HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. </li>
<li>The best growth rates are at <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a>, <a href="https://www.smartkarma.com/entities/china-international-capital-corporation-ltd" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">CICC (3908 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-capital-international-airport-bcia" target="_blank" data-smartkarma-citation="entities:10626:1" rel="noopener">Beijing Capital Intl Airport (694 HK)</a>, <a href="https://www.smartkarma.com/entities/tongcheng-travel-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng Travel (780 HK)</a>, and <a href="https://www.smartkarma.com/entities/sitc-international-holdings" target="_blank" data-smartkarma-citation="entities:15301:1" rel="noopener">SITC Intl (1308 HK)</a>. </li>
<li>The worst ones are <a href="https://www.smartkarma.com/entities/china-travel-international-investment-hong-kong" target="_blank" data-smartkarma-citation="entities:3879:1" rel="noopener">China Travel Intl (308 HK)</a>, <a href="https://www.smartkarma.com/entities/cosco-shipping-energy-tran-h" target="_blank" data-smartkarma-citation="entities:646:1" rel="noopener">Cosco Shipping Energy Transp (1138 HK)</a>, <a href="https://www.smartkarma.com/entities/china-southern-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1078:1" rel="noopener">China Southern Airlines (1055 HK)</a>, <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free" target="_blank" data-smartkarma-citation="entities:36229:1" rel="noopener">CTG Duty Free (1880 HK)</a>, and <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin (2343 HK)</a>. </li>
</ul>


For 1H25, the companies under our coverage will report a 16.8% earnings growth. Breaking down by quarter, 2Q25 growth will accelerate to 30.8%, from 14.1% in 1Q25. 
The best growth rates are at China National Building Material (3323 HK), CICC (3908 HK), Beijing Capital Intl Airport (694 HK), Tongcheng Travel (780 HK), and SITC Intl (1308 HK). 
The worst ones are China Travel Intl (308 HK), Cosco Shipping Energy Transp (1138 HK), China Southern Airlines (1055 HK), CTG Duty Free (1880 HK), and Pacific Basin (2343 HK). 


China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

Podcast by Magellan Asset Management, Magellan Asset Management

MAGELLAN - IN THE KNOW

Podcast by Magellan Asset Management

Magellan Asset Management

‘In The Know’ is a new monthly investment podcast brought to you by Magellan Asset Management, one of Australia’s leading global equities investors. We seek to bring you timely, unique and thought-provoking insights to help you make sense of today’s investment landscape. From deep dives into the latest macroeconomic and geopolitical issues, to our analysis on sectors and stocks on global markets. Join Magellan, as they connect with a myriad of experts in their field, including CEOs of stocks we hold, global leaders and consultants in finance, investing, risk and politics, and key members of our investment team and business. ‘In The Know’ - a monthly podcast from Magellan is worth investing your time in! Magellan - Experts in global investing.

<ul>
<li>Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers</li>
<li>Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand</li>
<li>Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors</li>
</ul>
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.


Gerald Stack, Ben McVicar, and Ofa Karlina discuss investing in infrastructure and the opportunities it offers
Infrastructure assets provide essential services like energy, water, and transport, leading to reliable and predictable long-term demand
Short-term problems or opportunities in infrastructure companies can impact share prices, creating investment opportunities for savvy investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Lessons Learnt from Investing in Essential Services

China kicked off its public infrastructure REIT issuance in Jun with an overwhelmingly positive subscription response from the market. For the 9 REITs in the first batch issuance, average placement allocation rate is 14.5% and public allocation rate is just 6.3%. The fund raised only represented a mere 3.3% average discount to the value of the underlying assets, with toll road dominated the overall mix to account for 40% of the overall amount raised.We think that the good demand is positive for <a href="https://www.smartkarma.com/entities/zhejiang-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2178:1" rel="noopener">Zhejiang Expressway Co H (576 HK)</a>, which is the only one under our coverage involved in the first batch, paving the way for more future issuance by the company. We continue to see the following names as the major beneficiaries of China's public infrastructure REIT program - <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a>, <a href="https://www.smartkarma.com/entities/shenzhen-intl-holdings" target="_blank" data-smartkarma-citation="entities:9:1" rel="noopener">Shenzhen Intl (152 HK)</a>, <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> and <a href="https://www.smartkarma.com/entities/china-everbright-environment-group-limited" target="_blank" data-smartkarma-citation="entities:15946:1" rel="noopener">China Everbright Environment (257 HK)</a>.

