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

Quantitative Analysis

<ul>
<li>Short notional in Hong Kong is HK$439bn and has been falling over the last 18 months due to a drop in the market.</li>
<li>In terms of short notional to issue market cap, the Information Technology, Materials, Health Care and Consumer Discretionary sectors are up there, with Communication Services, Real Estate the least shorted.</li>
<li>Over the year, the largest shorts in terms of notional have been built on Xiaomi Corp, Meituan, JD.com, AIA Group Ltd, Postal Savings Bank of China, Orient Overseas, Techtronic Industries.</li>
</ul>


Short notional in Hong Kong is HK$439bn and has been falling over the last 18 months due to a drop in the market.
In terms of short notional to issue market cap, the Information Technology, Materials, Health Care and Consumer Discretionary sectors are up there, with Communication Services, Real Estate the least shorted.
Over the year, the largest shorts in terms of notional have been built on Xiaomi Corp, Meituan, JD.com, AIA Group Ltd, Postal Savings Bank of China, Orient Overseas, Techtronic Industries.


Hong Kong: Where Have Shorts Been Building Up?

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a>’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.</li>
<li>Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.</li>
<li>While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.</li>
</ul>



Giordano International (709 HK)’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.
Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.
While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.


Giordano’s Conditional Offer Open, Price Declared Final, Unlikely to Meet 50%+ Voting Threshold

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a>’s 1H22 net profit is expected to be in the range of HK$91-101 million, which represents YoY growth of 52-68%. Interims will be out in early August.</li>
<li>The clear sign of a retail recovery diminishes the prospect of the Cheng family’s low-ball offer of HK$1.88 per share hitting the 50%+ minimum acceptance threshold.</li>
<li>The offer price has not been declared final suggesting that the Cheng family retains some room to test shareholder appetite with an improved offer.   </li>
</ul>



Giordano International (709 HK)’s 1H22 net profit is expected to be in the range of HK$91-101 million, which represents YoY growth of 52-68%. Interims will be out in early August.
The clear sign of a retail recovery diminishes the prospect of the Cheng family’s low-ball offer of HK$1.88 per share hitting the 50%+ minimum acceptance threshold.
The offer price has not been declared final suggesting that the Cheng family retains some room to test shareholder appetite with an improved offer.   


Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The healthy FY22 result of <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> showed its ability to solidify leadership position and ride through higher costs with margin expansion. </li>
<li>Management expects double-digit profit growth for FY23 as it pursues targeted "2+13" expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.</li>
<li>Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. </li>
</ul>


The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion. 
Management expects double-digit profit growth for FY23 as it pursues targeted "2+13" expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. 


Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a> announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  </li>
<li>The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.</li>
<li>David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  </li>
</ul>



Giordano International (709 HK) announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  
The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.
David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  


Giordano’s Conditional Offer at HK$1.88

Hong Kong

Bosideng is the largest down clothing company in the PRC, specializing in the research, design, development, manufacturing, marketing, and distribution of branded down apparel. The company also offers ladieswear, school uniforms, and provides OEM services. It was founded in 1976 and is headquartered in Hong Kong.

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Bosideng (3998 HK)

Hong Kong: Where Have Shorts Been Building Up?

Short notional in HK has decreased as a result of falling prices. Shorts have been increasing on a lot of stocks over the year. A rally could see...

Brian Freitas

Giordano’s Conditional Offer Open, Price Declared Final, Unlikely to Meet 50%+ Voting Threshold

As the offeror will not increase the offer price, there is little chance of meeting the 50%+ minimum acceptance threshold. A deal break implies, at...

Arun George

Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink

The positive profit alert diminishes the prospect of the Cheng family’s offer hitting the 50%+ voting threshold. The offer has not been declared...

Arun George

Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

Bosideng logged solid FY22 profit and we are confident that its leadership position, , margin expansion capability, quality management and rising...

Osbert Tang, CFA

Giordano’s Conditional Offer at HK$1.88

We think there is a 50% chance that the VGO meets the 50%+ minimum acceptance condition. Buy up to HK$1.74 per share, which implies a 50% deal...

Arun George

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