Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

Smoore International Holdings / Equity Bottom-Up

<ul>
<li>The new draft of the e-cigarette law will crack down the domestic market.</li>
<li>The revenue growth rate plunged in 2H21 despite the fact that the growth rate accelerated for the whole year 2021.</li>
<li>We set a downside of 27% and a price target of HK$13.90 for 2022.</li>
</ul>


The new draft of the e-cigarette law will crack down the domestic market.
The revenue growth rate plunged in 2H21 despite the fact that the growth rate accelerated for the whole year 2021.
We set a downside of 27% and a price target of HK$13.90 for 2022.


Smoore (6969 HK): Harsher E-Cigarette Law and Lower Growth Rate in 2H21

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>Net profit of RMB717mn came in at the low end of the pre-announcement, when revenue reportedly stood at a 9.4% YoY decline to RMB5.1bn.</li><li>A large part of the decline was explained by an 81.5% YoY tumble in China revenue to RMB393mn (or 96.3% YoY to RMB62mn should we excluding re-exporters), as a result of the enactment of the new national standard governing e-vapor, together with other market malignant practices.</li><li>From here, China revenue only represents only 1.2% to the total, and will no longer move the needle. </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>

Net profit of RMB717mn came in at the low end of the pre-announcement, when revenue reportedly stood at a 9.4% YoY decline to RMB5.1bn.A large part of the decline was explained by an 81.5% YoY tumble in China revenue to RMB393mn (or 96.3% YoY to RMB62mn should we excluding re-exporters), as a result of the enactment of the new national standard governing e-vapor, together with other market malignant practices.From here, China revenue only represents only 1.2% to the total, and will no longer move the needle. 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.

Smoore Int’l (6969 HK) – 1H Rev/Np -9%/-48%; Potential Turn-Around by 2024

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> announced a buyback of $500m, which is around 8.3% of the company’s share capital.</li>
<li>We expect short coverings following the buyback news possibly resulting in a second short squeeze in quick succession.</li>
<li>Meanwhile, the valuation mismatch between RLX and <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a> provides traders with an opportunity to a Long RLX/Short Smoore market-neutral pair trade.</li>
</ul>



RLX Technology Inc (RLX US) announced a buyback of $500m, which is around 8.3% of the company’s share capital.
We expect short coverings following the buyback news possibly resulting in a second short squeeze in quick succession.
Meanwhile, the valuation mismatch between RLX and Smoore International (6969 HK) provides traders with an opportunity to a Long RLX/Short Smoore market-neutral pair trade.


RLX Technology to Buyback 33% of The Free Float: Time To Reverse The Long Smoore/Short RLX Trade

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>The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.</li>
<li>Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a> a high probability inclusion candidate.</li>
<li>We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.</li>
</ul>


The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.


Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

<ul>
<li>The coming week has the rebalance implementation for the NIFTY family of indices on Thursday and the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> on Friday.</li>
<li>The review period for the December rebalance of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a>, <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>, <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> and the HSCI Index ends on Friday.</li>
<li>Inflows to mainland China ETFs resumed following a pause as markets continue to trade weak.</li>
</ul>


The coming week has the rebalance implementation for the NIFTY family of indices on Thursday and the Nikkei 225 (NKY INDEX) on Friday.
The review period for the December rebalance of the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI Index ends on Friday.
Inflows to mainland China ETFs resumed following a pause as markets continue to trade weak.


Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP

China

Smoore International Holdings Limited offering vaping technology solutions with advanced research and development technology. The Company manufactures and produces closed system vaping devices, self branded open system vaping devices, vaping components, and other products. Smoore International Holdings markets its products throughout Hong Kong.

Smoore International Holdings (6969 HK)

Smoore (6969 HK): Harsher E-Cigarette Law and Lower Growth Rate in 2H21

The new draft of the e-cigarette law will crack down the domestic market. The revenue growth rate plunged in 2H21. We set a downside of 27% and a...

Ming Lu

Smoore Int’l (6969 HK) – 1H Rev/Np -9%/-48%; Potential Turn-Around by 2024

Net profit of RMB717mn came in at the low end of the pre-announcement, when revenue reportedly stood at a 9.4% YoY decline to RMB5.1bn.

CMB International

RLX Technology to Buyback 33% of The Free Float: Time To Reverse The Long Smoore/Short RLX Trade

RLX’s buyback of 33% of its free float could cause panic among short-sellers, possibly resulting in a second short squeeze in quick succession.

Oshadhi Kumarasiri

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

There are 8 trading days to the announcement of the December rebalance results. With foreign companies newly eligible, Samsonite is a high...

Brian Freitas

Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas