| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 8.9% | 7.4% |
The Guinness China A Share Fund rose 8.9% in Q2 2026 but underperformed its benchmark by 8.3 percentage points as the onshore market was dominated by AI-related technology stocks. The MSCI China A Onshore Index rose 17.1%, driven by concentrated performance in Information Technology, while consumer sectors and financials lagged. The Fund's underweight to Technology and overweight to Consumer Discretionary detracted from relative performance, though strong stock selection in Materials, led by Shandong Sinocera, provided support. The managers initiated a position in Weichai Power to gain exposure to data center power infrastructure at more attractive valuations. While acknowledging the genuine long-term AI opportunity, they note that valuations in parts of the technology sector now reflect very optimistic assumptions, with A-share technology trading at nearly twice developed-market valuations and near 2015 bubble extremes. The portfolio trades at 15.8x forward earnings versus 16.8x for the index, creating a 6% valuation discount compared to historical premiums. The managers see better risk-reward in Industrials providing cheaper AI infrastructure exposure and Consumer Discretionary companies undervalued relative to long-term cashflow potential as China moves up the value chain.
The Fund invests in quality, profitable companies exposed to structural growth themes in China A shares, maintaining valuation discipline while participating in long-term opportunities including AI infrastructure, industrial modernization, and consumer upgrading.
The managers expect the portfolio to offer a more rational balance between participation in China's structural growth opportunities and protection against overly demanding investor expectations. They believe returns will ultimately be driven by cash flow growth and compounding rather than continued multiple expansion. The positioning may cause the Fund to lag the benchmark as market returns remain concentrated in highly valued AI-related companies, but over the longer term they see better risk-reward in selected Industrials and Consumer Discretionary companies than in the most highly valued parts of the Technology sector.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 20 2026 | 2026 Q2 | 000338.SZ, 002236.SZ, 002572.SZ, 300760.SZ, 600183.SS, 600563.SS, 601888.SS | AI, China, consumer, Data centers, industrials, Property, technology, Valuations |
600183.SS 600563.SS 601888.SS 002572.SZ 300760.SZ 000338.SZ |
The Fund underperformed in Q2 as China's onshore market concentrated in expensive AI stocks. The managers maintain valuation discipline, avoiding the most expensive technology names despite strong recent performance. The portfolio trades at a 6% discount to the market and offers exposure to AI infrastructure through cheaper industrial holdings and to long-term consumer growth through undervalued discretionary names. Current positioning prioritizes sustainable cash flow growth over multiple expansion. |
| Apr 28 2026 | 2026 Q1 | 000858.SZ, 002008.SZ, 600036.SS, 600563.SS, 600690.SS, 603659.SS, 688398.SS | AI, China, consumer discretionary, Energy Transition, industrials, Manufacturing, Valuations | - | Guinness China A Share Fund managers see attractive opportunities as valuations disconnect from improving fundamentals. The fund is overweight Industrials benefiting from AI infrastructure build-out and Consumer Discretionary stocks trading at low valuations. Despite Q1 underperformance, they believe markets are underestimating earnings recovery potential and structural growth themes in their portfolio companies. |
| Dec 31 2025 | 2025 Q4 | 000002.SZ, 000858.SZ, 300014.SZ, 300760.SZ, 600276.SS, 600519.SS, 600887.SS | A-shares, China, consumer, Industrial, Quality, Structural Growth, technology, value | - | Guinness China A Share Fund outperformed in November through stock selection in Consumer Discretionary. The fund focuses on high-quality companies with structural growth exposure rather than policy-dependent businesses. China's economy shows industrial strength but weak consumer demand, approaching a transition point where new industries should offset real estate drag by late next year. |
