HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

The Shenzhen Story: A Look at the Pair Trades on SZ Int, SZ Exp and SZ Inv

Shenzhen Investment (604 HK): Good Story yet Less Attractive than Shenzhen International (152.HK)

China Logistics: Key Beneficiaries of China's Greater Bay Area Postal and Express Development

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

Shenzhen Intl (152 HK): A Gem in the Greater Bay Area

China Real Estate: China Might Finally Be Getting Its Own REITs

Equity Bottom-Up

Shenzhen International / Equity Bottom-Up

<p>Shenzhen Airlines (SZA), <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>'s 49%-owned associated company, posted a sharp turnaround in 3Q20 with a profit of Rmb239m, compared with a loss of Rmb2.2bn in 1H20. This has very positive implications on SZIH given that SZA is its major profit contributor. Adding to that is the full recovery at its 51.56%-owned <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> (SZEX) which recorded a 1.9% YoY profit growth in 3Q20. We estimate that SZEX and SZA together will generate a massive positive swing of HK$1.7bn in SZIH's bottom line in 3Q20 when compared with 1H20.</p><p>In our view, the solid results of these two operating entities showcased a good momentum on SZIH's business segments in 2H20. With further improvement in its logistics business, we are positive on SZIH's recovery in 2H20. From the COVID-19 trough, the stock has underperformed the share price rebounds of the H-share airlines and H-share toll roads, yet SZEX and SZA normally contribute 86-87% of SZIH's recurrent earnings. That said, we see good value in SZIH which trades on undemanding 0.87x P/B.</p>

Shenzhen Airlines (SZA), Shenzhen Intl (152 HK)'s 49%-owned associated company, posted a sharp turnaround in 3Q20 with a profit of Rmb239m, compared with a loss of Rmb2.2bn in 1H20. This has very positive implications on SZIH given that SZA is its major profit contributor. Adding to that is the full recovery at its 51.56%-owned Shenzhen Expressway Co H (548 HK) (SZEX) which recorded a 1.9% YoY profit growth in 3Q20. We estimate that SZEX and SZA together will generate a massive positive swing of HK$1.7bn in SZIH's bottom line in 3Q20 when compared with 1H20.In our view, the solid results of these two operating entities showcased a good momentum on SZIH's business segments in 2H20. With further improvement in its logistics business, we are positive on SZIH's recovery in 2H20. From the COVID-19 trough, the stock has underperformed the share price rebounds of the H-share airlines and H-share toll roads, yet SZEX and SZA normally contribute 86-87% of SZIH's recurrent earnings. That said, we see good value in SZIH which trades on undemanding 0.87x P/B.

Shenzhen Intl (152 HK): Shenzhen Airlines Returned to Profit in 3Q20