Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A week after the State Council issued "Several Opinions" (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC <a href="http://www.csrc.gov.cn/csrc/c100028/c7474875/content.shtml" target="_blank" rel="noopener">announced</a> Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.</li>
<li>They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.</li>
<li>RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the "To Do" list "as soon as possible and smoothly." Watch impact on H/A Pairs.</li>
</ul>


A week after the State Council issued "Several Opinions" (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the "To Do" list "as soon as possible and smoothly." Watch impact on H/A Pairs.


RMB Dual Counter Trading Is Coming - This Changes AH Relationships

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>SenseTime reported FY24 results: total revenue was up by 11% YoY to RMB3.77bn, below consensus estimate of RMB4.50bn, mainly due to the decline in Traditional AI business revenue; adjusted net loss narrowed by 21% YoY to RMB4.25bn, but worse than consensus net loss estimate of RMB3.53bn, primarily due to the greater-than-expected R&amp;D investment in AI.</li><li>Supported by its growing computing power and enriching industry solutions, management remains upbeat on the Gen AI revenue growth in FY25E.</li><li>We forecast total revenue to grow by 27% YoY in FY25E, driven by the Gen AI business.</li></ul>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.

SenseTime reported FY24 results: total revenue was up by 11% YoY to RMB3.77bn, below consensus estimate of RMB4.50bn, mainly due to the decline in Traditional AI business revenue; adjusted net loss narrowed by 21% YoY to RMB4.25bn, but worse than consensus net loss estimate of RMB3.53bn, primarily due to the greater-than-expected R&amp;D investment in AI.Supported by its growing computing power and enriching industry solutions, management remains upbeat on the Gen AI revenue growth in FY25E.We forecast total revenue to grow by 27% YoY in FY25E, driven by the Gen AI business.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.

SenseTime (20 HK) - Gen AI Business Maintains Momentum on Increased AI Investment

<ul><li>SenseTime announced (4 Dec) the completion of a strategic organizational restructuring, after which the company has established a new “1+X” structure: 1) “1” stands for the core business, which will focus on AI cloud services, integration of large models &amp; AI applications, development of general computer vision (CV) models</li><li>2) “X” stands for other ecological businesses within the group including smart auto, domestic robot, smart healthcare, smart retail, etc.</li><li>Each ecological business will 1) designate an independent CEO; 2) have a flexible incentive mechanism and financing channels; 3) use SenseTime’s AI infrastructure &amp; large models (and pay SenseTime on an arm's length transaction basis) to develop AI applications in their respective fields. </li></ul>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.

SenseTime announced (4 Dec) the completion of a strategic organizational restructuring, after which the company has established a new “1+X” structure: 1) “1” stands for the core business, which will focus on AI cloud services, integration of large models &amp; AI applications, development of general computer vision (CV) models2) “X” stands for other ecological businesses within the group including smart auto, domestic robot, smart healthcare, smart retail, etc.Each ecological business will 1) designate an independent CEO; 2) have a flexible incentive mechanism and financing channels; 3) use SenseTime’s AI infrastructure &amp; large models (and pay SenseTime on an arm's length transaction basis) to develop AI applications in their respective fields. 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.

SenseTime (20 HK) - Restructuring to Focus on Gen AI Business and Accelerate Breakeven Progress

Equity Analyst, LightStream Research

Shifara Samsudeen, FCMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>AI software company SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period as pre-investors of the company took some profits.  </li>
<li>The company was placed in an investment blacklist by the US government prior to the IPO which forced to launch the IPO without investors from the US.</li>
<li>The company also priced the IPO at the bottom of the price range and despite all of this, shares quickly went up to HK$8.20 from IPO price of US$3.85.</li>
</ul>


AI software company SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period as pre-investors of the company took some profits.  
The company was placed in an investment blacklist by the US government prior to the IPO which forced to launch the IPO without investors from the US.
The company also priced the IPO at the bottom of the price range and despite all of this, shares quickly went up to HK$8.20 from IPO price of US$3.85.


SenseTime: Shares Fall with Lock-Up Expiry; Further Downside with More Selling at the Next Expiry

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>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.</li>
<li>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> FAF increase and potential inclusion in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index</a> will require passive trackers to buy 700m shares early September.</li>
<li>Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.</li>
</ul>



SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.


SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow

China

SenseTime Group Inc. offers information technology services. The Company develops artificial intelligence software products, computer vision software products, and other products. SenseTime Group provides its services throughout China.

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SenseTime Group (20 HK)

RMB Dual Counter Trading Is Coming - This Changes AH Relationships

1 year+ after the CSRC said it was working towards expanding HKD RMB dual counter trading in HK, making RMB counters eligible, last month through...

Travis Lundy

SenseTime (20 HK) - Gen AI Business Maintains Momentum on Increased AI Investment

We lower our target price to HK$1.85, which translates into 10.5x FY25E EV/sales in tune with AI-related sector valuation re-rating (previous:...

CMB International

SenseTime (20 HK) - Restructuring to Focus on Gen AI Business and Accelerate Breakeven Progress

SenseTime announced (4 Dec) the completion of a strategic organizational restructuring, after which the company has established a new “1+X” structure

CMB International

SenseTime: Shares Fall with Lock-Up Expiry; Further Downside with More Selling at the Next Expiry

SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period. Some shareholders have agreed to extend...

Shifara Samsudeen, FCMA, CGMA

SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow

SenseTime rallied post listing and has since dropped. Lock-up expiry in June could lead to short-term weakness but that will bring in large passive...

Brian Freitas

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