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 analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 27th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Meituan, Semiconductor Manufacturing International and CNOOC.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of October 27th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Meituan, Semiconductor Manufacturing International and CNOOC.


Hong Kong Connect Flows (Oct 27th): Meituan, Semiconductor Manufacturing International, CNOOC

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>We think <a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a> will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.</li>
<li>It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex. </li>
<li>Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.</li>
</ul>


We think Kunlun Energy (135 HK) will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.
It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex. 
Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.


Kunlun Energy (135 HK): The Story Is Still Going On

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

Index Rebalance

<ul>
<li>We finally got to 80 <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a> constituents in June. Now comes the next step of moving up to 100 index constituents though there is no timeline for completion.</li>
<li>The conclusions of the market consultation on the inclusion of foreign stocks in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a> should be announced soon though implementation could start only in December.</li>
<li>We highlight 10 potential inclusions to the index with passive trading impact varying from 1.5-5.6 days of ADV. There are large shorts on some of the stocks.</li>
</ul>


We finally got to 80 Hang Seng Index constituents in June. Now comes the next step of moving up to 100 index constituents though there is no timeline for completion.
The conclusions of the market consultation on the inclusion of foreign stocks in the Hang Seng Index should be announced soon though implementation could start only in December.
We highlight 10 potential inclusions to the index with passive trading impact varying from 1.5-5.6 days of ADV. There are large shorts on some of the stocks.


Hang Seng Index Rebalance Preview: 80 Member Target Achieved; What Next?

<ul>
<li>Dismal share price performance for <a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> has created an opportunity for bottom fishing. Management also looks positive with 30% profit growth guidance for FY23.</li>
<li>There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is also a value-enhancing move. </li>
<li>De-Rating over the last three years has put the stock on undemanding multiples of 8x PER and 0.75x P/B. Its 14.8% 3-year EPS CAGR is also better than sector average.</li>
</ul>


Dismal share price performance for China Gas Holdings (384 HK) has created an opportunity for bottom fishing. Management also looks positive with 30% profit growth guidance for FY23.
There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is also a value-enhancing move. 
De-Rating over the last three years has put the stock on undemanding multiples of 8x PER and 0.75x P/B. Its 14.8% 3-year EPS CAGR is also better than sector average.


China Gas Holdings (384 HK): Worth a Bet Now

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 14th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the outflows to be USD 538m and highlight flows for Meituan, BYD.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of July 14th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the outflows to be USD 538m and highlight flows for Meituan, BYD.


Hong Kong Connect Flows (Jul 14th): Meituan, BYD

Hong Kong

China Gas is a leading energy supplier and service provider primarily engaged in the investment, construction, and management of city gas pipeline infrastructure. It distributes natural gas and liquefied petroleum gas (LPG) to residential, industrial, and commercial users, and operates CNG/LNG refilling stations. The company was founded in 1995 and is headquartered in Hong Kong.

Price Gauge
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China Gas (384 HK)

Hong Kong Connect Flows (Oct 27th): Meituan, Semiconductor Manufacturing International, CNOOC

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Meituan, Semiconductor Manufacturing International, CNOOC.

Ke Yan, CFA, FRM

Kunlun Energy (135 HK): The Story Is Still Going On

Kunlun is expected to accelerate its operating momentum in 2H23, driven by increased natural gas sales and a positive dollar margin. Its strong...

Osbert Tang, CFA

Hang Seng Index Rebalance Preview: 80 Member Target Achieved; What Next?

There is just over a week to the announcement of the September changes for the HSI. A lot of the potential inclusions have outperformed the HSI...

Brian Freitas

China Gas Holdings (384 HK): Worth a Bet Now

There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is...

Osbert Tang, CFA

Hong Kong Connect Flows (Jul 14th): Meituan, BYD

We analyzed the Hong Kong Connect Scheme for last week. We estimate the outflows to be USD 38m and highlight flows for Meituan and BYD.

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hong Kong Connect Flows (Oct 27th): Meituan, Semiconductor Manufacturing International, CNOOC

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for Meituan, Semiconductor Manufacturing International, CNOOC.

Ke Yan, CFA, FRM

Kunlun Energy (135 HK): The Story Is Still Going On

​Kunlun is expected to accelerate its operating momentum in 2H23, driven by increased natural gas sales and a positive dollar margin. Its strong...

Osbert Tang, CFA

Hang Seng Index Rebalance Preview: 80 Member Target Achieved; What Next?

There is just over a week to the announcement of the September changes for the HSI. A lot of the potential inclusions have outperformed the HSI...

Brian Freitas

China Gas Holdings (384 HK): Worth a Bet Now

There are rooms for good dollar margin recovery, unit sales rebound and improvement in free cash flow in FY24. Spin-off of value-added services is...

Osbert Tang, CFA

Hong Kong Connect Flows (Jul 14th): Meituan, BYD

We analyzed the Hong Kong Connect Scheme for last week. We estimate the outflows to be USD 38m and highlight flows for Meituan and BYD.

Ke Yan, CFA, FRM

Kunlun is expected to accelerate its operating momentum in 2H23, driven by increased natural gas sales and a positive dollar margin. Its strong...