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>Hang Seng Indexes has announced a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the next rebalance in June.</li>
<li>
<a href="https://www.smartkarma.com/entities/netease-inc" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/trip-com-group-ltd-23a341d0-4f63-4175-a8c5-ee990906cacd" target="_blank" data-smartkarma-citation="entities:36424:1" rel="noopener">Trip.com (9961 HK)</a>, <a href="https://www.smartkarma.com/entities/nio-inc-2d526675-c878-4104-840f-87fed1735e85" target="_blank" data-smartkarma-citation="entities:35652:1" rel="noopener">NIO (9866 HK)</a>, <a href="https://www.smartkarma.com/entities/new-oriental-education-techn" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Techn (9901 HK)</a> and <a href="https://www.smartkarma.com/entities/weibo-corp" target="_blank" data-smartkarma-citation="entities:35280:1" rel="noopener">Weibo (9898 HK)</a> benefit; <a href="https://www.smartkarma.com/entities/gds-holdings-ltd" target="_blank" data-smartkarma-citation="entities:32157:1" rel="noopener">GDS Holdings (9698 HK)</a> loses out.</li>
<li>The FAF changes along with capping changes will result in a round-trip trade of HK$34.2bn (US$4.4bn) at the June rebalance with the largest turnover for the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index</a>. </li>
</ul>


Hang Seng Indexes has announced a change in the FreeFloat-Adjusted Factor (FAF) methodology for Secondary Listings that will be implemented from the next rebalance in June.

NetEase (9999 HK), Baidu (9888 HK), Trip.com (9961 HK), NIO (9866 HK), New Oriental Education &amp; Techn (9901 HK) and Weibo (9898 HK) benefit; GDS Holdings (9698 HK) loses out.
The FAF changes along with capping changes will result in a round-trip trade of HK$34.2bn (US$4.4bn) at the June rebalance with the largest turnover for the Hang Seng TECH Index. 


Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>NetEase, a major player in the global gaming industry, delivered a mixed set of results for its fourth quarter and full fiscal year 2024.</li><li>Total net revenue reached RMB 105.3 billion ($14.4 billion), a 2% increase year-over-year, driven primarily by their online games segment which contributed RMB 83.6 billion of the total.</li><li>Despite the growth, the increase was modest, reflecting challenges in certain areas of the company’s operations.</li></ul>

NetEase, a major player in the global gaming industry, delivered a mixed set of results for its fourth quarter and full fiscal year 2024.Total net revenue reached RMB 105.3 billion ($14.4 billion), a 2% increase year-over-year, driven primarily by their online games segment which contributed RMB 83.6 billion of the total.Despite the growth, the increase was modest, reflecting challenges in certain areas of the company’s operations.

NetEase Inc.: Are Its Efforts Towards Content & Community Building in Music & E-commerce Yielding Results?

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

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

<ul>
<li>NetEase reported C4Q24 rev., GAAP op. profit and GAAP net inc. in line/3.9%/27% vs. our est., and in line/9.3%/27% vs. cons. </li>
<li>We see NetEase entering a new phase of product-driven revenue growth, driven by rebounding mobile and accelerating PC game growth;</li>
<li>We raise TP to US$122 and keep NTES as our TOP PICK in gaming sector.</li>
</ul>


NetEase reported C4Q24 rev., GAAP op. profit and GAAP net inc. in line/3.9%/27% vs. our est., and in line/9.3%/27% vs. cons. 
We see NetEase entering a new phase of product-driven revenue growth, driven by rebounding mobile and accelerating PC game growth;
We raise TP to US$122 and keep NTES as our TOP PICK in gaming sector.


[NetEase (NTES US, BUY, TP US$122) TP Change]: C4Q24 Review: Getting Ready for Accelerated Growth

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

<ul>
<li>China announced game approval for the February batch. The number of games approved remained at a higher level than 2023.</li>
<li>The pace of China game approval appears to have accelerated to the same level as pre-tightening.</li>
<li>Of the companies that we are monitoring, Netease, Zengame got one approval each.</li>
</ul>


China announced game approval for the February batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening.
Of the companies that we are monitoring, Netease, Zengame got one approval each.