| Oct 30 2025 | 2025 Q3 | 000333.SZ, 0005.HK, 002714.SZ, 0700.HK, 0981.HK, 1024.HK, 2899.HK, 300274.SZ, 300750.SZ, 600519.SS, BABA, BIDU | AI, China, growth, semiconductors, technology, value | - | China A-shares fund returned 23.6% in Q3 but underperformed by avoiding overvalued AI stocks that drove market gains. Manager compares current AI valuations to China's COVID rally peak in 2021, staying disciplined on quality companies with structural growth exposure. Fund trades below historical averages while market trades above, creating attractive relative positioning for patient investors. |
| Jul 2 2025 | 2025 Q2 | BRK-B, JPM, MSFT, NVDA, PLTR | AI, Fed policy, growth, healthcare, Mega Cap, tariffs, technology | - | Oak Ridge's growth strategy focuses on AI transformation while managing concentration risk in mega-cap dominated markets. Healthcare holdings detracted in Q2 despite strong overall market performance. Technology stock selection in mid-caps drove alpha as the sector rebounded. Key catalysts include anticipated Fed rate cuts and continued earnings growth to support elevated 25X market valuations. |
| Apr 1 2025 | 2025 Q1 | BABA, BTI, CHTR, CRDA.L, DGE.L, FAST, HILS.L, MCO, MSFT, ORCL, PM, POOL, REL.L, SCHW, SGE.L, SPX.L, TMO, TXN, WSO | diversification, Funds, Long Term, NAV, Private Capital, Public Companies | - | Caledonia delivered 4.4% NAV return driven by strong Public Companies and Private Capital performance. Permanent capital structure enabled swift deployment during April volatility, adding Charles Schwab. Oracle's AI-driven gains provided profitable exit opportunity. Stonehage Fleming sale delivers 3.2x returns. Diversified three-pool approach continues outperforming inflation and markets over long term despite macroeconomic headwinds. |
| Jan 8 2025 | 2024 Q4 | - | - | - | |
| Oct 1 2024 | 2024 Q3 | - | - | - | |
| Jun 30 2024 | 2024 Q2 | - | - | - | |
| Apr 2 2024 | 2024 Q1 | - | - | - | |
| Jan 9 2024 | 2023 Q4 | ADS.DE, AMT, AMZN, AVGO, DEO, ES, GOOGL, MA, META, MSFT, NESN.SW, NKE, NVDA, ORCL, RKT.L, SAP, TSM, UMG.AS, UNH, YUM | AI, global, large cap, Quality, semiconductors, technology, Trade Policy | ADS.DE | Magellan Global Opportunities delivered solid Q3 returns despite lagging benchmark in risk-on environment. Portfolio benefited from Alphabet antitrust resolution and AI-related semiconductor demand but faced headwinds from telecom infrastructure concerns and AI disruption fears. Manager maintains cautious stance given record market levels and full valuations while seeing opportunities in high-quality individual names. |
| Sep 30 2023 | 2023 Q3 | ADS.DE, AMT, AMZN, ASML, AVGO, CMG, ES, GOOGL, INTC, MA, MELI, META, MSFT, NESN.SW, NVDA, NVO, ORCL, SAP, TSM, YUM | AI, consumer, global, Quality, semiconductors, Sportswear, technology | ADS.DE | The fund lagged during the September quarter as speculative AI-related companies outperformed in a risk-on environment. While positive on long-term GenAI potential, the manager views current AI enthusiasm as increasingly speculative and circular. Despite expecting reasonable US economic activity aided by rate cuts, the manager maintains caution given record equity valuations with insufficient risk discounting. |
| Jul 1 2023 | 2023 Q2 | - | Peer Group, Performance, tariffs, Trade Policy | - | RVK's Q2 2025 peer group analysis shows institutional portfolios posted positive returns despite initial tariff-driven market volatility. US trade policy dominated the quarter with sharp initial equity declines followed by recovery after a 90-day tariff pause and trade deal progress. Performance data spans multiple timeframes with percentile rankings for comparison. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIOnshore AI-related names rallied strongly, driven by data center expansion and AI server demand. However, valuations now reflect very optimistic growth assumptions, with some names reaching levels last seen near the 2021 market peak. The managers believe the long-term opportunity is genuine but maintain valuation discipline rather than chasing recent performance. |
Data Centers Semiconductors Valuations Technology |
Data CentersStrong demand for data centers and AI servers supported suppliers of semiconductor equipment, optical components, printed circuit boards, copper-clad laminates and advanced electronic materials. The Fund initiated a position in Weichai Power to benefit from growing demand for power solutions linked to data center expansion, including backup generators and gas turbines. |
