HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Chow Tai Fook Jewellery / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> is one of the best-performing <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index (HSI INDEX)</a> constituents YTD, but it is time to take some money off the table.</li>
<li>At 5%, its 12-month forward dividend yield is about the lowest in the last five years, implying limited share price upside. Valuations have run ahead of earnings momentum.</li>
<li>The recent recovery in Hong Kong jewellery retail sales is partly due to the low base effect. Additionally, a higher gold price will weigh on demand for gold products. </li>
</ul>



Chow Tai Fook Jewellery (1929 HK) is one of the best-performing Hang Seng Index (HSI INDEX) constituents YTD, but it is time to take some money off the table.
At 5%, its 12-month forward dividend yield is about the lowest in the last five years, implying limited share price upside. Valuations have run ahead of earnings momentum.
The recent recovery in Hong Kong jewellery retail sales is partly due to the low base effect. Additionally, a higher gold price will weigh on demand for gold products. 


Chow Tai Fook (1929 HK): A Lot Has Been Priced In

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewellery (6168 HK)</a>'s 1H25 results are healthy, but there are challenges, including weak revenue growth and higher R&amp;D costs.  </li>
<li>Growth is almost entirely driven by online sales, but its plan to expand offline stores rapidly may erode net profit in the near term. </li>
<li>The stock has become the most expensive one in the sector, based on its PERs of 22.4x CY25F and 21.4x CY26F. Its 3-year EPS CAGR of 6.8% is uninspiring.</li>
</ul>



Zhou Liu Fu Jewellery (6168 HK)'s 1H25 results are healthy, but there are challenges, including weak revenue growth and higher R&amp;D costs.  
Growth is almost entirely driven by online sales, but its plan to expand offline stores rapidly may erode net profit in the near term. 
The stock has become the most expensive one in the sector, based on its PERs of 22.4x CY25F and 21.4x CY26F. Its 3-year EPS CAGR of 6.8% is uninspiring.


Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>The value of Laopu lies in its innovation in business model,successfully breaking away from the low-profit attribute of the industry by following the pricing and operation methods of luxury goods.</li>
<li>However, Laopu cannot enjoy the valuation system of luxury brands because it cannot “escape” gold price cycle.So, when valuation of Laopu approaches that of luxury brands, it has overvaluation risks.</li>
<li>Current valuation has priced in overseas expansion, which however isn’t a done deal.During upward cycle of gold prices,it’s easy to optimistically linearly extrapolate Laopu’s growth potential<em>.Valuation</em> faces downward revision risk  </li>
</ul>


The value of Laopu lies in its innovation in business model,successfully breaking away from the low-profit attribute of the industry by following the pricing and operation methods of luxury goods.
However, Laopu cannot enjoy the valuation system of luxury brands because it cannot “escape” gold price cycle.So, when valuation of Laopu approaches that of luxury brands, it has overvaluation risks.
Current valuation has priced in overseas expansion, which however isn’t a done deal.During upward cycle of gold prices,it’s easy to optimistically linearly extrapolate Laopu’s growth potential.Valuation faces downward revision risk  


Laopu Gold (6181.HK) - The Business Model, the Concerns, the Valuation Outlook

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>We see 28 potential and close adds and 34 potential and close deletes for the Hang Seng Composite Index in September. Some of the stocks are close on market cap/liquidity.</li>
<li>A lot of the potential adds are very recently listed stocks that have a limited trading history. The low free float could lead to price spikes in the stocks.</li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 28 potential and close adds and 34 potential and close deletes for the Hang Seng Composite Index in September. Some of the stocks are close on market cap/liquidity.
A lot of the potential adds are very recently listed stocks that have a limited trading history. The low free float could lead to price spikes in the stocks.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect (Sep 2025): Plenty of Recent IPOs Could Be Added

