IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/magic-empire-global" target="_blank" data-smartkarma-citation="entities:36219:1" rel="noopener">Magic Empire Global (MEGL US)</a> shares are currently up 45x since its listing at US$4.00 per share on 5 August. Its market cap currently stands at US$3.6 billion.</li>
<li>Just like <a href="https://www.smartkarma.com/entities/amtd-digital" target="_blank" data-smartkarma-citation="entities:36214:1" rel="noopener">AMTD Digital (HKD US)</a>, it is hard to pinpoint the real reason for MEGL’s share price surge. MEGL’s financials are uninspiring and cannot justify the share price ramp.</li>
<li>MEGL has no unique competitive advantage which could justify it's current large premium multiple compared to larger and better-established peers.    </li>
</ul>



Magic Empire Global (MEGL US) shares are currently up 45x since its listing at US$4.00 per share on 5 August. Its market cap currently stands at US$3.6 billion.
Just like AMTD Digital (HKD US), it is hard to pinpoint the real reason for MEGL’s share price surge. MEGL’s financials are uninspiring and cannot justify the share price ramp.
MEGL has no unique competitive advantage which could justify it's current large premium multiple compared to larger and better-established peers.    


Magic Empire Global: More Trick than Treat

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 140 stocks over the last week.</li>
<li>The decline in A-H premium were led by health care and consumer staples, which was offset by the increase in consumer discretionary. </li>
<li>We highlight A-H premium changes in Zhejiang Shibao, PICC, CRRC, Shandong Xinhua, and Shenwan Hongyuan.</li>
</ul>


We analyse the changes of A/H premium on 140 stocks over the last week.
The decline in A-H premium were led by health care and consumer staples, which was offset by the increase in consumer discretionary. 
We highlight A-H premium changes in Zhejiang Shibao, PICC, CRRC, Shandong Xinhua, and Shenwan Hongyuan.


A-H Premium Weekly: Zhejiang Shibao, PICC, CRRC

<ul>
<li>As of Friday Nov 19, the average A/H premium of 134 A/H stocks are 109.3%. The average A/H premium changed by -1.4ppt over the past one week.</li>
<li>The sector with the biggest A/H premium increase was Utilities (ΔA/H premium=5.1ppt) while the sector with the biggest A/H premium decrease was Consumer Discretionary (ΔA/H premium=-13.1ppt).</li>
<li>The top 3 stocks based on increase in A/H premium in the past week were SINOPEC SHANG, YANTAI NORTH, and SINOPEC OILFIELD.</li>
</ul>


As of Friday Nov 19, the average A/H premium of 134 A/H stocks are 109.3%. The average A/H premium changed by -1.4ppt over the past one week.
The sector with the biggest A/H premium increase was Utilities (ΔA/H premium=5.1ppt) while the sector with the biggest A/H premium decrease was Consumer Discretionary (ΔA/H premium=-13.1ppt).
The top 3 stocks based on increase in A/H premium in the past week were SINOPEC SHANG, YANTAI NORTH, and SINOPEC OILFIELD.


A/H Premium Weekly: Utility Led the Premium Increase

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
</div>
<div>
<p>A recent addition is the possible status of H/A-share companies in the monitor which are subject to the Trump Executive Order on Chinese Military Companies. They are separated into three types (Possible Direct Qualifying Entity, Possible Indirect Qualifying Entity, and 20+%-owned by Qualifying Entity). They are color-coded as below.</p>
</div>
<section>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/784/original/image?1606541170" class="editor-image img-responsive" data-smartkarma-image-id="174784"></figure>
</section>
<div>
<p>For more on the list of names, please see <a href="https://www.smartkarma.com/insights/trump-s-executive-order-on-chinese-military-companies" target="_blank" data-smartkarma-citation="insights:45259" rel="noopener">Trump's Executive Order on Chinese Military Companies</a>. </p>
</div>
<hr>
<div class="content-highlight">
<p>This past week saw mixed movement in H/A spreads but on average they were narrower.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/829/original/Screenshot%202020-11-28%20at%206.25.16%20PM.png?1606559131" class="editor-image img-responsive" data-smartkarma-image-id="174829"></figure>
<p></p>
</section>
<p>Average performance of the 39 recommendations (long 27, short 12) from last week was for a profit of 0.67% per trade.</p>
<p>There are 43 recommendations for the upcoming week.</p>
</div>
<hr>
<div>
<p>The first sector discussed is <strong>Consumer</strong>, where liquid H/A spreads narrowed on average 0.6% this past week after narrowing 2.7% the week before. Spreads are now tighter by 2.1% on average over a four-week period. Four of six liquid Hs outperformed their As.</p>
<p>Southbound accounts were large-ish net buyers on the week. There were three net buys and three net sells but the net buying ended up being all <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, again. <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> saw significant net selling. </p>
</div>
<div>
<div>
<div class="content-highlight">
<p>Last week I recommended staying long the H vs A on <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> and that spread gained 1.6% for the week (after gaining 4.7% the week before when it was also recommended). This past week I put out the Weekly late on Monday (after 2pm), when BYD in Hong Kong had gained 3.7% vs the As on the day, and so recommended implementing a short BYD (1211 HK) H vs A share trade and from that point or even from the end of the day or the next, the Hs actually underperformed the As by 0.4%. </p>
<p>See below the fold for this week's recommendations.</p>
</div>
</div>
</div>
<section class="figure">
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/809/original/Screenshot%202020-11-28%20at%205.32.56%20PM.png?1606556000" class="editor-image img-responsive" data-smartkarma-image-id="174809"></figure>
</section>
<p></p>
</section>
<section class="figure"></section>
<section>
<section class="figure">For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</section>
</section>


The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...



