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China

Brief China: HK Connect Flows: One Year High Inflows into Tencent and more

By | China, Daily Briefs

In this briefing:

  1. HK Connect Flows: One Year High Inflows into Tencent

1. HK Connect Flows: One Year High Inflows into Tencent

Xiaomi corporation %281810 hk%29 weekly southbound inflow2020 01 20%2014 20 54

In our weekly HK Connect Flow series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.

In a Hong Kong exchange report released in July, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors’ 10% and UK investors’ 7% share respectively. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

We highlight top inflows into Tencent Holdings (700 HK), Xiaomi Corp (1810 HK), and Sunac China Holdings (1918 HK), as well as top outflows from Ping An Insurance (H) (2318 HK), Huaneng Renewables Corp H (958 HK), and China Resources Land (1109 HK).

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Brief China: HK Connect Flows: One Year High Inflows into Tencent and more

By | China, Daily Briefs

In this briefing:

  1. HK Connect Flows: One Year High Inflows into Tencent
  2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

1. HK Connect Flows: One Year High Inflows into Tencent

Xiaomi corporation %281810 hk%29 weekly southbound inflow2020 01 20%2014 20 54

In our weekly HK Connect Flow series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.

In a Hong Kong exchange report released in July, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors’ 10% and UK investors’ 7% share respectively. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

We highlight top inflows into Tencent Holdings (700 HK), Xiaomi Corp (1810 HK), and Sunac China Holdings (1918 HK), as well as top outflows from Ping An Insurance (H) (2318 HK), Huaneng Renewables Corp H (958 HK), and China Resources Land (1109 HK).

2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

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Brief China: EV Batteries Monthly: COVID 19 Risks; Panasonic-Tesla Gigafactory Profits & CATL Partners with Tesla and more

By | China, Daily Briefs

In this briefing:

  1. EV Batteries Monthly: COVID 19 Risks; Panasonic-Tesla Gigafactory Profits & CATL Partners with Tesla
  2. Morning Views Asia: Modern Land China
  3. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place
  4. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic
  5. Shanghai International Airport (600009 CH): Best of the Breed

1. EV Batteries Monthly: COVID 19 Risks; Panasonic-Tesla Gigafactory Profits & CATL Partners with Tesla

Image 48627219121582076013131

Highlights since our last monthly- ‘EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions’ are as follows:

  • In the last monthly, we stated that no further cut in NEV subsidy in China would suggest better market conditions for battery players there. However, the recent coronavirus outbreak and the production stoppage signal possible supply chain disruption risk for the battery players, although their key plants are currently located away from the affected province.
  • Panasonic Corp (6752 JP):
    • 3Q results point to recovery.
    • Gigafactory with Tesla made profits during the quarter. However, stabilisation of profits depends on Tesla’s ability to meet production targets.
    • The company continues moving towards Toyota Motor (7203 JP) regardless of the Gigafactory making profits.
  • CATL (A) (300750 CH) confirms tie-up with Tesla Motors (TSLA US). While the move might benefit Tesla, we think otherwise for CATL, as mentioned in CATL Could Be Tesla’s New Battery Supplier- Panasonic in Trouble?. We feel that Panasonic is not losing much by not joining Tesla in China, given its tie-up with Toyota to serve the Chinese market.
  • Tesla has reportedly started the process for building its own battery plant. While this might be true, we think that the success rate of this move and the time period for such an achievement are still questionable.
  • South Korean players seemed rather quiet, except that LG Chem Ltd (051910 KS) has also partnered with Tesla, taking on some risk, while Samsung Sdi (006400 KS) is bent on building its upstream by securing supplies, possibly to serve the deals it has already signed up for.
  • CATL’s share price continued to rise, followed by the Korean players, both outperforming the market. Panasonic’s share price regained following the 3Q earnings release and news on its Gigafactory reporting profits. BYD (1211 HK) continued to see relatively weak performance.

