Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A/H premium on 139 stocks over the last week.</li>
<li>Real estate, consumer discretionary and information technology led the 5.7ppt A-H premium decline last week.</li>
<li>We highlight stocks including China Southern, Shanghai Junshi, Shanghai Haohai, Shanghai Fudan. </li>
</ul>


We analyse the changes of A/H premium on 139 stocks over the last week.
Real estate, consumer discretionary and information technology led the 5.7ppt A-H premium decline last week.
We highlight stocks including China Southern, Shanghai Junshi, Shanghai Haohai, Shanghai Fudan. 


A-H Premium Weekly: China Southern, Shanghai Junshi, Shanghai Haohai, Shanghai Fudan

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Orient Overseas (International) / Index Rebalance

<ul>
<li>The review period for the March review of the HSCI ends on 31 December. There are expected to be a lot more inclusions than deletions at the review.</li>
<li>There are quite a few stocks that should be included following their listing over the last couple of months while others are now potential inclusions after passing the velocity test.</li>
<li>Quite a few of the potential deletions from the HSCI and Stock Connect have large holdings via Southbound Stock Connect and these stock could see some selling.</li>
</ul>


The review period for the March review of the HSCI ends on 31 December. There are expected to be a lot more inclusions than deletions at the review.
There are quite a few stocks that should be included following their listing over the last couple of months while others are now potential inclusions after passing the velocity test.
Quite a few of the potential deletions from the HSCI and Stock Connect have large holdings via Southbound Stock Connect and these stock could see some selling.


HSCI Index Rebalance and Stock Connect: More Inclusions than Exclusions in March

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

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<p>This week in StubWorld ...</p>
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<p>Both <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a> and 74.4%-held <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a> enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. </p>
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<p>Preceding my comments on Dah Sing are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...



Both Dah Sing Financial (440 HK) and 74.4%-held Dah Sing Banking (2356 HK) enjoyed massive upward moves last Friday, and equally impressive downward moves earlier this week. And not a peep from either company on these unusual moves. 

Preceding my comments on Dah Sing are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.







StubWorld: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

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<p>As discussed in <em><a href="https://skr.ma/p8tiS" target="_blank" rel="noopener">Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light</a></em>, Yue Xiu has made an Offer for <a href="https://www.smartkarma.com/entities/chong-hing-bank-ltd" target="_blank" data-smartkarma-citation="entities:344:1" rel="noopener">Chong Hing Bank (1111 HK)</a> shares not owned, at HK$20.80/share, which is a 10.1% discount to its NAV.</p>
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<p>This privatisation renews interest in Hong Kong's remaining  "family"-owned banks, such as <a href="https://www.smartkarma.com/entities/dah-sing-banking-group-ltd" target="_blank" data-smartkarma-citation="entities:342:1" rel="noopener">Dah Sing Banking (2356 HK)</a> and <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a>.</p>
<p>Of the two, DSB is the most obvious candidate. It is 74.4% held by <a href="https://www.smartkarma.com/entities/dah-sing-financial-holdings" target="_blank" data-smartkarma-citation="entities:589:1" rel="noopener">Dah Sing Financial (440 HK)</a>, which in turn is controlled by the Wong family with 42.96%.</p>
<p>More below the fold.</p>
</div>


As discussed in Chong Hing Bank (1111 HK): Yue Xiu's Offer Is Light, Yue Xiu has made an Offer for Chong Hing Bank (1111 HK) shares not owned, at HK$20.80/share, which is a 10.1% discount to its NAV.


This privatisation renews interest in Hong Kong's remaining  "family"-owned banks, such as Dah Sing Banking (2356 HK) and Bank of East Asia (23 HK).
Of the two, DSB is the most obvious candidate. It is 74.4% held by Dah Sing Financial (440 HK), which in turn is controlled by the Wong family with 42.96%.
More below the fold.


