Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Equity Bottom-Up

<ul>
<li>Cost and business optimisations lead to increased profits as revenues drop due to freight rate declines</li>
<li>Successfully pivoting by geography as the global trading environment changes</li>
<li>The company increases its dividend payout in a sign of confidence for the future</li>
</ul>


Cost and business optimisations lead to increased profits as revenues drop due to freight rate declines
Successfully pivoting by geography as the global trading environment changes
The company increases its dividend payout in a sign of confidence for the future


<ul>
<li>A Profit-Oriented State Owned Enterprise that is walking the walk.</li>
<li>Management incentives are aligned with shareholders, a rarity in China.</li>
<li>Plenty of upside remains despite the market outperformance to date</li>
</ul>


A Profit-Oriented State Owned Enterprise that is walking the walk.
Management incentives are aligned with shareholders, a rarity in China.
Plenty of upside remains despite the market outperformance to date


Sinotrans (598.HK), a Shining Example of SOE Reform

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>Recurring profit for <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> increased 16.4% in 1H22 and improved to 16.6% in 2Q22. The declaration of an interim dividend also highlights management's confidence.</li>
<li>We expect a pick-up in 2H22 as negative impact of the lockdowns faded. Also, contribution from DHL-Sinotrans should return to growth as international express regain momentum.</li>
<li>Strong financial position should allow for higher dividend payout, and currently it is already yielding 10.4%. Its 3.6x PER and 0.4x P/B are cheap, especially relative to ROE of 11.3%.</li>
</ul>


Recurring profit for Sinotrans (598 HK) increased 16.4% in 1H22 and improved to 16.6% in 2Q22. The declaration of an interim dividend also highlights management's confidence.
We expect a pick-up in 2H22 as negative impact of the lockdowns faded. Also, contribution from DHL-Sinotrans should return to growth as international express regain momentum.
Strong financial position should allow for higher dividend payout, and currently it is already yielding 10.4%. Its 3.6x PER and 0.4x P/B are cheap, especially relative to ROE of 11.3%.


Sinotrans (598 HK): Still a Very Decent Performance

<ul>
<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> has confirmed its plan to issue infrastructure REIT using six warehouse logistics assets as underlying assets, and they represents 7.6% of its total warehouse area.</li>
<li>The proposed issuance may boost its value by HK$0.16/share, or 7.3% of share price. Should all 4m sq.m. of warehouse assets are securitised, this may nearly double the stock's price.</li>
<li>Since Jun, Sinotrans has repurchased 14m H-shares, suggesting positive view on outlook. There will be more to come, and as the shares will be cancelled, EPS will be enhanced. </li>
</ul>



Sinotrans (598 HK) has confirmed its plan to issue infrastructure REIT using six warehouse logistics assets as underlying assets, and they represents 7.6% of its total warehouse area.
The proposed issuance may boost its value by HK$0.16/share, or 7.3% of share price. Should all 4m sq.m. of warehouse assets are securitised, this may nearly double the stock's price.
Since Jun, Sinotrans has repurchased 14m H-shares, suggesting positive view on outlook. There will be more to come, and as the shares will be cancelled, EPS will be enhanced. 


Sinotrans (598 HK): How Much Value Can Be Unlocked from Its First REIT?

<ul>
<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> posted a 17.7% YoY net profit growth for 1Q22, providing evidences that it can weather the slowing trade momentum. More encouragingly, net profit surged 54.9% QoQ.</li>
<li>Gross margin expanded 1.3pp YoY, signaling better cost performance. DHL-Sinotrans continued to provide very promising contribution, reflecting in a 14.3% growth in investment income. </li>
<li>Operation parameters are solid and gearing stays healthy (7.6%), providing room for higher dividend payout. Even at last year's payout, it trade on 10.9% yield; and it's on 3.3x PER.</li>
</ul>



Sinotrans (598 HK) posted a 17.7% YoY net profit growth for 1Q22, providing evidences that it can weather the slowing trade momentum. More encouragingly, net profit surged 54.9% QoQ.
Gross margin expanded 1.3pp YoY, signaling better cost performance. DHL-Sinotrans continued to provide very promising contribution, reflecting in a 14.3% growth in investment income. 
Operation parameters are solid and gearing stays healthy (7.6%), providing room for higher dividend payout. Even at last year's payout, it trade on 10.9% yield; and it's on 3.3x PER.


Sinotrans (598 HK): Another Very Promising Quarter

China

Sinotrans Limited provides integrated logistics services with core service of sea, air, rail and road freight forwarding, express services and shipping agency services.  The Company also provides support services of storage and terminal services, trucking and marine transportation services.

Sinotrans (598 HK)

Sinotrans (598. HK) Continues to Deliver

Cost and business optimizations increase profits as freight rates drop; Sinotrans adjusts operations geographically in response to changing trade...

Rikki Malik

Sinotrans (598.HK), a Shining Example of SOE Reform

State-owned enterprise in China demonstrates profit-oriented approach with management incentives aligned with shareholders, offering potential for...

Rikki Malik

Sinotrans (598 HK): Still a Very Decent Performance

We are positive towards Sinotrans' full-year performance. Its 16.4% growth in 1H22 recurring profit is a good achievement amid the pandemic....

Osbert Tang, CFA

Sinotrans (598 HK): How Much Value Can Be Unlocked from Its First REIT?

Value equals to HK$0.16 per share, or 7.3% of its share price, can be realised from the proposed REIT issuance by Sinotrans. Its recent H-share...

Osbert Tang, CFA

Sinotrans (598 HK): Another Very Promising Quarter

We consider Sinotrans' 17.7% growth in 1Q22 net profit a demonstration of the underlying strength of its operations. We think it is encouraging to...

Osbert Tang, CFA

Sinotrans (598. HK) Continues to Deliver

​Cost and business optimizations increase profits as freight rates drop; Sinotrans adjusts operations geographically in response to changing trade...

Rikki Malik

Sinotrans (598.HK), a Shining Example of SOE Reform

​State-owned enterprise in China demonstrates profit-oriented approach with management incentives aligned with shareholders, offering potential for...

Rikki Malik

Sinotrans (598 HK): Still a Very Decent Performance

We are positive towards Sinotrans' full-year performance. Its 16.4% growth in 1H22 recurring profit is a good achievement amid the pandemic....

Osbert Tang, CFA

Sinotrans (598 HK): How Much Value Can Be Unlocked from Its First REIT?

Value equals to HK$0.16 per share, or 7.3% of its share price, can be realised from the proposed REIT issuance by Sinotrans. Its recent H-share...

Osbert Tang, CFA

Sinotrans (598 HK): Another Very Promising Quarter

We consider Sinotrans' 17.7% growth in 1Q22 net profit a demonstration of the underlying strength of its operations. We think it is encouraging to...

Osbert Tang, CFA

Cost and business optimizations increase profits as freight rates drop; Sinotrans adjusts operations geographically in response to changing trade...

State-owned enterprise in China demonstrates profit-oriented approach with management incentives aligned with shareholders, offering potential for...