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>
<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

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>
<a href="https://www.smartkarma.com/entities/joy-city-property-ltd" target="_blank" data-smartkarma-citation="entities:10958:1" rel="noopener">Joy City Property (207 HK)</a>’s IFA opines that the share buyback by way of a scheme at HK$0.62 is fair and reasonable. The vote is on 17 November. </li>
<li>While the offer implies a P/B of 0.29x, it is reasonable compared to peer multiples and historical trading ranges. No disinterested shareholder holds a blocking stake.</li>
<li>Nevertheless, there remains vote risk and caution is warranted. At the current price and for a 4 December payment, the gross/annualised spread is 8.8%/103.6%. </li>
</ul>



Joy City Property (207 HK)’s IFA opines that the share buyback by way of a scheme at HK$0.62 is fair and reasonable. The vote is on 17 November. 
While the offer implies a P/B of 0.29x, it is reasonable compared to peer multiples and historical trading ranges. No disinterested shareholder holds a blocking stake.
Nevertheless, there remains vote risk and caution is warranted. At the current price and for a 4 December payment, the gross/annualised spread is 8.8%/103.6%. 


Joy City Property (207 HK): Wide Spread Ahead of the 17 November Scheme Vote

<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>'s FY24 net profit will range at HK$2.8-3.1bn (53-63% growth YoY), boosted by a HK$2.3bn gain from South China Logistics Park Transformation.</li>
<li>Extrapolating this gain to the whole land plot will generate a profit of HK$11.4bn, or 66% of the current market capitalisation. The stock is significantly undervalued at 0.49x P/B. </li>
<li>At an assumed 50% payout ratio, SZI's yield is at 9%. Moreover, with stable profit expected for FY25 and FY26, the yield will be maintained for the next two years.</li>
</ul>



Shenzhen International (152 HK)'s FY24 net profit will range at HK$2.8-3.1bn (53-63% growth YoY), boosted by a HK$2.3bn gain from South China Logistics Park Transformation.
Extrapolating this gain to the whole land plot will generate a profit of HK$11.4bn, or 66% of the current market capitalisation. The stock is significantly undervalued at 0.49x P/B. 
At an assumed 50% payout ratio, SZI's yield is at 9%. Moreover, with stable profit expected for FY25 and FY26, the yield will be maintained for the next two years.


Shenzhen Intl (152 HK): Good News from Positive Profit Alert

<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> is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  </li>
<li>Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.</li>
<li>Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.</li>
</ul>



Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.  
Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.


Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Hong Kong

Shenzhen Investment Limited, through its subsidiaries, develops and invests in properties, sells commercial and industrial goods, and provides transportation services.

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Shenzhen Investment (604 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): 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

Joy City Property (207 HK): Wide Spread Ahead of the 17 November Scheme Vote

While the offer is reasonable compared to peer multiples and historical trading ranges, there remains vote risk. For a 4 December payment, the...

Arun George

Shenzhen Intl (152 HK): Good News from Positive Profit Alert

Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

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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): 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

Joy City Property (207 HK): Wide Spread Ahead of the 17 November Scheme Vote

While the offer is reasonable compared to peer multiples and historical trading ranges, there remains vote risk. For a 4 December payment, the...

Arun George

Shenzhen Intl (152 HK): Good News from Positive Profit Alert

​Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...

Osbert Tang, CFA

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

Shenzhen Intl's FY23 result is a tad below consensus, but it still logged a decent 52% YoY increase. In particular, net profit surged 1.7x YoY in...

Osbert Tang, CFA

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

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

Shenzhen Intl's positive profit alert suggested FY24 net profit will grow by 53-63% YoY, boosted by the gain from South China Logistics Park...