Forensic Analyst

Jason Yap, CFA

Forensic Accounting

Qi An Xin Technology Group  / Forensic Accounting

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In the Second of this Three part SK Originals series, we discuss how China's Company Accounting Standard No. 14 - Revenue ("CAS No. 14") could impact the revenue recognition policy of <a href="https://www.smartkarma.com/entities/qi-an-xin-technology-group-a" target="_blank" data-smartkarma-citation="entities:31069:1" rel="noopener">Qi An Xin Technology Group (688561 CH)</a>.  This impact includes, amongst others, the timing of revenue recognition and differing revenue recognition across a company's business segments. 
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Similar to before. we discuss the materiality threshold used to identify the listed software companies that have made changes to their accounting polices in lieu of CAS No. 14, the key implications and what this all means for Qi An Xin, with reference to industry dynamics, relative valuation, and company fundamentals.
Further, Qi An Xin is the official Cyber Security Services and Anti-Virus Software Sponsor of the Beijing 2022 Olympic and Paralympic Winter Games. We discuss the potential uplift for Qi An Xin in terms of greater awareness derived from the Olympic event.



In the Second of this Three part SK Originals series, we discuss how China's Company Accounting Standard No. 14 - Revenue ("CAS No. 14") could impact the revenue recognition policy of Qi An Xin Technology Group (688561 CH).  This impact includes, amongst others, the timing of revenue recognition and differing revenue recognition across a company's business segments. 


Similar to before. we discuss the materiality threshold used to identify the listed software companies that have made changes to their accounting polices in lieu of CAS No. 14, the key implications and what this all means for Qi An Xin, with reference to industry dynamics, relative valuation, and company fundamentals.
Further, Qi An Xin is the official Cyber Security Services and Anti-Virus Software Sponsor of the Beijing 2022 Olympic and Paralympic Winter Games. We discuss the potential uplift for Qi An Xin in terms of greater awareness derived from the Olympic event.

Qi An Xin (688561 CH) - Potential Uplift as Cyber Security Vendor for Beijing 2022 Winter Olympics

Alpha-Centric ESG Research

Kyle Rudden

Well, that sure escalated quickly.Early last week, in the Insight <a href="https://www.smartkarma.com/insights/pre-ipo-esg-analysis-didi-s-exemplary-esg-achievements-eclipsed-by-regulatory-risks-and-uncertainty" target="_blank" data-smartkarma-citation="insights:53687" rel="noopener">Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty</a>, I juxtaposed <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi's (DIDI US)</a> relatively strong ESG results in areas under its control with serious concerns about regulatory risk outside of its direct control.Late last week, days after DiDi's successful US$4.4 billion initial public offering, Chinese regulators ordered the removal of DiDi's business-critical ride-hailing apps from online app markets, until the company rectifies "serious violations" pertaining to collection and use of customer data.DiDi is down 5.3% so far (delayed open today).Regulatory risk was central to my thesis in the first Insight. I hardly anticipated this, but I referred to regulatory risk as real, near-term, tangible investment risk; not just some fuzzy ESG risk. Given that, I felt obliged to follow up. At the same time, however, this news is covered ad nauseam.No sense in beating a dead horse with a broken record.So, I decided to do something different. That statement about regulatory risk being a real tangible investment risk is primarily based on anecdotal evidence – i.e., when regulators flex their muscle, stocks go down, not up. But "anecdotal" isn't good enough.Which is why I took this opportunity to quantify the impacts of adverse regulatory events in China. Specifically, with event studies measuring abnormal returns around major regulatory events across four broad categories. That's what most of this Insight is about. But back to DiDi for a moment.Regulatory risk and uncertainty for DiDi is much worse today than it was last week. Typically, the opposite would be true; a negative event out in the open is better than a possible event lurking in the shadows. But not this time. Barring an immediate change of heart by the PRC, this is bad.Therefore, downgrading to bearish.

