20180820-中国银河国际证券-Short_Selling_Analysis_for_August10_6页_1mb

Short Selling Analysis for August 10

Core Content Overview

This document provides an analysis of short selling activity in Hong Kong stocks based on data released by the Hong Kong Securities and Futures Commission (HKSC). The analysis focuses on three key criteria: (i) the net change in short positions between August 3 and August 10, (ii) short positions as a percentage of free float, and (iii) the absolute amount of short positions. The goal is to identify stocks that may be vulnerable to short-selling pressure and those that have seen a significant decline.

Key Companies Identified

Vulnerable to Short-Selling Activity

• China Education (0839.HK)

  • Short positions increased by 46.8% during the week ended August 10.
  • Outstanding short positions accounted for 4.08% of its free float.
  • The 5-day moving average short-selling amount rose to HK$25.6m from HK$3.15m.
  • Price dropped by 33.6% from HK$12.5 to HK$8.3.
  • Market cap: HK$16,768m, 2018E PER: 23.33x, 2019E PER: 17.41x, PBR: 2.58x, 2018E Dividend Yield: 0.95%.

• Wuxi Bio (2269.HK)

  • Short positions increased by 22.5% during the week ended August 10.
  • Outstanding short positions accounted for 5.46% of its free float.
  • The 5-day moving average short-selling amount rose to HK$135m from HK$69m.
  • Price dropped by 18.5% from HK$76.7 to HK$62.5.
  • Market cap: HK$76,537m, 2018E PER: 111.64x, 2019E PER: 65.73x, PBR: 15.84x, 2018E Dividend Yield: 0.02%.

Short Positions Declined

• Chaowei Power (0951.HK)
  • Short positions decreased by 17.3% during the week ended August 10.
  • Outstanding short positions accounted for 10.19% of its free float.
  • The 5-day moving average short-selling amount fell to HK$0.4m from HK$0.69m.
  • Price dropped by 3.9% from HK$3.88 to HK$3.73.
  • Market cap: HK$4,133m, 2018E PER: 5.50x, 2019E PER: 4.92x, PBR: 0.99x, 2018E Dividend Yield: 2.75%.

Data Sources and Limitations

• Data Source: The HKSCF releases aggregate short positions data every Friday with a one-week delay. HKEx provides daily short-selling activity data, but it does not disclose whether short positions are covered.
• Limitations: The dataset does not include short-selling activity through OTC derivative products, which may affect the completeness of the analysis.

Three Angles for Analysis

1. Net Change in Short Positions: This metric tracks the weekly change in short positions, indicating the level of short-selling pressure.
2. Short Positions as a Percentage of Free Float: This provides insight into the relative size of short positions compared to the total available shares.
3. Absolute Amount of Short Positions: This reflects the actual volume of short selling, which can indicate market sentiment and potential for price manipulation.

Summary of Findings

• China Education and Wuxi Bio show significant increases in short positions, suggesting potential vulnerability to short-selling activity.
• Chaowei Power experiences a notable decline in short positions, indicating reduced short-selling pressure.
• The analysis is based on objective, quantitative data and does not imply any judgment on corporate governance or fundamentals.
• The data is useful for tracking weekly short position changes but has limitations in covering all short-selling activities, especially through OTC products.

Analysts

• Wong Chi Man – Head of Research
• Mark Lau – Research Analyst

Conclusion

The analysis highlights the importance of monitoring short-selling activity through multiple metrics to gauge market sentiment and potential risks. Investors are advised to use this data as a reference while being aware of its limitations.