APAC IPOs & Placements, Aequitas Research

Akshat Shah

APAC 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

Sinotruk Hong Kong / Equity Capital Markets

<ul>
<li>German truckmaker, MAN SE (via MAN Finance and Holding) is looking to sell a ~2% stake in <a href="https://www.smartkarma.com/entities/sinotruk-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:19764:1" rel="noopener">Sinotruk Hong Kong (3808 HK)</a> to raise upto US$261m via a secondary selldown.</li>
<li>Sinotruk (Hong Kong) Ltd is China’s leading heavy-duty truck manufacturer, focused on commercial vehicles with strong domestic market share, growing exports, and consistent cash generation.</li>
<li>In this note we talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>


German truckmaker, MAN SE (via MAN Finance and Holding) is looking to sell a ~2% stake in Sinotruk Hong Kong (3808 HK) to raise upto US$261m via a secondary selldown.
Sinotruk (Hong Kong) Ltd is China’s leading heavy-duty truck manufacturer, focused on commercial vehicles with strong domestic market share, growing exports, and consistent cash generation.
In this note we talk about the deal dynamics and run the deal through our ECM framework.


Aequitas: Sinotruk Placement - Third Selldown in Seven Months After Strong Run-Up

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 195 stocks over the last week. The average A-H premium was 83.0% as of Jul 17th.</li>
<li>The average A-H premium changed by -1.9ppt week-on-week, led by real estate, consumer staples, energy.</li>
<li>We highlight weekly changes in A-H premium for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.</li>
</ul>


We analyse the changes of A-H premium on 195 stocks over the last week. The average A-H premium was 83.0% as of Jul 17th.
The average A-H premium changed by -1.9ppt week-on-week, led by real estate, consumer staples, energy.
We highlight weekly changes in A-H premium for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.


A-H Premium Weekly (Jul 17th): Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>China's construction machinery companies should benefit from the decision of bringing forward infrastructure investments by the Central Economic Work Conference; but the Nov industry figures still showed lacklustre performance.</li>
<li>Excavator sales volume was down 36.6% YoY in the month, with domestic sales even plunged by 51.4%. Wheel loader looks to be better with a lesser YoY decline at 8.5%.</li>
<li>High base and time lag for translating into demand mean unit sales will stay weak over the next few months. We prefer <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> as infrastructure play. </li>
</ul>


China's construction machinery companies should benefit from the decision of bringing forward infrastructure investments by the Central Economic Work Conference; but the Nov industry figures still showed lacklustre performance.
Excavator sales volume was down 36.6% YoY in the month, with domestic sales even plunged by 51.4%. Wheel loader looks to be better with a lesser YoY decline at 8.5%.
High base and time lag for translating into demand mean unit sales will stay weak over the next few months. We prefer China Communications Construction (1800 HK) as infrastructure play. 


China Construction Machinery: Not Seeing the End of the Tunnel Yet

China Specialist, Auto and Industrial Specialist

Victoria Li

We expect China construction machinery sector sales go down further in 2022E.Demand from infrastructure sector would be limited by reduced financial support from local governments on infrastructure investment. Demand from property sector would remain weak, due to tighten regulation for loans to real estate sector and weakening market demand on new properties.Demand from mining sector would be weak as well, with commodity capacity control policy. Demand from coal mining could go up in the next few months with coal mine restarts but will trend down once coal prices stabilize in line with China's carbon-neutrality strategyAlthough share prices of Zoomlion (1157.HK) and Sany Heavy (600031.CH) have been halved from their highs in 1H2021 and have priced in the down cycle, they would be under pressure with sector fundamental remaining weak in 2022E.

We expect China construction machinery sector sales go down further in 2022E.Demand from infrastructure sector would be limited by reduced financial support from local governments on infrastructure investment. Demand from property sector would remain weak, due to tighten regulation for loans to real estate sector and weakening market demand on new properties.Demand from mining sector would be weak as well, with commodity capacity control policy. Demand from coal mining could go up in the next few months with coal mine restarts but will trend down once coal prices stabilize in line with China's carbon-neutrality strategyAlthough share prices of Zoomlion (1157.HK) and Sany Heavy (600031.CH) have been halved from their highs in 1H2021 and have priced in the down cycle, they would be under pressure with sector fundamental remaining weak in 2022E.

China Construction Machinery Outlook 2022E

While sales for excavators and wheel loaders are still seeing YoY decline of 9.2% and 11.5% for Jul, there is no further significant deterioration when compared with the pace in Jun. We think that part of the reasons for the slowdown in the last few months are high base effect, and the extreme weather situation and outbreak of local COVID-19 cases have both exacerbated the headwinds. Nonetheless, we see outlook for 2H21 to be more promising.Similarly, a high base for 2H21 comparison should be well-anticipated. However, the recent positive tone from the government on infrastructure investment and the potential acceleration in special purpose bond issuance should bode well for the industry and we continue to see <a href="https://www.smartkarma.com/entities/lonking-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3944:1" rel="noopener">Lonking Holdings (3339 HK)</a> as well-placed. The encouraging new contract signed in 1H21 at <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> also lent a helping hand to the demand, in our view.

While sales for excavators and wheel loaders are still seeing YoY decline of 9.2% and 11.5% for Jul, there is no further significant deterioration when compared with the pace in Jun. We think that part of the reasons for the slowdown in the last few months are high base effect, and the extreme weather situation and outbreak of local COVID-19 cases have both exacerbated the headwinds. Nonetheless, we see outlook for 2H21 to be more promising.Similarly, a high base for 2H21 comparison should be well-anticipated. However, the recent positive tone from the government on infrastructure investment and the potential acceleration in special purpose bond issuance should bode well for the industry and we continue to see Lonking Holdings (3339 HK) as well-placed. The encouraging new contract signed in 1H21 at China Communications Construction (1800 HK) also lent a helping hand to the demand, in our view.

China Construction Machinery: Better Trajectory for 2H21

China

SANY Heavy Industry Co., Ltd manufactures and markets construction and engineering machinery and related parts. The Company produces and sells concrete pumps, concrete pump vehicles, road rollers, pavers, and other related products. Sany Heavy Industry markets its products worldwide.

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Sany Heavy Industry (600031 CH)

Aequitas: Sinotruk Placement - Third Selldown in Seven Months After Strong Run-Up

German truckmaker, MAN SE (via MAN Finance and Holding) is looking to sell around a 2% stake in Sinotruk (3808.HK) to raise up to US$261m via a...

Akshat Shah

A-H Premium Weekly (Jul 17th): Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Hua Hong Semi, Innocare, Yofc, China Life, Zijin Mining.

Ke Yan, CFA, FRM

China Construction Machinery: Not Seeing the End of the Tunnel Yet

While CEWC's decision to accelerate infrastructure investment bodes well for the construction machinery sector, high base and time lag in demand...

Osbert Tang, CFA

China Construction Machinery Outlook 2022E

We expect China construction machinery sector sales go down further in 2022E.Demand from infrastructure sector would be limited

Victoria Li

China Construction Machinery: Better Trajectory for 2H21

We are positive on the 2H21 outlook of construction machinery industry, driven by potential accelaration in China's infrastructure spending and...

Osbert Tang, CFA

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