China International Capital Corporation / Equity Bottom-Up

China International Capital Corporation (3908 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-international-capital-corporation-ltd" target="_blank" data-smartkarma-citation="entities:1071:1" rel="noopener">China International Capital Corporation (3908 HK)</a>'s 1H25 positive profit alert is encouraging, with 1H25 results growing by 55-78% YoY.  </li>
<li>YTD, CICC has a 59.5% share of the HK IPO market. The solid H-share IPO pipeline of A-share companies is beneficial, as this is its major area of strength.</li>
<li>Market consensus has underestimated its FY25 earnings, inflating its PER multiples. The current 51% discount of its H-share to A-share is just too steep (average 37.7%).</li>
</ul>



China International Capital Corporation (3908 HK)'s 1H25 positive profit alert is encouraging, with 1H25 results growing by 55-78% YoY.  
YTD, CICC has a 59.5% share of the HK IPO market. The solid H-share IPO pipeline of A-share companies is beneficial, as this is its major area of strength.
Market consensus has underestimated its FY25 earnings, inflating its PER multiples. The current 51% discount of its H-share to A-share is just too steep (average 37.7%).


CICC (3908 HK): It Is the Best of the Time

China

Zhou Liu Fu Jewellery Co., Ltd. engages in the research, design, development, manufacture, and retail of jewelry in China. The company offers a diverse range of gold, diamond-set, platinum, and jade jewelry products, including rings, necklaces, pendants, bracelets, and earrings. It was founded in 2004 and is headquartered in Shenzhen, China.

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Zhou Liu Fu Jewellery (6168 HK)

Chow Tai Fook (1929 HK): A Lot Has Been Priced In

CTF is a top-performing HSI constituent YTD, but with low dividend yield and high valuations, it may be time to sell. Recovery in HK jewellery...

Osbert Tang, CFA

Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Osbert Tang, CFA

Laopu Gold (6181.HK) - The Business Model, the Concerns, the Valuation Outlook

Laopu's innovative business model mimics luxury brands, but overvaluation risks arise due to gold price cycles impact and uncertain overseas...

Xinyao (Criss) Wang

HSCI Index Rebalance Preview and Stock Connect (Sep 2025): Plenty of Recent IPOs Could Be Added

The forecast adds to the index and Stock Connect are up 9.7% on average this month while the forecast deletes from the index and Stock Connect are...

Brian Freitas

CICC (3908 HK): It Is the Best of the Time

CICC is alerting a strong 1H25 profit growth, leading in the HK IPO market with a promising H-share IPO pipeline of A-share companies. The market...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Chow Tai Fook (1929 HK): A Lot Has Been Priced In

CTF is a top-performing HSI constituent YTD, but with low dividend yield and high valuations, it may be time to sell. Recovery in HK jewellery...

Osbert Tang, CFA

Zhou Liu Fu (6168 HK): 1H25 Is Fine, but Still......

​Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Osbert Tang, CFA

Laopu Gold (6181.HK) - The Business Model, the Concerns, the Valuation Outlook

​Laopu's innovative business model mimics luxury brands, but overvaluation risks arise due to gold price cycles impact and uncertain overseas...

Xinyao (Criss) Wang

HSCI Index Rebalance Preview and Stock Connect (Sep 2025): Plenty of Recent IPOs Could Be Added

The forecast adds to the index and Stock Connect are up 9.7% on average this month while the forecast deletes from the index and Stock Connect are...

Brian Freitas

CICC (3908 HK): It Is the Best of the Time

​CICC is alerting a strong 1H25 profit growth, leading in the HK IPO market with a promising H-share IPO pipeline of A-share companies. The market...

Osbert Tang, CFA

Zhou Liu Fu has a healthy 1H25, but faces challenges with weak revenue growth and higher R&D costs. Expansion of offline stores may impact net...

Laopu's innovative business model mimics luxury brands, but overvaluation risks arise due to gold price cycles impact and uncertain overseas...

CICC is alerting a strong 1H25 profit growth, leading in the HK IPO market with a promising H-share IPO pipeline of A-share companies. The market...