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.

Sinotrans (598 HK): Very Encouraging Profit Recovery Momentum in 2Q20

China Transportation: Strong Aug Export to Benefit Sinotrans (598 HK) And SITC Intl (1308 HK)

Sinotrans (0598 HK): China Merchants Group to Increase Stake - A Target for Privatisation?

Sinotrans (0598 HK): 1Q20 in Line, Still See Positive Risk-Return Payoff at Historical Low Valuation

Sinotrans (598 HK): Favorable Risk-Return Payoff

Equity Bottom-Up

<p>We see room for <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans Limited H (598 HK)</a> to have a substantial catch up in share price upon its release of the 1H20 result set for the end of Aug. All major macro and industry indicators suggest a good recovery in its businesses in 2Q20, and this should lead to a recovery in its profit in the quarter; but the share price is yet to reflect this. It has performed in tandem with one of its major suppliers - <a href="https://www.smartkarma.com/entities/china-cosco-holdings-h" target="_blank" data-smartkarma-citation="entities:286:1" rel="noopener">Cosco Shipping Holdings Co., Ltd (H) (1919 HK)</a> - in 1H20; and since end-Jun, COSCO has rallied 65%.</p><p>Although FY20 is a tough year, we forecast it will still generate an ROE of 6% and maintain a very healthy balance sheet with a marginal net debt position. As such, the stock's 0.36x 12-month forward P/B, or 1.5 SD below average, is undemanding. We believe the 1H20 result may potentially trigger a reversion to mean.  Even if the stock's valuation just returns to 1 SD below historical average (ie 0.48x P/B), this will still generate an impressive upside of 33%.</p>

We see room for Sinotrans Limited H (598 HK) to have a substantial catch up in share price upon its release of the 1H20 result set for the end of Aug. All major macro and industry indicators suggest a good recovery in its businesses in 2Q20, and this should lead to a recovery in its profit in the quarter; but the share price is yet to reflect this. It has performed in tandem with one of its major suppliers - Cosco Shipping Holdings Co., Ltd (H) (1919 HK) - in 1H20; and since end-Jun, COSCO has rallied 65%.Although FY20 is a tough year, we forecast it will still generate an ROE of 6% and maintain a very healthy balance sheet with a marginal net debt position. As such, the stock's 0.36x 12-month forward P/B, or 1.5 SD below average, is undemanding. We believe the 1H20 result may potentially trigger a reversion to mean.  Even if the stock's valuation just returns to 1 SD below historical average (ie 0.48x P/B), this will still generate an impressive upside of 33%.

Sinotrans

Sinotrans (598 HK): Ready for a Blowout?