Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p data-v-da61000a="" data-v-294dc056="">This update is the latest in a series dating back to <a href="https://skr.ma/c7hcH" target="_blank" rel="noopener">L<em>egend's Conversion of Domestic Shares</em></a> in June 2018.</p>
<p data-v-da61000a="" data-v-294dc056="">To date, 20 companies have sought approval to convert their domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.</p>
<p data-v-da61000a="" data-v-294dc056="">13 companies have now been given CSRC and Hong Kong listing approval to convert such shares. Only two of those have seen any noticeable movement in the converted shares.</p>
<p data-v-da61000a="" data-v-294dc056="">In the past four months, two companies have <em>withdrawn</em> their application to convert their domestic shares, citing further improvement in the rules and regulations of the domestic capital market, among other factors.  </p>
</div>
<div>
<p data-v-da61000a="" data-v-294dc056="">As always, more below the fold. </p>
</div>


This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018.
To date, 20 companies have sought approval to convert their domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.
13 companies have now been given CSRC and Hong Kong listing approval to convert such shares. Only two of those have seen any noticeable movement in the converted shares.
In the past four months, two companies have withdrawn their application to convert their domestic shares, citing further improvement in the rules and regulations of the domestic capital market, among other factors.  


As always, more below the fold. 


Full Circulation Of H-Shares: January 2021 Update

Travis Lundy

Thematic (Sector/Industry)

<p>In 1998, before the US and China entered into Permanent Normal Trade Relations with China in 2000, the US Congress enacted a law requiring the Clinton Administration to publish a list of Chinese companies in the US which did business with the People's Liberation Army (Public Law 105-261, Section 1237), and a "Communist Chinese military company" was defined in that law as any company named in to Defense Intelligence Agency documents from 1990 and 1995 and "any other entity owned or controlled by the PLA and engaged in providing commercial services, manufacturing, or exporting."</p><p>That law basically lay dormant until last year when the Pentagon launched a review of such companies following the Trump White House's labelling of China (and Russia) a "revisionist" power in its first National Security Strategy <a href="https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905-2.pdf" target="_blank" rel="noopener">report</a> in 2017. The goal was to investigate and warn about supply-chain vulnerabilities. The Department of Defense published a list in June 2020 of 20 companies which were "Qualified Entities". It updated the list in late August 2020. The former Secretary of Defense was ousted several days ago and the new Secretary of Defense is now responsible for the list. </p><p>There is, as of last night, an Executive Order by the White House blocking US 'persons' investment in any of the names mentioned - a list now 31 names long.</p><p>More below on the impact.</p>

In 1998, before the US and China entered into Permanent Normal Trade Relations with China in 2000, the US Congress enacted a law requiring the Clinton Administration to publish a list of Chinese companies in the US which did business with the People's Liberation Army (Public Law 105-261, Section 1237), and a "Communist Chinese military company" was defined in that law as any company named in to Defense Intelligence Agency documents from 1990 and 1995 and "any other entity owned or controlled by the PLA and engaged in providing commercial services, manufacturing, or exporting."That law basically lay dormant until last year when the Pentagon launched a review of such companies following the Trump White House's labelling of China (and Russia) a "revisionist" power in its first National Security Strategy report in 2017. The goal was to investigate and warn about supply-chain vulnerabilities. The Department of Defense published a list in June 2020 of 20 companies which were "Qualified Entities". It updated the list in late August 2020. The former Secretary of Defense was ousted several days ago and the new Secretary of Defense is now responsible for the list. There is, as of last night, an Executive Order by the White House blocking US 'persons' investment in any of the names mentioned - a list now 31 names long.More below on the impact.

