Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>Pop Mart’s total revenue increased by 62% YoY due to the promising overseas market.</li>
<li>Tongcheng’ revenue grew by 48% YoY in 2Q24, as new businesses are successful.</li>
<li>Alibaba’s Freshippo plans to set up frontline warehouses, which is a way back to online.</li>
</ul>


Pop Mart’s total revenue increased by 62% YoY due to the promising overseas market.
Tongcheng’ revenue grew by 48% YoY in 2Q24, as new businesses are successful.
Alibaba’s Freshippo plans to set up frontline warehouses, which is a way back to online.


China Consumption Weekly (26Aug2024): 2Q24 Rev Up By - PopMart 62%, Zeekr 58%, Tongcheng 48%, Etc.

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates; adjusted net income was RMB657mn, up 11% YoY, and was 4% better than consensus, which in our view was driven by efficient sales and marketing expense control.</li><li>Overall travel demands are likely better than feared in 3Q24, while management guided to scale back user subsidy to drive for balanced and efficient business development amid current macro environment.</li><li>Outbound travel demand remains a solid driver for long-term revenue and earnings growth for TC, in our view. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Tongcheng Travel (TC) reported 2Q24 results: total revenue was RMB4.2bn, up 48% YoY, and was inline with Bloomberg consensus estimates; adjusted net income was RMB657mn, up 11% YoY, and was 4% better than consensus, which in our view was driven by efficient sales and marketing expense control.Overall travel demands are likely better than feared in 3Q24, while management guided to scale back user subsidy to drive for balanced and efficient business development amid current macro environment.Outbound travel demand remains a solid driver for long-term revenue and earnings growth for TC, in our view. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Tongcheng Travel (780 HK) - Reported 2Q24 Results

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel Holdings (780 HK)</a> is still suffering from cost pressure, with adjusted net profit increased by 10.9% in 2Q24, despite a 48.1% revenue growth.</li>
<li>Both GMV and MPU growth rates have slowed in 2Q24 when compared with 1Q24, and revenue may also decelerate in 2H24 given the higher base for comparison.</li>
<li>The market will need some time to see if the moderating earnings trend will sustain, negatively affecting investor interests. Potential earnings downgrade is also a challenge.</li>
</ul>



Tongcheng Travel Holdings (780 HK) is still suffering from cost pressure, with adjusted net profit increased by 10.9% in 2Q24, despite a 48.1% revenue growth.
Both GMV and MPU growth rates have slowed in 2Q24 when compared with 1Q24, and revenue may also decelerate in 2H24 given the higher base for comparison.
The market will need some time to see if the moderating earnings trend will sustain, negatively affecting investor interests. Potential earnings downgrade is also a challenge.


Tongcheng Travel (780 HK): Seems like a Cost Issue

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.</li>
<li>This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. </li>
<li>Minimal flows on the HSI rebalance to be effective on 9 September. </li>
</ul>


The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. 
Minimal flows on the HSI rebalance to be effective on 9 September. 


Hang Seng Index Sep24 Rebal - No Name Changes, Some Capping, 1% One-Way Flow - Total 0️⃣🍔

<ul>
<li>The HSCEI is famous but has less AUM tracking it passively than you'd think. Nevertheless it is well-known and well-watched.</li>
<li>
<a href="https://www.smartkarma.com/entities/j-t-global-express-ltd" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1519 HK)</a> and <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Techn (9901 HK)</a> were ADDs. <a href="https://www.smartkarma.com/entities/jd-logistics-inc" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> and <a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> are DELETEs. </li>
<li>
<a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> was NOT included. This was a surprise. We may see some disappointment this week from pre-positioning getting sold.</li>
</ul>


The HSCEI is famous but has less AUM tracking it passively than you'd think. Nevertheless it is well-known and well-watched.

J&amp;T Global Express (1519 HK) and New Oriental Education &amp; Techn (9901 HK) were ADDs. JD Logistics (2618 HK) and SenseTime Group (20 HK) are DELETEs. 

PICC Property &amp; Casualty H (2328 HK) was NOT included. This was a surprise. We may see some disappointment this week from pre-positioning getting sold.


HSCEI Sep24 Rebal - Two ADDs, Two DELETEs, Two Surprises, Middling Flows

Hong Kong

Tongcheng Travel Holdings Limited is an investment holding company providing travel-related services in the People's Republic of China. It offers accommodation reservation, transportation ticketing, online advertising, hotel management, tourist attraction tickets, and packaged tours through its online platforms, mobile apps, and websites. The company was founded in 1999 and is headquartered in Suzhou, the People's Republic of China.

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Tongcheng Travel (780 HK)

China Consumption Weekly (26Aug2024): 2Q24 Rev Up By - PopMart 62%, Zeekr 58%, Tongcheng 48%, Etc.

Alibaba’s Freshippo plans to set up frontline warehouses, which is a way back to online. Many small caps' revenues grew strongly in 2Q24.

Ming Lu