HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<ul>
<li>While <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a>'s FY24 result is at the low end of the positive profit alert range, its 2H24 net profit has still grown by 22.7%. </li>
<li>Better outlook at <a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 HK)</a> and margin improvement for logistics hubs will drive FY25. Upside will come from further gains at South China Logistics Park. </li>
<li>SZI's valuations of 5.9x PER, 8.4% yield, and 0.5x P/B for FY25F are attractive. As more deals are sealed to realise its asset value, its P/B discount will narrow.</li>
</ul>


While Shenzhen International (152 HK)'s FY24 result is at the low end of the positive profit alert range, its 2H24 net profit has still grown by 22.7%. 
Better outlook at Shenzhen Expressway (548 HK) and margin improvement for logistics hubs will drive FY25. Upside will come from further gains at South China Logistics Park. 
SZI's valuations of 5.9x PER, 8.4% yield, and 0.5x P/B for FY25F are attractive. As more deals are sealed to realise its asset value, its P/B discount will narrow.


Shenzhen Intl (152 HK): Delivered as Promised

<ul>
<li>The listing of Air China Cargo and progress on the transformation and upgrading of its South China Logistics Park again demonstrated <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a>'s asset value. </li>
<li>Its 8.8% stake in Air China Cargo is now valued at HK$10.6bn, or 61% of its market capitalisation, suggesting its other assets are almost free.</li>
<li>Government approval on the South China Logistics Park transformation Phase I has been obtained, implying potential land value gains to be booked. </li>
</ul>


The listing of Air China Cargo and progress on the transformation and upgrading of its South China Logistics Park again demonstrated Shenzhen International (152 HK)'s asset value. 
Its 8.8% stake in Air China Cargo is now valued at HK$10.6bn, or 61% of its market capitalisation, suggesting its other assets are almost free.
Government approval on the South China Logistics Park transformation Phase I has been obtained, implying potential land value gains to be booked. 


Shenzhen Intl (152 HK): Realisation of Asset Values

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> saw its FY23 earnings reaccelerated, supported by gains from the logistics park transformation business. Earnings even surged 169.1% YoY in 2H23. </li>
<li>REIT issuance on two logistics assets, increase in areas of logistics projects, gains from South China Logistics Park transformation, and better <a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway (548 HK)</a> will fuel FY24.</li>
<li>A better debt structure will save finance costs. Its 0.45x P/B, or 1.5SD below the 5-year average, is cheap given its proven ability to realise underlying asset value.</li>
</ul>



Shenzhen International (152 HK) saw its FY23 earnings reaccelerated, supported by gains from the logistics park transformation business. Earnings even surged 169.1% YoY in 2H23. 
REIT issuance on two logistics assets, increase in areas of logistics projects, gains from South China Logistics Park transformation, and better Shenzhen Expressway (548 HK) will fuel FY24.
A better debt structure will save finance costs. Its 0.45x P/B, or 1.5SD below the 5-year average, is cheap given its proven ability to realise underlying asset value.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a> has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.</li>
<li>The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.</li>
<li>The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.</li>
</ul>



Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
The sum equals a significant 9% of SZI's market capitalisation. The agreement also kick-started the project's long-term contribution, which may provide an income stream lasting 3-5 years.
The deal showcased SZI's ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.


Shenzhen Intl (152 HK): A Big Step Forward

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<strong><a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen International (152 HK)</a></strong> seeks to spin off logistic assets on a PRC exchange; and  51.56%-held <strong><a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway Co H (548 HK)</a></strong> intends to place out A shares.</li>
<li>Preceding my comments on SZ Int'l/SZ E'Way are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>



Shenzhen International (152 HK) seeks to spin off logistic assets on a PRC exchange; and  51.56%-held Shenzhen Expressway Co H (548 HK) intends to place out A shares.
Preceding my comments on SZ Int'l/SZ E'Way are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: SZ International's Logistics Spin-Offs

Hong Kong

Shenzhen International Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides investment, construction, and operation of logistic infrastructure facilities, as well as offers value-added logistic services. Shenzhen International serves customers worldwide.

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Shenzhen International (152 HK)

Shenzhen Intl (152 HK): Delivered as Promised

Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Realisation of Asset Values

Air China Cargo's listing and progress on the South China Logistics Park upgrade showcase SZI's asset values, with its 8.8% stake in Air China...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Decent Rebound

SZI's FY23 earnings surged and FY24 profit will be fuelled by REIT issuance, increased logistics projects, and better Shenzhen Expressway...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Big Step Forward

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

StubWorld: SZ International's Logistics Spin-Offs

The parent is seeking to extract value via this NDRC/CSRC pilot program. That is positive. And SZ Int'l is at a deep discount to NAV. I'd tilt to...

David Blennerhassett

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Shenzhen Intl (152 HK): Delivered as Promised

​Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Realisation of Asset Values

​Air China Cargo's listing and progress on the South China Logistics Park upgrade showcase SZI's asset values, with its 8.8% stake in Air China...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Decent Rebound

​SZI's FY23 earnings surged and FY24 profit will be fuelled by REIT issuance, increased logistics projects, and better Shenzhen Expressway...

Osbert Tang, CFA

Shenzhen Intl (152 HK): A Big Step Forward

​Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...

Osbert Tang, CFA

StubWorld: SZ International's Logistics Spin-Offs

The parent is seeking to extract value via this NDRC/CSRC pilot program. That is positive. And SZ Int'l is at a deep discount to NAV. I'd tilt to...

David Blennerhassett

Shenzhen Intl's 2H24 net profit grew 22.7%, with a positive FY25 outlook driven by Shenzhen Exp and logistics margin recovery. Valuations are...

Air China Cargo's listing and progress on the South China Logistics Park upgrade showcase SZI's asset values, with its 8.8% stake in Air China...

SZI's FY23 earnings surged and FY24 profit will be fuelled by REIT issuance, increased logistics projects, and better Shenzhen Expressway...

Shenzhen International receives Rmb1.058bn compensation for South China Logistics Park Phase I transformation, highlighting its ability to realize...