 Source: CapIQ

2. Morning Views Asia: Modern Land China

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

3. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place

  • XTep has followed Anta Sports Products (2020 HK) lead of 17th February and finally updated investors on the situation they are facing relating to the coronavirus disease 2019 (COVID-19) outbreak in China.
  • We examine the implications of the earnings outlook and timing. 
  • We question if the latest release should change our stance on the company.

4. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic

Image?1582013049

  • LK has lost office consumers, as very few employees are in their offices.
  • LK also lost resident consumers, as delivery men cannot enter communities.
  • We believe LK can hardly survive the epidemic.

Our previous coverage on Luckin Coffee:

5. Shanghai International Airport (600009 CH): Best of the Breed

Price%20performance

We regard Shanghai International Airport Co, Ltd. (600009 CH) (SIAC) as the best airport play in China when compared with its peers like Beijing Capital International Airport (BCIA) (694 HK) and Guangzhou Baiyun International Airport (600004 CH) given its strong competitive position, its exposure to international traffic growth in the long term and growth in non-aeronautical revenue. 

Despite its premium P/B valuation, SIAC has a better ROE and stronger profit outlook. We think this justifies the stock’s higher P/B valuation than BCIA. In earnings terms, however, it is the least expensive amongst its peers on FY21 PER. Its high international exposure may be clouded by the Novel Coronavirus Pnemonia (NCP) outbreak, but we expect SIAC to be best positioned for the revival in international traffic over the long term. 

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Brief China: HK Connect Flows: One Year High Inflows into Tencent and more

By | China, Daily Briefs

In this briefing:

  1. HK Connect Flows: One Year High Inflows into Tencent
  2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions
  3. China Internet Weekly (20Jan2020): 18,000 Game Developers Bankrupt, PDD Sued in 1,765 Lawsuits

1. HK Connect Flows: One Year High Inflows into Tencent

Xiaomi corporation %281810 hk%29 weekly southbound inflow2020 01 20%2014 20 54

In our weekly HK Connect Flow series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting observations.

In a Hong Kong exchange report released in July, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors’ 10% and UK investors’ 7% share respectively. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

We highlight top inflows into Tencent Holdings (700 HK), Xiaomi Corp (1810 HK), and Sunac China Holdings (1918 HK), as well as top outflows from Ping An Insurance (H) (2318 HK), Huaneng Renewables Corp H (958 HK), and China Resources Land (1109 HK).

2. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

3. China Internet Weekly (20Jan2020): 18,000 Game Developers Bankrupt, PDD Sued in 1,765 Lawsuits

Image 98273767621579395100706

The Weekly will be suspended for two weeks and be back on February 10, as normally Chinese authorities and companies do not release significant news during the Chinese New Year. The news we can expect is that three tutoring companies will release their quarterly results on January 20th and 21st. They are TAL Education, New Oriental (EDU), and EDU’s subsidiary Koolearn (1797 HK). 

Ratings of our coverage in China:

  • Buy: Alibaba (BABA), Tencent (700 HK), JD.com (JD), Meituan (3690), TAL Education (TAL), New Oriental (EDU).
  • Hold: Ctrip.com (CTRP), Autohome (HTHM), 58.com (WUBA), NetEase (NTES)
  • Sell: Tencent Music (TME), Baidu (BIDU), Weibo (WB), Pinduoduo (PDD)

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Brief China: EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions and more

By | China, Daily Briefs

In this briefing:

  1. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions
  2. China Internet Weekly (20Jan2020): 18,000 Game Developers Bankrupt, PDD Sued in 1,765 Lawsuits
  3. Hong Kong Buyback Weekly: Xingyi Glass, Yichang HEC, Consun Pharma

1. EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Image 22892592331579491277918

The highlights for December are as follows:

  • Panasonic:
    • The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
    • A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
    • Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.
  • There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
  • CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
  • South Korean players had no major battery highlights last month.
  • CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.

