HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lonking-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3944:1" rel="noopener">Lonking Holdings (3339 HK)</a>'s positive profit alert suggested that FY24 earnings will beat the market consensus by a significant 25.8-34.6%. </li>
<li>Better profitability indicates that it will further accumulate net cash. At an unchanged 50% payout ratio, it yields 7.8%, but at a higher payout of 70%, it will be 10.9%.</li>
<li>Trading on 0.59x P/B, it is at the historical average valuation. If 1SD above average, there will be a 20% upside. It will go to HK$2.20 if 2SD above.</li>
</ul>



Lonking Holdings (3339 HK)'s positive profit alert suggested that FY24 earnings will beat the market consensus by a significant 25.8-34.6%. 
Better profitability indicates that it will further accumulate net cash. At an unchanged 50% payout ratio, it yields 7.8%, but at a higher payout of 70%, it will be 10.9%.
Trading on 0.59x P/B, it is at the historical average valuation. If 1SD above average, there will be a 20% upside. It will go to HK$2.20 if 2SD above.


Lonking (3339 HK): A (Massive) Positive Profit Alert

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Zoomlion Heavy Industry H / Equity Bottom-Up

<ul>
<li>Hong Kong continues its secular bull market and has now reached its first significant resistance in the 24k to 25k.  Growth factor investing is leading in long-only investing.</li>
<li>Mainland buyers continue buying Hong Kong stocks at a historic rate with buying focused in the tech sector and specifically in AI-related companies.</li>
<li>
<a href="https://www.smartkarma.com/entities/zoomlion-heavy-industry-h" target="_blank" data-smartkarma-citation="entities:7817:1" rel="noopener">Zoomlion Heavy Industry H (1157 HK)</a> has broken its double-top formation and is at a new high.  <a href="https://www.smartkarma.com/entities/vtech-holdings-ltd" target="_blank" data-smartkarma-citation="entities:18812:1" rel="noopener">Vtech Holdings (303 HK)</a> broke out to a new high with improving momentum.
</li>
</ul>


Hong Kong continues its secular bull market and has now reached its first significant resistance in the 24k to 25k.  Growth factor investing is leading in long-only investing.
Mainland buyers continue buying Hong Kong stocks at a historic rate with buying focused in the tech sector and specifically in AI-related companies.

Zoomlion Heavy Industry H (1157 HK) has broken its double-top formation and is at a new high.  Vtech Holdings (303 HK) broke out to a new high with improving momentum.



Technically Speaking, Breakouts and Breakdowns: HONG KONG (March 6)

Macroeconomics

<ul>
<li>China will roll out its 2026 - 2030 five-year plan this month, which outline the economic and social roadmap until the end of the decade.  </li>
<li>Historically the five-year plans have been a roadmap for investors to look for tailwinds for economic sector performance.  We believe the high-tech industries will remain the main focus for investment.</li>
<li>Exporters of high-end equipment and machinery will continue to benefit with the consumption sector being a focus for international investors.</li>
</ul>


China will roll out its 2026 - 2030 five-year plan this month, which outline the economic and social roadmap until the end of the decade.  
Historically the five-year plans have been a roadmap for investors to look for tailwinds for economic sector performance.  We believe the high-tech industries will remain the main focus for investment.
Exporters of high-end equipment and machinery will continue to benefit with the consumption sector being a focus for international investors.


EMERGING THEMES: China's Next 5 Year Plan

<ul>
<li>Industry sales of wheel loaders and excavators surged 16.5% and 27.2% in 2M25. For Feb alone, the growth rates are even more impressive at 34.4% and 52.8%, respectively.</li>
<li>Post-CNY, the utilisation hours and rates of construction machinery rose 70.3% YoY and 12.3pp. Market share gain in developing countries will drive exports.</li>
<li>Government supportive policies announced in NPC will provide support to demand. Current consensus forecasts for profit decline in FY25 are disconnected from industry data.</li>
</ul>