Power Equipment Infrastructure Semiconductors Energy | |
Electric VehiclesWeaker domestic EV demand and intense price competition placed significant pressure on industry margins. However, this was increasingly offset by rapid export growth, particularly in electric vehicles, which became an important source of volume growth and helped absorb excess domestic capacity. |
Autos Exports China Competition | |
Consumer Finance RetailConsumer-related sectors were among the weakest parts of the market, reflecting weak confidence, the prolonged property downturn and subdued retail sales growth. Weakness was most pronounced in property-related and higher-ticket categories including home furnishings, appliances, baijiu, and automobiles. However, the managers believe leading consumer companies are undervalued relative to their long-term cashflow potential as China moves up the value chain and incomes rise. |
Property Confidence Consumption Valuations | |
SemiconductorsSemiconductor equipment suppliers and advanced materials producers benefited from strong AI infrastructure investment and domestic supply chain localization. Companies like Shandong Sinocera and Shengyi Technology saw strong demand for AI-server grade products. However, valuations rose sharply, with share prices generally rising much faster than earnings expectations. |
Materials Equipment Supply Chain Valuations | |
Commercial Real EstateThe prolonged property downturn continued to weigh on household wealth, confidence and willingness to spend. This affected consumer spending, particularly in property-related categories like home furnishings and appliances. The weakness in housing transactions also impacted companies like Suofeiya Home Collection. |
Property Household Wealth Consumer Confidence | |
Energy StorageEnergy storage showed double-digit growth and helped offset weaker EV demand for companies like Xiamen Faratronic. Looking ahead, energy storage, AI data center infrastructure and power grid investment provide additional growth opportunities for industrial companies in the portfolio. |
Power Infrastructure Growth Industrial | |
ValuationsThe Fund's current holdings trade on 15.8x forward earnings, below their ten-year average of 19.1x. By contrast, the MSCI China A Onshore Index trades on 16.8x, close to two standard deviations above its historical average. The portfolio therefore trades at a 6% discount to the market, creating a materially more attractive relative valuation starting point compared to a substantial premium for most of the past decade. |
Discount Market Opportunity Risk-Reward | |
| 2026 Q1 |
AIThe fund sees compelling opportunities in Industrials benefiting from AI-related infrastructure build-out, including power generation and grid investment. Several holdings benefit from power and infrastructure build-out for AI data centres, though they trade at materially lower valuations than direct AI beneficiaries like semiconductor stocks. |
Data Centers Infrastructure Power Equipment Semiconductors Industrials |
Energy TransitionThe portfolio includes exposure to solar encapsulation film manufacturing through Hangzhou First Applied Material, battery materials through Shanghai Putailai New Energy, and energy storage solutions. These companies are positioned to benefit from the ongoing transition to renewable energy sources. |
Solar Battery Supply Chain Energy Storage Renewable Components | |
Electric VehiclesHoldings include exposure to EV supply chain through companies like Xiamen Faratronic and Shanghai Putailai New Energy. While EV pricing dynamics remain a headwind with ongoing pricing pressure, management sees prices nearing floor levels and expects continued double-digit growth. |
EV Batteries Auto Parts Battery Supply Chain | |
Industrial PolicyThe government's policy focus on upgrading the manufacturing sector and moving up the value chain creates opportunities. The objective is to increase output per worker, enabling higher wages and stronger consumption over time, reinforcing preference for companies exposed to industrial upgrading and productivity gains. |
Industrial Machinery Automation Manufacturing | |
| 2025 Q4 |
