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?

<ul>
<li>China's Central Document No.1 emphasizes the need to boost the agricultural industry and improve well-being of the peasants. We see the directions positive for the agricultural sector.</li>
<li>Direct beneficiaries are <a href="https://www.smartkarma.com/entities/sinofert-holdings-ltd" target="_blank" data-smartkarma-citation="entities:893:1" rel="noopener">Sinofert Holdings (297 HK)</a>, <a href="https://www.smartkarma.com/entities/china-xlx-fertiliser-ltd" target="_blank" data-smartkarma-citation="entities:5679:1" rel="noopener">China Xlx Fertiliser (1866 HK)</a>, <a href="https://www.smartkarma.com/entities/first-tractor-co-h" target="_blank" data-smartkarma-citation="entities:12416:1" rel="noopener">First Tractor Co H (38 HK)</a> and <a href="https://www.smartkarma.com/entities/xinjiang-tianye-water-saving-irrigation" target="_blank" data-smartkarma-citation="entities:10975:1" rel="noopener">Xinjiang Tianye Water Saving Irrigation (840 HK)</a>. </li>
<li>Growing rural affluence is positive to <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <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> and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>, while cold chain network buildout is good to <a href="https://www.smartkarma.com/entities/shenzhen-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen Intl (152 HK)</a>. </li>
</ul>


China's Central Document No.1 emphasizes the need to boost the agricultural industry and improve well-being of the peasants. We see the directions positive for the agricultural sector.
Direct beneficiaries are Sinofert Holdings (297 HK), China Xlx Fertiliser (1866 HK), First Tractor Co H (38 HK) and Xinjiang Tianye Water Saving Irrigation (840 HK). 
Growing rural affluence is positive to BYD (1211 HK), Haier Smart Home (6690 HK) and Pinduoduo (PDD US), while cold chain network buildout is good to Shenzhen Intl (152 HK). 


China Agricultural Sector: A Read into China Central Document No.1

Hong Kong

Xinjiang Tianye Water Saving Irrigation System Co Ltd. designs, develops, manufactures, sells, and installs water saving irrigation systems.

Xinjiang Tianye Water Saving Irrigation (840 HK)

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Xinjiang Tianye Water Saving Irrigation (840 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

China Agricultural Sector: A Read into China Central Document No.1

Directions in China's Central Document No.1 in 2023 are positive for the agricultural sector. We see direct benficiaries being Sinofert, China XLX...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

China Agricultural Sector: A Read into China Central Document No.1

Directions in China's Central Document No.1 in 2023 are positive for the agricultural sector. We see direct benficiaries being Sinofert, China XLX...

Osbert Tang, CFA

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