Industry sales of wheel loaders and excavators surged 16.5% and 27.2% in 2M25. For Feb alone, the growth rates are even more impressive at 34.4% and 52.8%, respectively.
Post-CNY, the utilisation hours and rates of construction machinery rose 70.3% YoY and 12.3pp. Market share gain in developing countries will drive exports.
Government supportive policies announced in NPC will provide support to demand. Current consensus forecasts for profit decline in FY25 are disconnected from industry data.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/lonking-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3944:1" rel="noopener">Lonking Holdings (3339 HK)</a>'s positive profit alert for 33-50% YoY increase in 1H24 earnings suggests that market consensus of just 10% full-year growth is way too conservative.  </li>
<li>Industry sales momentum for excavators and wheel loaders has accelerated in the last three months. A low base in 2H24 will mean an even stronger recovery.</li>
<li>Government supportive measures for equipment renewal and faster special purpose bond issuance will fuel demand too. We estimate net cash equals 90% of the share price. </li>
</ul>



Lonking Holdings (3339 HK)'s positive profit alert for 33-50% YoY increase in 1H24 earnings suggests that market consensus of just 10% full-year growth is way too conservative.  
Industry sales momentum for excavators and wheel loaders has accelerated in the last three months. A low base in 2H24 will mean an even stronger recovery.
Government supportive measures for equipment renewal and faster special purpose bond issuance will fuel demand too. We estimate net cash equals 90% of the share price. 


Lonking (3339 HK): Setting the Stage for Better Profitability

China

Zoomlion Heavy Industry Science and Technology Co., Ltd.manufactures and markets construction machinery.  The Company's products include concrete machinery, cranes, road machinery, drilling equipment, and other heavy construction equipment.  Zoomlion also produces environmental machinery and satellite navigation products.

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Zoomlion Heavy Industry H (1157 HK)

Lonking (3339 HK): A (Massive) Positive Profit Alert

Lonking's net profit reached Rmb1.02bn in FY24, a 57.8% growth. For 2H24, net profit surged 65.7%, with gross margin expanding 2pp. A final DPS of...

Osbert Tang, CFA

Technically Speaking, Breakouts and Breakdowns: HONG KONG (March 6)

Hong Kong continues its secular bull market outperforming global markets over the last year. After advancing more than 20% this year, the market...

David Mudd

EMERGING THEMES: China's Next 5 Year Plan

China will roll out its 2026 - 2030 five-year plan this month, outlining the economic and social roadmap until the end of the decade.Historically...

David Mudd

Lonking (3339 HK): Boom, Boom, Boom

Sany Intl's net profit grew 23.2% in 1Q25, suggesting good momentum for the construction and heavy machinery demand. CCMA data also indicated that...

Osbert Tang, CFA

Lonking (3339 HK): Setting the Stage for Better Profitability

Lonking expects 1H24 earnings to grow by 33-50% YoY, signaling a much stronger full-year performance than market consensus. Industry sales...

Osbert Tang, CFA

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52-week Range

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Lonking (3339 HK): A (Massive) Positive Profit Alert

Lonking's net profit reached Rmb1.02bn in FY24, a 57.8% growth. For 2H24, net profit surged 65.7%, with gross margin expanding 2pp. A final DPS of...

Osbert Tang, CFA

Technically Speaking, Breakouts and Breakdowns: HONG KONG (March 6)

Hong Kong continues its secular bull market outperforming global markets over the last year. After advancing more than 20% this year, the market...

David Mudd

EMERGING THEMES: China's Next 5 Year Plan

China will roll out its 2026 - 2030 five-year plan this month, outlining the economic and social roadmap until the end of the decade.Historically...

David Mudd

Lonking (3339 HK): Boom, Boom, Boom

Sany Intl's net profit grew 23.2% in 1Q25, suggesting good momentum for the construction and heavy machinery demand. CCMA data also indicated that...

Osbert Tang, CFA

Lonking (3339 HK): Setting the Stage for Better Profitability

​Lonking expects 1H24 earnings to grow by 33-50% YoY, signaling a much stronger full-year performance than market consensus. Industry sales...

Osbert Tang, CFA

Lonking expects 1H24 earnings to grow by 33-50% YoY, signaling a much stronger full-year performance than market consensus. Industry sales...