ChinaChinese markets continued to lag after a strong Q3 run, with the MSCI China A Onshore Index falling 2.3% in November. The economy has lost momentum with industrial production at 4.8% while retail sales rose only 1.3%, reflecting government support favoring industrial upgrades over consumer demand. China is reaching a critical transition point where new pillar industries should offset real estate drag by late next year. |
A-shares Industrial Consumer Transition |
QualityThe fund focuses on high-quality, profitable companies with durable competitive advantages and long-term growth potential. These companies are not solely reliant on the macro environment to generate growth, offering exposure to structural growth themes rather than businesses dependent on short-term policy support. |
Profitable Competitive Structural Growth | |
Consumer DiscretionaryStock selection in Consumer Discretionary was a key contributor to relative performance, driven by holdings like Suofeiya Home Collection, Zhejiang Supor, China Tourism Group and Midea Group. The fund maintains exposure to consumer themes built upon changes in incomes, demographics, and technology application in consumer settings. |
Consumer Demographics Technology | |
| 2025 Q3 |
AIChina's onshore AI stocks have driven significant market gains but are viewed as significantly overvalued with 70-90% of valuations based on uncertain future cash flows. The manager avoids these names, comparing current valuations to the peak of China's COVID rally in early 2021. |
Artificial Intelligence Semiconductors Technology Valuation Growth |
ChinaThe fund focuses exclusively on China A-shares, with weak macroeconomic data contrasting with booming equity markets. The manager sees selective opportunities while avoiding overvalued AI names and maintaining exposure to structural growth themes. |
A-shares Onshore Structural Growth Demographics Technology | |
SemiconductorsSemiconductor and technology hardware companies feature prominently in both holdings and market performance drivers. The fund benefits from positions in companies like Shengyi Technology while avoiding expensive AI-related semiconductor names. |
Chips Hardware Manufacturing Supply Chain Electronics | |
| 2025 Q2 |
AITechnology has been at the forefront with great excitement over transformative effects of AI, evidenced by sold-out Nvidia Blackwell chips and strong Microsoft Azure results. AI will likely continue to create transformative new opportunities at an unprecedented pace. The market concentration in AI-dominant fields is notable with all but Berkshire and J.P. Morgan among the top 10 S&P 500 constituents being in AI-dominant fields. |
Nvidia Microsoft Azure Blackwell Technology |
GLP1Healthcare holdings included long-term positions in a leading pharmaceutical company that had soared due to their leading GLP-1 drug and robust pipeline. A health and wellness company spiked 67% on their involvement in adding GLP-1 drugs to their lineup. The drug company is believed to be poised for future upside revisions due to further advances in weight loss and new drugs for Alzheimer's and cancer. |
Pharmaceuticals Weight Loss Healthcare Biotech | |
Trade PolicyThe quarter began with panic selloff in reaction to triple-digit tariffs threatened on President Trump's Liberation Day. Fed concerns over tariff effects on inflation and interest rates initially caused market stress, though the market began to view any inflationary impact as transitory. Companies have reduced capital investment and labor hiring while trimming estimates for 2025 due to anticipated protectionism policies. |
Tariffs Protectionism Inflation Fed Policy | |
| 2025 Q1 |
AIOracle, Microsoft, and Alibaba Group were strong performers driven by their cloud businesses and AI-related services. Oracle's share price rose sharply following AI-related announcements which led to significant re-rating of the shares. The company took opportunity to realize gains from Oracle given the strong AI-driven performance. |
Cloud Software Technology Growth |
Private CapitalThe Private Capital pool comprises direct investments in private companies, predominantly in the UK mid-market. The strategy focuses on cash generative businesses with strong growth potential using low levels of leverage. The agreed sale of Stonehage Fleming represents an excellent outcome, delivering 3.2x multiple on cost. |
Buyouts Mid Market Direct Investment Value Creation | |
