Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Equity Bottom-Up

<ul>
<li>Zhongsheng share price surged by 26% on Friday as investors warms up to China, and accumulate beaten down consumer stocks. Zhongsheng was the top performing HSI stock.  </li>
<li>Businesswise, nothing has changed and consensus earnings for Zhongsheng remain largely unchanged. It is all about positive re-rating of the Chinese markets. </li>
<li>Our fair value is raised to HKD16-20.5, based on historical mean PE of 9.4x and ceiling of 12x. Zhongsheng is still cheap and have further upside potential in our view. </li>
</ul>


Zhongsheng share price surged by 26% on Friday as investors warms up to China, and accumulate beaten down consumer stocks. Zhongsheng was the top performing HSI stock.  
Businesswise, nothing has changed and consensus earnings for Zhongsheng remain largely unchanged. It is all about positive re-rating of the Chinese markets. 
Our fair value is raised to HKD16-20.5, based on historical mean PE of 9.4x and ceiling of 12x. Zhongsheng is still cheap and have further upside potential in our view. 


Zhongsheng Group Holdings (881 HK, BUY, TP:HKD16.0-20.5): Long Overdue PoP, Still More Valuation Gap

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>While the worst-performing stocks in 2023 have gone down by an average of 17.6% YTD, their pick-up in the last month is significant at 19.9%. </li>
<li>The cut in US interest rate and the Chinese government's stimulus measures will benefit the HSI, providing room for shifting position from heavily overweighted names to underweighted.</li>
<li>
<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>, <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a>, and <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> are the key "dogs" in last year that are worth a look. </li>
</ul>


While the worst-performing stocks in 2023 have gone down by an average of 17.6% YTD, their pick-up in the last month is significant at 19.9%. 
The cut in US interest rate and the Chinese government's stimulus measures will benefit the HSI, providing room for shifting position from heavily overweighted names to underweighted.

Li Ning (2331 HK), Meituan (3690 HK), Wuxi Biologics (2269 HK), and Zhongsheng Group (881 HK) are the key "dogs" in last year that are worth a look. 


China & HK Strategy: Time for The "Dogs" To Revenge?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>After publishing my insight (<a href="https://skr.ma/y1QWE" target="_blank" rel="noopener">Jardine Matheson (JM SP): Trading "Cheap"</a>) last week, my NAV calcs were called into question by some readers, when compared to street estimates.</li>
<li>Which is cool. I'm big enough to admit mistakes, where needed. So I've done some digging, including a back and forth with <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>.</li>
<li>The upshot? I have not lead you astray. You've been coming to the right place.</li>
</ul>


After publishing my insight (Jardine Matheson (JM SP): Trading "Cheap") last week, my NAV calcs were called into question by some readers, when compared to street estimates.
Which is cool. I'm big enough to admit mistakes, where needed. So I've done some digging, including a back and forth with Jardine Matheson Holdings (JM SP).
The upshot? I have not lead you astray. You've been coming to the right place.


Jardine Matheson (JM SP): Squeezing More Life Out Of The NAV

<ul>
<li>Historical valuation affirms that Zhongzheng is the cheapest it has been in the past 10 years </li>
<li>Chart analysis is to compliment our recent report <a href="https://www.smartkarma.com/insights/zhongsheng-group-holdings-881-hk-buy-tp-hkd12-5-a-contrarian-play" target="_blank" data-smartkarma-citation="insights:157671" rel="noopener">Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play</a> published yesterday</li>
<li>Our TP of HKD12.5 is based on FY25 PE of 5x. This implies an UPSIDE POTENTIAL of 33%. It also delivers a dividend yield of ~9% at current prices. </li>
</ul>


Historical valuation affirms that Zhongzheng is the cheapest it has been in the past 10 years 
Chart analysis is to compliment our recent report Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play published yesterday
Our TP of HKD12.5 is based on FY25 PE of 5x. This implies an UPSIDE POTENTIAL of 33%. It also delivers a dividend yield of ~9% at current prices. 


Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap

<ul>
<li>1H24 results were below expectations, with profits halved YoY. Irrational competition with overzealous discounts, and general decline in preference of traditional luxury cars for NEVs is hurting Zhongzheng (ZS)</li>
<li>Signs of bottoming as industry are trying to stop the discounting madness and instill some level of rationality</li>
<li>ZS is trading at 0.47x book, its cash = MCAP, and FY25 PE of 3.7x. Ridiculously cheap for a profitable and positive FCF churning company.  </li>
</ul>


1H24 results were below expectations, with profits halved YoY. Irrational competition with overzealous discounts, and general decline in preference of traditional luxury cars for NEVs is hurting Zhongzheng (ZS)
Signs of bottoming as industry are trying to stop the discounting madness and instill some level of rationality
ZS is trading at 0.47x book, its cash = MCAP, and FY25 PE of 3.7x. Ridiculously cheap for a profitable and positive FCF churning company.  


Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play

China

Zhongsheng Group Holdings Ltd. retails automobiles.  The Company imports and retails primarily luxury and mid- to high-end automobile brands.

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Zhongsheng Group (881 HK)

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD16.0-20.5): Long Overdue PoP, Still More Valuation Gap

Zhongsheng share price has finally popped after 3-year underperformance. The stock remains cheap based on historical valuation ranges, and we think...

Mohshin Aziz

China & HK Strategy: Time for The "Dogs" To Revenge?

The "Dogs" surged more significantly than the HSI in the last two days. On average, their share price rose by 10.6%, outperforming the Index by...

Osbert Tang, CFA

Jardine Matheson (JM SP): Squeezing More Life Out Of The NAV

I've bolted on US$0.5bn to NAV. That adjustment doesn't move the needle. Look to set up the stub: Long JMH, short DFI, HKL, MO & JC&C on a...

David Blennerhassett

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap

Historical valuation shows Zhongzheng is the cheapest in 10 years for all the traditional valuation metrics. Stock is really cheap, our target...

Mohshin Aziz

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play

Zhongzheng profits halved due to irrational competition and shift to NEVs, but signs of recovery as industry aims to curb discounts. ZS trading at...

Mohshin Aziz

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD16.0-20.5): Long Overdue PoP, Still More Valuation Gap

Zhongsheng share price has finally popped after 3-year underperformance. The stock remains cheap based on historical valuation ranges, and we think...

Mohshin Aziz

China & HK Strategy: Time for The "Dogs" To Revenge?

The "Dogs" surged more significantly than the HSI in the last two days. On average, their share price rose by 10.6%, outperforming the Index by...

Osbert Tang, CFA

Jardine Matheson (JM SP): Squeezing More Life Out Of The NAV

I've bolted on US$0.5bn to NAV. That adjustment doesn't move the needle. Look to set up the stub: Long JMH, short DFI, HKL, MO & JC&C on a...

David Blennerhassett

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap

​Historical valuation shows Zhongzheng is the cheapest in 10 years for all the traditional valuation metrics. Stock is really cheap, our target...

Mohshin Aziz

Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play

​Zhongzheng profits halved due to irrational competition and shift to NEVs, but signs of recovery as industry aims to curb discounts. ZS trading at...

Mohshin Aziz

Historical valuation shows Zhongzheng is the cheapest in 10 years for all the traditional valuation metrics. Stock is really cheap, our target...

Zhongzheng profits halved due to irrational competition and shift to NEVs, but signs of recovery as industry aims to curb discounts. ZS trading at...