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 June rebalance of the <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet ETF (KWEB US)</a> will take place at the close of trading today.</li>
<li>There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.</li>
<li>The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.</li>
</ul>


The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.


KWEB Index Rebalance: Few Changes at the Close Today

China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>IQIYI's 1Q23 top line beat our est. by 8.5%, while its non-GAAP net income beat our est./cons by 95%/82%, largely due to its blockbuster &lt;Knockout&gt;. </li>
<li>However, we expect its content pipeline is weaker compared with other key competitors in Q2. </li>
<li>Our top and bottom lines in 2Q23 are (3.4%)/(7.4%) vs cons, due to the fierce competition. Maintain SELL and cut TP to US$ 5.0, implying 16.7X PE in 2023.</li>
</ul>


IQIYI's 1Q23 top line beat our est. by 8.5%, while its non-GAAP net income beat our est./cons by 95%/82%, largely due to its blockbuster &lt;Knockout&gt;. 
However, we expect its content pipeline is weaker compared with other key competitors in Q2. 
Our top and bottom lines in 2Q23 are (3.4%)/(7.4%) vs cons, due to the fierce competition. Maintain SELL and cut TP to US$ 5.0, implying 16.7X PE in 2023.


[iQIYI, Lnc. (IQ US, SELL, TP US$5) Target Price Change]: Content Pipeline Weakens After

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>IQ delivered upbeat 1Q23 results, with rev +15% YoY (5% above consensus) and adj. NP at RMB940mn (82% above consensus).</li><li>The breakthrough of The Knockout boosted subs up to 128.9mn in 1Q23, with net adds of 17mn.</li><li>2Q23E subs members might see a slight sequential decline (forecasting at 112mn) for soft seasonality, but we expect upcoming rich pipeline to support subs momentum in summer holiday and 2H23E (e.g. Story of Kunning Palace, The Demon Hunter's Romance). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

IQ delivered upbeat 1Q23 results, with rev +15% YoY (5% above consensus) and adj. NP at RMB940mn (82% above consensus).The breakthrough of The Knockout boosted subs up to 128.9mn in 1Q23, with net adds of 17mn.2Q23E subs members might see a slight sequential decline (forecasting at 112mn) for soft seasonality, but we expect upcoming rich pipeline to support subs momentum in summer holiday and 2H23E (e.g. Story of Kunning Palace, The Demon Hunter's Romance). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

IQIYI (IQ US) – Looking into 2Q23E Rich Pipeline

<ul>
<li>We forecast iQIYI 1Q23 top line/bottom line to miss cons. by (3.6%)/(6.3%), largely due to the rebound of content costs to cope with competition pressure. </li>
<li>We raise our full year ads revenue estimate slightly to reflect the better-than-expected macro recovery. Our top and bottom lines in 2023 are (3.3%)/(7.0%) vs cons, due to long-term competition. </li>
<li>Maintain SELL but slightly raise TP to US$ 5.60, implying 18.4X PE in 2023.</li>
</ul>


We forecast iQIYI 1Q23 top line/bottom line to miss cons. by (3.6%)/(6.3%), largely due to the rebound of content costs to cope with competition pressure. 
We raise our full year ads revenue estimate slightly to reflect the better-than-expected macro recovery. Our top and bottom lines in 2023 are (3.3%)/(7.0%) vs cons, due to long-term competition. 
Maintain SELL but slightly raise TP to US$ 5.60, implying 18.4X PE in 2023.


[iQIYI, Lnc. (IQ US) Target Price Change]: Reiterate SELL for Increasing Competition

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Private Capital Markets

<ul>
<li>Founded in 2017 in Beijing, <a href="https://www.smartkarma.com/entities/hangzhou-tai-ruo-technology-co-ltd-nreal-ai" target="_blank" data-smartkarma-citation="entities:36880:1" rel="noopener">Nreal.ai (1690070D CH)</a> is an Augmented Reality (AR)/ mixed reality (MR) technology company that develops and sells AR glasses.</li>
<li>The company's glasses have received wide recognition as they are designed to be lightweight, comfortable and affordable, making them more accessible to consumers.</li>
<li>The company has raised more than USD240m in funding and as per the company, we could expect an IPO over the next 18-24 months.  </li>
</ul>


Founded in 2017 in Beijing, Nreal.ai (1690070D CH) is an Augmented Reality (AR)/ mixed reality (MR) technology company that develops and sells AR glasses.
The company's glasses have received wide recognition as they are designed to be lightweight, comfortable and affordable, making them more accessible to consumers.
The company has raised more than USD240m in funding and as per the company, we could expect an IPO over the next 18-24 months.  


Nreal: AR/MR Technology Player Recognised for Affordable Glasses

China

iQIYI, Inc. offers video entertainment services. The Company provides movies, television dramas, variety shows, and other video contents. iQIYI offers services worldwide.

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iQIYI Inc (IQ US)

KWEB Index Rebalance: Few Changes at the Close Today

The KWEB ETF rebalances at the close today. There are 2 adds & 1 delete. There will be capping changes and funding flows across the other index...

Brian Freitas

[iQIYI, Lnc. (IQ US, SELL, TP US$5) Target Price Change]: Content Pipeline Weakens After

We expect its content pipeline is weaker compared with other key competitors in Q2. Our top and bottom lines in 2Q23 are (3.4%)/(7.4%) vs cons, due...

Blue Lotus Research Institute

IQIYI (IQ US) – Looking into 2Q23E Rich Pipeline

2Q23E subs members might see a slight sequential decline (forecasting at 112mn) for soft seasonality, but we expect upcoming rich pipeline to...

CMB International

[iQIYI, Lnc. (IQ US) Target Price Change]: Reiterate SELL for Increasing Competition

We forecast iQIYI 1Q23 top line/bottom line to miss cons. by (3.6%)/(6.3%), largely due to the rebound of content costs to cope with competition...

Blue Lotus Research Institute

Nreal: AR/MR Technology Player Recognised for Affordable Glasses

Nreal is an AR/ mixed reality (MR) tech company that develops and sells AR glasses. Nreal’s more-affordable, lightweight AR glasses are more...

Shifara Samsudeen, FCMA, CGMA

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