Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<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>
<p>On average, </p>
<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  </p>
<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> where the net selling activity amounted to 15.5% and 22% of volume respectively. </p>
<p>Hisense remains at the overbought end of the 52-week range. <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 <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> are now at 52-week wides. </p>
<div class="content-highlight">
<p>Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.</p>
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<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>
</div>


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. 

On average, 
The first sector is Consumer, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of Hisense Home Appliances Group Co., Ltd. H (921 HK), this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  
Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both Tsingtao Brewery Co Ltd H (168 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) where the net selling activity amounted to 15.5% and 22% of volume respectively. 
Hisense remains at the overbought end of the 52-week range. Great Wall Motor (2333 HK) and Guangzhou Automobile Group (2238 HK) are now at 52-week wides. 

Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.





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


Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

<p>There is little evidence of any major economic shutdown in China during early this year. There is also little evidence of the period when China re-opened its economy only to find most all other economies were closed. It was arguably an especially difficult period for China and its banks. Where many banks have now reported their results, it becomes clearer that the numbers hardly reflect crisis - temporary or otherwise. This though is not what really matters; rather it is the implication for profit delta during 2H20.</p>

There is little evidence of any major economic shutdown in China during early this year. There is also little evidence of the period when China re-opened its economy only to find most all other economies were closed. It was arguably an especially difficult period for China and its banks. Where many banks have now reported their results, it becomes clearer that the numbers hardly reflect crisis - temporary or otherwise. This though is not what really matters; rather it is the implication for profit delta during 2H20.

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 Capital Markets

China Bohai Bank   / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/china-bohai-bank" target="_blank" data-smartkarma-citation="entities:29034:1" rel="noopener">China Bohai Bank (9668 HK)</a> is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, as its promoter and founder. Bohai will commence trading on Thursday, 16 July. Bohai priced its IPO at HK$4.80 per share, towards the bottom end of the indicative price range of HK$4.75-4.98 per share. Bohai raised net proceeds of HK$13,470.6 million ($1.7 billion).</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-bohai-bank-ipo-initiation-the-bucks-stop-here" target="_blank" rel="noopener">our initiation note</a>, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). Despite the improving sentiment towards Chinese online game companies (based on the recent multiple expansion), we continue to believe that Bohai is fully valued at the IPO price.</p></div></div></div>

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, Standard Chartered (STAN LN), as its promoter and founder. Bohai will commence trading on Thursday, 16 July. Bohai priced its IPO at HK$4.80 per share, towards the bottom end of the indicative price range of HK$4.75-4.98 per share. Bohai raised net proceeds of HK$13,470.6 million ($1.7 billion).In our initiation note, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). Despite the improving sentiment towards Chinese online game companies (based on the recent multiple expansion), we continue to believe that Bohai is fully valued at the IPO price.

<p><a href="https://www.smartkarma.com/entities/china-bohai-bank" target="_blank" data-smartkarma-citation="entities:29034:1" rel="noopener">China Bohai Bank (9668 HK)</a> is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, as its promoter and founder. Bohai has launched its IPO at a price range of HK$4.75-4.98 per share. At the mid-point of the IPO price range, Bohai will raise net proceeds of HK$13,668.1 million ($1,763 million). </p><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-bohai-bank-ipo-initiation-the-bucks-stop-here" target="_blank" rel="noopener">our initiation note</a>, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). However, our analysis suggests that Bohai is fully valued at the proposed IPO price range. Although we think that Bohai is a good business, we would give the IPO a pass on valuation grounds.</p></div></div>

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, Standard Chartered (STAN LN), as its promoter and founder. Bohai has launched its IPO at a price range of HK$4.75-4.98 per share. At the mid-point of the IPO price range, Bohai will raise net proceeds of HK$13,668.1 million ($1,763 million). In our initiation note, we stated that our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio). However, our analysis suggests that Bohai is fully valued at the proposed IPO price range. Although we think that Bohai is a good business, we would give the IPO a pass on valuation grounds.

<p><a href="https://www.smartkarma.com/entities/china-bohai-bank" target="_blank" data-smartkarma-citation="entities:29034:1" rel="noopener">China Bohai Bank (BOHAIBZ HK)</a> is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>, as its promoter and founder. Bohai is seeking to raise $2 billion through a Hong Kong IPO, according to press reports. </p><div class="content-highlight"><p>Overall, our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio).    </p></div>

China Bohai Bank (BOHAIBZ HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only nationwide joint-stock commercial bank in China that has a foreign bank, Standard Chartered (STAN LN), as its promoter and founder. Bohai is seeking to raise $2 billion through a Hong Kong IPO, according to press reports. Overall, our analysis suggests that Bohai’s fundamentals are attractive as the positives (loan book growth, improving operating metrics) far outweigh the negatives (high NPL ratio).    

China Bohai Bank IPO Initiation: The Bucks Stop Here

China

China Everbright Bank Company Limited provides banking services. The Company offers deposits, loans, domestic settlement, currency trading, and other services. China Everbright Bank provides its services to individuals, enterprises, and other clients.

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China Everbright Bank Co A (601818 CH)

China Banks – Muted Profit Delta

The profile for provision expenses and profits at China's banks during 1H20 is wholly different to many others globally.

Daniel Tabbush

China Bohai Bank IPO: Trading Debut

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

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China Bohai Bank IPO: Valuation Insights

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

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China Bohai Bank IPO Initiation: The Bucks Stop Here

China Bohai Bank (BOHAIBZ HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

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Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Quiddity H/A Spread Monitor for the week ending 23 October 2020. Spreads widened in Consumer, narrowed in every other sector. Southbound were...

Travis Lundy

China Banks – Muted Profit Delta

The profile for provision expenses and profits at China's banks during 1H20 is wholly different to many others globally.

Daniel Tabbush

China Bohai Bank IPO: Trading Debut

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

China Bohai Bank IPO: Valuation Insights

China Bohai Bank (9668 HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

China Bohai Bank IPO Initiation: The Bucks Stop Here

China Bohai Bank (BOHAIBZ HK) is the youngest nationwide joint-stock commercial bank in China. In 2005, Bohai was established and became the only...

Arun George

Quiddity Weekly H/A: Share Spread Monitor 23 Oct 2020