Well, that sure escalated quickly.Early last week, in the Insight Pre-IPO ESG Analysis: DiDi's Exemplary ESG Achievements Eclipsed By Regulatory Risks and Uncertainty, I juxtaposed DiDi's (DIDI US) relatively strong ESG results in areas under its control with serious concerns about regulatory risk outside of its direct control.Late last week, days after DiDi's successful US$4.4 billion initial public offering, Chinese regulators ordered the removal of DiDi's business-critical ride-hailing apps from online app markets, until the company rectifies "serious violations" pertaining to collection and use of customer data.DiDi is down 5.3% so far (delayed open today).Regulatory risk was central to my thesis in the first Insight. I hardly anticipated this, but I referred to regulatory risk as real, near-term, tangible investment risk; not just some fuzzy ESG risk. Given that, I felt obliged to follow up. At the same time, however, this news is covered ad nauseam.No sense in beating a dead horse with a broken record.So, I decided to do something different. That statement about regulatory risk being a real tangible investment risk is primarily based on anecdotal evidence – i.e., when regulators flex their muscle, stocks go down, not up. But "anecdotal" isn't good enough.Which is why I took this opportunity to quantify the impacts of adverse regulatory events in China. Specifically, with event studies measuring abnormal returns around major regulatory events across four broad categories. That's what most of this Insight is about. But back to DiDi for a moment.Regulatory risk and uncertainty for DiDi is much worse today than it was last week. Typically, the opposite would be true; a negative event out in the open is better than a possible event lurking in the shadows. But not this time. Barring an immediate change of heart by the PRC, this is bad.Therefore, downgrading to bearish.

PRC Shows DiDi Who's Boss: An Analysis of Adverse Regulatory Events on Stock Prices

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar ESG performance can do a lot of  good for a stock price. Rather, it's that the Social pillar stuff is more ethereal, harder to wrap one's head around. And, let's face it, the Social ESG pillar is a little more rosewater than crude oil.It is amazing how a global pandemic changes things. Whether it is ESG's social or Corporate Social Responsibility's (CSR) "social," socially-responsibility – as well as social irresponsibility or inaction – by corporations are front-and-center. In prior reports I assessed corporate coronavirus responses from an ESG perspective. In doing so, I something became increasingly (and painfully) obvious:Company responses are very diverse (as they should be), making comparative analysis difficult.For society, comparisons aren't necessarily relevant. A patient receiving better medical care due to a generous contribution from Company A probably doesn't care that Company B – same sector but the other side of the world – gave a larger contribution to its local hospital. For investors, however, comparisons kind of matter. After all, what's the value of a stand-alone P/E multiple?Rather than go insane trying to standardise and normalise everything – e.g., the economic value of donated masks or cost of retrofitting manufacturing lines to produce ventilators – I decided to look at coronavirus-related corporate philanthropy as a comparative metric. It is universal, quantifiable, and decidedly much easier to measure and value than, say, vats of hand sanitiser.This takes a data-driven look at coronavirus-related corporate social responsibility and specifically  philanthropy by listed companies in Asia Pacific countries. APAC first because Asian companies are doing a lot of giving, and nearly all of that inspirational cross-border humanitarian aid – including to the U.S., despite a certain orange-haired xenophobe in a white house.

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar ESG performance can do a lot of  good for a stock price. Rather, it's that the Social pillar stuff is more ethereal, harder to wrap one's head around. And, let's face it, the Social ESG pillar is a little more rosewater than crude oil.It is amazing how a global pandemic changes things. Whether it is ESG's social or Corporate Social Responsibility's (CSR) "social," socially-responsibility – as well as social irresponsibility or inaction – by corporations are front-and-center. In prior reports I assessed corporate coronavirus responses from an ESG perspective. In doing so, I something became increasingly (and painfully) obvious:Company responses are very diverse (as they should be), making comparative analysis difficult.For society, comparisons aren't necessarily relevant. A patient receiving better medical care due to a generous contribution from Company A probably doesn't care that Company B – same sector but the other side of the world – gave a larger contribution to its local hospital. For investors, however, comparisons kind of matter. After all, what's the value of a stand-alone P/E multiple?Rather than go insane trying to standardise and normalise everything – e.g., the economic value of donated masks or cost of retrofitting manufacturing lines to produce ventilators – I decided to look at coronavirus-related corporate philanthropy as a comparative metric. It is universal, quantifiable, and decidedly much easier to measure and value than, say, vats of hand sanitiser.This takes a data-driven look at coronavirus-related corporate social responsibility and specifically  philanthropy by listed companies in Asia Pacific countries. APAC first because Asian companies are doing a lot of giving, and nearly all of that inspirational cross-border humanitarian aid – including to the U.S., despite a certain orange-haired xenophobe in a white house.

