expectation for FY23/24 earnings of Sa Sa International Hldgs (178 HK) is overly conservative. It achieved HK$110-125m of profit in 1H, and 2H is the normal peak season.
Offline sales in 2Q23/24 recovered to 47.2% of the 2019 level and the rebound in mainland tourist arrivals should boost sales over the next 12 months. 
Lower rent costs should allow for higher operating leverage as revenue revives. Its gross margin for 1H23/24 has further expanded and we think this trend can be sustained. 


Sa Sa Intl (178 HK): Revival Well on Track

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>The share price of <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a> has not moved and lagged behind other transport operators in Asia.</li>
<li>High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.</li>
<li>The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come. </li>
</ul>


The share price of MTR Corp (66 HK) has not moved and lagged behind other transport operators in Asia.
High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.
The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come. 


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. </li>
<li>Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.</li>
<li>The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. </li>
</ul>


Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 


<ul>
<li>We think <a href="https://www.smartkarma.com/entities/sa-sa-international-hldgs" target="_blank" data-smartkarma-citation="entities:20143:1" rel="noopener">Sa Sa International Hldgs (178 HK)</a>'s risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  </li>
<li>Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.</li>
<li>Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. </li>
</ul>


We think Sa Sa International Hldgs (178 HK)'s risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  
Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.
Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. 


Sa Sa Intl (178 HK): Is It Too Late to Buy Now?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hang Seng Composite Index (HSCI) there are 36 inclusions and 29 deletions, taking the number of index constituents up to 500.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. Secondary Listings are not eligible for inclusion in the Stock Connect program.Of the 36 inclusions, 4 are already a part of Stock Connect by virtue of having listed A-shares, 2 are Secondary listings and will not be included in Stock Connect, 9 will be added to Shanghai and Shenzhen Stock Connect, while 21 stocks will only be added to Shenzhen Stock Connect.Of the 29 index deletions, 13 are not a part of Stock Connect, 7 will continue to remain a part of Stock Connect by virtue of having listed A-shares, while 9 will be deleted from the Stock Connect program.We identify 4 stocks that could sell off ahead of their removal from the Stock Connect Buy list, while Biotech stocks could be in focus ahead of their inclusion in the Stock Connect Buy and Sell list.

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

Hong Kong

Sa Sa International Holdings Limited, through its subsidiaries, retails and wholesales cosmetics. The Company also provides beauty and health club services to members.

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Sa Sa International Hldgs (178 HK)

Sa Sa Intl (178 HK): Revival Well on Track

Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...

Osbert Tang, CFA

MTR (66): Should Start to Move

MTR share price has not moved up although the statistics have improved tremendously. This is probably a good buying opportunity although it may be...

Henry Soediarko

Poya International: Key Catalysts

Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market...

Douglas Kim

Sa Sa Intl (178 HK): Is It Too Late to Buy Now?

It is still not too late to get into Sa Sa now, even after the sharp rally since end-Nov. Consensus profit forecasts may have underestimated the...

Osbert Tang, CFA

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

There are 36 inclusions/ 29 exclusions for the Hang Seng Composite Index. 9 stocks will be deleted from the Stock Connect Buy list & there are a...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Sa Sa Intl (178 HK): Revival Well on Track

​Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...

Osbert Tang, CFA

MTR (66): Should Start to Move

MTR share price has not moved up although the statistics have improved tremendously. This is probably a good buying opportunity although it may be...

Henry Soediarko

Poya International: Key Catalysts

Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market...

Douglas Kim

Sa Sa Intl (178 HK): Is It Too Late to Buy Now?

It is still not too late to get into Sa Sa now, even after the sharp rally since end-Nov. Consensus profit forecasts may have underestimated the...

Osbert Tang, CFA

HSCI Index Rebalance & Stock Connect: Inclusions & Exclusions

There are 36 inclusions/ 29 exclusions for the Hang Seng Composite Index. 9 stocks will be deleted from the Stock Connect Buy list & there are a...

Brian Freitas

Market expectation for FY23/24 earnings of Sa Sa is too conservative. Strong 1H profits and rebounding sales indicate growth potential. Lower rent...