Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/gcl-poly-energy-holdings-limited" target="_blank" data-smartkarma-citation="entities:3708:1" rel="noopener">Gcl Poly Energy Holdings Limited (3800 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> while there was short covering on <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>. Shorts increased on Financials, Information Technology, Communication Services and Health Care, and decreased on Real Estate.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/seiko-epson-corp" target="_blank" data-smartkarma-citation="entities:16793:1" rel="noopener">Seiko Epson (6724 JP)</a>, <a href="https://www.smartkarma.com/entities/zenkoku-hosho-co-ltd" target="_blank" data-smartkarma-citation="entities:5537:1" rel="noopener">Zenkoku Hosho (7164 JP)</a> and <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>, <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi &amp; Co (4507 JP)</a>, <a href="https://www.smartkarma.com/entities/thk-co-ltd" target="_blank" data-smartkarma-citation="entities:19572:1" rel="noopener">Thk Co Ltd (6481 JP)</a> and <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>. Sectorally, shorts increased on Consumer Staples and Financials, while decreasing on Information Technology and Industrials.</p></div><div><p>In Korea, there were short positions put on in <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a> and <a href="https://www.smartkarma.com/entities/kia-motors-corp" target="_blank" data-smartkarma-citation="entities:156:1" rel="noopener">Kia Motors Corp (000270 KS)</a> while shorts were covered in <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/posco-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12421:1" rel="noopener">Posco Chemical Co Ltd (003670 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electro-mechanics-co" target="_blank" data-smartkarma-citation="entities:539:1" rel="noopener">Samsung Electro Mechanics Co, Ltd. (009150 KS)</a> and <a href="https://www.smartkarma.com/entities/mirae-asset-daewoo-co-ltd-b50c4d95-1687-46cb-9b58-f79ce0e72670" target="_blank" data-smartkarma-citation="entities:12061:1" rel="noopener">Mirae Asset Daewoo (006800 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/e-sun-financial-holding-co" target="_blank" data-smartkarma-citation="entities:719:1" rel="noopener">E.Sun Financial Holding Co (2884 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/cathay-financial-holding-co" target="_blank" data-smartkarma-citation="entities:17677:1" rel="noopener">Cathay Financial Holding Co (2882 TT)</a> and <a href="https://www.smartkarma.com/entities/china-life-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:603:1" rel="noopener">China Life Insurance (2823 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a> and <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Tencent Holdings (700 HK), Xiaomi Corp (1810 HK), Ping An Insurance (H) (2318 HK), Gcl Poly Energy Holdings Limited (3800 HK) and Alibaba Group (9988 HK) while there was short covering on Smoore International (6969 HK), Great Wall Motor (2333 HK), China Mobile (941 HK), BYD (1211 HK) and Haidilao (6862 HK). Shorts increased on Financials, Information Technology, Communication Services and Health Care, and decreased on Real Estate.In Japan, stocks that saw the most shorts were Lasertec Corp (6920 JP), Seiko Epson (6724 JP), Zenkoku Hosho (7164 JP) and Itochu Corp (8001 JP) while shorts decreased on Advantest Corp (6857 JP), Shionogi &amp; Co (4507 JP), Thk Co Ltd (6481 JP) and Anritsu Corp (6754 JP). Sectorally, shorts increased on Consumer Staples and Financials, while decreasing on Information Technology and Industrials.In Korea, there were short positions put on in Celltrion Inc (068270 KS), Hyundai Motor Co (005380 KS), Doosan Infracore (042670 KS) and Kia Motors Corp (000270 KS) while shorts were covered in Amorepacific Corp (090430 KS), Posco Chemical Co Ltd (003670 KS), Samsung Electro Mechanics Co, Ltd. (009150 KS) and Mirae Asset Daewoo (006800 KS). Stocks in Taiwan that saw the highest increase in shorts were E.Sun Financial Holding Co (2884 TT), Taiwan Cement (1101 TT), Cathay Financial Holding Co (2882 TT) and China Life Insurance (2823 TT) while shorts were covered on Largan Precision (3008 TT), Evergreen Marine Corp (2603 TT), Walsin Technology (2492 TT) and TSMC (2330 TT). 

