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/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> noted that the pre-condition for <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai Natural Gas (603393 CH)</a> privatisation offer at HK$1.85 per share has been satisfied (which was expected). </li>
<li>The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.</li>
<li>It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. </li>
</ul>



Aag Energy Holdings (2686 HK) noted that the pre-condition for Xinjiang Xintai Natural Gas (603393 CH) privatisation offer at HK$1.85 per share has been satisfied (which was expected). 
The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.
It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. 


AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> released solid FY22 results which magnify the scheme risk of <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai Natural Gas (603393 CH)</a>'s pre-conditional privatisation offer of HK$1.85 per share.</li>
<li>The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.</li>
<li>The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.</li>
</ul>



Aag Energy Holdings (2686 HK) released solid FY22 results which magnify the scheme risk of Xinjiang Xintai Natural Gas (603393 CH)'s pre-conditional privatisation offer of HK$1.85 per share.
The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.
The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.


AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The oil majors - <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a>, <a href="https://www.smartkarma.com/entities/china-petroleum-chemical-h" target="_blank" data-smartkarma-citation="entities:369:1" rel="noopener">China Petroleum &amp; Chemical (386 HK)</a> and <a href="https://www.smartkarma.com/entities/petrochina-co-ltd-h" target="_blank" data-smartkarma-citation="entities:262:1" rel="noopener">PetroChina (857 HK)</a> - are interesting plays on government's plan to boost capital market valuations.</li>
<li>Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders are just some example of supporting tactics.</li>
<li>The government may possibly mobilise more offshore funds of SOEs to add stakes. We think ROE expansion and capital market valuations to gain importance in senior management KPIs.</li>
</ul>


The oil majors - CNOOC Ltd (883 HK), China Petroleum &amp; Chemical (386 HK) and PetroChina (857 HK) - are interesting plays on government's plan to boost capital market valuations.
Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders are just some example of supporting tactics.
The government may possibly mobilise more offshore funds of SOEs to add stakes. We think ROE expansion and capital market valuations to gain importance in senior management KPIs.


China Oil Sector: A Look from SOE Valuation Enhancement Angle

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

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.</li>
<li>With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.</li>
<li>We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.</li>
</ul>


The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.


HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms

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 monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.</li>
<li>We highlight inflows into China Mobile, GWM, Sensetime, and outflows from Tencent, HKEx, CCB, Meituan, BYD.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.
We highlight inflows into China Mobile, GWM, Sensetime, and outflows from Tencent, HKEx, CCB, Meituan, BYD.


Hong Kong Connect Flows Monthly: First Monthly Outflows in 12 Months

China

CNOOC Limited, through its subsidiaries, explores, develops, produces, and sells crude oil and natural gas. The Company focuses in the areas such as Bohai, Western South China Sea, Eastern South China Sea and East China Sea in offshore China. Internationally, the Group has oil and gas assets in Asia, Africa, North America, South America, and Oceania.

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CNOOC Ltd (883 HK)

AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In

There is an overhang of dissatisfied retail minorities. However, the widening spread and the volatile markets could nudge minorities towards the...

Arun George

AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote

The solid FY22 results could be a wake-up call for minorities to take action. The downside is capped due to the low offer premium and shares...

Arun George

China Oil Sector: A Look from SOE Valuation Enhancement Angle

Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders can...

Osbert Tang, CFA

HSCEI Dividend Futures: Fair Value Estimates as Result Season Looms

HSCEI constituents will declare 2022 results and dividends in the next few weeks. 2023 div futures are trading around fair, but there could be...

Brian Freitas

Hong Kong Connect Flows Monthly: First Monthly Outflows in 12 Months

We analyzed the Hong Kong Connect Scheme for February and highlight flows for China Mobile, GWM, Sensetime, Tencent, HKEx, CCB, Meituan, BYD.

Ke Yan, CFA, FRM

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