HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Shenzhen Kinwong Electronic / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shenzhen-kinwong-electronic-co-ltd" target="_blank" data-smartkarma-citation="entities:58633:1" rel="noopener">Shenzhen Kinwong Electronic (3228 HK)</a>'s IPO is seeking HK$4.96bn, though priced at a steep 45.9% discount to the A-share, the absolute PER is not cheap.</li>
<li>The key strengths lie in its comprehensive product portfolio, strong market reputation, and strategic partnerships with global customers. </li>
<li>We value it at 32.7x PER for FY26, in line with the global peer average, meaning a price of HK$80.15. But this is not without risks, given potential earnings disappointment.</li>
</ul>



Shenzhen Kinwong Electronic (3228 HK)'s IPO is seeking HK$4.96bn, though priced at a steep 45.9% discount to the A-share, the absolute PER is not cheap.
The key strengths lie in its comprehensive product portfolio, strong market reputation, and strategic partnerships with global customers. 
We value it at 32.7x PER for FY26, in line with the global peer average, meaning a price of HK$80.15. But this is not without risks, given potential earnings disappointment.


Shenzhen Kinwong (3228 HK) IPO: Marginally Attractive

Thematic (Sector/Industry)

<ul>
<li>Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.</li>
<li>
<a href="https://www.smartkarma.com/entities/vesync" target="_blank" data-smartkarma-citation="entities:31067:1" rel="noopener">Vesync (2148 HK)</a>, <a href="https://www.smartkarma.com/entities/chervon-holdings-limited" target="_blank" data-smartkarma-citation="entities:35309:1" rel="noopener">Chervon Holdings (2285 HK)</a>, and <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> are more exposed given their significant US sales yet most production is still in China. </li>
<li>While the US generated over 50% of the revenue of <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Industries (669 HK)</a> and <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a>, they are less exposed given their worldwide manufacturing presence. </li>
</ul>


Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.

Vesync (2148 HK), Chervon Holdings (2285 HK), and AAC Technologies Holdings (2018 HK) are more exposed given their significant US sales yet most production is still in China. 
While the US generated over 50% of the revenue of Techtronic Industries (669 HK) and Nexteer Automotive (1316 HK), they are less exposed given their worldwide manufacturing presence. 


China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

Shenton Research

Shenton Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 11th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent, China Mobile, Innovent Bio, Zijin Mining.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 11th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent, China Mobile, Innovent Bio, Zijin Mining.


HK Connect Flows Weekly (Sep 11th): Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent

<ul>
<li>With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.</li>
<li>
<a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a>, while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. </li>
<li>Based on the gearing level, floating rate proportion, and YTD performance, <a href="https://www.smartkarma.com/entities/new-world-development" target="_blank" data-smartkarma-citation="entities:7037:1" rel="noopener">New World Development (17 HK)</a> and <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> are the two potential best bets.</li>
</ul>


With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.

Sands China (1928 HK), while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. 
Based on the gearing level, floating rate proportion, and YTD performance, New World Development (17 HK) and Hang Lung Properties (101 HK) are the two potential best bets.


HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the rankings of potential ADDs and potential DELs for the December 2026 index rebal event.</li>
<li>At present, we see two changes based on the latest data but the rankings can change until 30th September 2026.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the December 2026 index rebal event.
At present, we see two changes based on the latest data but the rankings can change until 30th September 2026.


Quiddity Leaderboard HSCEI Dec26: Two ADDs/DELs Likely

China

Shenzhou International Group Holdings Limited is a vertically integrated knitwear manufacturer. The company produces knitted sportswear, casual wear, and lingerie, and offers services such as customized fabrics, dyeing, finishing, printing, embroidery, cutting, and sewing. It is headquartered in Hong Kong and was founded in 2005.

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Shenzhou International (2313 HK)

Shenzhen Kinwong (3228 HK) IPO: Marginally Attractive

Shenzhen Kinwong's IPO is seeking HK$4.96bn, though priced at a steep 45.9% discount to the A-share, the absolute PER is not cheap. We are also...

Osbert Tang, CFA

China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

With the Trump administration announcing global reciprocal tariffs, even companies with manufacturing presence in other countries will suffer...

Osbert Tang, CFA

HK Connect Flows Weekly (Sep 11th): Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for Smic, Bidu, Hua Hong Semi, Zj Innolight, Xiaomi, Tencent,...

Ke Yan, CFA, FRM

HK Strategy: Rate Cut Beneficiaries - Fixed & Floating Rate Debt Analysis

With the Fed hinting at a slower rate cut path, the beneficiaries mentioned in this Insight will turn to suffer more. The names with the highest...

Osbert Tang, CFA

Quiddity Leaderboard HSCEI Dec26: Two ADDs/DELs Likely

One of our expected DELs have more than 1x ADV to trade. The other names have less than 1x ADV to trade. However, our flow expectations can change...

Janaghan Jeyakumar, CFA

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