HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<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> posted 11% profit decline for FY21, with Shenzhen Airlines the main drag. Stripping this and one-off items out, its bottom line would have grown by 46.6%.</li>
<li>Logistics growth pipeline is highly visible, and this adds to potential gains from logistics park transformation and strategic offload of matured and suitable projects through REIT or private fund.</li>
<li>The stock remains a deeply undervalued asset play at just 0.48x P/B. Its willingness to share gains with investors has put its dividend yield at 10.4% on current share price.</li>
</ul>



Shenzhen International (152 HK) posted 11% profit decline for FY21, with Shenzhen Airlines the main drag. Stripping this and one-off items out, its bottom line would have grown by 46.6%.
Logistics growth pipeline is highly visible, and this adds to potential gains from logistics park transformation and strategic offload of matured and suitable projects through REIT or private fund.
The stock remains a deeply undervalued asset play at just 0.48x P/B. Its willingness to share gains with investors has put its dividend yield at 10.4% on current share price.


Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value

<ul>
<li>By deconsolidating <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> (SZX) from <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> (SZI), SZI's net book value reached HK$16.4bn. Its current market cap of HK$18.9bn implies SZX is almost free. </li>
<li>SZI's high gearing is primarily due to SZX. Excluding SZX, SZI's gearing is just 32.3%. As Shenzhen's flagship SOE, there is consistent monitoring and huge support from the local government.   </li>
<li>SZI's 0.47x P/B is more than 2SD below historical average; but it has proven capability to realise value of underlying assets. Excluding SZX, SZI is on even cheaper 0.32x P/B. </li>
</ul>


By deconsolidating Shenzhen Expressway (548 HK) (SZX) from Shenzhen International (152 HK) (SZI), SZI's net book value reached HK$16.4bn. Its current market cap of HK$18.9bn implies SZX is almost free. 
SZI's high gearing is primarily due to SZX. Excluding SZX, SZI's gearing is just 32.3%. As Shenzhen's flagship SOE, there is consistent monitoring and huge support from the local government.   
SZI's 0.47x P/B is more than 2SD below historical average; but it has proven capability to realise value of underlying assets. Excluding SZX, SZI is on even cheaper 0.32x P/B. 


Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued

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.

Equity Capital Markets

Hangzhou SF Intra-city Industrial / Equity Capital Markets

Hangzhou SF Intra-city Industrial (9699 HK)

<ul>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-delivering-losses" target="_blank" data-smartkarma-citation="insights:61272" rel="noopener">SF Intra-City Industrial IPO: Delivering Losses</a>, we noted that SF Intra-city’s fundamentals are less than inspiring. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:61939" rel="noopener">SF Intra-City Industrial IPO: Valuation Insights</a>, we noted that the IPO price is unattractive in the context of its unappetizing mix of high growth at the cost of losses.  </li>
<li>The IPO price is HK$16.42 and it closed -9% lower in the grey market. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.  </li>
</ul>


In SF Intra-City Industrial IPO: Delivering Losses, we noted that SF Intra-city’s fundamentals are less than inspiring. 
In SF Intra-City Industrial IPO: Valuation Insights, we noted that the IPO price is unattractive in the context of its unappetizing mix of high growth at the cost of losses.  
The IPO price is HK$16.42 and it closed -9% lower in the grey market. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.  


SF Intra-City Industrial IPO: Trading Debut

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hangzhou-sf-intra-city-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:34916:1" rel="noopener">SF Intra-City (9699 HK)</a> is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-delivering-losses" target="_blank" data-smartkarma-citation="insights:61272" rel="noopener">SF Intra-City Industrial IPO: Delivering Losses</a>, we noted that SF Intra-city’s fundamentals are less than inspiring. </li>
<li>While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   </li>
</ul>



SF Intra-City (9699 HK) is the largest Chinese independent third-party on-demand delivery service provider. It launched an HKEx IPO to raise net proceeds of $273 million at the IPO mid-point. 
In SF Intra-City Industrial IPO: Delivering Losses, we noted that SF Intra-city’s fundamentals are less than inspiring. 
While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of losses/cash burn.   


SF Intra-City Industrial IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hangzhou-sf-intra-city-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:34916:1" rel="noopener">SF Intra-City (1874747D CH)</a> is the largest independent third-party on-demand delivery service provider in China. It is pre-marketing an HKEx IPO to raise up to $500 million, according to reports. </li>
<li>In <a href="https://www.smartkarma.com/insights/sf-intra-city-industrial-ipo-initiation-missed-delivery" target="_blank" data-smartkarma-citation="insights:60224" rel="noopener">SF Intra-City Industrial IPO Initiation: Missed Delivery</a>, we stated that it offers an unappetizing mix of high growth at the cost of gross losses and cash burn. </li>
<li>The PHIP which discloses 5M21 results continues to highlight the growth at all costs strategy. We continue to think that SF Intra-city’s fundamentals are less than inspiring. </li>
</ul>



SF Intra-City (1874747D CH) is the largest independent third-party on-demand delivery service provider in China. It is pre-marketing an HKEx IPO to raise up to $500 million, according to reports. 
In SF Intra-City Industrial IPO Initiation: Missed Delivery, we stated that it offers an unappetizing mix of high growth at the cost of gross losses and cash burn. 
The PHIP which discloses 5M21 results continues to highlight the growth at all costs strategy. We continue to think that SF Intra-city’s fundamentals are less than inspiring. 


SF Intra-City Industrial IPO: Delivering Losses

Hong Kong

Shenzhen International Holdings Limited invests in, constructs, and operates logistics infrastructure facilities, including logistics parks, toll roads, and ports. The company also provides third-party logistics services, logistics information services, and general environmental protection businesses, offering value-added services like intelligent warehousing and integrated cold chain solutions. The company is headquartered in Hong Kong.

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Shenzhen International (152 HK)

Shenzhen Intl (152 HK): More Room to Realise Underlying Asset Value

SZIH is an attractive asset play - it does not only has lots of hidden assets, but also the capability to turn them into profit and cash flow, and...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Deep Dissection Indicates Truly Undervalued

We deconsolidated Shenzhen Expressway from Shenzhen Intl and find that SZI is trading on very cheap 0.32x P/B based on its standalone net asset...

Osbert Tang, CFA

SF Intra-City Industrial IPO: Trading Debut

The IPO price is HK$16.42 and shares will be listed on 14 Dec. Our base-case DCF value of HK$15.44 per share is a 6% downside to the IPO price.

Arun George

SF Intra-City Industrial IPO: Valuation Insights

While the valuation is undemanding vs peers, we give the IPO a pass as SF Intra-city offers an unappetizing mix of high growth at the cost of...

Arun George

SF Intra-City Industrial IPO: Delivering Losses

SF Intra-city is pre-marketing an HKEx IPO to raise up to $500 m. The PHIP continues to show that it offers an unappetizing mix of high growth at...

Arun George

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