Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

Topsports International Holdings / Equity Bottom-Up

<ul>
<li>One of the key reasons why we are bearish on this stock (despite cheap valuations) is that the valuations may become even cheaper. </li>
<li>The CCP remains intent on maintaining its ZERO COVID policy which means continued sporadic lockdowns and social distancing measures, which is negative for sports apparel products.</li>
<li>All in all, we believe that a better time to get back into Topsports International is when the CCP becomes more vocal about finally relenting on its ZERO COVID policy. </li>
</ul>


One of the key reasons why we are bearish on this stock (despite cheap valuations) is that the valuations may become even cheaper. 
The CCP remains intent on maintaining its ZERO COVID policy which means continued sporadic lockdowns and social distancing measures, which is negative for sports apparel products.
All in all, we believe that a better time to get back into Topsports International is when the CCP becomes more vocal about finally relenting on its ZERO COVID policy. 


Topsports International: CCP's ZERO COVID Policy Has a Bigger Whopper Impact than Cheap Valuations

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

China Tourism Group Duty Free Corp Ltd / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. </li>
<li>While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.</li>
<li>We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. </li>
</ul>



China Tourism Group Duty Free Corp Ltd (601888 CH) has revived its H-share IPO plan by re-submitting the Application Proof to the Hong Kong Stock Exchange on 1 Jul. 
While there is no material changes in the Proof, weaker 1Q22 result, negative impact of pandemic and new agreements signed with Guangzhou Airport are recent developments that should be noted.
We think CDFC's H-shares, based on similar valuation before cancellation of the previous IPO plan, look less attractive given the sharp pull back of its peers in Hong Kong. 


CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

Thematic (Sector/Industry)

<ul>
<li>2Q22 is a tough quarter for China's consumer discretionary companies. <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> has experienced improvement in recovery in May and Jun, but we see FILA stay challenging.</li>
<li>In its FY22 result, <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> demonstrated its resilience in gross margin despite higher input costs. More positive developments are brewing in 2H of this year.</li>
<li>
<a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> has its business rebounding after the lockdown and healthy performance in overseas market should partly mitigate the lockdown-induced weakness in 2Q22.</li>
</ul>


2Q22 is a tough quarter for China's consumer discretionary companies. Anta Sports Products (2020 HK) has experienced improvement in recovery in May and Jun, but we see FILA stay challenging.
In its FY22 result, Bosideng International Holdings (3998 HK) demonstrated its resilience in gross margin despite higher input costs. More positive developments are brewing in 2H of this year.

Haier Smart Home (600690 CH) has its business rebounding after the lockdown and healthy performance in overseas market should partly mitigate the lockdown-induced weakness in 2Q22.


China Consumer Discretionary: Darkness Before Dawn

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>Q1 22 operating figures are better than the smaller peers although not exactly beating Anta. </li>
<li>Launching the cafe to boost SSSG post-COVID-19 is a positive strategy. </li>
<li>Its valuation is currently trading below its historical highs . Turn positive on <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning (2331 HK)</a> .</li>
</ul>


Q1 22 operating figures are better than the smaller peers although not exactly beating Anta. 
Launching the cafe to boost SSSG post-COVID-19 is a positive strategy. 
Its valuation is currently trading below its historical highs . Turn positive on Li Ning (2331 HK) .


<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 Group Co (3818 HK)</a> posted Rmb748m losses for 1H FY22, primarily a result of investment losses. Nonetheless, we still consider it a very undervalued asset play.</li>
<li>Net cash reached Rmb1.4bn and investment portfolio is valued at Rmb7.7bn. This compared attractively relative to current market cap of just HK$4.3bn, or roughly equals to 61% discount.  </li>
<li>Its sports business will suffer in the near term as the rejuvenation progress is weaker than expected. However, this is not an important part and should not move CNDX much. </li>
</ul>



China Dongxiang Group Co (3818 HK) posted Rmb748m losses for 1H FY22, primarily a result of investment losses. Nonetheless, we still consider it a very undervalued asset play.
Net cash reached Rmb1.4bn and investment portfolio is valued at Rmb7.7bn. This compared attractively relative to current market cap of just HK$4.3bn, or roughly equals to 61% discount.  
Its sports business will suffer in the near term as the rejuvenation progress is weaker than expected. However, this is not an important part and should not move CNDX much. 


China Dongxiang (3818 HK): Disappointing Result, But Still a Very Undervalued Asset Play

China

Xtep International Holdings Ltd. designs, manufactures, and markets sportwear. The Company produces footwear, apparel, and accessories.

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Xtep International (1368 HK)

Topsports International: CCP's ZERO COVID Policy Has a Bigger Whopper Impact than Cheap Valuations

The CCP remains intent on maintaining its ZERO COVID policy which means continued sporadic lockdowns and social distancing measures, which is...

Douglas Kim

China Consumer Discretionary: Darkness Before Dawn

The Covid-induced lockdowns have brought headwinds to China consumer discretionary names in 2Q22, but we are seeing a gradual recovery with...

Osbert Tang, CFA

Li Ning (2331): Turning Positive.

Since the last insight shorting Li Ning would have made investors between 1-2% after the recent rally in the Hong Kong equity market. Now is the...

Henry Soediarko

China Dongxiang (3818 HK): Disappointing Result, But Still a Very Undervalued Asset Play

Bad result should have reflected in the share price, and China Dongxiang is still deeply undervalued with its share trading at 61% discount to the...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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Topsports International: CCP's ZERO COVID Policy Has a Bigger Whopper Impact than Cheap Valuations

The CCP remains intent on maintaining its ZERO COVID policy which means continued sporadic lockdowns and social distancing measures, which is...

Douglas Kim

CTG Duty Free (601888 CH) Pre-IPO: Revival of H-Share IPO

CDFC re-activated its H-share IPO by refreshing its Application Proof. If the issue details are unchanged, it is less attractive than previously...

Osbert Tang, CFA

China Consumer Discretionary: Darkness Before Dawn

The Covid-induced lockdowns have brought headwinds to China consumer discretionary names in 2Q22, but we are seeing a gradual recovery with...

Osbert Tang, CFA

Li Ning (2331): Turning Positive.

Since the last insight shorting Li Ning would have made investors between 1-2% after the recent rally in the Hong Kong equity market. Now is the...

Henry Soediarko

China Dongxiang (3818 HK): Disappointing Result, But Still a Very Undervalued Asset Play

Bad result should have reflected in the share price, and China Dongxiang is still deeply undervalued with its share trading at 61% discount to the...

Osbert Tang, CFA