Trump's Executive Order on Chinese Military Companies

AviChina Industry & Technology H / Event-Driven

<p>Civil-aviation and defense play <a href="https://www.smartkarma.com/entities/avichina-industry-tech-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">Avichina Industry &amp; Tech H (2357 HK)</a> is trading at a steep 68% discount to NAV. The implied stub, netting off listed holdings, is also at a multi-year low.</p>
<p>In the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0918/2020091800348.pdf" target="_blank" rel="noopener">2020 interim report</a>, AviChina stated:</p>
<blockquote>
<p>During the first half of 2020, with the strategic goal of building an aviation power in the new era in all respects, the Company has been dedicated to becoming a flagship company to provide high-tech aviation products and services for both military and civil purposes.</p>
</blockquote>
<div data-v-e1aeccf8="">
<h3>The Fifth Plenum</h3>
<p data-v-d6b361f8="" data-v-e1aeccf8="">China concluded a four-day meeting, known as the fifth plenum, on the 29th October, in which the 14th five-year plan and the development goals for 2035 were discussed.</p>
<p data-v-d6b361f8="" data-v-e1aeccf8="">One of the key goals from the communique of the plenum was to turn the People‘s Liberation Army into a modern military force (one on par with the US) by 2027 - in time to mark the centennial founding of the PLA. </p>
<p data-v-d6b361f8="" data-v-e1aeccf8="">Concurrent with China's "dual circularity" development - discussed in <em><a href="https://skr.ma/ANkER" target="_blank" rel="noopener">China's Dual Circulation: Hedged Integration</a></em> - wherein China will primarily depend on “domestic circulation” buttressed by external resources or “international circulation”, timing appears favourable for Chinese defense stocks.</p>
<p data-v-d6b361f8="" data-v-e1aeccf8="">Put another way: why provide spending transparency in a sensitive industry via a listed vehicle? At this multiyear low discount to NAV, AviChina is cheap on a standalone basis. And potentially a take-private candidate. </p>
<p data-v-d6b361f8="" data-v-e1aeccf8="">More below the fold.</p>
</div>

Civil-aviation and defense play Avichina Industry &amp; Tech H (2357 HK) is trading at a steep 68% discount to NAV. The implied stub, netting off listed holdings, is also at a multi-year low.
In the 2020 interim report, AviChina stated:

During the first half of 2020, with the strategic goal of building an aviation power in the new era in all respects, the Company has been dedicated to becoming a flagship company to provide high-tech aviation products and services for both military and civil purposes.


The Fifth Plenum
China concluded a four-day meeting, known as the fifth plenum, on the 29th October, in which the 14th five-year plan and the development goals for 2035 were discussed.
One of the key goals from the communique of the plenum was to turn the People‘s Liberation Army into a modern military force (one on par with the US) by 2027 - in time to mark the centennial founding of the PLA. 
Concurrent with China's "dual circularity" development - discussed in China's Dual Circulation: Hedged Integration - wherein China will primarily depend on “domestic circulation” buttressed by external resources or “international circulation”, timing appears favourable for Chinese defense stocks.
Put another way: why provide spending transparency in a sensitive industry via a listed vehicle? At this multiyear low discount to NAV, AviChina is cheap on a standalone basis. And potentially a take-private candidate. 
More below the fold.


AviChina (2357 HK): Buy The Modern Army Narrative

<div>
<p data-v-da61000a="" data-v-294dc056="">This update is the latest in a series dating back to <em><a href="https://skr.ma/c7hcH" target="_blank" rel="noopener">Legend's Conversion of Domestic Shares</a></em> in June 2018, with the most recent addition <em><a href="https://skr.ma/kJWeU" target="_blank" rel="noopener">CPPCC And Full Circulation Of H-Shares</a></em> speculating the 2020 National People's Congress and Chinese People's Political Consultative may provide guidance on the "<em>full circulation of H shares</em>", which would allow the conversion of domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.</p>
<p data-v-da61000a="" data-v-294dc056="">Since that insight, another 6 companies have been given the green light to convert and/or have submitted applications to covert.</p>
<p data-v-da61000a="" data-v-294dc056="">There has also been one noticeable movement in one of the initial pilot companies to have converted domestic shares.</p>
<p data-v-da61000a="" data-v-294dc056="">As always, more below the fold. </p>
</div>
<div></div>
<div>
<p data-v-da61000a="" data-v-294dc056=""></p>
</div>


This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018, with the most recent addition CPPCC And Full Circulation Of H-Shares speculating the 2020 National People's Congress and Chinese People's Political Consultative may provide guidance on the "full circulation of H shares", which would allow the conversion of domestic shares into H shares, which would then be eligible to be listed and traded on Hong Kong's stock exchange.
Since that insight, another 6 companies have been given the green light to convert and/or have submitted applications to covert.
There has also been one noticeable movement in one of the initial pilot companies to have converted domestic shares.
As always, more below the fold. 






