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

<ul>
<li>At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.</li>
<li>We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.</li>
<li>The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.</li>
</ul>


At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.


Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

<ul>
<li>One year ago we looked at the arrangement between <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan (7201 JP)</a> and <a href="https://www.smartkarma.com/entities/renault-sa" target="_blank" data-smartkarma-citation="entities:21536:1" rel="noopener">Renault (RNO FP)</a> regarding their relationship, which left Renault with a 28% Nissan stake to be sold.</li>
<li>Since then, Renault has undertaken one selldown but its recent announcement of Ampere’s listing cancellation once again raises the possibility of a further selldown of Nissan’s stake by Renault.</li>
<li>In this note, we talk about the updates since our previous note and the impact of the Ampere listing delay.</li>
</ul>


One year ago we looked at the arrangement between Nissan (7201 JP) and Renault (RNO FP) regarding their relationship, which left Renault with a 28% Nissan stake to be sold.
Since then, Renault has undertaken one selldown but its recent announcement of Ampere’s listing cancellation once again raises the possibility of a further selldown of Nissan’s stake by Renault.
In this note, we talk about the updates since our previous note and the impact of the Ampere listing delay.


Nissan’s Renault Led Selldown Updates - Lack of Ampere Listing Brings Back the US$4bn Overhang

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.</li>
<li>The index changes for the March 2024 index rebal will be announced on 16th February 2024.</li>
<li>While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.</li>
</ul>


In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.
The index changes for the March 2024 index rebal will be announced on 16th February 2024.
While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.


Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul>
<li>Apple reported FY1Q24 (CY4Q23) revenue of US$119.6bn (+2% YoY) and EPS of US$2.18 (+16% YoY), which are in line and 4% above consensus, mainly due to a favourable product mix and better leverage, despite weak China sales (- 12.9% YoY) and one less week of sales compared with last year.</li>
<li>For FY2Q24E, mgmt. expected overall revenue and iPhone sales to be both US$5bn less YoY due to a high base in CY1Q23 caused by iPhone supply constraints, while the service segment revenue should increase YoY at a similar double-digit growth rate compared with the Dec quarter.</li>
<li>Given Huawei’s comeback in China and a lack of foldable phones in 2024, we believe iPhone shipments will face challenges in the near term, and Apple may focus on improving its shipment mix towards higherend Pro models. </li>
</ul>
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Apple reported FY1Q24 (CY4Q23) revenue of US$119.6bn (+2% YoY) and EPS of US$2.18 (+16% YoY), which are in line and 4% above consensus, mainly due to a favourable product mix and better leverage, despite weak China sales (- 12.9% YoY) and one less week of sales compared with last year.
For FY2Q24E, mgmt. expected overall revenue and iPhone sales to be both US$5bn less YoY due to a high base in CY1Q23 caused by iPhone supply constraints, while the service segment revenue should increase YoY at a similar double-digit growth rate compared with the Dec quarter.
Given Huawei’s comeback in China and a lack of foldable phones in 2024, we believe iPhone shipments will face challenges in the near term, and Apple may focus on improving its shipment mix towards higherend Pro models. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Technology - Apple FY1Q24 Beat on Better Margins and Resilient Service Revenue

Equity Bottom-Up

<ul><li>We reiterate BUY rating on BYDE after it preannounced strong FY23 earnings growth of 110-123% YoY, with mid-point 2%/3% above our/consensus estimates.</li><li>For 4Q23, net profit delivered strong growth of 57% YoY. As stated in our note last week, we believe recent stock correction was mainly due to concerns on slower smartphone recovery in 1Q24, NEV biz price pressure and Jabil’s casing earnings uncertainties.</li><li>We believe market concern is overdone given 1) Huawei’s high-end model comeback likely to boost shipments and ASP hikes on titanium upgrade, 2) solid growth for NEV biz on new product ramp-up, parentco orders and new orders wins, and 3) sales synergies from Jabil’s acquisition. After recent correction, the stock now trades at 11.2x FY24E P/E, which is attractive in our view. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We reiterate BUY rating on BYDE after it preannounced strong FY23 earnings growth of 110-123% YoY, with mid-point 2%/3% above our/consensus estimates.For 4Q23, net profit delivered strong growth of 57% YoY. As stated in our note last week, we believe recent stock correction was mainly due to concerns on slower smartphone recovery in 1Q24, NEV biz price pressure and Jabil’s casing earnings uncertainties.We believe market concern is overdone given 1) Huawei’s high-end model comeback likely to boost shipments and ASP hikes on titanium upgrade, 2) solid growth for NEV biz on new product ramp-up, parentco orders and new orders wins, and 3) sales synergies from Jabil’s acquisition. After recent correction, the stock now trades at 11.2x FY24E P/E, which is attractive in our view. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

BYDE (285 HK) - FY23 Positive Profit Alert Above Expectations

China

BYD Electronic International Co., Ltd. researches, develops, manufactures handset components such as handset casings and handset keypads and modules for handset manufacturers.  The Company also provides assembly services comprising assembly service and PCB assembly service to global handset manufacturers.

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BYD Electronics (285 HK)

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

The announcement of the inclusions to the HSI at the March rebalance will be made post market close today. Most stocks are trading lower which is...

Brian Freitas

Nissan’s Renault Led Selldown Updates - Lack of Ampere Listing Brings Back the US$4bn Overhang

A year ago we looked at the arrangement between Nissan and Renault regarding their relationship, which left Renault with a 28% Nissan stake to be...

Sumeet Singh

Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

The index changes for the Hang Seng Index for the March 2024 index rebal event will be announced on 16th February 2024. Although the index...

Janaghan Jeyakumar, CFA

Technology - Apple FY1Q24 Beat on Better Margins and Resilient Service Revenue

Apple reported FY1Q24 (CY4Q23) revenue of US$119.6bn (+2% YoY) and EPS of US$2.18 (+16% YoY), which are in line and 4% above consensus

CMB International

BYDE (285 HK) - FY23 Positive Profit Alert Above Expectations

We reiterate BUY rating on BYDE after it preannounced strong FY23 earnings growth of 110-123% YoY, with mid-point 2%/3% above our/consensus estimates.

CMB International

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