COVID-19 and ESG: Tencent, Alibaba Lead in Coronavirus Aid for Asia Pacific Region

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.

Equity Capital Markets

360 Finance, Inc. / Equity Capital Markets

360 Finance, a spin-off from 360 Security Technology (601360 CH), has filed for an IPO in the US to raise up to USD 200m. In this insight, we will discuss the following topics:
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<li>The revenue model of the company</li>
<li>Analysis of key metrics and risk going forward</li>
<li>Synergies and relationship with 360</li>
<li>Company history and shareholders</li>
<li>Initial thoughts on valuation</li>
</ul>

360 Finance, a spin-off from 360 Security Technology (601360 CH), has filed for an IPO in the US to raise up to USD 200m. In this insight, we will discuss the following topics:

The revenue model of the company
Analysis of key metrics and risk going forward
Synergies and relationship with 360
Company history and shareholders
Initial thoughts on valuation


360 Finance (360金融) IPO First-Take: Too Late into Cash Loan Game

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Event-Driven

IKang Healthcare Group (ADR) / Event-Driven

<a href="https://www.smartkarma.com/entities/741" target="_blank" data-smartkarma-citation="entities:741:1">iKang Healthcare Group (ADR) (KANG US)</a> 's December quarter results provide updated benchmarks for evaluating Yunfeng and Alibaba's US$20/ADS offer for the company. Management did not speak to the offer on their conference call and brushed away several related questions from investors. We think that a fair offer is at least US$24/ADS given the earnings recovery and the potential for "exchange arbitrage" in some form. Unfortunately, management is the biggest obstacle to obtaining a higher offer. We have tagged this Insight as positive because we think a deal is likely to go through.

iKang Healthcare Group (ADR) (KANG US) 's December quarter results provide updated benchmarks for evaluating Yunfeng and Alibaba's US$20/ADS offer for the company. Management did not speak to the offer on their conference call and brushed away several related questions from investors. We think that a fair offer is at least US$24/ADS given the earnings recovery and the potential for "exchange arbitrage" in some form. Unfortunately, management is the biggest obstacle to obtaining a higher offer. We have tagged this Insight as positive because we think a deal is likely to go through.

IKang: Endgame Approaching, But Fair Price Is Distant

China

360 Security Technology Inc. offers technology services. The Company mainly researches and develops internet security technology and products. 360 Security Technology provides services in China.

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360 Security Technology Inc. (601360 CH)

Qi An Xin (688561 CH) - Potential Uplift as Cyber Security Vendor for Beijing 2022 Winter Olympics

In this Insight, we discuss how CAS No. 14 Standards could affect the revenue recognition policies of Qi An Xin. We also explore its business...

Jason Yap, CFA

PRC Shows DiDi Who's Boss: An Analysis of Adverse Regulatory Events on Stock Prices

Last week, I wrote about DiDi's regulatory risk. This week, it's worse. Hence the downgrade. But this is mostly an analysis of how regulatory...

Kyle Rudden

COVID-19 and ESG: Tencent, Alibaba Lead in Coronavirus Aid for Asia Pacific Region

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar...

Kyle Rudden

360 Finance (360金融) IPO First-Take: Too Late into Cash Loan Game

360 Finance, a spin-off from 360 Security Technology (601360 CH), has filed for an IPO in the US to raise up to USD 200m. In this insight, we will...

Ke Yan, CFA, FRM

IKang: Endgame Approaching, But Fair Price Is Distant

iKang Healthcare Group (ADR) (KANG US) 's December quarter results provide updated benchmarks for evaluating Yunfeng and Alibaba's US$20/ADS offer...

Kemp Dolliver, CFA

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