20181119-中国银河国际证券-Strategy_Short_Selling_Analysis_for_November_9_6页_1mb

Short Selling Analysis for November 9

Core Content

This document provides an analysis of short selling activity in Hong Kong stocks as of November 9, based on data released by the Hong Kong Securities Clearing Company (HKSC). The analysis focuses on three key criteria: (i) the net change in short positions between November 2 and November 9, (ii) short positions as a percentage of free float, and (iii) the absolute amount of short positions. It emphasizes that the analysis is purely quantitative and does not reflect any judgment on corporate governance or fundamentals.

Key Companies Analyzed

Vulnerable to Short-Selling Activity

• Sihuan Pharm (460.HK):

  • Short positions increased by 63.9% during the week ended November 9.
  • Outstanding short positions equivalent to 5.33% of free float.
  • 5-day moving average short-selling amount on November 16 was HK$326.63 million, up from HK$258.55 million on November 9.
  • Price increased slightly from HK$1.67 to HK$1.72.
  • Market cap: HK$16.29 billion, with 2018E PER at 10.17x and 2019E PER at 9.25x.

• Maanshan Iron (323.HK):

  • Short positions increased by 22.7% during the week ended November 9.
  • Outstanding short positions equivalent to 9.98% of free float.
  • 5-day moving average short-selling amount on November 16 was HK$32.94 million, up from HK$25.30 million on November 9.
  • The stock rebounded by 17% from its mid-September low.
  • Price increased from HK$4.25 to HK$4.17.
  • Market cap: HK$34.53 billion, with 2018E PER at 4.31x and 2019E PER at 4.86x.

Short Positions Declined

• Hisense Kelon (921.HK):
  • Short positions decreased by 16.2% during the week ended November 9.
  • Outstanding short positions equivalent to 2.92% of free float.
  • 5-day moving average short-selling amount on November 16 was HK$266,712, down from HK$310,638 on November 9.
  • The stock has fallen over 30% from its June peak.
  • Price increased from HK$5.74 to HK$6.12.
  • Market cap: HK$10.52 billion, with 2018E PER at 5.90x and 2019E PER at 5.00x.

Limitations of the Data

• The HKSCF provides weekly data on aggregate short positions, while the HKEx provides daily data, but investors cannot determine if the short positions are covered.
• The dataset does not include OTC derivative products, which may affect the completeness of the analysis.

Three Angles of Analysis

1. Net Change in Short Positions:

   • Sihuan Pharm and Maanshan Iron showed significant increases in short positions.
   • Hisense Kelon showed a notable decrease in short positions.

2. Short Positions as a Percentage of Free Float:

   • Maanshan Iron had the highest percentage of short positions relative to free float at 9.98%.
   • Sihuan Pharm followed with 5.33%.
   • Hisense Kelon had a lower percentage at 2.92%.

3. Absolute Amount of Short Positions:

   • Sihuan Pharm had the highest absolute amount of short positions at HK$326.63 million.
   • Maanshan Iron had HK$32.94 million.
   • Hisense Kelon had HK$266,712.

Summary of Findings

• Sihuan Pharm and Maanshan Iron are identified as companies that require close monitoring due to their rising short positions.
• Hisense Kelon, on the other hand, experienced a significant drop in short positions, indicating a potential shift in market sentiment.
• The analysis is based on objective data and should not be interpreted as an evaluation of the companies’ governance or fundamentals.

Contact Information

• Mark Lau – Research Analyst

  • Phone: (852) 3698-6393
  • Email: marklau@chinastock.com.hk

• Wong Chi Man – Head of Research

  • Phone: (852) 3698-6317
  • Email: cmwong@chinastock.com.hk