Full Circulation Of H-Shares - July Update

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

<p>Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jun 19.</p><p>In the past 7 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 515.3 million worth of buybacks), Avichina Industry &amp; Technology Company Limited (2357 HK) (HKD 48.5 million worth of buybacks), Golden Eagle Retail Group Limited (3308 HK) (HKD 15.8 million worth of buybacks).</p><p>In the past 30 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 2,082.8 million worth of buybacks), Avichina Industry &amp; Technology Company Limited (2357 HK) (HKD 124.0 million worth of buybacks), China Communications Construction Company Limited (1800 HK) (HKD 59.1 million worth of buybacks).</p><p>In the past 90 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 2,861.1 million worth of buybacks), Xiaomi Corporation (1810 HK) (HKD 499.5 million worth of buybacks), New World Development Co Ltd (17 HK) (HKD 415.4 million worth of buybacks).</p><p>In the past 365 days, the top 3 companies that repurchased the most shares from the market were Hsbc Holdings Plc (5 HK) (HKD 7,813.7 million worth of buybacks), Link Reit (823 HK) (HKD 4,156.7 million worth of buybacks), China Evergrande Group (3333 HK) (HKD 2,861.1 million worth of buybacks).</p>

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jun 19.In the past 7 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 515.3 million worth of buybacks), Avichina Industry &amp; Technology Company Limited (2357 HK) (HKD 48.5 million worth of buybacks), Golden Eagle Retail Group Limited (3308 HK) (HKD 15.8 million worth of buybacks).In the past 30 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 2,082.8 million worth of buybacks), Avichina Industry &amp; Technology Company Limited (2357 HK) (HKD 124.0 million worth of buybacks), China Communications Construction Company Limited (1800 HK) (HKD 59.1 million worth of buybacks).In the past 90 days, the top 3 companies that repurchased the most shares from the market were China Evergrande Group (3333 HK) (HKD 2,861.1 million worth of buybacks), Xiaomi Corporation (1810 HK) (HKD 499.5 million worth of buybacks), New World Development Co Ltd (17 HK) (HKD 415.4 million worth of buybacks).In the past 365 days, the top 3 companies that repurchased the most shares from the market were Hsbc Holdings Plc (5 HK) (HKD 7,813.7 million worth of buybacks), Link Reit (823 HK) (HKD 4,156.7 million worth of buybacks), China Evergrande Group (3333 HK) (HKD 2,861.1 million worth of buybacks).

Hong Kong Buybacks League Table: Evergrande, Avic, Golden Eagle

China

AviChina Industry & Technology Co Ltd manufactures and sells aviation tools and aero-parts. The Company's main products include helicopters, regional aircrafts, trainers, general aircrafts, aero-parts and components and aero-electrical products.

AviChina Industry & Technology H (2357 HK)

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

AviChina Industry & Technology H (2357 HK)

Full Circulation Of H-Shares: January 2021 Update

To date, 20 companies have sought approval to convert their domestic shares into H shares, 13 of which have now been given CSRC and Hong Kong...

David Blennerhassett

Trump's Executive Order on Chinese Military Companies

The White House announced an Executive Order prohibiting "US persons" from "providing capital" to a list of "China Military Cos" which has been...

Travis Lundy

AviChina (2357 HK): Buy The Modern Army Narrative

One would think the "modern army" maxim will catalyse companies such as AviChina (2357 HK). That is positive. But why subject capex to outside...

David Blennerhassett

Full Circulation Of H-Shares - July Update

This update is the latest in a series dating back to Legend's Conversion of Domestic Shares in June 2018, with the most recent addition CPPCC And...

David Blennerhassett

Hong Kong Buybacks League Table: Evergrande, Avic, Golden Eagle

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)