HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Bright Smart Securities & Commodities / Equity Bottom-Up

Bright Smart Securities & Commodities (1428 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-commodities-group" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a> rallied by 132% since our last Insight, fueled by the euphoria in the brokerage and securities sector on the HK government's stablecoin initiative.</li>
<li>At HK$16.44, it is at 100% PER premium to the sector average, ex-<a href="https://www.smartkarma.com/entities/guotai-junan-international" target="_blank" data-smartkarma-citation="entities:13438:1" rel="noopener">Guotai Junan International (1788 HK)</a>. The risk-reward payoff now looks less attractive.</li>
<li>It also implies net profit to grow by 150% by FY31F and priced at 18x PER. This appears stretched in the near term, though long-term prospects stay decent. </li>
</ul>



Bright Smart Securities (1428 HK) rallied by 132% since our last Insight, fueled by the euphoria in the brokerage and securities sector on the HK government's stablecoin initiative.
At HK$16.44, it is at 100% PER premium to the sector average, ex-Guotai Junan International (1788 HK). The risk-reward payoff now looks less attractive.
It also implies net profit to grow by 150% by FY31F and priced at 18x PER. This appears stretched in the near term, though long-term prospects stay decent. 


<ul>
<li>
<a href="https://www.smartkarma.com/entities/bright-smart-securities-and" target="_blank" data-smartkarma-citation="entities:20511:1" rel="noopener">Bright Smart Securities (1428 HK)</a>'s earnings rebounded solidly by 20.4% YoY in 2H FY25, fueled by higher client accounts and assets, and better HK market turnover.</li>
<li>BSS has been an underperformer against peers since May, as other brokerage companies rallied on the back of potential entry into the virtual asset dealing business. </li>
<li>Ant Financial will be able to transform BSS into a sizeable cross-asset house. The share price's current implied earnings growth and PER valuations are conservative.</li>
</ul>



Bright Smart Securities (1428 HK)'s earnings rebounded solidly by 20.4% YoY in 2H FY25, fueled by higher client accounts and assets, and better HK market turnover.
BSS has been an underperformer against peers since May, as other brokerage companies rallied on the back of potential entry into the virtual asset dealing business. 
Ant Financial will be able to transform BSS into a sizeable cross-asset house. The share price's current implied earnings growth and PER valuations are conservative.


Bright Smart (1428 HK): Bright and Smart FY25

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<li>
<a href="https://www.smartkarma.com/entities/futu-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27858:1" rel="noopener">Futu Holdings Ltd (FUTU US)</a>'s 2Q26 non-GAAP net profit growth of 40.1% is impressive, suggesting that the negative impact of regulatory issues is fading. </li>
<li>Operational metrics accelerated sequentially, partly due to the solid HK IPO pipeline, which is likely to sustain. 3Q26 momentum moderated slightly but is manageable.</li>
<li>Its 12.1x FY26 PER is inflated given the room for earnings upgrades. It is also cheaper than the average of 17.2x since 2021 and 13.7x since 2025.</li>
</ul>



Futu Holdings Ltd (FUTU US)'s 2Q26 non-GAAP net profit growth of 40.1% is impressive, suggesting that the negative impact of regulatory issues is fading. 
Operational metrics accelerated sequentially, partly due to the solid HK IPO pipeline, which is likely to sustain. 3Q26 momentum moderated slightly but is manageable.
Its 12.1x FY26 PER is inflated given the room for earnings upgrades. It is also cheaper than the average of 17.2x since 2021 and 13.7x since 2025.


Guotai Junan International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/guotai-haitong-securities-co-ltd-class-h" target="_blank" data-smartkarma-citation="entities:23752:1" rel="noopener">Guotai Haitong Securities (2611 HK)</a> proposed to privatise <a href="https://www.smartkarma.com/entities/guotai-junan-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:13438:1" rel="noopener">Guotai Junan International (1788 HK)</a> at HK$3.0, a 44.2% premium to the pre-suspension price, which looks good enough. </li>
<li>The proposed price equals 11.9x PER for FY26F, higher than the average of 10.1x since 2024. This is better than the sector's average PER of 10.3x.</li>
<li>It also equates to 1.6x 12-month forward P/B, or 1.3SD above the 5-year average, well reflecting a projected ROE recovery in the next two years.</li>
</ul>



Guotai Haitong Securities (2611 HK) proposed to privatise Guotai Junan International (1788 HK) at HK$3.0, a 44.2% premium to the pre-suspension price, which looks good enough. 
The proposed price equals 11.9x PER for FY26F, higher than the average of 10.1x since 2024. This is better than the sector's average PER of 10.3x.
It also equates to 1.6x 12-month forward P/B, or 1.3SD above the 5-year average, well reflecting a projected ROE recovery in the next two years.


