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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Beijing-Shanghai High Speed Ra / Event-Driven

<ul>
<li>On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.</li>
<li>For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.</li>
<li>There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.</li>
</ul>


On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.


Northbound Stock Connect Expansion: Potential Changes in 2023

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 analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of December 16th.</li>
<li>We estimate the weekly inflows to be US$101.5 million, led by financials, consumer staples, communication services sectors, and offset by industrials, materials.</li>
<li>We highlight flows for China Merchants Bank, Shanghai Intl Airport, Tongwei.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of December 16th.
We estimate the weekly inflows to be US$101.5 million, led by financials, consumer staples, communication services sectors, and offset by industrials, materials.
We highlight flows for China Merchants Bank, Shanghai Intl Airport, Tongwei.


Northbound Flows (Dec 16th): CMB, Shanghai Intl Airport, Tongwei

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of December 9th.</li>
<li>We estimate the weekly inflows to be US$1,068.5 million, led by consumer staples, consumer discretionary, health care sectors, and offset by information technology, industrials.</li>
<li>We highlight flows for  Midea, Wuliangye, Shenzhen Mindray, CATL, BYD, Yunnan Energy New Material, BJ-SH High Speed Rail, Goertek, Goodwe, Nari.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of December 9th.
We estimate the weekly inflows to be US$1,068.5 million, led by consumer staples, consumer discretionary, health care sectors, and offset by information technology, industrials.
We highlight flows for  Midea, Wuliangye, Shenzhen Mindray, CATL, BYD, Yunnan Energy New Material, BJ-SH High Speed Rail, Goertek, Goodwe, Nari.


Northbound Flows (Dec 9th): Midea, Wuliangye, Shenzhen Mindray, CATL, BYD

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Beijing-Shanghai High Speed Ra / Equity Bottom-Up

The announcement by <a href="https://www.smartkarma.com/entities/beijing-shanghai-high-speed-railway-a" target="_blank" data-smartkarma-citation="entities:28433:1" rel="noopener">Beijing-Shanghai High Speed Railway (601816 CH)</a> to adjust its fare from a flat price to a floating range look apparently like a positive move, but we do not see any meaningful impact on its bottom line. The limited upside to the Second Class fare and the small number of Business Class seats suggested that the amount of benefits is immaterial. We estimate that, in a normal year, a 1% change in average passenger yield will only lift its profit by an equal 1%. However, the current consensus earnings forecasts, particularly for FY21, are too optimistic due to challenges including slow traffic recovery, inflexible cost structure and more severe loss at Beijing-Fuzhou Railway Anhui Co., Ltd. At 22.7x consensus EPS for FY21, it is still expensive and we continue to see risk of re-testing levels close to its IPO price of Rmb4.88.

The announcement by Beijing-Shanghai High Speed Railway (601816 CH) to adjust its fare from a flat price to a floating range look apparently like a positive move, but we do not see any meaningful impact on its bottom line. The limited upside to the Second Class fare and the small number of Business Class seats suggested that the amount of benefits is immaterial. We estimate that, in a normal year, a 1% change in average passenger yield will only lift its profit by an equal 1%. However, the current consensus earnings forecasts, particularly for FY21, are too optimistic due to challenges including slow traffic recovery, inflexible cost structure and more severe loss at Beijing-Fuzhou Railway Anhui Co., Ltd. At 22.7x consensus EPS for FY21, it is still expensive and we continue to see risk of re-testing levels close to its IPO price of Rmb4.88.

Beijing-Shanghai High Speed Railway (601816 CH): Adjustment in Fare Price Not of Much Help

It is disappointing to see <a href="https://www.smartkarma.com/entities/beijing-shanghai-high-speed-railway-a" target="_blank" data-smartkarma-citation="entities:28433:1" rel="noopener">Beijing-Shanghai High Speed Railway (601816 CH)</a>'s net profit for 2Q20 declined significantly on a QoQ basis (-36.1%). 1H20 net profit of Rmb530m is just 7.5% of full-year consensus forecasts, suggesting substantial downside earnings revisions. Also, with Beijing-Fuzhou Railway Anhui Co., Ltd (BFRAC) making a loss of Rmb1.23bn in 1H20, such acquisition has turned out to be a major drag. We believe the stock is expensive at 43.1x consensus PER. BSHR will continue to face challenges from the moderate pace of traffic recovery, highly inflexible cost structure and drag from BFRAC. We see risk for the stock to re-test levels close to its IPO price of Rmb4.88 given the headwinds.

It is disappointing to see Beijing-Shanghai High Speed Railway (601816 CH)'s net profit for 2Q20 declined significantly on a QoQ basis (-36.1%). 1H20 net profit of Rmb530m is just 7.5% of full-year consensus forecasts, suggesting substantial downside earnings revisions. Also, with Beijing-Fuzhou Railway Anhui Co., Ltd (BFRAC) making a loss of Rmb1.23bn in 1H20, such acquisition has turned out to be a major drag. We believe the stock is expensive at 43.1x consensus PER. BSHR will continue to face challenges from the moderate pace of traffic recovery, highly inflexible cost structure and drag from BFRAC. We see risk for the stock to re-test levels close to its IPO price of Rmb4.88 given the headwinds. 

Beijing-Shanghai High Speed Railway (601816 CH): Weaker 2Q20 QoQ Showed the Tough Environment

China

Beijing-Shanghai High Speed Railway Co., Ltd. provides railway operation services. The Company offers high-speed railway and stations investment, construction, operation, and other services. Beijing-Shanghai High Speed Railway provides services in China.

Beijing-Shanghai High Speed Ra (601816 CH)

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Beijing-Shanghai High Speed Ra (601816 CH)

Northbound Stock Connect Expansion: Potential Changes in 2023

The universe for inclusion in Northbound Stock Connect has been expanded to include the SSE A Share Index and the SZSE Composite Index...

Brian Freitas

Northbound Flows (Dec 16th): CMB, Shanghai Intl Airport, Tongwei

We analyzed the Shanghai/Shenzhen Connect Scheme for last week and highlight flows for CMB, Shanghai Intl Airport, Tongwei.

Ke Yan, CFA, FRM

Northbound Flows (Dec 9th): Midea, Wuliangye, Shenzhen Mindray, CATL, BYD

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlight flows for Midea, Wuliangye, Shenzhen Mindray, CATL, BYD.

Ke Yan, CFA, FRM

Beijing-Shanghai High Speed Railway (601816 CH): Adjustment in Fare Price Not of Much Help

Beijing-Shanghai High Speed Railway's fare adjustment will not bring much positive bottom line impact. It is expensive at 22.7x FY21 PER, despite a...

Osbert Tang, CFA

Beijing-Shanghai High Speed Railway (601816 CH): Weaker 2Q20 QoQ Showed the Tough Environment

It is disappointing to see Beijing-Shanghai High Speed Railway (601816 CH)'s net profit for 2Q20 declined significantly on a QoQ basis (-36.1%)....

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)