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

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Bairong raised around US$508m in its Hong Kong IPO. 
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We have covered various aspects of the deal in our earlier notes:
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<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/bairong-pre-ipo-the-positives-largest-independent-big-data-analytics-provider" target="_blank" rel="noopener">Bairong Pre-IPO - The Positives - Largest Independent Big-Data Analytics Provider,</a> </li>
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<a href="https://www.smartkarma.com/insights/bairong-pre-ipo-the-negatives-playing-with-its-own-data" target="_blank" rel="noopener">Bairong Pre-IPO - The Negatives - Playing with Its Own Data</a>,</li>
<li><a href="https://www.smartkarma.com/insights/bairong-pre-ipo-earnings-forecast-peer-comparison-and-valuation" target="_blank" rel="noopener">Bairong Pre-IPO - Earnings Forecast, Peer Comparison and Valuation, and</a></li>
<li><a href="https://www.smartkarma.com/insights/bairong-pre-ipo-phip-and-valuation-updates-better-4q20-but-client-data-isn-t-as-encouraging" target="_blank" rel="noopener">Bairong Pre-IPO - PHIP and Valuation Updates - Better 4Q20, but Client Data Isn’t as Encouraging</a></li>
<li><a href="https://www.smartkarma.com/insights/bairong-ipo-decent-valuation-probably-weighed-down-by-regulation" target="_blank" rel="noopener">Bairong IPO - Decent Valuation Probably Weighed Down by Regulation</a></li>
</ul>
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In this note, we will talk about deal dynamics and updates since our last note.
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Bairong raised around US$508m in its Hong Kong IPO. 


We have covered various aspects of the deal in our earlier notes:




Bairong Pre-IPO - The Positives - Largest Independent Big-Data Analytics Provider, 

Bairong Pre-IPO - The Negatives - Playing with Its Own Data,
Bairong Pre-IPO - Earnings Forecast, Peer Comparison and Valuation, and
Bairong Pre-IPO - PHIP and Valuation Updates - Better 4Q20, but Client Data Isn’t as Encouraging
Bairong IPO - Decent Valuation Probably Weighed Down by Regulation



In this note, we will talk about deal dynamics and updates since our last note.


Bairong IPO Trading - Strong Overall Demand but Comes with Large Retail Allocation

Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

Haidilao International Holding / Equity Bottom-Up

In this insight, we discuss why we believe <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> at current prices has a higher downside risk versus upside potential given limited visibility of near term operational recovery and its premium valuation.<a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> had issued a profit warning that it is expected to record a decrease of approximately 90% in net profit for the year ended Dec 2020 versus the previous year; this implies a likely recovery in earnings in 2H2020 vs 1H2020 but not significant enough to match pre-COVID levels nor street estimates. Detailed results are expected this week on March 23rd.We believe <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>'s pace of sales recovery to be slower versus QSR peers (1) in the near term from ongoing restrictions in the social and dining scene, following cluster outbreaks, and (2) in the medium term from a shift in customer preference towards off-premise dining. Unlike QSR peer, <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> that managed to recover most of the COVID-led fall in dining demand by growing off-premise dining, we believe  <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> may find it difficult to pivot given experiential fine dining was core to its appeal and value positioning. Despite a difficult operating environment, the stock is up 83% YoY; a steep upswing in February this year was led by reports of it being included in HongKong's benchmark HangSeng Index from mid-March.

In this insight, we discuss why we believe Haidilao (6862 HK) at current prices has a higher downside risk versus upside potential given limited visibility of near term operational recovery and its premium valuation.Haidilao (6862 HK) had issued a profit warning that it is expected to record a decrease of approximately 90% in net profit for the year ended Dec 2020 versus the previous year; this implies a likely recovery in earnings in 2H2020 vs 1H2020 but not significant enough to match pre-COVID levels nor street estimates. Detailed results are expected this week on March 23rd.We believe Haidilao (6862 HK)'s pace of sales recovery to be slower versus QSR peers (1) in the near term from ongoing restrictions in the social and dining scene, following cluster outbreaks, and (2) in the medium term from a shift in customer preference towards off-premise dining. Unlike QSR peer, Yum China Holdings Inc (9987 HK) that managed to recover most of the COVID-led fall in dining demand by growing off-premise dining, we believe  Haidilao (6862 HK) may find it difficult to pivot given experiential fine dining was core to its appeal and value positioning. Despite a difficult operating environment, the stock is up 83% YoY; a steep upswing in February this year was led by reports of it being included in HongKong's benchmark HangSeng Index from mid-March.

Haidilao (6862 HK): Hot Pots Don't Pivot Easily.

In this insight, we discuss the investment view on <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> for the long and short term, based on analysis of its valuations, operational and financial outlook and Management commentary following the Q42020 results.<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> has rewarded investors with an 18% return in the past 6 months, almost in line with the index, and a 16% return from its HK secondary (Sep. 2020) listing price. The steady stock performance was backed by a stable recovery in operations and financials; it reported an 11 % growth in Q4 revenues and robust growth in operating and net income compared to 2019. The contrast with market-favourite in the segment, <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> is notably stark. In the same time period (past 6 months), Haidilao stock price had a rollercoaster ride - buoyed up by index inclusion; and now back to Sep 2020 levels, underperforming the index by a wide margin.

