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 analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 112.0% as of Aug 26th.</li>
<li>The average A-H premium changed by 0.4ppt, led by Financials, Utilities and offset by Information Technology, Real Estate, Consumer Discretionary. </li>
<li>We highlight weekly changes in A-H premium for China Telecom, China Life, Huaneng Power, Chongqing Iron, CICC.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 112.0% as of Aug 26th.
The average A-H premium changed by 0.4ppt, led by Financials, Utilities and offset by Information Technology, Real Estate, Consumer Discretionary. 
We highlight weekly changes in A-H premium for China Telecom, China Life, Huaneng Power, Chongqing Iron, CICC.


A-H Premium Weekly (Aug 26th): China Telecom, China Life, Huaneng Power, Chongqing Iron, CICC

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>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a>'s Free-Float Adjustment Factor (FAF) increases from 3% to 40% following lock-up expiry and the stock will replace <a href="https://www.smartkarma.com/entities/china-pacific-insurance-group" target="_blank" data-smartkarma-citation="entities:6177:1" rel="noopener">China Pacific Insurance (2601 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI INDEX</a>. </li>
<li>Using prices from the close on 19 August, estimated one-way turnover is 3.82% and will result in a one-way trade of HK$2,751m at the close on 2 September.</li>
<li>Increase in the FAF on a couple of stocks saves them from index deletion in September but is probably not enough to save them from index deletion in December.</li>
</ul>



SenseTime Group (20 HK)'s Free-Float Adjustment Factor (FAF) increases from 3% to 40% following lock-up expiry and the stock will replace China Pacific Insurance (2601 HK) in the HSCEI INDEX. 
Using prices from the close on 19 August, estimated one-way turnover is 3.82% and will result in a one-way trade of HK$2,751m at the close on 2 September.
Increase in the FAF on a couple of stocks saves them from index deletion in September but is probably not enough to save them from index deletion in December.


HSCEI Index Rebalance: SenseTime (20 HK) Added As FAF Increases Dramatically

Event-Driven

<ul>
<li>The Ping An AH premium has moved from 1-2% to near 10% over the last month while the HSAHP Index has stayed around the same level.</li>
<li>The Ping AH premium is now nearing the level from where reversals take place. Interim results on 23 August could be a trigger for a reversal.</li>
<li>Northbound Stock Connect holdings on the A-shares have been decreasing, while Southbound Stock Connect holdings on the H-shares have been increasing over the last month.</li>
</ul>


The Ping An AH premium has moved from 1-2% to near 10% over the last month while the HSAHP Index has stayed around the same level.
The Ping AH premium is now nearing the level from where reversals take place. Interim results on 23 August could be a trigger for a reversal.
Northbound Stock Connect holdings on the A-shares have been decreasing, while Southbound Stock Connect holdings on the H-shares have been increasing over the last month.


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.

Equity Capital Markets

Thai Life Insurance  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/thai-life-insurance" target="_blank" data-smartkarma-citation="entities:34915:1" rel="noopener">Thai Life Insurance (TLI TB)</a> will start trading on 25 July. Thai Life raised US$975 million at the IPO price of THB16.00 per share.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/thai-life-insurance-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:71653" rel="noopener">Thai Life Insurance IPO: The Bull Case</a>, <a href="https://www.smartkarma.com/insights/thai-life-insurance-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:71693" rel="noopener">Thai Life Insurance IPO: The Bear Case</a> and <a href="https://www.smartkarma.com/insights/thai-life-insurance-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:71995" rel="noopener">Thai Life Insurance IPO: Valuation Insights</a>. </li>
<li>The average of our DDM and relative valuation methodology suggests a price of THB15.43 per share. Remain on the sidelines as the IPO price is fair. </li>
</ul>



Thai Life Insurance (TLI TB) will start trading on 25 July. Thai Life raised US$975 million at the IPO price of THB16.00 per share.
We previously discussed the IPO in Thai Life Insurance IPO: The Bull Case, Thai Life Insurance IPO: The Bear Case and Thai Life Insurance IPO: Valuation Insights. 
The average of our DDM and relative valuation methodology suggests a price of THB15.43 per share. Remain on the sidelines as the IPO price is fair. 


<ul>
<li>Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.</li>
<li>We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.</li>
<li>There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.</li>
</ul>


Currently at 69 constituents, it is unlikely that we reach 80 member by year end. Hang Seng Indexes is finding it tough to reach the target by excluding unprofitable companies.
We list 11 stocks that could be added to the index in September - with one-way turnover just over 5%, the actual number of inclusions will be lower.
There are a few potential inclusions where short interest is over 5% of the free float. These stocks could see short covering ahead of announcement of the changes.


HSI Index Rebalance Preview: Finding the Balance

China

China Life Insurance Co., Limited offers a wide range of life, accident, and health insurance products and services.

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China Life Insurance Co (Adr) (LFC US)

A-H Premium Weekly (Aug 26th): China Telecom, China Life, Huaneng Power, Chongqing Iron, CICC

We analyzed A-H premium last week and highlight weekly changes in A-H premium for China Telecom, China Life, Huaneng Power, Chongqing Iron, CICC.

Ke Yan, CFA, FRM

HSCEI Index Rebalance: SenseTime (20 HK) Added As FAF Increases Dramatically

SenseTime's FAF increases from 3% to 40% & the stock will replace CPIC in the HSCEI. Passive trackers will need to buy 7 days of ADV on SenseTime...

Brian Freitas

Ping An A/H Premium: Near The High End

The Ping An AH premium has increased from 1-2% in July to over 9% now. Interim results will be published on 23 August and could provide a catalyst...

Brian Freitas

Thai Life Insurance IPO: Trading Debut

The average of our DDM and relative valuation methodology suggests a price of THB15.43 per share. Remain on the sidelines as the IPO price is fair.

Arun George

HSI Index Rebalance Preview: Finding the Balance

There could be up to 5 inclusions as Hang Seng works its way up to 80 index members. We highlight the probable inclusions and find that some of...

Brian Freitas

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