DividendsThe Income portfolio aims to deliver an initial yield on invested cost of 3.5% with overall dividend from holdings growing ahead of inflation over the longer term. The board declared an interim dividend of 3.68p per share, reflecting the change in dividend payment profile to 50% of the prior year total annual dividend. |
Income Yield Distribution Growth | |
| 2023 Q4 |
AIRenewed enthusiasm in the AI trade has driven markets to fresh highs, with large deals announced by OpenAI with Nvidia, Broadcom, Oracle and AMD. However, these deals are circular in nature and heavily dependent on OpenAI growing and monetising its user base given its limited current revenue. Considerable uncertainty remains on the pace and degree of monetisation, resulting in increasing risks to the market. |
OpenAI Monetisation Data Centers Chips |
SemiconductorsSemiconductor demand sentiment was lifted by announcements of several OpenAI partnerships with Oracle, Nvidia and Broadcom. These were positive developments in their potential to drive incremental demand for AI-related chips and manufacturing capacity. However, focus remains on end-market demand dynamics necessary to support these capacity plans, particularly given single-customer concentration. |
TSMC Nvidia Broadcom Manufacturing | |
Trade PolicyThe quarter was marked by passage of the 'One Big Beautiful Bill Act' and progress on trade policy as the EU, Japan and South Korea all came closer to trade deals with the US. The US Supreme Court challenged the legality of President Trump's IEEPA-based tariffs with a hearing to begin late this year. |
Tariffs Trade Deals Supreme Court IEEPA | |
| 2023 Q3 |
AIRenewed enthusiasm in the AI trade has driven markets to fresh highs, with large deals announced by OpenAI with Nvidia, Broadcom, Oracle and AMD. However, these deals are somewhat circular in nature and heavily dependent on OpenAI growing and monetising its user base given its limited current revenue. While positive on GenAI potential over the long term, considerable uncertainty remains on the pace and degree of monetisation. |
Artificial Intelligence OpenAI Monetisation Data Centers Chips |
SemiconductorsTSMC benefited from improved semiconductor demand sentiment due to announcements of several OpenAI partnerships with Oracle, Nvidia and Broadcom. These were positive developments in their potential to drive incremental demand for AI-related chips and manufacturing capacity, though focus remains on end-market demand dynamics necessary to support these capacity plans, particularly given single-customer concentration. |
TSMC Manufacturing Capacity Demand AI Chips | |
SportswearAdidas represents a compelling long-term opportunity as the world's #2 player in athletic footwear and apparel. The company has demonstrated resilience through challenging periods and has regained strong momentum under new leadership. Periods of disruption in categories where structural growth tailwinds and economic moat drivers remain intact can present attractive investment opportunities. |
Adidas Athletic Brand Equity Global Distribution Marketing |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 20, 2026 | Fund Letters | Guinness China | - | Shandong Sinocera Functional Material Co., Ltd. | Electronic Components | Specialty Chemicals | Bull | Shenzhen Stock Exchange | advanced materials, AI servers, automotive electronics, Ceramic Materials, China, Dielectric Powders, growth, MLCCs, Satellite communications, solid-state battery, specialty chemicals | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 600183.SS | Shengyi Technology Co., Ltd. | Electronic Components | Specialty Chemicals | Bull | Shanghai Stock Exchange | Advanced Packaging, AI servers, automotive electronics, CCL, China, Copper-Clad Laminate, growth, materials, PCB, Printed Circuit Boards | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 600563.SS | Xiamen Faratronic Co., Ltd. | Electronic Components | Electronic Components | Bull | Shanghai Stock Exchange | China, Data Centres, Electric Vehicles, Electronic Components, energy storage, Film Capacitors, growth, Industrial Equipment, Power Grids, renewable energy | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 601888.SS | China Tourism Group Duty Free Corporation Limited | Specialty Retail | Specialty Retail | Bear | Shanghai Stock Exchange | China, Consumer Discretionary, Duty-Free Retail, Hainan, Hong Kong, Luxury goods, Macau, Specialty retail, Tourism | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 