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

<ul>
<li>On 28th Mar 2023, <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a> announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.</li>
<li>Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.</li>
<li>In our previous notes, we highlighted which divisions could list and looked at some of the divisions in more detail. In this note, we will talk about the local operations.</li>
</ul>


On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
In our previous notes, we highlighted which divisions could list and looked at some of the divisions in more detail. In this note, we will talk about the local operations.


Alibaba Potential IPOs - Part 5 - An Early Look at Local Operations

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.

Equity Bottom-Up

<ul>
<li>Cloud Music reported FY22 financial results on 23 Feb. Total revenue was up by 24% YoY to RMB4.7bn in 2H22, largely in line with our/consensus estimate of RMB4.6/4.8bn.</li>
<li>FY22 total revenue grew by 29% YoY to RMB9.0bn in FY22, driven by solid growth of social entertainment and music subscription businesses.</li>
<li>Cloud Music recorded positive adjusted net income of RMB102mn in 2H22 versus adjusted net loss of RMB511mn in 2H21, beating our/consensus estimate (adj. net loss of RMB135/188mn), mainly attributable to the strong GPM expansion and effective control in marketing. </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>


Cloud Music reported FY22 financial results on 23 Feb. Total revenue was up by 24% YoY to RMB4.7bn in 2H22, largely in line with our/consensus estimate of RMB4.6/4.8bn.
FY22 total revenue grew by 29% YoY to RMB9.0bn in FY22, driven by solid growth of social entertainment and music subscription businesses.
Cloud Music recorded positive adjusted net income of RMB102mn in 2H22 versus adjusted net loss of RMB511mn in 2H21, beating our/consensus estimate (adj. net loss of RMB135/188mn), mainly attributable to the strong GPM expansion and effective control in marketing. 

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.

Cloud Music (9899 HK) – Strong GPM expansion supported the breakeven in 2H22

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>There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.</li>
<li>We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.</li>
<li>19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.</li>
</ul>


There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.


HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/iqiyi-inc" target="_blank" data-smartkarma-citation="entities:26755:1" rel="noopener">IQIYI Inc (IQ US)</a> aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.</li>
<li>The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. </li>
<li>The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. </li>
</ul>



IQIYI Inc (IQ US) aims to raise net proceeds of US$442.3 million through the placement of 76.5 million ADS at US$5.90 per ADS.
The net proceeds will be used for working capital purposes, including serving its existing debt obligations. The placement closes on 19 January. 
The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin improvement and declining cash burn. 


IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

Brilliance China Automotive / Index Rebalance

<ul>
<li>We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.</li>
<li>We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. </li>
<li>There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.</li>
</ul>


We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.


HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

China

NetEase Cloud Music operates as one of China's leading online music platforms, offering music streaming, membership subscriptions, digital music sales, and social entertainment services including live streaming and online karaoke. It provides an interactive content community for music enthusiasts with personalized recommendations. The company is headquartered in Hangzhou, China, and was launched in 2013.

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NetEase Cloud Music (9899 HK)

Alibaba Potential IPOs - Part 5 - An Early Look at Local Operations

On 28th Mar 2023, Alibaba (BABA US) announced that it would adopt a new organizational and governance structure. In those note we take an early...

Sumeet Singh

Cloud Music (9899 HK) – Strong GPM expansion supported the breakeven in 2H22

Cloud Music reported FY22 financial results on 23 Feb. Total revenue was up by 24% YoY to RMB4.7bn in 2H22, largely in line with our/consensus...

CMB International

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds & 28 deletes for the HSCI in March leading to 29 adds & 20 deletes for Stock Connect. 19 index constituents could be dropped from...

Brian Freitas

IQIYI (IQ US) Placement: Fair Price for a Potential but Risky Recovery Play

The placement price is fair vs peers and is an opportunity to play iQiyi’s expected topline recovery which is supported by ongoing margin...

Arun George

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

We forecast 44 adds/19 deletes for the HSCI in March leading to 37 adds/deletes for Southbound Stock Connect. There could be more Connect changes...

Brian Freitas

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