Source: CapIQ

2. China Internet Weekly (20Jan2020): 18,000 Game Developers Bankrupt, PDD Sued in 1,765 Lawsuits

Image 98273767621579395100706

The Weekly will be suspended for two weeks and be back on February 10, as normally Chinese authorities and companies do not release significant news during the Chinese New Year. The news we can expect is that three tutoring companies will release their quarterly results on January 20th and 21st. They are TAL Education, New Oriental (EDU), and EDU’s subsidiary Koolearn (1797 HK). 

Ratings of our coverage in China:

  • Buy: Alibaba (BABA), Tencent (700 HK), JD.com (JD), Meituan (3690), TAL Education (TAL), New Oriental (EDU).
  • Hold: Ctrip.com (CTRP), Autohome (HTHM), 58.com (WUBA), NetEase (NTES)
  • Sell: Tencent Music (TME), Baidu (BIDU), Weibo (WB), Pinduoduo (PDD)

3. Hong Kong Buyback Weekly: Xingyi Glass, Yichang HEC, Consun Pharma

Image 97853847121579238653820

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. 

In the past 7 days, the top 3 companies that repurchased the most shares from the market were Xinyi Glass Holdings (868 HK) (HKD 35.2 million worth of buybacks), Yichang Hec Changjiang Pharm (1558 HK) (HKD 20.2 million worth of buybacks), Consun Pharmaceutical (1681 HK) (HKD 14.1 million worth of buybacks). There were 34 companies that repurchased shares in the market. These repurchases amounted to HKD 147.6 million.

In the past 30 days, the top 3 companies that repurchased the most shares from the market were Bosideng Intl Hldgs (3998 HK) (HKD 124.9 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 90.6 million worth of buybacks), Xinyi Glass Holdings (868 HK) (HKD 65.3 million worth of buybacks). 

In the past 90 days, the top 3 companies that repurchased the most shares from the market were Xiaomi Corp (1810 HK) (HKD 1,014.4 million worth of buybacks), Jacobson Pharma (2633 HK) (HKD 127.6 million worth of buybacks), Bosideng International Holdings Limited (3998 HK) (HKD 124.9 million worth of buybacks). 

In the past year, the top 3 companies that repurchased the most shares from the market were Xiaomi Corporation (1810 HK) (HKD 3,114.2 million worth of buybacks), Tencent Holdings (700 HK) (HKD 1,125.6 million worth of buybacks), E House China Holdings (2048 HK) (HKD 832.0 million worth of buybacks). 

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Brief China: Morning Views Asia: Modern Land China and more

By | China, Daily Briefs

In this briefing:

  1. Morning Views Asia: Modern Land China
  2. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place
  3. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic
  4. Shanghai International Airport (600009 CH): Best of the Breed
  5. HSCEI Rejection Level

1. Morning Views Asia: Modern Land China

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

2. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place

  • XTep has followed Anta Sports Products (2020 HK) lead of 17th February and finally updated investors on the situation they are facing relating to the coronavirus disease 2019 (COVID-19) outbreak in China.
  • We examine the implications of the earnings outlook and timing. 
  • We question if the latest release should change our stance on the company.

3. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic

Image?1582013049

  • LK has lost office consumers, as very few employees are in their offices.
  • LK also lost resident consumers, as delivery men cannot enter communities.
  • We believe LK can hardly survive the epidemic.

Our previous coverage on Luckin Coffee:

4. Shanghai International Airport (600009 CH): Best of the Breed

Ncp%20cases%20 %203%20cities

We regard Shanghai International Airport Co, Ltd. (600009 CH) (SIAC) as the best airport play in China when compared with its peers like Beijing Capital International Airport (BCIA) (694 HK) and Guangzhou Baiyun International Airport (600004 CH) given its strong competitive position, its exposure to international traffic growth in the long term and growth in non-aeronautical revenue. 

Despite its premium P/B valuation, SIAC has a better ROE and stronger profit outlook. We think this justifies the stock’s higher P/B valuation than BCIA. In earnings terms, however, it is the least expensive amongst its peers on FY21 PER. Its high international exposure may be clouded by the Novel Coronavirus Pnemonia (NCP) outbreak, but we expect SIAC to be best positioned for the revival in international traffic over the long term. 

