HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The cheap valuations of the Hong Kong market have driven an increase in privatisation activities. Stocks with profit, high net cash, and low P/B are likely candidates.</li>
<li>We discover 29 stocks with net cash more than their market capitalisation while having a P/B of below 0.5x. Many of them are small-cap stocks.</li>
<li>The cheapest five names are trading on P/B of no more than 0.2x. Also, six stocks have their major shareholders owning a significant 75% stake.</li>
</ul>


The cheap valuations of the Hong Kong market have driven an increase in privatisation activities. Stocks with profit, high net cash, and low P/B are likely candidates.
We discover 29 stocks with net cash more than their market capitalisation while having a P/B of below 0.5x. Many of them are small-cap stocks.
The cheapest five names are trading on P/B of no more than 0.2x. Also, six stocks have their major shareholders owning a significant 75% stake.


China & HK Strategy: Are These Stocks Potential Privatisation Targets?

Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Research-Intensive Fundamental Value Advisor

Wickhams Hill

Wickhams Hill Capital is a research-intensive fundamental value advisor, on long and occasionally short investment opportunities concentrated in small and mid-cap public companies.

This is the first instalment of Wickhams Hill’s monthly note covering the performance of small-cap markets across ASEAN and Hong Kong. While starting small, we hope to build out the content over time to be more useful and insightful for readers. Any feedback or suggestions are most welcome in the comments below.<h2>Market Overview</h2>Asia small-caps were off to a positive start in most markets and more in-line with large-cap indices, in contrast to last year. Indonesia and Singapore were the stands…

This is the first instalment of Wickhams Hill’s monthly note covering the performance of small-cap markets across ASEAN and Hong Kong. While starting small, we hope to build out the content over time to be more useful and insightful for readers. Any feedback or suggestions are most welcome in the comments below.Market OverviewAsia small-caps were off to a positive start in most markets and more in-line with large-cap indices, in contrast to last year. Indonesia and Singapore were the stands…

Asia Small-Cap: Top Movers, Buybacks and Insider Dealing - Jan'18

Looking for insights from people really in-the-know, we tracked insider dealing during 2017. We ranked the top five companies for insider buying and selling to get a sense of which management teams are selling out at the top or backing a horse they know is a winner.For this screen we opened the universe to all market caps, increasing relevance to more investors and to potentially highlight any shortable opportunities. The companies are ranked by net traded value as a % of market cap. We may…

Looking for insights from people really in-the-know, we tracked insider dealing during 2017. We ranked the top five companies for insider buying and selling to get a sense of which management teams are selling out at the top or backing a horse they know is a winner.For this screen we opened the universe to all market caps, increasing relevance to more investors and to potentially highlight any shortable opportunities. The companies are ranked by net traded value as a % of market cap. We may…

Insider Report: Largest Insider Dealings for 2017

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

China Traditional Chinese Medicine / Event-Driven

China Traditional Chinese Medicine (570 HK)

<ul>
<li>Just plain ugly. <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> ("TCM") fell 11.7% yesterday. It's down another 7.9%, on large volume, as I type.  The stock is now ~35% below terms</li>
<li>Depending on who you talk to, the sudden move was triggered by a couple of event pods dumping stock; or the incoming CNPGC chairman is not supportive. Or perhaps both. </li>
<li>Since rumours surfaced early Feb as to an Offer, a basket of TCM's peers are up 8% on average. The HSI is up 15%. TCM's downside from here appears limited.</li>
</ul>


Just plain ugly. China Traditional Chinese Medicine (570 HK) ("TCM") fell 11.7% yesterday. It's down another 7.9%, on large volume, as I type.  The stock is now ~35% below terms
Depending on who you talk to, the sudden move was triggered by a couple of event pods dumping stock; or the incoming CNPGC chairman is not supportive. Or perhaps both. 
Since rumours surfaced early Feb as to an Offer, a basket of TCM's peers are up 8% on average. The HSI is up 15%. TCM's downside from here appears limited.


Hong Kong

Sanai Health Industry Group is an investment holding company primarily engaged in the development, manufacturing, marketing, and sales of pharmaceutical products, provision of finance leasing services, and genetic testing and molecular diagnostic services. The company was incorporated in the Cayman Islands on March 21, 2006, with its principal place of business in Hong Kong.

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Sanai Health Industry Group (1889 HK)

China & HK Strategy: Are These Stocks Potential Privatisation Targets?

Hong Kong market sees a rise in privatisation as cheap valuations attract investors. We developed a list of 29 stocks attractive for potential...

Osbert Tang, CFA

Asia Small-Cap: Top Movers, Buybacks and Insider Dealing - Jan'18

This is the first instalment of Wickhams Hill’s monthly note covering the performance of small-cap markets across ASEAN and Hong Kong. While...

Lloyd Moffatt

Insider Report: Largest Insider Dealings for 2017

Looking for insights from people really in-the-know, we tracked insider dealing during 2017. We ranked the top five companies for insider buying...

Lloyd Moffatt

TCM (570 HK): Where's The Floor?

With shares up 14.8% month-to-date, you kinda anticipated some positive developments were happening behind the scenes. Two articles came out this...

David Blennerhassett

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52-week Range

Market Cap (USDm)

P/E

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China & HK Strategy: Are These Stocks Potential Privatisation Targets?

​Hong Kong market sees a rise in privatisation as cheap valuations attract investors. We developed a list of 29 stocks attractive for potential...

Osbert Tang, CFA

Asia Small-Cap: Top Movers, Buybacks and Insider Dealing - Jan'18

This is the first instalment of Wickhams Hill’s monthly note covering the performance of small-cap markets across ASEAN and Hong Kong. While...

Lloyd Moffatt

Insider Report: Largest Insider Dealings for 2017

Looking for insights from people really in-the-know, we tracked insider dealing during 2017. We ranked the top five companies for insider buying...

Lloyd Moffatt

TCM (570 HK): Where's The Floor?

With shares up 14.8% month-to-date, you kinda anticipated some positive developments were happening behind the scenes. Two articles came out this...

David Blennerhassett

Hong Kong market sees a rise in privatisation as cheap valuations attract investors. We developed a list of 29 stocks attractive for potential...