China kicked off its public infrastructure REIT issuance in Jun with an overwhelmingly positive subscription response from the market. For the 9 REITs in the first batch issuance, average placement allocation rate is 14.5% and public allocation rate is just 6.3%. The fund raised only represented a mere 3.3% average discount to the value of the underlying assets, with toll road dominated the overall mix to account for 40% of the overall amount raised.We think that the good demand is positive for Zhejiang Expressway Co H (576 HK), which is the only one under our coverage involved in the first batch, paving the way for more future issuance by the company. We continue to see the following names as the major beneficiaries of China's public infrastructure REIT program - China Communications Construction (1800 HK), Shenzhen Intl (152 HK), Sinotrans (598 HK) and China Everbright Environment (257 HK). 

China Infrastructure REITs: Excellent First Batch Result - Good for Zhejiang Expressway (576 HK)

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a <a href="http://www.csrc.gov.cn/newsite/zjhxwfb/xwdd/202004/t20200430_374845.html" target="_blank" rel="noopener">notice</a> in April on establishing a pilot program to promote Infrastructure Real Estate Investment Trust Funds (REITs).The focus will be on supporting key areas such as Beijing-Tianjin-Hebei, Yangtze River Economic Belt, Xiong'an New Area, Guangdong, Hong Kong, Macao and The Great Bay Area, Hainan and the Yangtze River Delta and on industries such as warehousing logistics, toll roads and other transportation facilities, water and electrical heating and other municipal projects, urban sewage waste treatment, solid waste and waste treatment and other pollution control projects.In this Insight, following on from <a href="https://www.smartkarma.com/profiles/osbert-tang-cfa" target="_blank" data-smartkarma-citation="accounts:3879" rel="noopener">Osbert Tang, CFA</a>'s <a href="https://www.smartkarma.com/insights/china-infrastructure-reits-first-look-on-h-share-toll-road-sector" target="_blank" rel="noopener">Insight</a>, we put together a tradeable basket on toll road names listed in Hong Kong and China.

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a pilot program to promote Infrastructure Real Estate Investment Trust Funds (REITs).The focus will be on supporting key areas such as Beijing-Tianjin-Hebei, Yangtze River Economic Belt, Xiong'an New Area, Guangdong, Hong Kong, Macao and The Great Bay Area, Hainan and the Yangtze River Delta and on industries such as warehousing logistics, toll roads and other transportation facilities, water and electrical heating and other municipal projects, urban sewage waste treatment, solid waste and waste treatment and other pollution control projects.In this Insight, following on from Osbert Tang, CFA's Insight, we put together a tradeable basket on toll road names listed in Hong Kong and China.

