Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A/H premium on 134 stocks over the last week.</li>
<li>Consumer discretionary, consumer staple and health care sectors lower the overall A/H premium. </li>
<li>Real estate and industrials sectors are the only two sectors with WoW A/H premium increases.</li>
</ul>


We analyse the changes of A/H premium on 134 stocks over the last week.
Consumer discretionary, consumer staple and health care sectors lower the overall A/H premium. 
Real estate and industrials sectors are the only two sectors with WoW A/H premium increases.


A/H Premium Weekly: Consumer and Health Care Lowered A/H Premium

<ul>
<li>We analyse the changes of A/H premium on 134 stocks over the last week. </li>
<li>The sector with the biggest A/H premium increase was Health Care (ΔA/H premium=+8.1ppt).  The average A/H premium of the the Health Care sector was also at 52 week high. </li>
<li>This is due to the A/H premia of many Health Care stocks at 52 week high: Wuxi Apptec, Tigermed, Pharmaron, Hepalink, and the increase of A/H for Join Lab, Haohai. </li>
</ul>


We analyse the changes of A/H premium on 134 stocks over the last week. 
The sector with the biggest A/H premium increase was Health Care (ΔA/H premium=+8.1ppt).  The average A/H premium of the the Health Care sector was also at 52 week high. 
This is due to the A/H premia of many Health Care stocks at 52 week high: Wuxi Apptec, Tigermed, Pharmaron, Hepalink, and the increase of A/H for Join Lab, Haohai. 


A/H Premium Weekly: Health Care A/H Premium at 52W High

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Dec 10 based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Cspc Pharmaceutical(1093 HK), Livzon Pharmaceutical (1513 HK), Xiaomi (1810 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Cspc Pharmaceutical (1093 HK), Xiaomi (1810 HK), Skyworth(751 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Dec 10 based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Cspc Pharmaceutical(1093 HK), Livzon Pharmaceutical (1513 HK), Xiaomi (1810 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Cspc Pharmaceutical (1093 HK), Xiaomi (1810 HK), Skyworth(751 HK).


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

B-shares - remember them?
Created in 1992 to attract foreign investors,  their introduction, which followed the launch of A-shares, was a precursor to wider market access reforms for foreigners, as China integrated itself with the global economy.
Fast forward and years of market liberalisation provide foreign investors access to 3,000+ companies with A-shares. As a result, the combined market value of B shares accounts for less than 0.2% of the capitalisation of A-shares issued by companies in Shanghai. More importantly, the average daily trading volume for B-shares is ~0.1% of its peers.
Over the last decade, the HSI is up 30%. The Shanghai Exchange is up 18%, whereas the Shanghai B-share index is down 22%. For Shenzhen, the main index is up 70% versus 37% for the B-share index. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/194/975/original/image_19472098951615942317700.png?1615942320" class="editor-image img-responsive" data-smartkarma-image-id="194975"></figure>
<div style="text-align: left;" class="content-caption">Source: CapIQ</div>
B shares have become a sort of zombie market for foreigners. 
The authorities could merge the B and A shares, which would result in a spike in the Bs, given their historical trading discount.
Alternatively, B shares can be transferred into H-shares for trading on the Hong Kong exchange, as seen in <a href="https://www.smartkarma.com/entities/china-international-marine-cntnrs-gp-ltd" target="_blank" data-smartkarma-citation="entities:11752:1" rel="noopener">China International Marine Cntnrs Gp (2039 HK)</a>, <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke Co Ltd (H) (2202 HK)</a>, and <a href="https://www.smartkarma.com/entities/livzon-pharmaceutical-group-inc" target="_blank" data-smartkarma-citation="entities:18726:1" rel="noopener">Livzon Pharmaceutical Group (1513 HK)</a>.
<h3>The New News</h3>
On the 29 January 2021, <a href="https://www.smartkarma.com/entities/shandong-chenming-paper-a" target="_blank" data-smartkarma-citation="entities:19264:1" rel="noopener">Shandong Chenming Paper A (000488 CH)/(1812 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0201/2021020100079.pdf" target="_blank" rel="noopener">announced</a> the proposed listing of its domestic (B-shares) on the Hong Kong Stock Exchange, as H-shares. The circular is <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0221/2021022100021.pdf" target="_blank" rel="noopener">here</a>, and shareholders approved the transfer on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0314/2021031400011.pdf" target="_blank" rel="noopener">9 March</a>.
B-shares closed yesterday at HK$5.49/share. Yet the H-shares - in which the B-shares will be converted into - are trading at HK$6.70/share.
More below the fold ...