002572.SZ | Suofeiya Home Collection Co., Ltd. | Furnishings, Fixtures & Appliances | Home Furnishings | Bull | Shenzhen Stock Exchange | China, Consumer Discretionary, Customised Cabinets, Cyclical, dividend yield, home furnishings, Property, Renovation, Value | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 300760.SZ | Shenzhen Mindray Bio-Medical Electronics Co., Ltd. | Medical Devices | Health Care Equipment | Bull | Shenzhen Stock Exchange | China, growth, Health Care Equipment, In-vitro diagnostics, international expansion, Laboratory Automation, Medical devices, minimally invasive surgery, Patient Monitoring | Login |
| Jul 20, 2026 | Fund Letters | Guinness China | 000338.SZ | Weichai Power Co., Ltd. | Auto Manufacturers | Industrial Machinery | Bull | Shenzhen Stock Exchange | AI infrastructure, backup power, China, Data Centres, Diesel Engines, Gas turbines, Heavy-Duty Engines, industrial machinery, Power generation, recurring revenue, Value | Login |
| Sep 30, 2025 | Fund Letters | Guinness China | ADS.DE | Adidas AG | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | XETRA | athleisure, athletic apparel, Brand Equity, Consumer Discretionary, Football, Germany, Global, innovation, Marketing, Sportswear, turnaround | Login |
| Sep 30, 2025 | Fund Letters | Guinness China | ADS.DE | Adidas AG | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | XETRA | athleisure, athletic apparel, Brand Equity, Consumer Discretionary, Football, Germany, Global distribution, Marketing, Sportswear, turnaround | Login |
| TICKER | COMMENTARY |
|---|---|
| 002236.SZ | Shandong Sinocera (+288.3% in USD) is a diversified advanced materials producer and a leading Chinese supplier of dielectric powders used in multilayer ceramic capacitors (MLCCs). The shares rose sharply as investors focused on growing demand from AI servers and automotive electronics. Sinocera reported continued volume growth, progress with higher-end products at core customers and additional capacity coming online, with management expecting rapid growth in AI-server and automotive-grade powders in 2026. Meanwhile, Japanese and Korean competitors have been prioritising higher-margin products for these applications, reducing capacity for more conventional products and supporting demand for Sinocera's standard-grade powders. Investors also attached value to earlier-stage opportunities in solid-state battery electrolytes and ceramic components for satellite communications. However, reported earnings growth remained more modest as first-quarter revenue rose 9% and net income increased 5%. The rally, therefore, reflected a substantial re-rating of Sinocera's longer-term growth prospects rather than an equivalent acceleration in current profits. The company itself highlighted this gap, warning that its valuation had reached historically high levels, while its AI data centre ceramic substrates remained under development and had yet to secure volume orders. We took advantage of the sharp re-rating to rebalance the position in June and realise recent gains. |
| 600183.SS | Shengyi Technology (+151.5%) is the world's second-largest producer of copper-clad laminate (CCL), a key material used in printed circuit boards (PCBs). The shares rose strongly as demand for high-speed CCL and advanced PCBs used in AI servers continued to grow. Shengyi benefited from an improving product mix, price increases, and high-capacity utilisation, allowing it to offset rising costs for inputs, including specialist glass cloth, copper foil, and resin. First quarter revenue rose 45% while net income increased 105%. The gross margin expanded 3.5pp to 28.1%, reflecting a stronger product mix and improved pricing. Looking ahead, Shengyi is investing in additional high-performance CCL capacity targeted at AI servers, automotive electronics and advanced packaging. |