Dah Sing (2356 HK): Trading Cheap As Chong Hing Gets Bid

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

<p><span class="sk-hover-linkanchor"><strong>Bank of Chongqing</strong></span><span class="sk-hover-linkanchor"> (1963 HK) dedicates itself increasingly to corporate lending (61.4% of loan book) but also to consumer segments (34.7%), to some discount bills (3.9%), funded by time deposits (68% of deposits) and by transaction accounts (26.6%). The bank </span>has been expanding its business in recent years, whether it be Corporate, SME, Consumer, Trade Finance, Capital Markets, Green Finance, Wealth Management, or Financial Leasing. While rooted in Chongqing, the bank has built a strong presence in Sichuan, Guizhou, and Shaanx. Management is fortifying the application of financial technologies, with the online loan business growing fast, while deposits are growing moderately. Balance Sheet expansion is somewhat in excess of the System in general. In addition, the Bank has strengthened governance, and put in place a mechanism for online tracking of asset quality and a risk monitoring system that combines micro and macro aspects. Management has beefed up risk control tools, advanced post-loan online service and the online management of credit authorisation and inquiry, and promoted the tools used to expand the credit business. Fintech innovation is centred on 5G, AI, IoT, biometrics, blockchain and other technologies through lean management robots, remote banks, intelligent WAN and integrated operation and maintenance projects. Management is active in funding Belt and Road, Yangtze River Economic Belt, and the Chengu-Chongqing Economic Circle.</p><p>Recent results show positive fundamental momentum and trends with clear improvement in Efficiency, NIM and Spread, as well as better Capital Adequacy and Provisioning. The valuation variable too is a positive in our PH Score™. Given the increase in LLPs, on account of a 15% jump in NPLs, Profitability though eroded somewhat. Growth in “Core Income” was robust, especially in Net Interest Income, spurred by above-System credit expansion of 16% YoY.</p><div class="content-highlight"><p>A FV of 9%, a PBV of 0.39x, an Earnings Yield of 28.0%, and a Dividend Yield of 8.4%, are not unattractive. The bank commands both a top quartile PH Score™ and VFM ranking. </p></div>

Bank of Chongqing (1963 HK) dedicates itself increasingly to corporate lending (61.4% of loan book) but also to consumer segments (34.7%), to some discount bills (3.9%), funded by time deposits (68% of deposits) and by transaction accounts (26.6%). The bank has been expanding its business in recent years, whether it be Corporate, SME, Consumer, Trade Finance, Capital Markets, Green Finance, Wealth Management, or Financial Leasing. While rooted in Chongqing, the bank has built a strong presence in Sichuan, Guizhou, and Shaanx. Management is fortifying the application of financial technologies, with the online loan business growing fast, while deposits are growing moderately. Balance Sheet expansion is somewhat in excess of the System in general. In addition, the Bank has strengthened governance, and put in place a mechanism for online tracking of asset quality and a risk monitoring system that combines micro and macro aspects. Management has beefed up risk control tools, advanced post-loan online service and the online management of credit authorisation and inquiry, and promoted the tools used to expand the credit business. Fintech innovation is centred on 5G, AI, IoT, biometrics, blockchain and other technologies through lean management robots, remote banks, intelligent WAN and integrated operation and maintenance projects. Management is active in funding Belt and Road, Yangtze River Economic Belt, and the Chengu-Chongqing Economic Circle.Recent results show positive fundamental momentum and trends with clear improvement in Efficiency, NIM and Spread, as well as better Capital Adequacy and Provisioning. The valuation variable too is a positive in our PH Score™. Given the increase in LLPs, on account of a 15% jump in NPLs, Profitability though eroded somewhat. Growth in “Core Income” was robust, especially in Net Interest Income, spurred by above-System credit expansion of 16% YoY.A FV of 9%, a PBV of 0.39x, an Earnings Yield of 28.0%, and a Dividend Yield of 8.4%, are not unattractive. The bank commands both a top quartile PH Score™ and VFM ranking. 

Bank of Chongqing: Cheap Given Fundamental Dynamics

China

Bank of Chongqing Co., Ltd. provides a comprehensive range of banking and related financial services to corporate and individual clients across the People's Republic of China. The bank offers deposit and lending products, financial market services, and digital banking solutions. It was founded in 1996 and is headquartered in Chongqing, People's Republic of China.

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Bank of Chongqing (1963 HK)

A-H Premium Weekly: China Southern, Shanghai Junshi, Shanghai Haohai, Shanghai Fudan

A-H premium declined by 5.7ppt last week, real estate, consumer discretionary and information technology led the decline. We highlight China...

Ke Yan, CFA, FRM

HSCI Index Rebalance and Stock Connect: More Inclusions than Exclusions in March

We expect there will be a lot more inclusions than exclusions at the March rebalance of the HSCI. The changes to the index will result in changes...

Brian Freitas

StubWorld: Mysteriously, No News Or Suspension For Dah Sing's Roller Coaster

I'd still be long both DSF (440 HK) and DSB (2356 HK) here. I find it wholly unlikely there was no substance to that move last Friday.

David Blennerhassett

Dah Sing (2356 HK): Trading Cheap As Chong Hing Gets Bid

I think one could be long both DSF and DSB. DSF is cheaper, and because of the securities holdings, the discount is more egregious.

David Blennerhassett

Bank of Chongqing: Cheap Given Fundamental Dynamics

Valuation at Bank of Chongqing is undemanding given the fundamental progression underway and strategic focus on technology and fast developing...

Paul Hollingworth

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