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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.</p><p>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/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <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>.</p><p>The 3 inclusions will increase the number of index constituents to 58. With the target of getting to 80 stocks by mid-2022, the expectation was for more stocks to be included at this review. What likely resulted in fewer stocks being added was the large turnover due to the capping changes.</p><p>While we had expected the inclusion of <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> and <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>, the inclusion of <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> will have a big impact since the stock has also been included in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a>. </p><p>One-way turnover is estimated at 7.77% and will result in a one-way trade of HK$16.82bn.  The largest passive inflows will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> as a result of the capping change from 5% to 8%, while the largest outflows will be from <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a> due to the capping change from 10% to 8%.</p><p>There are only 10 trading days to implementation of the changes and we expect all 3 inclusions to open higher on Monday and continue to outperform the market over the period.</p>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the Hong Kong Hang Seng Index (HSI INDEX) there are 3 inclusions - Xinyi Solar Holdings (968 HK), BYD (1211 HK) and Country Garden Services Holdings (6098 HK).The 3 inclusions will increase the number of index constituents to 58. With the target of getting to 80 stocks by mid-2022, the expectation was for more stocks to be included at this review. What likely resulted in fewer stocks being added was the large turnover due to the capping changes.While we had expected the inclusion of Xinyi Solar Holdings (968 HK) and Country Garden Services Holdings (6098 HK), the inclusion of BYD (1211 HK) will have a big impact since the stock has also been included in the Hang Seng China Enterprises Index (HSCEI INDEX). One-way turnover is estimated at 7.77% and will result in a one-way trade of HK$16.82bn.  The largest passive inflows will be on Meituan (3690 HK) and Alibaba Group (9988 HK) as a result of the capping change from 5% to 8%, while the largest outflows will be from AIA Group Ltd (1299 HK), Tencent (700 HK) and HSBC Holdings (5 HK) due to the capping change from 10% to 8%.There are only 10 trading days to implementation of the changes and we expect all 3 inclusions to open higher on Monday and continue to outperform the market over the period.

HSI Index Rebalance: Only 3 Additions but BIG Turnover

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p><a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a>, the logistics spin-off of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, will <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0517/2021051700101.pdf" target="_blank" rel="noopener">price</a> its shares between HK$39.36 and HK$43.36 each, raising HK$25.2bn using the half-way price, before over-allotment.</p>
<p>Reportedly the retail proportion was 141x oversubscribed on the opening day.</p>
<p>JD.com's stake will decline to 64.4% (63.5% including the over-allotment) from 71.57% currently.</p>
<p>JD.com's shares are down 35% from its recent high in February as Beijing scrutinises large domestic internet players. That's a significant move - and value at the stub level is emerging.</p>
<p>More below the fold.</p>

JD Logistics (2618 HK), the logistics spin-off of JD.com Inc. (9618 HK), will price its shares between HK$39.36 and HK$43.36 each, raising HK$25.2bn using the half-way price, before over-allotment.
Reportedly the retail proportion was 141x oversubscribed on the opening day.
JD.com's stake will decline to 64.4% (63.5% including the over-allotment) from 71.57% currently.
JD.com's shares are down 35% from its recent high in February as Beijing scrutinises large domestic internet players. That's a significant move - and value at the stub level is emerging.
More below the fold.

JD.com's Stub Trading Cheapish Ahead Of Logistics Spin-Off

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

<p>Following the listing of the logistics business on the Hong Kong stock exchange, <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> could potentially present investors with an entirely new investment angle in terms of holdcos.</p><p>After examining JD.com’s holdco structure, we see a limited upside potential for JD.com unless <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> pops over 100% on its trading debut.</p>

Following the listing of the logistics business on the Hong Kong stock exchange, JD.com Inc (ADR) (JD US) could potentially present investors with an entirely new investment angle in terms of holdcos.After examining JD.com’s holdco structure, we see a limited upside potential for JD.com unless JD Logistics (2618 HK) pops over 100% on its trading debut.

Examining JD.com from a Holdco Angle as the Company Prepares to List Its Logistics Unit

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Smoore International Holdings / Event-Driven

<p>For our next Webinar, we 're excited to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/brian-freitas" target="_blank" data-smartkarma-citation="accounts:4091" rel="noopener">Brian Freitas</a> , who will discuss the upcoming rebalance 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>. Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.</p><h3>The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.</h3><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=87998710285" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div><p>Brian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.</p>

For our next Webinar, we 're excited to welcome back Insight Provider Brian Freitas , who will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX). Scheduled for June 2021, the HSI rebalance is slated to increase constituents to 80 by mid-2022, better balance representation among industry groups, and rationalise the weighting cap to 8% for all stocks.The webinar will be hosted on Wednesday, 19 May 2021, 17:00 SGT/HKT.Register for the Webinar hereBrian Freitas is a highly experienced ex-delta one trader with over 17 years of experience. He was previously with Barclays, Macquarie, Credit Suisse and BNP Paribas.

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

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

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a>, a technology platform for insurance and healthcare services in China, aims to raise up to US$360m in its US IPO. <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> owned 22.1% and <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> owned 5.7% of the company prior to its listing.</p></div><div><p>In our previous note, <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-positives-fast-growth-strong-backers" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers</a>, and <a href="https://www.smartkarma.com/insights/waterdrop-pre-ipo-the-negatives-scandals-shutdowns-competing-with-giants-regulation" target="_blank" rel="noopener">Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation</a> we spoke about the positive and negative aspects of the deal. </p></div><div><p>In this note, we’ll run the deal through our ECM framework and talk about valuations.</p></div>

Waterdrop Inc (WDH US), a technology platform for insurance and healthcare services in China, aims to raise up to US$360m in its US IPO. Tencent Holdings (700 HK) owned 22.1% and Swiss Re AG (SREN SW) owned 5.7% of the company prior to its listing.In our previous note, Waterdrop Pre-IPO - The Positives - Fast Growth, Strong Backers, and Waterdrop Pre-IPO - The Negatives - Scandals, Shutdowns, Competing with Giants, Regulation we spoke about the positive and negative aspects of the deal. In this note, we’ll run the deal through our ECM framework and talk about valuations.

Waterdrop IPO - Valuation Has Nearly Tripled over the past Year

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

HSI Index Rebalance: Only 3 Additions but BIG Turnover

There are 3 inclusions (BYD, Xinyi Solar, CG Services) to the HSI taking the number of constituents up to 58. Turnover is high at 7.77% and will...

Brian Freitas

JD.com's Stub Trading Cheapish Ahead Of Logistics Spin-Off

Given its reliance on its parent, I'd prefer to play JD.com; yet a 35% discount to NAV doesn't appear overly stretched, and may further widen amid...

David Blennerhassett

Examining JD.com from a Holdco Angle as the Company Prepares to List Its Logistics Unit

Following the listing of the logistics business on the Hong Kong stock exchange, JD.com could potentially present investors with an entirely new...

Oshadhi Kumarasiri

Smartkarma Webinar | Hang Seng (HSI INDEX) Rebalance: What's in Store for June?

On 19 May, 5PM SGT, join our webinar with Brian Freitas, where we will discuss the upcoming rebalance of the Hong Kong Hang Seng Index (HSI INDEX)...

Smartkarma Research

Waterdrop IPO - Valuation Has Nearly Tripled over the past Year

Waterdrop, a technology platform for insurance and healthcare services in China, aims to raise up to US$360m in its US IPO. Tencent owned 22.1% and...

Sumeet Singh

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