HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a>'s share price change has not sufficiently reflected <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>'s movement. Their share price ratio is now at a historical low. </li>
<li>Its SOTP value increased by HK$927m with the surge in its PE, unlisted and fixed-income investment value, but its market capitalisation has gone up by just HK$258m.</li>
<li>Holdings in unlisted assets like Ant Financial and JD Technology (JD Digital) will benefit from the AI bonanza and the better sentiment in the HK IPO market.</li>
</ul>



China Dongxiang (3818 HK)'s share price change has not sufficiently reflected Alibaba Group (9988 HK)'s movement. Their share price ratio is now at a historical low. 
Its SOTP value increased by HK$927m with the surge in its PE, unlisted and fixed-income investment value, but its market capitalisation has gone up by just HK$258m.
Holdings in unlisted assets like Ant Financial and JD Technology (JD Digital) will benefit from the AI bonanza and the better sentiment in the HK IPO market.


China Dongxiang (3818 HK): More than Just BABA

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>Xtep’s 4Q24 results were slightly better than expected (retail sales growth was inline but the inventory level was better than expected).</li><li>And we are delighted to hear that sales trend in Jan 2025 is decent and management outlook for FY25E has turned more positive.</li><li>However, we will continue to stay prudent at the moment given the macro uncertainty. </li></ul>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.

Xtep’s 4Q24 results were slightly better than expected (retail sales growth was inline but the inventory level was better than expected).And we are delighted to hear that sales trend in Jan 2025 is decent and management outlook for FY25E has turned more positive.However, we will continue to stay prudent at the moment given the macro uncertainty. 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.

Xtep (1368 HK) - A Beat in 4Q24 with a Constructive Outlook

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

CSSC (Hong Kong) Shipping / Equity Bottom-Up

<ul>
<li>Hong Kong and China shares have outperformed most Asian markets over the last year.  In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.</li>
<li>
<a href="https://www.smartkarma.com/entities/cssc-hong-kong-shipping-co-l" target="_blank" data-smartkarma-citation="entities:28068:1" rel="noopener">CSSC (Hong Kong) Shipping Co Ltd (3877 HK)</a> was rated BUY after reporting strong results.  Analysts have a target price of $2.50 on the stock.
</li>
<li><a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.</li>
</ul>


Hong Kong and China shares have outperformed most Asian markets over the last year.  In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.

CSSC (Hong Kong) Shipping Co Ltd (3877 HK) was rated BUY after reporting strong results.  Analysts have a target price of $2.50 on the stock.

Bosideng International Holdings (3998 HK) has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.


BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-dongxiang-group-co" target="_blank" data-smartkarma-citation="entities:1068:1" rel="noopener">China Dongxiang (3818 HK)</a> turned around in 1H FY25 as it reported a net profit of Rmb137m, vs. losses of Rmb410m a year ago. Interim DPS increased 92.7% YoY.</li>
<li>Investment gain is the key driver, reaching Rmb171m in the period, compared with losses of Rmb497m previously. Most investment categories contributed positively. </li>
<li>CDNX trades on a 76.9% discount to its SOTP value and a P/B of just 0.22x. Net cash amounted to Rmb3.2bn, or 58.3% more than its market capitalisation. </li>
</ul>



China Dongxiang (3818 HK) turned around in 1H FY25 as it reported a net profit of Rmb137m, vs. losses of Rmb410m a year ago. Interim DPS increased 92.7% YoY.
Investment gain is the key driver, reaching Rmb171m in the period, compared with losses of Rmb497m previously. Most investment categories contributed positively. 
CDNX trades on a 76.9% discount to its SOTP value and a P/B of just 0.22x. Net cash amounted to Rmb3.2bn, or 58.3% more than its market capitalisation. 


China Dongxiang (3818 HK): Investment Gain Remains the Driver

<ul><li>Xtep’s 3Q24 retail sales growth was weak, but that was well expected.</li><li>On the other hand, inventory level and discounts were still decent and better-thanexpected, in our view.</li><li>We are prudent about sales growth in 4Q24E and FY25E but still confident about the respective margin expansions, supported by slowdown in store expansion, limited retail discounts and active control over various opex. Maintain BUY and raise TP to HK$ 7.50.</li></ul>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.

Xtep’s 3Q24 retail sales growth was weak, but that was well expected.On the other hand, inventory level and discounts were still decent and better-thanexpected, in our view.We are prudent about sales growth in 4Q24E and FY25E but still confident about the respective margin expansions, supported by slowdown in store expansion, limited retail discounts and active control over various opex. Maintain BUY and raise TP to HK$ 7.50.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.

Xtep (1368 HK) - Double 11 Is Critical but NP Target Is Still Intact

China

Xtep International Holdings Limited designs, develops, manufactures, markets, and sells sportswear, including footwear, apparel, and accessories for adults and children. The company operates a multi-brand portfolio, featuring its core Xtep brand alongside international brands such as Saucony and Merrell. It was founded in 1987 and is headquartered in Xiamen, Fujian, China.

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Xtep (1368 HK)

China Dongxiang (3818 HK): More than Just BABA

CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

Osbert Tang, CFA

Xtep (1368 HK) - A Beat in 4Q24 with a Constructive Outlook

Xtep’s 4Q24 results were slightly better than expected (retail sales growth was inline but the inventory level was better than expected).

CMB International

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

HK/China markets have outperformed other Asian markets since the beginning of 2024. In HK the consumer discretionary sector has lost momentum as...

David Mudd

China Dongxiang (3818 HK): Investment Gain Remains the Driver

China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...

Osbert Tang, CFA

Xtep (1368 HK) - Double 11 Is Critical but NP Target Is Still Intact

Xtep’s 3Q24 retail sales growth was weak, but that was well expected. On the other hand, inventory level and discounts were still decent and better...

CMB International

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China Dongxiang (3818 HK): More than Just BABA

​CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

Osbert Tang, CFA

Xtep (1368 HK) - A Beat in 4Q24 with a Constructive Outlook

Xtep’s 4Q24 results were slightly better than expected (retail sales growth was inline but the inventory level was better than expected).

CMB International

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

HK/China markets have outperformed other Asian markets since the beginning of 2024. In HK the consumer discretionary sector has lost momentum as...

David Mudd

China Dongxiang (3818 HK): Investment Gain Remains the Driver

​China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...

Osbert Tang, CFA

Xtep (1368 HK) - Double 11 Is Critical but NP Target Is Still Intact

Xtep’s 3Q24 retail sales growth was weak, but that was well expected. On the other hand, inventory level and discounts were still decent and better...

CMB International

CNDX's share price has not reflected BABA's, and the price ratio is at a historical low. The change in market cap has not kept pace with SOTP. Its...

China Dongxiang turned around in 1H FY25 with a net profit of Rmb137m, driven by investment gains. CDNX trades at a significant discount to its...