H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the average sector spread and the individual spreads within each sector over the last three years. 



A recent addition is the possible status of H/A-share companies in the monitor which are subject to the Trump Executive Order on Chinese Military Companies. They are separated into three types (Possible Direct Qualifying Entity, Possible Indirect Qualifying Entity, and 20+%-owned by Qualifying Entity). They are color-coded as below.





For more on the list of names, please see Trump's Executive Order on Chinese Military Companies. 



This past week saw mixed movement in H/A spreads but on average they were narrower.




Average performance of the 39 recommendations (long 27, short 12) from last week was for a profit of 0.67% per trade.
There are 43 recommendations for the upcoming week.



The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 0.6% this past week after narrowing 2.7% the week before. Spreads are now tighter by 2.1% on average over a four-week period. Four of six liquid Hs outperformed their As.
Southbound accounts were large-ish net buyers on the week. There were three net buys and three net sells but the net buying ended up being all BYD (1211 HK), again. Guangzhou Automobile Group (2238 HK) saw significant net selling. 




Last week I recommended staying long the H vs A on Great Wall Motor (2333 HK) and that spread gained 1.6% for the week (after gaining 4.7% the week before when it was also recommended). This past week I put out the Weekly late on Monday (after 2pm), when BYD in Hong Kong had gained 3.7% vs the As on the day, and so recommended implementing a short BYD (1211 HK) H vs A share trade and from that point or even from the end of the day or the next, the Hs actually underperformed the As by 0.4%. 
See below the fold for this week's recommendations.











For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​​A: Share Spread Monitor as of 27 Nov 2020

China and US Equity Analyst

Roger Xie

<p>China A-share market daily turnover has surged to pass RMB 1.5 trillion on Monday with Shanghai Composite Index jumped almost 6% in a day. The rising trading activities have driven China A-share daily turnover exceeding RMB 1 trillion consecutively in the past week, which was the first time since 2015. Chinese brokers, as typically seen as a barometer for market sentiment, led gains Monday. With our bullish view for China A-share in 2H 2020, we believe there are upside risk for estimated 2020 average daily turnover. Chinese brokers could benefit the most from surging trading activities, more IPO deals, and better return from their asset management business.</p><p>We also want to reiterate our view that capital market reform would likely serve as the catalyst for market upside. China is taking another step to reform the NASDAQ-style ChiNext board at Shenzhen Stock Exchange, which hosts some of the world’s fastest growing technology and pharmaceutical A-shares. China A-share IPO process is long being plagued by its central control by regulator and lack of market pricing mechanism. The new proposal, if executed successfully, would remove the major bottleneck of IPO applications and market-based pricing. This could lead to far-reaching impacts on the structure of China A-share market.</p><p><a href="https://www.smartkarma.com/entities/csc-financial" target="_blank" rel="noopener" data-smartkarma-citation="entities:23710:1">CSC Financial (6066 HK)</a> is our top pick in Chinese broker sector. CSC Financial was ranked 4th by equity and bond underwriting ranking. It has a dominant position on the IPO underwriting volume and pipeline in ChiNext board, which has direct benefits from the ChiNext board reform. In addition, it is also reported by local media that <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" rel="noopener" data-smartkarma-citation="entities:463:1">Citic Securities (H) (6030 HK)</a> and <a href="https://www.smartkarma.com/entities/csc-financial" target="_blank" rel="noopener" data-smartkarma-citation="entities:23710:1">CSC Financial (6066 HK)</a>, along with their major shareholders CITIC Group and Central Huijin, have started to study on a potential merger of these two brokers. But both CITICS and CSC Financial have declined to provide more information on this. We think past Chinese brokers mergers might provide some hints on potential deal structure. For example, <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" rel="noopener" data-smartkarma-citation="entities:463:1">Citic Securities (H) (6030 HK)</a> has acquired 100% stake of Guangzhou Securities (not listed) through new A-share issuance in 2018. Another case is that <a href="https://www.smartkarma.com/entities/shenwan-hongyuan-group-co-ltd-78530c35-b2fd-4715-acd0-57021e9cf66f" target="_blank" rel="noopener" data-smartkarma-citation="entities:28026:1">Shenwan Hongyuan Group (H) (6806 HK)</a>, which is the merger of brokerage firm Shenyin Wanguo Securities and Hongyuan Securities via new A-share issuance as well. </p><p>Past reports:</p><p><a href="https://www.smartkarma.com/insights/china-a-share-strategy-more-upside-in-2nd-half-of-2020" target="_blank" rel="noopener">China A-Share Strategy: More Upside in 2nd Half of 2020</a></p><p><a href="https://www.smartkarma.com/insights/china-broker-pair-trade-long-csc-financial-6066-hk-and-short-china-renaissance-1911-hk" target="_blank" rel="noopener">China Broker Pair Trade: Long CSC Financial (6066.HK) And Short China Renaissance (1911.HK)</a></p>

