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>The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.</li>
<li>There were big inflows to ETFs tracking the <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX)</a> while there were redemptions from the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index-etf" target="_blank" data-smartkarma-citation="entities:25:1" rel="noopener">Hang Seng H Share Index ETF (2828 HK)</a>. </li>
<li>Inflows continue for <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex China (EMXC US)</a> while there were outflows from <a href="https://www.smartkarma.com/entities/ishares-msci-acwi-etf" target="_blank" data-smartkarma-citation="entities:24402:1" rel="noopener">iShares ACWI ETF (ACWI US)</a>. </li>
</ul>


The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK). 
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US). 


Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Concord Healthcare Group / Equity Capital Markets

<ul>
<li>Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.</li>
<li>We've doubts about Concord's endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. </li>
<li>Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.</li>
</ul>


Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.
We've doubts about Concord's endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. 
Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.


Pre-IPO Concord Healthcare Group (PHIP Updates) - Some Points Worth the Attention

Equity Bottom-Up

<ul>
<li>Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.</li>
<li>Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.</li>
<li>Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. </li>
</ul>


Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.
Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.
Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. 


Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>In 1H23, <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> reported revenue growth of 15% YoY to RMB1,760 million, mainly driven by a 16% YoY growth in hospital business.</li>
<li>Hygeia’s gross profit margin contracted 20bps YoY to 32.4%. Riding on 5.6x increase in government grant, operating profit jumped 33% YoY to RMB420M, leading to 320bps margin expansion to 23.9%.</li>
<li>In July, Hygeia acquired Chang’an Hospital for RMB1,660 million. The acquisition will provide Hygeia with greater room to expand its business in the northwest region of the PRC.  </li>
</ul>


In 1H23, Hygeia Healthcare Group (6078 HK) reported revenue growth of 15% YoY to RMB1,760 million, mainly driven by a 16% YoY growth in hospital business.
Hygeia’s gross profit margin contracted 20bps YoY to 32.4%. Riding on 5.6x increase in government grant, operating profit jumped 33% YoY to RMB420M, leading to 320bps margin expansion to 23.9%.
In July, Hygeia acquired Chang’an Hospital for RMB1,660 million. The acquisition will provide Hygeia with greater room to expand its business in the northwest region of the PRC.  


Hygeia Healthcare Group (6078 HK): Double-Digit Revenue Growth in 1H23; Business Expansion Continues

<ul>
<li>The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.</li>
<li>Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a> a high probability inclusion candidate.</li>
<li>We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.</li>
</ul>


The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.


Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

China

Hygeia Healthcare is a prominent oncology healthcare group in China, dedicated to enhancing the accessibility and affordability of cancer treatment services. The company operates a network of oncology hospitals, providing comprehensive services from screening and diagnosis to various treatment modalities like chemotherapy, immunotherapy, and radiotherapy. It also offers radiotherapy consulting and equipment licensing. Hygeia Healthcare was founded in 2009 and is headquartered in Shanghai, China.

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Hygeia Healthcare (6078 HK)

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Pre-IPO Concord Healthcare Group (PHIP Updates) - Some Points Worth the Attention

An acquisition stimulated the growth of Concord and brought its revenue scale to a new level. But concerns on endogenous growth capability and...

Xinyao (Criss) Wang

Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

In the insight, we expressed concerns that Hygeia's 2023 results would fall short of expectation, and they did - The management has lowered...

Xinyao (Criss) Wang

Hygeia Healthcare Group (6078 HK): Double-Digit Revenue Growth in 1H23; Business Expansion Continues

Hygeia Healthcare saw 15% YoY revenue growth in 1H23, driven by 16% YoY growth in its hospital business. The acquisition of Chang'an Hospital will...

Tina Banerjee

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

There are 8 trading days to the announcement of the December rebalance results. With foreign companies newly eligible, Samsonite is a high...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Pre-IPO Concord Healthcare Group (PHIP Updates) - Some Points Worth the Attention

An acquisition stimulated the growth of Concord and brought its revenue scale to a new level. But concerns on endogenous growth capability and...

Xinyao (Criss) Wang

Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

In the insight, we expressed concerns that Hygeia's 2023 results would fall short of expectation, and they did - The management has lowered...

Xinyao (Criss) Wang

Hygeia Healthcare Group (6078 HK): Double-Digit Revenue Growth in 1H23; Business Expansion Continues

​Hygeia Healthcare saw 15% YoY revenue growth in 1H23, driven by 16% YoY growth in its hospital business. The acquisition of Chang'an Hospital will...

Tina Banerjee

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

There are 8 trading days to the announcement of the December rebalance results. With foreign companies newly eligible, Samsonite is a high...

Brian Freitas

Hygeia Healthcare saw 15% YoY revenue growth in 1H23, driven by 16% YoY growth in its hospital business. The acquisition of Chang'an Hospital will...