Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

China Yangtze Power Co, Ltd. / Index Rebalance

<ul>
<li>There are 5 changes to the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.</li>
<li>There is same way flow on <a href="https://www.smartkarma.com/entities/zhangzhou-pientzehuang-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:15709:1" rel="noopener">Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd" target="_blank" data-smartkarma-citation="entities:34045:1" rel="noopener">China Telecom (601728 CH)</a> and <a href="https://www.smartkarma.com/entities/sanan-optoelectronics-co-ltd" target="_blank" data-smartkarma-citation="entities:4436:1" rel="noopener">Sanan Optoelectronics Co (600703 CH)</a> around the time of the SSE50 inclusion.</li>
<li>With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.</li>
</ul>


There are 5 changes to the SSE50 Index (SSE50 INDEX) as a part of the December rebalance. One-way turnover is 6% and the one-way trade is CNY 3.3bn.
There is same way flow on Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH), China Telecom (601728 CH) and Sanan Optoelectronics Co (600703 CH) around the time of the SSE50 inclusion.
With active futures contracts traded on the CFFEX, there will be cash and carry positions and the rebalancing could add to the impact on the inclusions and exclusions.


SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

<ul>
<li>
Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.</li>
<li>
Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.</li>
<li>Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, </li>
<li>
As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.</li>
</ul>



Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.

Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.
Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, 

As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.


Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> posted another set of strong result in 3Q21 with recurring earnings grew by 34.2% YoY. The slow growth of 5.8% in reported earnings is distorted by an Rmb143m provision in litigation loss, and investors should not let this non-recurring figure mask the interpretation of good result. We saw healthy double-digit volume growth for logistics and e-commerce businesses in the quarter, and international express JV DHL-Sinotrans continued to stage a solid growth in profit contribution.We believe Sinotrans is deeply undervalued at 0.47x 12-month forward P/B given an 11.7% ROE and a 41% earnings growth for FY21F. The 21% pullback in share price along with the container shipping sector in a month's time looks unjustified, in our view. Sinotrans has a solid financial position with 3Q21 gearing of just 6.6%, and assume a stable dividend payout, it is sitting on an attractive dividend yield of 7.4% for this year.

Sinotrans (598 HK) posted another set of strong result in 3Q21 with recurring earnings grew by 34.2% YoY. The slow growth of 5.8% in reported earnings is distorted by an Rmb143m provision in litigation loss, and investors should not let this non-recurring figure mask the interpretation of good result. We saw healthy double-digit volume growth for logistics and e-commerce businesses in the quarter, and international express JV DHL-Sinotrans continued to stage a solid growth in profit contribution.We believe Sinotrans is deeply undervalued at 0.47x 12-month forward P/B given an 11.7% ROE and a 41% earnings growth for FY21F. The 21% pullback in share price along with the container shipping sector in a month's time looks unjustified, in our view. Sinotrans has a solid financial position with 3Q21 gearing of just 6.6%, and assume a stable dividend payout, it is sitting on an attractive dividend yield of 7.4% for this year.  

Sinotrans (598 HK): From Strength to Strength

Pacific Basin Shipping / Equity Bottom-Up

The 3Q21 trading update for <a href="https://www.smartkarma.com/entities/pacific-basin-shipping-ltd" target="_blank" data-smartkarma-citation="entities:929:1" rel="noopener">Pacific Basin Shipping (2343 HK)</a> painted a positive picture for the earnings performance for 2H21 and FY22. There is good QoQ improvement in time-charter equivalents for its Handysize and Supramax fleet in 3Q21, which are 69.3% and 98.6%, respectively, higher than 1H21. On such basis, we estimate that its 3Q21 profit may be some 33% more than 1H21, blowing away market consensus by sizeable margin.Additionally, the growth in minor bulk trade, particularly construction materials, cement and clinker and grains, has underpinned good Handysize and Supramax demand. The supply pressure is also light as net fleet growth is expected to be 3% and 1.8% for FY21 and FY22, respectively. We also think Pacific Basin may take opportunistic disposals of vessel to capture the favourable capital value movements. All in all, we think that having retreated 25% from the peak, the stock has returned to more attractive valuation multiples.

The 3Q21 trading update for Pacific Basin Shipping (2343 HK) painted a positive picture for the earnings performance for 2H21 and FY22. There is good QoQ improvement in time-charter equivalents for its Handysize and Supramax fleet in 3Q21, which are 69.3% and 98.6%, respectively, higher than 1H21. On such basis, we estimate that its 3Q21 profit may be some 33% more than 1H21, blowing away market consensus by sizeable margin.Additionally, the growth in minor bulk trade, particularly construction materials, cement and clinker and grains, has underpinned good Handysize and Supramax demand. The supply pressure is also light as net fleet growth is expected to be 3% and 1.8% for FY21 and FY22, respectively. We also think Pacific Basin may take opportunistic disposals of vessel to capture the favourable capital value movements. All in all, we think that having retreated 25% from the peak, the stock has returned to more attractive valuation multiples.

Pacific Basin Shipping (2343 HK): Stellar 2H21 in the Making

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.

Equity Capital Markets

Orient Overseas International / Equity Capital Markets

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

China

COSCO SHIPPING Holdings Co., Ltd. offers shipping services. The Company provides container shipping, terminal operation, bulk shipping, and container leasing services. COSCO SHIPPING Holdings conducts businesses worldwide.

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COSCO SHIPPING Holdings (601919 CH)

SSE50 Index Rebalance: 5 Changes and Same Way Index Flow

There are 5 changes to the SSE50 Index at the Dec rebalance and there are stocks that have over 1.5 days of ADV to trade. With CFFEX traded futures...

Brian Freitas

Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

As we move through into Q1 2022, we expect to see volatility around highly priced & leveraged names. This screen is a key starting point towards...

David Lepper

Sinotrans (598 HK): From Strength to Strength

Sinotrans' slower 3Q21 profit growth is due to non-recurring item; and excluding this, its growth was an impressive 34.2%. The 0.47x P/B has deeply...

Osbert Tang, CFA

Pacific Basin Shipping (2343 HK): Stellar 2H21 in the Making

Great 3Q21 trading update suggests 2H21 and FY22 outlook remain encouraging. Demand-supply dynamics remain favourable and there is room for...

Osbert Tang, CFA

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

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