Sales commentary, not BofA research

Headlines

l  Y’day: NKY +2.22%, HSI +0.17%, SHCOMP +1.77%, KOSPI +1.67%

l  Overnight: Dow +0.04%, SPX -0.94%, Nasdaq -2.13%

l  COVID-19: Pfizer & BioNTech SE received permission from US FDA to fast-track 2 vaccine candidates

l  HK: Tightens virus measures from Wed: Bans dine-in at restaurants from 6pm-5am ++

l  HK: Sa Sa Apr-Jun HK, Macau SSS -72% on yr.  109 stores in HK/Macau, down from 112.

l  SINO-US: US denounces China’s claims to Sth China Sea as unlawful

l  SINO-US: Trump aides rule out ending HKD peg as punishment

l  SINO-US: Trump admin plans to abandon 2013 agmt b/w US & CN auditing authorities, Reuters reports

l  CN: Ucommune, CN’s largest co-working grp plans NASDAQ backdoor listing at 75% disc to ‘18 valn.

l  CN: China stock leverage rises 11th day to RMB1.33TR...

l  MACAU: Lifts final quarantine requirement for visitors from China

Finally: A rise in e-commerce demand + supply chain shifts & social distancing needs all point toward 1 thing - more warehouse automation, which now incls barcode labels & scanning automation, automated guided vehicles, picking automation, inventory automation & Back-office automation. The links below outline some of the ways what happens inside warehouses is changing.  Amazon deploys a wide variety of material-handling equipment in its warehouses, incl (1) automated guided vehicles (AGVs) that lift shelves w/ goods & transport them to the warehouse worker, thus eliminating the need for workers to walk across the warehouse & aisles, & (2) articulated robots that palletize & sort heavy packages.  In another case, China’s largest online retailer JD.com, utilizes a system of equipment such as AS/RS, AGVs, automated sorting conveyors, piece-picking robots (supplied by MUJIN), & barcode scanning/ tracking, which are integrated in its 5G network.   … all of which I presume lowers reliance on humans & improves efficency (Easyship, Robotics & Automation, Robotics Tomorrow)

2020 II All-China Flyer | Request a ballot (sign up with work email then apply)

ii China starts today & this yr, its v, v important to our mgt. I would really be grateful if you cld vote 5 stars for BofA & for Karl Choi in the Real Estate category.  Please let me know if you vote.

If you have the patience, we would appreciate votes for:

Cheong-Ga (Karl) Choi;  Fan Tso (China property mgt service companies); Eric Du; Sirius Chan & Feifan Liu

The team has had some great calls this past year:  In HK, office was our least preferred & HKL was one of the worst performing stocks YTD, while we consistently liked HLP (best performing YTD).  In China, Shimao & CIFI were consistently top picks and they have outperformed beautifully YTD. 

Shanghai Jun apt rent ↓9.1%MoM, Shenzhen’s ↓12.4%MoM. (The Paper) 

Haikou city 1H sold 23 sites (↑21%YoY) w/ Rmb3.2b (↑72.5%YoY). Jun Rmb2.3b (2.5x MoM). (The Paper)

Ucommune, China’s largest co-working operator, goes for NASDAQ backdoor listing at 75% disc from 2018 valn. (Mingtiandi)

Hong Kong Shanghai Alliance buys Pullman Skyway Hotel complex in Shanghai for Rmb3.1b ($443m) from Shanghai’s Great Wall RE.  The 329-room hotel a/cs for ~51,060m² GFA. (Mingtiandi)

New home sales in 26 key cities ↑ 10%YoY in the past wk, vs. a strong 45% YoY in the prior wk. Softening was across tiers of cities, and tier 1/2/3 cities posted 7% /10% /11% volume increase.  On a rolling 4-wk basis, sales volume was up 10% YoY. (CRIES)

Shenzhen Bureau of Housing and Urban Rural Devt visited Changsha BOHURD, who shared the successful experience related to how to stabilize property market via policies adjustment. (Leju) >>> Karl: According to NBS, SZ second-home prices +1.5% MoM in each month Mar-May. This BOHURD meeting b/w Shenzhen & Changsha enhanced tightening expectation in SZ. But didn’t unveil signs of policy tightening.

