HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-international-marine-cntnrs-gp-ltd" target="_blank" data-smartkarma-citation="entities:11752:1" rel="noopener">China International Marine Cntnrs Gp (2039 HK)</a>'s positive profit alert suggested a very solid performance for <a href="https://www.smartkarma.com/entities/singamas-container-holdings" target="_blank" data-smartkarma-citation="entities:13602:1" rel="noopener">Singamas Container Holdings (716 HK)</a> in 4Q24. </li>
<li>Annualising Singamas' 1H24 earnings for the full year will mean a 78% profit surge in 2H24, but this is still conservative - CIMC's 2H24 profit leaped 93x YoY.</li>
<li>Trading on 6x PER, versus CIMC's 10.3x, the stock is cheap. Net cash equals 86% of market capitalisation, potentially providing a yield higher than the 8.8% currently projected.</li>
</ul>



China International Marine Cntnrs Gp (2039 HK)'s positive profit alert suggested a very solid performance for Singamas Container Holdings (716 HK) in 4Q24. 
Annualising Singamas' 1H24 earnings for the full year will mean a 78% profit surge in 2H24, but this is still conservative - CIMC's 2H24 profit leaped 93x YoY.
Trading on 6x PER, versus CIMC's 10.3x, the stock is cheap. Net cash equals 86% of market capitalisation, potentially providing a yield higher than the 8.8% currently projected.


Singamas (716 HK): Further Positive Indications from CIMC Profit Alert

Orient Overseas (International) / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas International (316 HK)</a> sits on decent yields of 12% for FY24 and 9.6% for FY25. Its net cash (66.2% of the share price) can support such dividends.</li>
<li>Despite the retreat from the recent peak, the spot freight rates are 9.7% and 145% higher than 1H24 and 2H23 respectively, pointing to better 2H24 earnings.</li>
<li>Operationally, it recorded the first YoY realised rate increase in 2Q24 after 6 quarters of consecutive decline. Its load factor also grew 2.3pp YoY in the quarter.</li>
</ul>



Orient Overseas International (316 HK) sits on decent yields of 12% for FY24 and 9.6% for FY25. Its net cash (66.2% of the share price) can support such dividends.
Despite the retreat from the recent peak, the spot freight rates are 9.7% and 145% higher than 1H24 and 2H23 respectively, pointing to better 2H24 earnings.
Operationally, it recorded the first YoY realised rate increase in 2Q24 after 6 quarters of consecutive decline. Its load factor also grew 2.3pp YoY in the quarter.


Orient Overseas Intl (316 HK): Don't Overlook Its Yield, Backed by Net Cash

Thematic (Sector/Industry)

<ul>
<li>The top ten highest-yielding stocks under our coverage have an average yield of 7.4% for FY25F and 7.2% for FY26F, attractive amid the declining interest rate environment.</li>
<li>
<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a>, <a href="https://www.smartkarma.com/entities/anhui-expressway-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5236:1" rel="noopener">Anhui Expressway Co Ltd H (995 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-railway-signal-communication-co-ltd" target="_blank" data-smartkarma-citation="entities:613:1" rel="noopener">China Railway Signal &amp; Communication (3969 HK)</a> are better quality ones with 6-7% average yield.</li>
<li>Chinese airlines are low on yields given they are still loss-making, but they have a good earnings rebound in 2H25, making them suitable for aggressive investors.</li>
</ul>


The top ten highest-yielding stocks under our coverage have an average yield of 7.4% for FY25F and 7.2% for FY26F, attractive amid the declining interest rate environment.

Sinotrans (598 HK), Anhui Expressway Co Ltd H (995 HK), and China Railway Signal &amp; Communication (3969 HK) are better quality ones with 6-7% average yield.
Chinese airlines are low on yields given they are still loss-making, but they have a good earnings rebound in 2H25, making them suitable for aggressive investors.


China & HK Strategy: The High-Yield Playbook

<ul>
<li>For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. </li>
<li>The best growth rates are at <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a>, <a href="https://www.smartkarma.com/entities/china-international-capital-corporation-ltd" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">CICC (3908 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-capital-international-airport-bcia" target="_blank" data-smartkarma-citation="entities:10626:1" rel="noopener">Beijing Capital Intl Airport (694 HK)</a>, <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel (780 HK)</a>, and <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC Intl (1308 HK)</a>. </li>
<li>The worst ones are <a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel Intl (308 HK)</a>, <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transp (1138 HK)</a>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">CTG Duty Free (1880 HK)</a>, and <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin (2343 HK)</a>. </li>
</ul>


For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. 
The best growth rates are at China National Building Material (3323 HK), CICC (3908 HK), Beijing Capital Intl Airport (694 HK), Tongcheng Travel (780 HK), and SITC Intl (1308 HK). 
The worst ones are China Travel Intl (308 HK), Cosco Shipping Energy Transp (1138 HK), China Southern Airlines (1055 HK), CTG Duty Free (1880 HK), and Pacific Basin (2343 HK). 


China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

<p>On Tuesday morning we spoke to Mr. S.S. Teo, Managing Director of Pacific International Lines (PIL). PIL is a private, family-owned container carrier currently ranked number thirteen world-wide in terms of fleet carrying capacity (about 376,000 TEUs according to Alphaliner). PIL has a strong presence in trades between East Asia and India, the Middle East, and Africa, and a much smaller presence in the larger trades connecting Asia, North America, and Europe; it mainly serves these latter markets…</p>

On Tuesday morning we spoke to Mr. S.S. Teo, Managing Director of Pacific International Lines (PIL). PIL is a private, family-owned container carrier currently ranked number thirteen world-wide in terms of fleet carrying capacity (about 376,000 TEUs according to Alphaliner). PIL has a strong presence in trades between East Asia and India, the Middle East, and Africa, and a much smaller presence in the larger trades connecting Asia, North America, and Europe; it mainly serves these latter markets…

Pacific International Lines' MD Discusses Container Sector Consolidation: 'Fewer Weddings' in 2017

Hong Kong

Singamas Container is a leading manufacturer of various containers, including dry freight, specialized, tank, and offshore containers. The company also operates container depots and provides logistics services such as storage, repair, and handling. It was founded in 1988 and is headquartered in Hong Kong.

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Singamas Container (716 HK)

Singamas (716 HK): Further Positive Indications from CIMC Profit Alert

Singamas announced an FY24 positive profit alert, expecting a net profit of at least US$30m, with 54.3% YoY growth. The key reasons are strong...

Osbert Tang, CFA

Orient Overseas Intl (316 HK): Don't Overlook Its Yield, Backed by Net Cash

Supported by net cash, OOIL offers attractive yields of 12% and 9.6% for FY24 and FY25. Improving operational performance points to a positive 2H24...

Osbert Tang, CFA

China & HK Strategy: The High-Yield Playbook

With the increase in volatility in the near term due to the uncertainties from potentially higher tariffs and the Trump-Xi meeting in APEC, there...

Osbert Tang, CFA

China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

The companies under our coverage are expected to report 16.8% earnings growth for 1H25, with 2Q25 accelerating to 30.8%. Top performers include...

Osbert Tang, CFA

Pacific International Lines' MD Discusses Container Sector Consolidation: 'Fewer Weddings' in 2017

On Tuesday morning we spoke to Mr. S.S. Teo, Managing Director of Pacific International Lines (PIL). PIL is a private, family-owned container...

Daniel Hellberg

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