HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.</li>
<li>
<a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a>, <a href="https://www.smartkarma.com/entities/link-reit" target="_blank" data-smartkarma-citation="entities:872:1" rel="noopener">Link REIT (823 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Properties (101 HK)</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> are massive laggards YTD.</li>
<li>As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. </li>
</ul>


Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.

Li Auto (2015 HK), Link REIT (823 HK), China Mengniu Dairy Co (2319 HK), Hang Lung Properties (101 HK) and Galaxy Entertainment Group (27 HK) are massive laggards YTD.
As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year. 


HK Strategy: Where Are the Short-Term Opportunities?

<ul>
<li>With US inflation figures higher than expectations, there is an increase in risk that the Fed's next move may be a hike.  Some HSI constituents are set to benefit.</li>
<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>, <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing APAC (1876 HK),</a> and <a href="https://www.smartkarma.com/entities/galaxy-entertainment-group-limited" target="_blank" data-smartkarma-citation="entities:806:1" rel="noopener">Galaxy Entertainment Group (27 HK)</a> have significant USD net cash position and will be gainers.</li>
<li>
<a href="https://www.smartkarma.com/entities/sunny-optical-technology-group" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical Technology Group (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home (6690 HK)</a> have large China operations but they are net long on USD balance and this will make them beneficiaries.</li>
</ul>


With US inflation figures higher than expectations, there is an increase in risk that the Fed's next move may be a hike.  Some HSI constituents are set to benefit.

Orient Overseas International (316 HK), Budweiser Brewing APAC (1876 HK), and Galaxy Entertainment Group (27 HK) have significant USD net cash position and will be gainers.

Sunny Optical Technology Group (2382 HK) and Haier Smart Home (6690 HK) have large China operations but they are net long on USD balance and this will make them beneficiaries.


HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

Analyst

Steve

Equity Bottom-Up

<ul>
<li>Since my previous insight on <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> in October 2023, the stock is up 17%, massively outperforming the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a>. </li>
<li>The company is still trading at 6x forward PE, compared to an average forward PE of 11x since 2016. </li>
<li>With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside. </li>
</ul>


Since my previous insight on WH Group (288 HK) in October 2023, the stock is up 17%, massively outperforming the Hang Seng Index (HSI INDEX). 
The company is still trading at 6x forward PE, compared to an average forward PE of 11x since 2016. 
With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside. 


WH Group (288 HK):  Update On The Bull Case

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

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 Capital Markets

Dekon Food and Agriculture Group / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dekon-food-and-agriculture-group" target="_blank" data-smartkarma-citation="entities:36756:1" rel="noopener">Dekon Food and Agriculture Group (DFAG CH)</a> raised around US$128m in its Hong Kong IPO. </li>
<li>Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.</li>
<li>We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.</li>
</ul>



Dekon Food and Agriculture Group (DFAG CH) raised around US$128m in its Hong Kong IPO. 
Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.


Dekon Food and Agriculture Group IPO Trading - Tight Float at Listing, Subscription Rates Were Tepid

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dekon-food-and-agriculture-group" target="_blank" data-smartkarma-citation="entities:36756:1" rel="noopener">Dekon Food and Agriculture Group (DFAG CH)</a> is looking to raise up to US$128m in its Hong Kong IPO.</li>
<li>Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.</li>
<li>In this note, we will look at past performance, and share our thoughts on valuation.</li>
</ul>



Dekon Food and Agriculture Group (DFAG CH) is looking to raise up to US$128m in its Hong Kong IPO.
Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.
In this note, we will look at past performance, and share our thoughts on valuation.


Dekon Food and Agriculture Group IPO - Ebbs and Flows of Cycle Have Hurt Profitability

Hong Kong

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

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WH Group (288 HK)

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...

Osbert Tang, CFA

WH Group (288 HK): Update On The Bull Case

With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside.

Steve

Dekon Food and Agriculture Group IPO Trading - Tight Float at Listing, Subscription Rates Were Tepid

Dekon Food and Agriculture Group (DFAG CH) raised around US$128m in its Hong Kong IPO. In this note, we will talk about the demand and trading...

Clarence Chu

Dekon Food and Agriculture Group IPO - Ebbs and Flows of Cycle Have Hurt Profitability

Dekon Food and Agriculture Group (DFAG CH) is looking to raise up to US$128m in its Hong Kong IPO. In this note, we will look at past performance,...

Clarence Chu

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough...

Osbert Tang, CFA

HK Strategy: What Are the Winners if US Hike Rates Instead of Cut?

​HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...

Osbert Tang, CFA

WH Group (288 HK): Update On The Bull Case

With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside.

Steve

Dekon Food and Agriculture Group IPO Trading - Tight Float at Listing, Subscription Rates Were Tepid

Dekon Food and Agriculture Group (DFAG CH) raised around US$128m in its Hong Kong IPO. In this note, we will talk about the demand and trading...

Clarence Chu

Dekon Food and Agriculture Group IPO - Ebbs and Flows of Cycle Have Hurt Profitability

Dekon Food and Agriculture Group (DFAG CH) is looking to raise up to US$128m in its Hong Kong IPO. In this note, we will look at past performance,...

Clarence Chu

HSI constituents like Orient Overseas, Budweiser Brewing, Galaxy Entertainment, Sunny Optical, and Haier Smart Home are set to gain in case the...