Guotai Junan Intl (1788 HK): A Good Enough Privatisation Price

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<p>Where so many of us are focused on the impact of China slowdown on its banks, it is worth highlighting the risks to Hong Kong’s banks. But what we are focused on here is their domestic lending, not the stuff booked locally but for use in China. For most, the perception is that Hong Kong banks have little risk due to a strong emphasis on mortgage lending, but we are not convinced this is holding up, and we believe it will worsen.  Of course, the new marginally higher interest costs in Hong Kong…</p>

Where so many of us are focused on the impact of China slowdown on its banks, it is worth highlighting the risks to Hong Kong’s banks. But what we are focused on here is their domestic lending, not the stuff booked locally but for use in China. For most, the perception is that Hong Kong banks have little risk due to a strong emphasis on mortgage lending, but we are not convinced this is holding up, and we believe it will worsen.  Of course, the new marginally higher interest costs in Hong Kong…

Domestic NPLs in Hong Kong Can Surprise – Not Just Those in Neighboring China

Hong Kong

Sun Hung Kai & Co. is a principal-led alternative investment platform based in Hong Kong, specializing in alternative investing across public markets, private equity, private credit, and real assets. The company also operates financial services platforms, including consumer finance and mortgage lending. It was established in 1969 and is headquartered in Hong Kong.

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Sun Hung Kai & Co. (86 HK)

Bright Smart (1428 HK): Valuation Update

Bright Smart announced that it is still working on satisfying condition c.), which is reporting with the NDRC. Given that the Long Stop Date is 25...

Osbert Tang, CFA

Bright Smart (1428 HK): Bright and Smart FY25

BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Osbert Tang, CFA

Futu Holdings (FUTU US): A Splendid Show

Futu Holdings' 2Q26 results are impressive, and operating metrics have accelerated sequentially. The impact of regulatory issues is fading, and it...

Osbert Tang, CFA

Guotai Junan Intl (1788 HK): A Good Enough Privatisation Price

Guotai Haitong proposes to privatise Guotai Junan International at HK$3.0, a 44.2% premium over the closing price, offering a higher-than-average...

Osbert Tang, CFA

Domestic NPLs in Hong Kong Can Surprise – Not Just Those in Neighboring China

Where so many of us are focused on the impact of China slowdown on its banks, it is worth highlighting the risks to Hong Kong’s banks. But what we...

Daniel Tabbush

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52-week Range

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Bright Smart (1428 HK): Valuation Update

Bright Smart announced that it is still working on satisfying condition c.), which is reporting with the NDRC. Given that the Long Stop Date is 25...

Osbert Tang, CFA

Bright Smart (1428 HK): Bright and Smart FY25

​BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Osbert Tang, CFA

Futu Holdings (FUTU US): A Splendid Show

Futu Holdings' 2Q26 results are impressive, and operating metrics have accelerated sequentially. The impact of regulatory issues is fading, and it...

Osbert Tang, CFA

Guotai Junan Intl (1788 HK): A Good Enough Privatisation Price

​Guotai Haitong proposes to privatise Guotai Junan International at HK$3.0, a 44.2% premium over the closing price, offering a higher-than-average...

Osbert Tang, CFA

Domestic NPLs in Hong Kong Can Surprise – Not Just Those in Neighboring China

Where so many of us are focused on the impact of China slowdown on its banks, it is worth highlighting the risks to Hong Kong’s banks. But what we...

Daniel Tabbush

BSS saw a 20.4% YoY earnings rebound in 2H FY25, driven by increased client accounts and assets, and better market turnover. Ant Financial's...

Guotai Haitong proposes to privatise Guotai Junan International at HK$3.0, a 44.2% premium over the closing price, offering a higher-than-average...