Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 86.7% as of April 4th. </li>
<li>The average A-H premium changed by 1.6ppt week-on-week, led by consumer staples.</li>
<li>We highlight weekly changes in A-H premium for Joinn Lab, Beigene, Qinhuangdao Port, Sichuan Expressway.</li>
</ul>


We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 86.7% as of April 4th. 
The average A-H premium changed by 1.6ppt week-on-week, led by consumer staples.
We highlight weekly changes in A-H premium for Joinn Lab, Beigene, Qinhuangdao Port, Sichuan Expressway.


A-H Premium Weekly (Apr 4th): Joinn Lab, Beigene, Qinhuangdao Port, Sichuan Expressway

<ul>
<li>We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 97.3% as of Dec 27th.</li>
<li>The average A-H premium changed by -3.2ppt week-on-week, led by consumer staples, information technology, real estate.</li>
<li>We highlight weekly changes in A-H premium for China Southern Air, Guolian Securities, GWM, SMIC, Pharmaron, ZTE, Tigermed.</li>
</ul>


We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 97.3% as of Dec 27th.
The average A-H premium changed by -3.2ppt week-on-week, led by consumer staples, information technology, real estate.
We highlight weekly changes in A-H premium for China Southern Air, Guolian Securities, GWM, SMIC, Pharmaron, ZTE, Tigermed.


A-H Premium Weekly (Dec 27th): China Southern Air, Guolian Securities, GWM, SMIC, Pharmaron, ZTE

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  </li>
<li>Chinese banks dominated the list with below-book A-shares. <a href="https://www.smartkarma.com/entities/china-everbright-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:16221:1" rel="noopener">China Everbright Bank (6818 HK)</a>, <a href="https://www.smartkarma.com/entities/china-citic-bank-corp-ltd-ea6c25fd-4b20-45cb-a4a6-df7a60136f03" target="_blank" data-smartkarma-citation="entities:653:1" rel="noopener">China Citic Bank H (998 HK)</a>, and <a href="https://www.smartkarma.com/entities/industrial-and-commercial-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a> are the prime beneficiaries.</li>
<li>Infrastructure construction companies <a href="https://www.smartkarma.com/entities/china-railway-construction-corp-limited" target="_blank" data-smartkarma-citation="entities:263:1" rel="noopener">China Railway Cons Corp (1186 HK)</a>, <a href="https://www.smartkarma.com/entities/china-railway-group-ltd-h" target="_blank" data-smartkarma-citation="entities:264:1" rel="noopener">China Railway Group H (390 HK)</a>, and <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Comm Cons (1800 HK)</a> are also well-positioned to gain.</li>
</ul>


CSRC's Market Value Management Guidelines will indirectly benefit the H-share stocks with their A-share counterparts with a P/B of below 1x.  
Chinese banks dominated the list with below-book A-shares. China Everbright Bank (6818 HK), China Citic Bank H (998 HK), and ICBC (H) (1398 HK) are the prime beneficiaries.
Infrastructure construction companies China Railway Cons Corp (1186 HK), China Railway Group H (390 HK), and China Comm Cons (1800 HK) are also well-positioned to gain.


China & HK Strategy: Names to Watch for Market Value Management

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a> showed encouraging QoQ improvements in profit trend, margins, new orders, and operating cash flow in 3Q24, though reported profit was still down in 9M24.</li>
<li>Cost control has contributed to 4.6pp QoQ gross margin expansion. Meanwhile, new order growth has accelerated to 63.8% YoY, from just a teens level in 1Q24 and 2Q24.</li>
<li>Our estimate suggests that backlog is enough to cover 1.9x its annual revenue, enhancing visibility. Its PER, dividend yield and P/B are all standing on attractive levels.</li>
</ul>



Dongfang Electric (1072 HK) showed encouraging QoQ improvements in profit trend, margins, new orders, and operating cash flow in 3Q24, though reported profit was still down in 9M24.
Cost control has contributed to 4.6pp QoQ gross margin expansion. Meanwhile, new order growth has accelerated to 63.8% YoY, from just a teens level in 1Q24 and 2Q24.
Our estimate suggests that backlog is enough to cover 1.9x its annual revenue, enhancing visibility. Its PER, dividend yield and P/B are all standing on attractive levels.


Dongfang Electric (1072 HK): Good Sequential Improvement Masked

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

<ul>
<li>The conglomerate sector continues to show momentum in Hong Kong while the materials and energy sectors lag</li>
<li>
<a href="https://www.smartkarma.com/entities/weibo-corp" target="_blank" data-smartkarma-citation="entities:35280:1" rel="noopener">Weibo (9898 HK)</a><a href="https://www.smartkarma.com/entities/weibo-corp-adr" target="_blank" data-smartkarma-citation="entities:3826:1" rel="noopener">Weibo Corp (WB US)</a> was rated a BUY as valuations and potential catalysts from parent <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> could support a higher stock price.
</li>
<li>
<a href="https://www.smartkarma.com/entities/china-east-education-holdings" target="_blank" data-smartkarma-citation="entities:27843:1" rel="noopener">China East Education (667 HK)</a> was upgraded to BUY with higher higher price target due to profit increase. <a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a> was initiated with a BUY with strong upside.
</li>
</ul>


The conglomerate sector continues to show momentum in Hong Kong while the materials and energy sectors lag

Weibo (9898 HK)Weibo Corp (WB US) was rated a BUY as valuations and potential catalysts from parent Alibaba Group Holding (9988 HK) could support a higher stock price.


China East Education (667 HK) was upgraded to BUY with higher higher price target due to profit increase. Dongfang Electric (1072 HK) was initiated with a BUY with strong upside.



BUY/SELL/HOLD: Hong Kong Stock Updates (September 21)

China

Dongfang Electric Corporation Limited manufactures and sells hydro and steam power generators and AC/DC electric motors. The Company also provides repair, upgrade, maintenance, and other services for the products.

Price Gauge
52-week Range	0.00 - 0.00
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Dongfang Electric (1072 HK)

A-H Premium Weekly (Apr 4th): Joinn Lab, Beigene, Qinhuangdao Port, Sichuan Expressway

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Joinn Lab, Beigene, Qinhuangdao Port, Sichuan Expressway.

Ke Yan, CFA, FRM

A-H Premium Weekly (Dec 27th): China Southern Air, Guolian Securities, GWM, SMIC, Pharmaron, ZTE

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Southern Air, Guolian Securities, GWM, SMIC,...

Ke Yan, CFA, FRM

China & HK Strategy: Names to Watch for Market Value Management

SASAC issued "Several opinions on improving and strengthening the market value management of listed companies controlled by central enterprises"...

Osbert Tang, CFA