| 600563.SS | Xiamen Faratronic (+90.2%) is one of the world's leading manufacturers of film capacitors, which are used across EVs, renewable energy, industrial equipment, data centres and power grids. The shares rose as investors focused on growth broadening beyond EVs. While domestic EV demand was weaker in the first quarter, double-digit growth in energy storage and industrial controls, supported by demand for data centre power equipment, helped offset this weakness. First-quarter revenue rose 7%, while net income increased 1%. Headline growth was affected by the removal of a subsidiary from the consolidated accounts and foreign-exchange losses, with underlying revenue growth estimated to have remained in double digits. Looking ahead, energy storage, AI data centre infrastructure and power grid investment provide additional growth opportunities. However, rising raw material costs and continued demands for price reductions from automotive customers remain headwinds. The company is also moving its planned overseas production base from Hungary to Malaysia to support international expansion and reduce its exposure to trade barriers. |
| 601888.SS | China Tourism Group Duty Free (-41.5%) is China's leading duty-free retailer. The shares fell as the recovery in Hainan duty-free spending slowed sharply during the second quarter, raising concerns that the strong growth seen around the Chinese New Year was not sustainable. Official data showed Hainan duty-free sales growth slowing from 26% in the first quarter to 19% for the first half of the year, indicating a marked deceleration during the second quarter. The business is also seeing a growing contribution from lower-margin categories such as gold jewellery and consumer electronics. This led investors to question whether earnings growth driven by margin improvement and cost control could continue without a stronger recovery in revenue. The acquisition of DFS's Greater China retail business was completed in March, broadening the company's operations in Hong Kong and Macau, but it was not enough to offset these near-term concerns. |
| 002572.SZ | Suofeiya Home Collection (-40.5%) is a leading Chinese manufacturer of customised cabinets and home furnishings. The shares fell as the prolonged property downturn continued to weigh on housing transactions and household confidence. Policy support also weakened, as Suofeiya's core furniture and cabinetry products are not covered by this year's national trade-in subsidy scheme. First quarter revenue declined 25%, and the company reported a small loss compared with a profit in the same period last year, as weaker demand reduced operating leverage. Suofeiya is seeking to reduce its reliance on new-home demand by expanding into existing-home renovation, but this has not yet been sufficient to offset continued weakness in sales of new properties. Despite poor earnings momentum, we believe its current valuation is too low for a business that continues to generate a cash return above its cost of capital. The shares also offer an attractive dividend yield of c.9%. |
| 300760.SZ | Shenzhen Mindray Bio-Medical (-25.8%) is a Chinese medical device manufacturer. The shares were held back by continued weakness in the domestic market, where tighter hospital budgets and delayed procurement remained a drag on demand. This was partly offset by strong overseas growth, particularly in Europe and developing markets, as Mindray continued to expand its presence among hospitals. The company also continued to gain market share in domestic in-vitro diagnostics, supported by the installation of its laboratory-automation systems and a broad product offering, while newer businesses such as minimally invasive surgery, interventional products and animal health maintained strong momentum. First-quarter revenue rose 1%, while net income declined 11%, partly reflecting foreign-exchange headwinds. Looking ahead, international expansion, further market share gains and growth in emerging businesses should support a gradual recovery, although domestic hospital funding constraints and policy-driven pricing pressure remain headwinds. |
| 000338.SZ | We initiated a position in Weichai Power, a leading manufacturer of heavy-duty engines, where we see an opportunity to benefit from growing demand for power solutions linked to data centre expansion. In our view, the market has not fully reflected this growth opportunity, continuing to value the business largely as a traditional engine manufacturer while undervaluing the servicing and maintenance opportunity, which generates high-margin, recurring revenue. The company's capability in both diesel and gas-powered generation positions it well to benefit from growing demand for flexible and reliable on-site power solutions across both primary and backup use cases. |
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