5. HSCEI Rejection Level

Hscei

Hang Seng China Enterprises Index (HSCEI INDEX) has rallied back to test the underside of broken wedge support which is now labeled backswing resistance. Current resistance near 10,920 is a natural rejection level.

It is the rising wedge formation in H shares that has our attention as well as similar wedge patterns noted in the HSI, Korea and Singapore.

Wedge patterns like this show a 70% probability of breaking to the downside but when you add in the bear divergence tact, odds increase to 85%. Given the late January break of wedge support this is labeled a re test where a rejection is expected with 11,000 acting as a key pivot level just above noted resistance.

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Brief China: Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending and more

By | China, Daily Briefs

In this briefing:

  1. Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending

1. Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending

Pb

Lonking Holdings (3339 HK) has been a laggard among the Chinese construction machinery companies in last year’s rally. However, we think that the company has excellent exposure to a recovery in China’s infrastructure spending, given its number one position in the wheel loader market in the country. 

We like Lonking’s quality management, willingness to reward shareholders, strong financial position and undemanding valuations. We estimate that the stock is now trading on just 5.9x PER and 11% dividend yield for FY20; and it is a cheap and quality alternative to peers including Sany Heavy Industry Co., (600031 CH) and Zoomlion Heavy Industry S A (000157 CH) which have run up by 102.3% and 92.2%, respectively, in last year.

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Brief China: Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place and more

By | China, Daily Briefs

In this briefing:

  1. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place
  2. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic
  3. Shanghai International Airport (600009 CH): Best of the Breed
  4. HSCEI Rejection Level
  5. Peijia Medical (沛嘉医疗) Pre-IPO: Reminiscence of Venus Medtech?

1. Notes from the Silk Road: XTep Int’l Holdings (1368 HK): Negative Earnings Watch in Place

  • XTep has followed Anta Sports Products (2020 HK) lead of 17th February and finally updated investors on the situation they are facing relating to the coronavirus disease 2019 (COVID-19) outbreak in China.
  • We examine the implications of the earnings outlook and timing. 
  • We question if the latest release should change our stance on the company.

2. Luckin Coffee (LK) On the Ground: Lost Residential and Office Consumers Due to Epidemic

Image?1582013051

  • LK has lost office consumers, as very few employees are in their offices.
  • LK also lost resident consumers, as delivery men cannot enter communities.
  • We believe LK can hardly survive the epidemic.

Our previous coverage on Luckin Coffee:

3. Shanghai International Airport (600009 CH): Best of the Breed

Price%20performance

We regard Shanghai International Airport Co, Ltd. (600009 CH) (SIAC) as the best airport play in China when compared with its peers like Beijing Capital International Airport (BCIA) (694 HK) and Guangzhou Baiyun International Airport (600004 CH) given its strong competitive position, its exposure to international traffic growth in the long term and growth in non-aeronautical revenue. 

Despite its premium P/B valuation, SIAC has a better ROE and stronger profit outlook. We think this justifies the stock’s higher P/B valuation than BCIA. In earnings terms, however, it is the least expensive amongst its peers on FY21 PER. Its high international exposure may be clouded by the Novel Coronavirus Pnemonia (NCP) outbreak, but we expect SIAC to be best positioned for the revival in international traffic over the long term. 

4. HSCEI Rejection Level

Hscei

Hang Seng China Enterprises Index (HSCEI INDEX) has rallied back to test the underside of broken wedge support which is now labeled backswing resistance. Current resistance near 10,920 is a natural rejection level.

It is the rising wedge formation in H shares that has our attention as well as similar wedge patterns noted in the HSI, Korea and Singapore.

Wedge patterns like this show a 70% probability of breaking to the downside but when you add in the bear divergence tact, odds increase to 85%. Given the late January break of wedge support this is labeled a re test where a rejection is expected with 11,000 acting as a key pivot level just above noted resistance.