Nantong (tier-3 city in Jiangsu) sold a land parcel w/ 56.44% land premium. Lishui (tier-3 city in Zhejiang) sold a land parcel w/ 37.7% land premium. (Guandian) >>> Karl: W/ prop mkts heating up, we already saw policy tightening in Hangzhou & Ningbo. In particular, regulators pay much attention to high land prices as a warning signal.

R&F withdrew its A-share listing application. (Cailianshe) >>>Eric: As the overall policy stance is still tight, there is low likelihood for developers to be listed in the A-share market at this moment.

Beijing’s Sino-Ocean Capital acqrs a 60,000m² office asset in Shanghai’s Caohejing for Rmb2b. (Mingtiandi)

China South City 1Q (Apr-Jun) contract sales HK$3.7b (+3.3%YoY, +105%QoQ), GFA 421,100m². (Co)

CR Land Jun acqd 8 sites for Rmb12b, GFA 1.5m m². (Co)

China Merchants Land reports 1H profit warning: xpctd net profit to↓ 69%YoY. (Co)

HK prop transactions to ↓11.6%MoM to 7,300 deals in Jul, val to↓10.4% to HK$63b, per centline. (SCMP)

China Resources Beer reportedly buys industrial asset in eastern New Territories for HK$820m ($106m) or HK$4,052/ft², area 202,361ft². (HKET)

SHKP uploads sales brochure for new project in Tuen Mun named Regency Bay. Xpctd to be launched near term, pricing likely to be set w/ reference to its sister project Mount Regency. (HK$16.2k/ft²). (HKET)

3 default cases at CKA/MTRC’s Sea to Sky on 13 Jul as these buyers forfeit 5% down payments.  All related to large units (3 to 4 bedroom units). (HKET)

WeWork cuts membership fees in HK, per Apple Daily. WeWork giving 30% disc to users who lease a 3-4 person room at CWB center for 3 mths (HK$27k /mth), and more disc for 6 mths. Apple Daily reported about ½ of the CWB center appears unoccupied. (Apple Daily)

Evergrande to start sales of 83 units in Vertex, Cheung Sha Wan Thurs. Sold total 100 units for HK$810m YTD. (HKET)

Cromwell E-Reit signed agreement w/ sponsor & Stratus Data Centres to co-invest directly into 50% stakes in 2 European data centre projects. 1^st is a 2-stage, 100MW data centre in London; 2^nd is a 14ha site, multi-stage 300MW project in Frankfurt. (Biz Times)

MacPherson Rd industrial bldg up for sale, guide px S$21m, GFA 38,287ft², land area 14,400ft². (Biz Times)

Ascott Residence Trust 1H DPS to ↓65-75%YoY from S3.43c in 1H19. (Biz Times)

Australian mall vacancy rate ↑ to 5.1% in Jun from 3.8% 6mths earlier, hits 20yr high as retailers shrink, per JLL.  (Commercial RE)

Stockland to sell a 12-ha, A$65m Perth dairy processing centre. (AFR)

Odey Asset Mngt's stake in Leopalace21 ↓to 7.08% from 8.10%. (Kabutan)

Ichigo Asset Mngt reports 5.03% stake in Open House. (Kabutan)

110k ha land available w/ India's 12 major ports to devp industries, per Shipping Minister. (India Times)

Phoenix Mills approves raising Rs11b via equity; to issue Rs1b convtble warrants to founder. (India Times)

Hotel bookings across Malaysia ↑ 30%MoM in Jun as domestic travel tourism are allowed. (Star)

Covid-19 - The gov’t may announce new quarantine “classifications” tomorrow when Metro Manila’s GCQ status expires. The new classification appears to be designed to deal with rising cases in specific areas but not lump the National Capital Region (NCR) in one category.   This may address the opposing calls for stricter lockdowns versus further relaxation. For now, Mayors have the free hand to impose stricter lockdowns within their areas of responsibility but no authority to relax them beyond the national government classification. As such, Navotas City announced yesterday stricter lockdown measures for another 15 days up to July 29 ahead of the national government announcement for NCR.

Thailand plans to create travel bubble for tourists w/ 14-day stay min in 5 destinations. Instead of being kept in quarantine, tourists cld still travel w/in 5 designated areas: Chiang Mai, Koh Samui, Krabi, Phuket & Pattaya. (Bangkok Post)

S. Korean economy likely to ↓ 2.3%YoY in 2020, per KERI. (YNA)

* My pa holdings: BAC US, 1 HK, 6 HK, ST SP