In this insight, we discuss the investment view on Yum China Holdings Inc (9987 HK) for the long and short term, based on analysis of its valuations, operational and financial outlook and Management commentary following the Q42020 results.Yum China Holdings Inc (9987 HK) has rewarded investors with an 18% return in the past 6 months, almost in line with the index, and a 16% return from its HK secondary (Sep. 2020) listing price. The steady stock performance was backed by a stable recovery in operations and financials; it reported an 11 % growth in Q4 revenues and robust growth in operating and net income compared to 2019. The contrast with market-favourite in the segment, Haidilao (6862 HK) is notably stark. In the same time period (past 6 months), Haidilao stock price had a rollercoaster ride - buoyed up by index inclusion; and now back to Sep 2020 levels, underperforming the index by a wide margin. 

Yum China (9987 HK): Simple Fare Trumps the Special Treat (6862 HK). What Now?

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Haidilao International Holding / Index Rebalance

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>, there are 3 inclusions - <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>. This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a> while the impact on <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> is lower, though still substantial.There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 26 February. The constituent changes will be effective after the close of trading on 12 March.For the Hong Kong Hang Seng Index (HSI INDEX), there are 3 inclusions - Alibaba Health Information Technology (241 HK), Longfor Properties (960 HK) and Haidilao (6862 HK). This takes the number of index constituents to 55 and sets the stage for a further increase in the number of stocks as a part of the market consultation, the conclusions of which are to be announced on 1 March.One-way turnover is estimated at 2.65% and will result in a one-way trade of HK$6.08bn. The highest impact is on Longfor Properties (960 HK) while the impact on Alibaba Health Information Technology (241 HK) and Haidilao (6862 HK) is lower, though still substantial.There are only 10 trading days to implementation of the changes, so the three stocks should move up on Monday and outperform their peers till implementation date.Hang Seng Indexes is scheduled to announce the conclusions of the market consultation on Monday, 1 March and there will be a lot more changes to the index. These changes should commence at the June 2021 review and will most likely be implemented in 4 tranches, concluding at the March 2022 review.

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

China Resources Beer Holdings / Index Rebalance

Last evening, Hang Seng Indexes announced that the conclusions of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> market consultation will be released on 1 March. This means that the implementation of the changes using the new methodology will begin at the June 2021 review and conclude at the March 2022 review.With the results of the March 2021 review scheduled to be announced post market close tomorrow (26 February), the review will follow the current methodology. But with the leeway afforded to the index committee to decide on the stocks to be included/ excluded, stocks could be selected based on whether they will make the cut for inclusion based on the future methodology. This will also reduce the turnover at future reviews.The <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> already has 52 constituents and we expect this to increase further at the March review. We expect only inclusions and the number of stocks in the index could increase to 55-56. This too will reduce the turnover at future reviews. The stocks included at the March review will see a big impact since they will be included in one shot, as opposed to stocks included at the June review where the implementation will most likely occur in 4 tranches.Potential inclusions are <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a>. Outside possibilities are <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>, <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> and <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a>.

Last evening, Hang Seng Indexes announced that the conclusions of the Hong Kong Hang Seng Index (HSI INDEX) market consultation will be released on 1 March. This means that the implementation of the changes using the new methodology will begin at the June 2021 review and conclude at the March 2022 review.With the results of the March 2021 review scheduled to be announced post market close tomorrow (26 February), the review will follow the current methodology. But with the leeway afforded to the index committee to decide on the stocks to be included/ excluded, stocks could be selected based on whether they will make the cut for inclusion based on the future methodology. This will also reduce the turnover at future reviews.The Hong Kong Hang Seng Index (HSI INDEX) already has 52 constituents and we expect this to increase further at the March review. We expect only inclusions and the number of stocks in the index could increase to 55-56. This too will reduce the turnover at future reviews. The stocks included at the March review will see a big impact since they will be included in one shot, as opposed to stocks included at the June review where the implementation will most likely occur in 4 tranches.Potential inclusions are ENN Energy (2688 HK), China Resources Beer Holdings (291 HK), Country Garden Services Holdings (6098 HK). Outside possibilities are Haidilao (6862 HK), China Gas Holdings (384 HK) and Longfor Properties (960 HK).

HSI March Index Rebalance Preview - Last One Before New Methodology Kicks In

China

Haidilao International Holding Ltd. operates Chinese cuisine restaurant brand focusing on hot pot cuisine. The Company provides hot pots, soup bases, dipping sauces, drinks, prepared food, and other products. Haidilao International Holding opens restaurants in Taiwan, Hong Kong, Singapore, South Korea, Japan, and the United States.

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Haidilao International Holding (6862 HK)

Bairong IPO Trading - Strong Overall Demand but Comes with Large Retail Allocation

Bairong raised around US$508m in its Hong Kong IPO. We have covered various aspects of the deal in our earlier notes. In this note, we will talk...

Sumeet Singh

Haidilao (6862 HK): Hot Pots Don't Pivot Easily.

Downside risks outweigh upside potential given the expected slower pace of sales recovery versus peers and premium valuations. Difficult to pivot...

Devi Subhakesan

Yum China (9987 HK): Simple Fare Trumps the Special Treat (6862 HK). What Now?

Discuss Investment view on the stock - both long and short term - backed by analysis of valuations, operational/financial outlook and Management...

Devi Subhakesan

Hang Seng Index Rebalance: Three Adds; Market Consultation Conclusions on 1 March

There are 3 inclusions to the HSI - Ali Health, Longfor Prop and Haidilao. With 10 days to implementation, the stocks should outperform....

Brian Freitas

HSI March Index Rebalance Preview - Last One Before New Methodology Kicks In

HSIL will announce the changes to the HSI post market close tomorrow. With the conclusions of the market consultation being announced on 1 March,...

Brian Freitas

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