5. Peijia Medical (沛嘉医疗) Pre-IPO: Reminiscence of Venus Medtech?

Image?1581992965

Peijia Medical is a leading domestic player in the transcatheter valve therapeutic medical device market and the neurointerventional procedural medical devices.

The company’s core TAVR product TaurusOne will be commercialized soon in 4Q2020. Having said that, the company is three years behind its domestic competitors, including Venus MedTech (2500 HK), Suzhou Jiecheng and Microport Scientific (853 HK). TAVR market is characterized by under-penetration and rapid growth.

The company is also a leading domestic player in the neurointerventional product. We believe its newly launched guide catheter complements its existing guide wire and micro catheter well. The company will benefit from the market growth as well as replacement of international products by its domestic competitors.

The company has a strong founder team with relevant experience in the interventional device market. The CEO and COO have worked in MicroPort Scientific which is a leading interventional medical device company in China. It also attracted a decent line-up of pre-IPO investors. 


If you have not read our 2019 IPO Analytic Series, please have a look:

Aequitas Research 2019 IPO Analytics

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Brief China: Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending and more

By | China, Daily Briefs

In this briefing:

  1. Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending
  2. Trade Deal/ Tech War/ Financial Services/ Taiwan/ Scams
  3. China Phase 1 – Dumb Deal

1. Lonking (3339 HK): A Cheap and Quality Pick for China’s Infrastructure Spending

Pb

Lonking Holdings (3339 HK) has been a laggard among the Chinese construction machinery companies in last year’s rally. However, we think that the company has excellent exposure to a recovery in China’s infrastructure spending, given its number one position in the wheel loader market in the country. 

We like Lonking’s quality management, willingness to reward shareholders, strong financial position and undemanding valuations. We estimate that the stock is now trading on just 5.9x PER and 11% dividend yield for FY20; and it is a cheap and quality alternative to peers including Sany Heavy Industry Co., (600031 CH) and Zoomlion Heavy Industry S A (000157 CH) which have run up by 102.3% and 92.2%, respectively, in last year.

2. Trade Deal/ Tech War/ Financial Services/ Taiwan/ Scams

China News That Matters

  • Signed, sealed but how to deliver? 
  • Risky business
  • Foreign financial services firms rush in
  • The dangers of democracy
  • State-owned scams and scammers

In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

3. China Phase 1 – Dumb Deal

  • Not So Fast:  Mainland China is NOT reducing tariffs on USD 138 bn of existing US imports at rates of 5%-25%, and will only suspend new tariffs. The exchange rate of CNY/USD remains at 7 and is weakening and more than offsets the existing tariffs on mainland Chinese goods.
  • Pie In the Sky:Under Phase 2, the US is demanding mainland China address SOE subsidies, cyber attacks, cross-border data flows, et al.   
  • Sentiment Positive:As for the markets, the draft agreement is a positive for sentiment to the extent this convinces businesses to invest. 

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Brief China: Trade Deal/ Tech War/ Financial Services/ Taiwan/ Scams and more

By | China, Daily Briefs

In this briefing:

  1. Trade Deal/ Tech War/ Financial Services/ Taiwan/ Scams
  2. China Phase 1 – Dumb Deal

1. Trade Deal/ Tech War/ Financial Services/ Taiwan/ Scams

China News That Matters

  • Signed, sealed but how to deliver? 
  • Risky business
  • Foreign financial services firms rush in
  • The dangers of democracy
  • State-owned scams and scammers

In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

2. China Phase 1 – Dumb Deal

  • Not So Fast:  Mainland China is NOT reducing tariffs on USD 138 bn of existing US imports at rates of 5%-25%, and will only suspend new tariffs. The exchange rate of CNY/USD remains at 7 and is weakening and more than offsets the existing tariffs on mainland Chinese goods.
  • Pie In the Sky:Under Phase 2, the US is demanding mainland China address SOE subsidies, cyber attacks, cross-border data flows, et al.   
  • Sentiment Positive:As for the markets, the draft agreement is a positive for sentiment to the extent this convinces businesses to invest. 

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