Tencent/Netease: One Game Approval for Netease in Feb

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>NetEase reported 4Q24 results on 20 Feb: total revenue was down by 1.4% YoY to RMB26.7bn, largely in line with consensus estimates; operating profit grew by 13.9% YoY to RMB7.8bn, 8% ahead of consensus estimates, mainly attributable to the prudent control of S&amp;M expenses (-33% YoY).</li><li>Total revenue and operating profit grew by 2% and 7% YoY in FY24 respectively.</li><li>Looking into FY25E, we expect new game titles such as Marvel Rivals and Where Winds Meet to drive reacceleration of games revenue growth.  prudent opex control. We maintain our SOTPderived target price of US$125.5. Maintain BUY</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>

NetEase reported 4Q24 results on 20 Feb: total revenue was down by 1.4% YoY to RMB26.7bn, largely in line with consensus estimates; operating profit grew by 13.9% YoY to RMB7.8bn, 8% ahead of consensus estimates, mainly attributable to the prudent control of S&amp;M expenses (-33% YoY).Total revenue and operating profit grew by 2% and 7% YoY in FY24 respectively.Looking into FY25E, we expect new game titles such as Marvel Rivals and Where Winds Meet to drive reacceleration of games revenue growth.  prudent opex control. We maintain our SOTPderived target price of US$125.5. Maintain BUYContent 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.

NetEase (NTES US) - Steady 4Q24 Performance; New Game Titles to Support FY25 Revenue Growth

China

NetEase, Inc. operates as an leading internet technology company providing online services including content, community, communication, and commerce. The Company develops and operates online games, electronic commerce, internet media, innovative business, and other businesses. NetEase expands its businesses to Japan, North American, and other other international markets.

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NetEase (9999 HK)

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase

The big buys are up in the last week: NetEase (+3.75%), Baidu (+2.1%), Trip.com (+1.8%) while the headline indices are down: HSI (-1.1%), HSCEI (...

Brian Freitas

NetEase Inc.: Are Its Efforts Towards Content & Community Building in Music & E-commerce Yielding Results?

NetEase, a major player in the global gaming industry, delivered a mixed set of results for its fourth quarter and full fiscal year 2024. Total...

Baptista Research

[NetEase (NTES US, BUY, TP US$122) TP Change]: C4Q24 Review: Getting Ready for Accelerated Growth

NetEase's strong financial performance and focus on product-driven revenue growth lead to a raised price target and top pick status in the gaming...

Blue Lotus Research Institute

Tencent/Netease: One Game Approval for Netease in Feb

We analyzed the game approval issued by NPPA for Chinese online game players for the month of February. Game approvals for large players are slow...

Ke Yan, CFA, FRM

NetEase (NTES US) - Steady 4Q24 Performance; New Game Titles to Support FY25 Revenue Growth

NetEase reported 4Q24 results on 20 Feb: total revenue was down by 1.4% YoY to RMB26.7bn, largely in line with consensus estimates

CMB International

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hang Seng Indexes: FAF Methodology Change for Secondary Listings; Over US$1bn to Buy in NetEase

The big buys are up in the last week: NetEase (+3.75%), Baidu (+2.1%), Trip.com (+1.8%) while the headline indices are down: HSI (-1.1%), HSCEI (...

Brian Freitas

NetEase Inc.: Are Its Efforts Towards Content & Community Building in Music & E-commerce Yielding Results?

NetEase, a major player in the global gaming industry, delivered a mixed set of results for its fourth quarter and full fiscal year 2024. Total...

Baptista Research

[NetEase (NTES US, BUY, TP US$122) TP Change]: C4Q24 Review: Getting Ready for Accelerated Growth

​NetEase's strong financial performance and focus on product-driven revenue growth lead to a raised price target and top pick status in the gaming...

Blue Lotus Research Institute

Tencent/Netease: One Game Approval for Netease in Feb

We analyzed the game approval issued by NPPA for Chinese online game players for the month of February. Game approvals for large players are slow...

Ke Yan, CFA, FRM

NetEase (NTES US) - Steady 4Q24 Performance; New Game Titles to Support FY25 Revenue Growth

NetEase reported 4Q24 results on 20 Feb: total revenue was down by 1.4% YoY to RMB26.7bn, largely in line with consensus estimates

CMB International

NetEase's strong financial performance and focus on product-driven revenue growth lead to a raised price target and top pick status in the gaming...