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.

Event-Driven

<ul>
<li>On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.</li>
<li>At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares.</li>
<li>We have spoken about the background of the deal in our earlier notes. In this note, we talk about the overnight updates.</li>
</ul>


On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares.
We have spoken about the background of the deal in our earlier notes. In this note, we talk about the overnight updates.


Tencent Meituan Dividend - All Shares in CCASS - More Pressure Now but Will Have a Shorter Overhang

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

<ul>
<li>Following the settlement of <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> shares from <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>'s in-specie dividend, nearly all the shares are now in CCASS. </li>
<li>
<a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> has underperformed <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> by nearly 50% 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> by 27% since the announcement of the in-specie dividend.</li>
<li>Short interest is higher over the last couple of months but is far lower than the selling that could come through, especially on the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> holding.</li>
</ul>


Following the settlement of Meituan (3690 HK) shares from Tencent (700 HK)'s in-specie dividend, nearly all the shares are now in CCASS. 

Meituan (3690 HK) has underperformed Tencent (700 HK) by nearly 50% and Alibaba Group (9988 HK) by 27% since the announcement of the in-specie dividend.
Short interest is higher over the last couple of months but is far lower than the selling that could come through, especially on the Prosus (PRX NA) holding.


Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling

<ul>
<li>On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.</li>
<li>At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn</li>
<li>We have covered the background of the event in our previous notes. In this note, we talk about the recent updates.</li>
</ul>


On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn
We have covered the background of the event in our previous notes. In this note, we talk about the recent updates.


Tencent Meituan Dividend - The US$17bn Overhang Is Here - Not All Shares in CCASS, Here We Go Again!

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>In early 2022, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> made clear it was on a divestment path - disposing of investments able to support themselves - possibly "obliged" after 2021's China internet mess.</li>
<li>In August, Reuters suggested <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> was next. Tencent denied it, but in November with Q3 earnings, announced a January 2023 distribution with March 2023 settlement. </li>
<li>US$16bn of Meituan shares get delivered on 24 March 2023 - this Friday. That's a lot. <em>But this time is different than last time.</em>
</li>
</ul>


In early 2022, Tencent (700 HK) made clear it was on a divestment path - disposing of investments able to support themselves - possibly "obliged" after 2021's China internet mess.
In August, Reuters suggested Meituan (3690 HK) was next. Tencent denied it, but in November with Q3 earnings, announced a January 2023 distribution with March 2023 settlement. 
US$16bn of Meituan shares get delivered on 24 March 2023 - this Friday. That's a lot. But this time is different than last time.



Meituan (3690 HK) - US$16bn of Shares To Be Delivered This Week

<ul>
<li>From the time of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> announcement of the in-specie dividend, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> has underperformed <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/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> by around 35%.</li>
<li>Surprisingly, short interest on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> has dropped in the last few months as the stock has continued to drop.</li>
<li>As with <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>, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> could sell <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> in the months following settlement. Or they could remove the overhang by placing a block.</li>
</ul>


From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.


Meituan (3690 HK): Tencent's In-Specie Div Settles in Two Weeks

China

Prosus N.V. provides internet based services. The Company focuses on investments in internet, digital media, e-commerce retailing, and consumer internet companies. Prosus serves customers worldwide.

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Prosus NV (PRX NA)

Tencent Meituan Dividend - All Shares in CCASS - More Pressure Now but Will Have a Shorter Overhang

On 16th Nov 22, Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan. In this note, we talk...

Sumeet Singh

Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling

All Meituan stock from Tencent's distribution is in CCASS. Prosus has likely started to sell stock; shorts are small compared to the Prosus...

Brian Freitas

Tencent Meituan Dividend - The US$17bn Overhang Is Here - Not All Shares in CCASS, Here We Go Again!

On 16th Nov 22, Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan. The settlement was...

Sumeet Singh

Meituan (3690 HK) - US$16bn of Shares To Be Delivered This Week

There are about US$16bn of Meituan (3690 HK) shares to be delivered at the end of this week. This setup resembles the JD.com distribution by...

Travis Lundy

Meituan (3690 HK): Tencent's In-Specie Div Settles in Two Weeks

Meituan shares from Tencent's in-specie div settle in just over 2 weeks. Meituan has underperformed Tencent & Alibaba by 35% since announcement....

Brian Freitas

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