HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Foreign exchange gains/losses are major swing factors in FY22 results of many companies and we think investors may have overlooked their importance in driving FY23 earnings. </li>
<li>With Rmb/USD exchange rate appreciated YTD, reversing the 8.5% depreciation in last year, the demons of many companies in last year will become positive earnings contributor. </li>
<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>, <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <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 <a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a> are key beneficiaries, while <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric (3899 HK)</a> may turned into exchange losses.</li>
</ul>


Foreign exchange gains/losses are major swing factors in FY22 results of many companies and we think investors may have overlooked their importance in driving FY23 earnings. 
With Rmb/USD exchange rate appreciated YTD, reversing the 8.5% depreciation in last year, the demons of many companies in last year will become positive earnings contributor. 

Shenzhen International (152 HK), ENN Energy (2688 HK), Shenzhen Expressway (548 HK) and Kunlun Energy (135 HK) are key beneficiaries, while CIMC Enric (3899 HK) may turned into exchange losses.


China Strategy: It Is the Foreign Exchange Impact, Stupid!

Equity Bottom-Up

<ul>
<li>While we like <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> in the long term, we are caution that 1Q23 result may be disappointing. Its 4Q22 earnings already showed 49.1% YoY and 73.3% QoQ decline.</li>
<li>Indicators including China's PMI new export orders, export growth, container shipping freight rates (SCFI) and airfreight rates all showed that the recovery trend is weak. </li>
<li>9% of FY22 profit is from exchange gain as Rmb depreciated, and this may not happen again. Consensus forecast of just 10% decline in FY23 net profit seems overly optimistic. </li>
</ul>


While we like Sinotrans (598 HK) in the long term, we are caution that 1Q23 result may be disappointing. Its 4Q22 earnings already showed 49.1% YoY and 73.3% QoQ decline.
Indicators including China's PMI new export orders, export growth, container shipping freight rates (SCFI) and airfreight rates all showed that the recovery trend is weak. 
9% of FY22 profit is from exchange gain as Rmb depreciated, and this may not happen again. Consensus forecast of just 10% decline in FY23 net profit seems overly optimistic. 


Sinotrans (598 HK): We Are Concerned About the near Term Challenges

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 113.6% as of Mar 31st.</li>
<li>The average A-H premium changed by -0.5ppt week on week, led by communication services, energy, utilities and offset by consumer staples, health care.</li>
<li>We highlight weekly changes in A-H premium for Yankuang Energy, CRRC, China Telecom, CCCC.</li>
</ul>


We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 113.6% as of Mar 31st.
The average A-H premium changed by -0.5ppt week on week, led by communication services, energy, utilities and offset by consumer staples, health care.
We highlight weekly changes in A-H premium for Yankuang Energy, CRRC, China Telecom, CCCC.


A-H Premium Weekly (Mar 31st): Yankuang Energy, CRRC, China Telecom, CCCC

<ul>
<li>We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 109.1% as of Jan 13th.</li>
<li>The average A-H premium changed by -0.1ppt week on week, led by real estate, information technology, communication services and offset by utilities, financials, health care.</li>
<li>We highlight weekly changes in A-H premium for Fuyao Glass, Shenhua, Minsheng, Yankuang Energy, China Longyuan, Flat Glass.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 109.1% as of Jan 13th.
The average A-H premium changed by -0.1ppt week on week, led by real estate, information technology, communication services and offset by utilities, financials, health care.
We highlight weekly changes in A-H premium for Fuyao Glass, Shenhua, Minsheng, Yankuang Energy, China Longyuan, Flat Glass.


A-H Premium Weekly (Jan 13th): Fuyao Glass, Shenhua, Minsheng, Yankuang Energy, China Longyuan

<ul>
<li>We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 30th.</li>
<li>The average A-H premium changed by -0.0ppt weeok on week, led by utilities, real estate, consumer discretionary and offset by communication services, consumer staples, energy.</li>
<li>We highlight weekly changes in A-H premium for Xinjiang Goldwind, Weichai Power, Baiyunshan, China Telecom, Sinopec Oilfield, Cosco Shipping.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 30th.
The average A-H premium changed by -0.0ppt weeok on week, led by utilities, real estate, consumer discretionary and offset by communication services, consumer staples, energy.
We highlight weekly changes in A-H premium for Xinjiang Goldwind, Weichai Power, Baiyunshan, China Telecom, Sinopec Oilfield, Cosco Shipping.


A-H Premium Weekly (Dec 30th): Xinjiang Goldwind, Weichai Power, Baiyunshan

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.

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Sinotrans (598 HK)

China Strategy: It Is the Foreign Exchange Impact, Stupid!

Shenzhen Intl, ENN Energy, Shenzhen Expressway and Kunlun Energy are the key beneficiaries of the reverse in Rmb/USD depreciation trend in FY23,...

Osbert Tang, CFA

Sinotrans (598 HK): We Are Concerned About the near Term Challenges

After a weak 4Q22 result, we think there are risks that 1Q23 and 1H23 earnings may not come out as expected. Market consensus forecast of 10% net...

Osbert Tang, CFA

A-H Premium Weekly (Mar 31st): Yankuang Energy, CRRC, China Telecom, CCCC

We analyzed A-H premium for last week and highlight weekly changes in A-H premium for Yankuang Energy, CRRC, China Telecom, CCCC.

Ke Yan, CFA, FRM

A-H Premium Weekly (Jan 13th): Fuyao Glass, Shenhua, Minsheng, Yankuang Energy, China Longyuan

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Fuyao Glass, Shenhua, Minsheng, Yankuang Energy, China...

Ke Yan, CFA, FRM

A-H Premium Weekly (Dec 30th): Xinjiang Goldwind, Weichai Power, Baiyunshan

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Xinjiang Goldwind, Weichai Power, Baiyunshan, China Telecom,...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)