B-shares - remember them?
Created in 1992 to attract foreign investors,  their introduction, which followed the launch of A-shares, was a precursor to wider market access reforms for foreigners, as China integrated itself with the global economy.
Fast forward and years of market liberalisation provide foreign investors access to 3,000+ companies with A-shares. As a result, the combined market value of B shares accounts for less than 0.2% of the capitalisation of A-shares issued by companies in Shanghai. More importantly, the average daily trading volume for B-shares is ~0.1% of its peers.
Over the last decade, the HSI is up 30%. The Shanghai Exchange is up 18%, whereas the Shanghai B-share index is down 22%. For Shenzhen, the main index is up 70% versus 37% for the B-share index. 

Source: CapIQ
B shares have become a sort of zombie market for foreigners. 
The authorities could merge the B and A shares, which would result in a spike in the Bs, given their historical trading discount.
Alternatively, B shares can be transferred into H-shares for trading on the Hong Kong exchange, as seen in China International Marine Cntnrs Gp (2039 HK), China Vanke Co Ltd (H) (2202 HK), and Livzon Pharmaceutical Group (1513 HK).
The New News
On the 29 January 2021, Shandong Chenming Paper A (000488 CH)/(1812 HK) announced the proposed listing of its domestic (B-shares) on the Hong Kong Stock Exchange, as H-shares. The circular is here, and shareholders approved the transfer on the 9 March.
B-shares closed yesterday at HK$5.49/share. Yet the H-shares - in which the B-shares will be converted into - are trading at HK$6.70/share.
More below the fold ...

Shandong Chenming Paper (1812 HK): The H/B Convergence Trade

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Bio-Thera Solutions Ltd / Equity Bottom-Up

In the first quarter of 2021, following the failure of the BAT8001 phase III clinical trial, <a href="https://www.smartkarma.com/entities/bio-thera-solutions-ltd" target="_blank" data-smartkarma-citation="entities:29127:1" rel="noopener">Bio-Thera Solutions Ltd (688177 CH)</a> announced the suspension of R&amp;D of two other projects in the pipeline, BAT8003 and BAT1306. It is estimated that Bio-Thera has invested about RMB340 million in these three projects. Currently, Bio-Thera has only one product (Qletli) on the market. In the financial reports of 2020, the revenue was RMB185 million and Qletli contributed about RMB183 million, almost the entire revenue of the Company. Meanwhile, the net loss in 2020 was RMB513 million, and the Company has been suffering from losses for five consecutive years. So, what's next for Bio-Thera after R&amp;D setbacks and years of losses?

In the first quarter of 2021, following the failure of the BAT8001 phase III clinical trial, Bio-Thera Solutions Ltd (688177 CH) announced the suspension of R&amp;D of two other projects in the pipeline, BAT8003 and BAT1306. It is estimated that Bio-Thera has invested about RMB340 million in these three projects. Currently, Bio-Thera has only one product (Qletli) on the market. In the financial reports of 2020, the revenue was RMB185 million and Qletli contributed about RMB183 million, almost the entire revenue of the Company. Meanwhile, the net loss in 2020 was RMB513 million, and the Company has been suffering from losses for five consecutive years. So, what's next for Bio-Thera after R&amp;D setbacks and years of losses?

Bio-Thera Solutions (688177.CH) - What's Next for Bio-Thera After R&D Setbacks and Years of Losses?

China

Livzon Pharmaceutical Group is a comprehensive pharmaceutical company engaged in the research, development, production, and sales of various pharmaceutical products. Its portfolio includes chemical drugs, biological drugs, traditional Chinese medicine, and in vitro diagnostic reagents, covering therapeutic areas such as digestion, cardiovascular, reproductive endocrinology, and mental/nervous systems. The company was founded in January 1985 and is headquartered in Zhuhai City, Guangdong Province, China.

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Livzon Pharmaceutical Group (1513 HK)

A/H Premium Weekly: Consumer and Health Care Lowered A/H Premium

We highlight that the consumer discretionary, consumer staple and health care sectors are the biggest driver for lower A/H premium WoW.

Ke Yan, CFA, FRM

A/H Premium Weekly: Health Care A/H Premium at 52W High

We highlight that A/H premium of Health Care sector at 52 week high due to rumor of entity list inclusion, this is due to A/H premia of many...

Ke Yan, CFA, FRM

Hong Kong Buybacks: CSPC, Livzon, Xiaomi

We highlight the top 3 companies that repurchased the most shares in HK were CSPC Pharmaceutical (1093 HK), Livzon Pharmaceutical (1513 HK), and...

Ke Yan, CFA, FRM

Shandong Chenming Paper (1812 HK): The H/B Convergence Trade

On the expectation of a 3-6 month timeline, if you can source borrow on the H's, do so, and buy the Bs. Hearing borrow costs of 10-20%,

David Blennerhassett

Bio-Thera Solutions (688177.CH) - What's Next for Bio-Thera After R&D Setbacks and Years of Losses?

The article analyzed the concerns after the suspension of R&D of its three core products, the challenges of its listed product Qletli,and also the...

Xinyao (Criss) Wang

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