China A-share market daily turnover has surged to pass RMB 1.5 trillion on Monday with Shanghai Composite Index jumped almost 6% in a day. The rising trading activities have driven China A-share daily turnover exceeding RMB 1 trillion consecutively in the past week, which was the first time since 2015. Chinese brokers, as typically seen as a barometer for market sentiment, led gains Monday. With our bullish view for China A-share in 2H 2020, we believe there are upside risk for estimated 2020 average daily turnover. Chinese brokers could benefit the most from surging trading activities, more IPO deals, and better return from their asset management business.We also want to reiterate our view that capital market reform would likely serve as the catalyst for market upside. China is taking another step to reform the NASDAQ-style ChiNext board at Shenzhen Stock Exchange, which hosts some of the world’s fastest growing technology and pharmaceutical A-shares. China A-share IPO process is long being plagued by its central control by regulator and lack of market pricing mechanism. The new proposal, if executed successfully, would remove the major bottleneck of IPO applications and market-based pricing. This could lead to far-reaching impacts on the structure of China A-share market.CSC Financial (6066 HK) is our top pick in Chinese broker sector. CSC Financial was ranked 4th by equity and bond underwriting ranking. It has a dominant position on the IPO underwriting volume and pipeline in ChiNext board, which has direct benefits from the ChiNext board reform. In addition, it is also reported by local media that Citic Securities (H) (6030 HK) and CSC Financial (6066 HK), along with their major shareholders CITIC Group and Central Huijin, have started to study on a potential merger of these two brokers. But both CITICS and CSC Financial have declined to provide more information on this. We think past Chinese brokers mergers might provide some hints on potential deal structure. For example, Citic Securities (H) (6030 HK) has acquired 100% stake of Guangzhou Securities (not listed) through new A-share issuance in 2018. Another case is that Shenwan Hongyuan Group (H) (6806 HK), which is the merger of brokerage firm Shenyin Wanguo Securities and Hongyuan Securities via new A-share issuance as well. Past reports:China A-Share Strategy: More Upside in 2nd Half of 2020China Broker Pair Trade: Long CSC Financial (6066.HK) And Short China Renaissance (1911.HK)

China Brokers: Surging Trading Activities Benefit the Sector, CSC Financial (6066.HK) Is Top Pick

China

Shenwan Hongyuan Group Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities investment fund agency, securities asset management, and other services. Shenwan Hongyuan Group provides services in China.

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Shenwan Hongyuan Group (6806 HK)

Magic Empire Global: More Trick than Treat

It is hard to pinpoint the real reason for MEGL’s share price surge. While it is difficult to predict when the share price will reflect...

Arun George

A-H Premium Weekly: Zhejiang Shibao, PICC, CRRC

We highlight week-on-week A-H premium changes in stocks including Zhejiang Shibao, PICC, CRRC, Shandong Xinhua, and Shenwan Hongyuan.

Ke Yan, CFA, FRM

A/H Premium Weekly: Utility Led the Premium Increase

We highlight the utility sector as the biggest A/H premium gainer and the Consumer Discretionary as the biggest A/H premium lager.

Ke Yan, CFA, FRM

China Brokers: Surging Trading Activities Benefit the Sector, CSC Financial (6066.HK) Is Top Pick

China A-share market daily turnover has surged to pass RMB 1.5 trillion on Monday with Shanghai Composite Index jumped almost 6% in a day. The...

Roger Xie

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Magic Empire Global: More Trick than Treat

It is hard to pinpoint the real reason for MEGL’s share price surge. While it is difficult to predict when the share price will reflect...

Arun George

A-H Premium Weekly: Zhejiang Shibao, PICC, CRRC

We highlight week-on-week A-H premium changes in stocks including Zhejiang Shibao, PICC, CRRC, Shandong Xinhua, and Shenwan Hongyuan.

Ke Yan, CFA, FRM

A/H Premium Weekly: Utility Led the Premium Increase

We highlight the utility sector as the biggest A/H premium gainer and the Consumer Discretionary as the biggest A/H premium lager.

Ke Yan, CFA, FRM

Quiddity Weekly H/​​A: Share Spread Monitor as of 27 Nov 2020

The weekly H/A Share Monitor and Trade Recommendations. Spreads narrower on the week. Last week's 39 trade recommendations gained 0.67% on average....

Travis Lundy

China Brokers: Surging Trading Activities Benefit the Sector, CSC Financial (6066.HK) Is Top Pick

China A-share market daily turnover has surged to pass RMB 1.5 trillion on Monday with Shanghai Composite Index jumped almost 6% in a day. The...

Roger Xie

Quiddity Weekly H/A: Share Spread Monitor as of 27 Nov 2020