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

Chinese government's promotion of public infrastructure REITs should benefit many different infrastructure sectors. We first look at the H-share toll road companies and believe REITs can benefit them by: 1.) narrowing the discount to book value and NAV that many of them are currently trading on, and 2.) allowing them to recycle their projects and realise cash inflow for either reducing their debt level or funding of investment in new projects.Over the medium term, we expect REIT program to narrow the underperformance of H-share toll road against the HSCEI. In our view, the H-share toll road companies that will realise the best benefits from infrastructure REIT push are in the following order: 1.) <a href="https://www.smartkarma.com/entities/sichuan-expressway-co-h" target="_blank" data-smartkarma-citation="entities:15375:1" rel="noopener">Sichuan Expressway Co H (107 HK)</a>, 2.) <a href="https://www.smartkarma.com/entities/zhejiang-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2178:1" rel="noopener">Zhejiang Expressway Co H (576 HK)</a>, 3.) <a href="https://www.smartkarma.com/entities/shenzhen-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2875:1" rel="noopener">Shenzhen Expressway Co H (548 HK)</a>, 4.) <a href="https://www.smartkarma.com/entities/jiangsu-express-co-ltd-h" target="_blank" data-smartkarma-citation="entities:9956:1" rel="noopener">Jiangsu Express Co Ltd H (177 HK)</a> and 5.) <a href="https://www.smartkarma.com/entities/anhui-expressway-co-ltd-h" target="_blank" data-smartkarma-citation="entities:5236:1" rel="noopener">Anhui Expressway Co Ltd H (995 HK)</a>.

Chinese government's promotion of public infrastructure REITs should benefit many different infrastructure sectors. We first look at the H-share toll road companies and believe REITs can benefit them by: 1.) narrowing the discount to book value and NAV that many of them are currently trading on, and 2.) allowing them to recycle their projects and realise cash inflow for either reducing their debt level or funding of investment in new projects.Over the medium term, we expect REIT program to narrow the underperformance of H-share toll road against the HSCEI. In our view, the H-share toll road companies that will realise the best benefits from infrastructure REIT push are in the following order: 1.) Sichuan Expressway Co H (107 HK), 2.) Zhejiang Expressway Co H (576 HK), 3.) Shenzhen Expressway Co H (548 HK), 4.) Jiangsu Express Co Ltd H (177 HK) and 5.) Anhui Expressway Co Ltd H (995 HK).

China Infrastructure REITs: First Look on H-Share Toll Road Sector

China

Zhejiang Expressway Co., Ltd. is an investment holding company primarily engaged in the design, construction, operation, maintenance, and management of high-grade roads. It also operates a securities business offering broking, asset management, and other financial services. The company was founded on March 1, 1997, and is headquartered in Hangzhou, China.

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Zhejiang Expressway (576 HK)

China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

The companies under our coverage are expected to report 16.8% earnings growth for 1H25, with 2Q25 accelerating to 30.8%. Top performers include...

Osbert Tang, CFA

Lessons Learnt from Investing in Essential Services

The podcast explores the benefits of investing in infrastructure assets for reliable long-term cash flows and opportunities for growth.

MAGELLAN - IN THE KNOW

China Infrastructure REITs: Excellent First Batch Result - Good for Zhejiang Expressway (576 HK)

Good response to the first batch of China public infrastructure REIT issuance indicates investor demand, and this is positive to Zhejiang Exp,...

Osbert Tang, CFA

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China & HK Strategy: 1H25 Preview - Where Are the Upside and Downside Surprises?

The companies under our coverage are expected to report 16.8% earnings growth for 1H25, with 2Q25 accelerating to 30.8%. Top performers include...

Osbert Tang, CFA

Lessons Learnt from Investing in Essential Services

The podcast explores the benefits of investing in infrastructure assets for reliable long-term cash flows and opportunities for growth.

MAGELLAN - IN THE KNOW

China Infrastructure REITs: Excellent First Batch Result - Good for Zhejiang Expressway (576 HK)

Good response to the first batch of China public infrastructure REIT issuance indicates investor demand, and this is positive to Zhejiang Exp,...

Osbert Tang, CFA

China Infrastructure REITs: Toll Road Baskets on H-Shares and A-Shares

The National Development and Reform Commission of the China Securities Regulatory Commission (CSRC) released a notice in April on establishing a...

Brian Freitas

China Infrastructure REITs: First Look on H-Share Toll Road Sector

Chinese government's promotion of public infrastructure REITs should benefit many different infrastructure sectors. We first look at the H-share...

Osbert Tang, CFA