HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Zhou Liu Fu Jewellery Co., Ltd. / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/zhou-liu-fu-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:43706:1" rel="noopener">Zhou Liu Fu Jewelery Co., Ltd. (6168 HK)</a>'s IPO does not appeal to us, given deteriorating profitability, smaller size, and inferior financials. </li>
<li>Its IPO price of HK$24.0 appears to be fair relative to the peers' valuation, leaving limited upside and downside in the secondary market. </li>
<li>We value the stock at HK$22.5-25.7, based on 20-30% discount to <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>. It is not another <a href="https://www.smartkarma.com/entities/laopu-gold-co-ltd" target="_blank" data-smartkarma-citation="entities:44036:1" rel="noopener">Laopu Gold (6181 HK)</a>. </li>
</ul>



Zhou Liu Fu Jewelery Co., Ltd. (6168 HK)'s IPO does not appeal to us, given deteriorating profitability, smaller size, and inferior financials. 
Its IPO price of HK$24.0 appears to be fair relative to the peers' valuation, leaving limited upside and downside in the secondary market. 
We value the stock at HK$22.5-25.7, based on 20-30% discount to Chow Tai Fook Jewellery (1929 HK). It is not another Laopu Gold (6181 HK). 


Zhou Liu Fu (6168 HK) IPO: Not Our Cup of Tea

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Foshan Haitian Flavouring & Food / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring &amp; Food (603288 CH)</a>'s global offering opens today and the raise could reach up to US$1.5bn if the offer-size adjustment option and the overallotment option are exercised.</li>
<li>There is a large allocation to cornerstone investors. The discount of around 22% to the A-shares is attractive given the recent trend for <a href="https://www.smartkarma.com/entities/midea-group-co-ltd" target="_blank" data-smartkarma-citation="entities:43993:1" rel="noopener">Midea (300 HK)</a> and <a href="https://www.smartkarma.com/entities/contemporary-amperex-technology-catl-co-limited" target="_blank" data-smartkarma-citation="entities:45179:1" rel="noopener">CATL (3750 HK)</a>. </li>
<li>The H-shares could be added to a global index and the <a href="https://www.smartkarma.com/entities/ishares-china-large-cap-etf" target="_blank" data-smartkarma-citation="entities:766:1" rel="noopener">FXI ETF</a> in December. Inclusion in the HSCI should be in September and Southbound Stock Connect in July. </li>
</ul>



Foshan Haitian Flavouring &amp; Food (603288 CH)'s global offering opens today and the raise could reach up to US$1.5bn if the offer-size adjustment option and the overallotment option are exercised.
There is a large allocation to cornerstone investors. The discount of around 22% to the A-shares is attractive given the recent trend for Midea (300 HK) and CATL (3750 HK). 
The H-shares could be added to a global index and the FXI ETF in December. Inclusion in the HSCI should be in September and Southbound Stock Connect in July. 


Foshan Haitian Flavouring & Food (3288 HK): Offering Details & Index Inclusion

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Foshan Haitian Flavouring & Food / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/foshan-haitian-flavouring-food-co-ltd" target="_blank" data-smartkarma-citation="entities:15577:1" rel="noopener">Foshan Haitian Flavouring &amp; Food (603288 CH)</a> (FHCC), China’s leading condiments company, raised around US$1.5bn (including over-allocation) in its H-share listing.</li>
<li>FHCC is China’s leading condiments company within its main product categories of soy sauce, oyster sauce, flavored sauce, specialty condiment products and other products.</li>
<li>We have looked at the past performance and likely A/H premium in our previous note. In this note, we talk about the trading dynamics.</li>
</ul>



Foshan Haitian Flavouring &amp; Food (603288 CH) (FHCC), China’s leading condiments company, raised around US$1.5bn (including over-allocation) in its H-share listing.
FHCC is China’s leading condiments company within its main product categories of soy sauce, oyster sauce, flavored sauce, specialty condiment products and other products.
We have looked at the past performance and likely A/H premium in our previous note. In this note, we talk about the trading dynamics.


Foshan Haitian Flavouring A/H Trading - Very Strong Demand, Weak Price Momentum

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>US stocks flat after the Federal Reserve kept interest rates unchanged</li>
<li>Marvell (MRVL) +7% on bullish AI guidance. Momentum in U.S. semi names continues to support investor appetite for global tech exposure</li>
<li>Activist investor, Effissimo Capital Management, increased its stake in UACJ</li>
</ul>


US stocks flat after the Federal Reserve kept interest rates unchanged
Marvell (MRVL) +7% on bullish AI guidance. Momentum in U.S. semi names continues to support investor appetite for global tech exposure
Activist investor, Effissimo Capital Management, increased its stake in UACJ


Ohayo Japan | Fed in No Rush to Cut Rates

US IPOs and Secondary Offerings, IPO Boutique

IPO Boutique

US IPOs and Secondary Offerings

For more than 20 years, we have been providing research, analysis, commentary and ratings on US Equity Capital Markets to institutional investors (US IPOs and Secondary Offerings). Our vast network of contacts across the Equity Capital Markets and attention-to-detail sets us apart from our competitors.

Since 2012, we have achieved a successful hit rating on 89% of Buy-rated IPOs. The collective “Buy” ratings averaged a first trade of 16.3% above issue.Our Neutral Rated Deals averaged just 2% above the issue price at first trade.

Our written research includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

In addition, we provide a high-touch premium desk access which includes analyst access, as well as real time insights on US IPOs as well as secondary offerings.

IPOs and Secondary Offerings

Slide Insurance Holdings / Equity Capital Markets

<ul>
<li>Slide Holdings Insurance, Inc. (SLDE) priced 24.0mm shares (upsized from 20.0mm) at $17.00  and opened at $21.00 for a gain of 23.5% at first trade.</li>
<li>The deal finished north of 12-times oversubscribed. The deal saw the top ten accounts receive 65% of the deal and the top 20 accounts took home 80% of the transaction. </li>
<li>With a strong, clean and well-capitalized balance sheet and tailwinds from the sector, it was no "surprise" to see a four-point premium at open.</li>
</ul>


Slide Holdings Insurance, Inc. (SLDE) priced 24.0mm shares (upsized from 20.0mm) at $17.00  and opened at $21.00 for a gain of 23.5% at first trade.
The deal finished north of 12-times oversubscribed. The deal saw the top ten accounts receive 65% of the deal and the top 20 accounts took home 80% of the transaction. 
With a strong, clean and well-capitalized balance sheet and tailwinds from the sector, it was no "surprise" to see a four-point premium at open.


Slide Holdings Insurance, Inc.(SLDE): Another Insurance IPO Winner, Opens Four Points Higher