Asia Short Interest: Tencent, Xiaomi, GCL Poly, Mobile, BYD, Lasertec, Advantest, Celltrion, Largan

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.

Equity Capital Markets

RLX Technology Inc / Equity Capital Markets

<div>
<p><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> has raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p>
</div>
<div>
<p>In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, talk about the trading dynamics and provide a valuation table at different  share price levels.</p>
</div>
<div>
<p>Links to our previous notes:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" data-smartkarma-citation="insights:46797" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a> </li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-negatives-limited-track-record-and-missing-international-ops" target="_blank" data-smartkarma-citation="insights:46836" rel="noopener">RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-rlx-store-visits-to-relx-and-its-competitors" target="_blank" rel="noopener">RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-peer-comparison-and-valuation" target="_blank" rel="noopener">RLX Technology Pre-IPO - Peer Comparison and Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/rlx-technology-ipo-valuation-has-more-than-doubled-in-two-months" target="_blank" rel="noopener">RLX Technology IPO - Valuation Has More than Doubled in Two Months</a></li>
</ul>
</div>


RLX Technology Inc (RLX US) has raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. 


In our previous note, links to which are below, we have spoke about various aspects of the deal. In this note, talk about the trading dynamics and provide a valuation table at different  share price levels.


Links to our previous notes:




RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration 
RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops
RLX Technology Pre-IPO (RLX): Store Visits to Relx and Its Competitors
RLX Technology Pre-IPO - Peer Comparison and Valuation
RLX Technology IPO - Valuation Has More than Doubled in Two Months



RLX Technology IPO Trading - We Won't Be Chasing

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.

<p><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>, China’s number one branded e-vapour company, has demonstrated strong growth since inception in January 2018. The company has captured 62.6% of China’s closed-system e-vapour products market during the first 33 months of operations and might find it difficult to maintain domestic revenue growth in high double digits range in future. Even though overseas expansion has the potential to offset the slowdown of domestic revenue growth, RELX’s performance in about 100 overseas markets was thus far unimpressive. However, the IPO valuation seems to imply sustained growth rates. Thus, we would avoid the RLX Technology IPO on long term investment standpoint. However, as a relative play, RLX Technology’s IPO valuation appears to be at a substantial discount to <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, a recent HK IPO in the upstream portion of the e-vapour supply chain. We discuss the details below.</p>

RLX Technology Inc (RLX US), China’s number one branded e-vapour company, has demonstrated strong growth since inception in January 2018. The company has captured 62.6% of China’s closed-system e-vapour products market during the first 33 months of operations and might find it difficult to maintain domestic revenue growth in high double digits range in future. Even though overseas expansion has the potential to offset the slowdown of domestic revenue growth, RELX’s performance in about 100 overseas markets was thus far unimpressive. However, the IPO valuation seems to imply sustained growth rates. Thus, we would avoid the RLX Technology IPO on long term investment standpoint. However, as a relative play, RLX Technology’s IPO valuation appears to be at a substantial discount to Smoore International (6969 HK), a recent HK IPO in the upstream portion of the e-vapour supply chain. We discuss the details below.

RLX Technology IPO Valuation: Smoore International May Not Be The Perfect Hedge

<p><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>, China’s number one branded e-vapor company with a market share of 62.6% of the closed-system e-vapor products, has announced its indicative pricing range at $8-10 per ADS which implies an EV between $11.4-14.3bn.</p><p>At the top end of the IPO price range, our 2022 revenue estimate of $867.7m (Revenue CAGR of 56% through 2019-22) places RLX on 16.5x 2022 EV/Sales. With revenue growth of 93% YoY in 9M20, domestic market share of 62.6% and an overseas footprint in 100 countries by the end of 2020, we believe our revenue estimate is quite reasonable.</p><p>E-vapor OEM, <a href="https://www.smartkarma.com/entities/smoore-international" target="_blank" data-smartkarma-citation="entities:28241:1" rel="noopener">Smoore International (6969 HK)</a>, whose 2019-22 revenue CAGR is 35% is currently trading at 2022 EV/Sales of 19.0x, 15% above RLX’s 2022 EV/Sales multiple. Therefore, RLX’s 16.5x 2022 EV/Sales multiple does not seem so unreasonable, especially considering the current behavior of capital markets.</p><p>The IPO valuation looks attractive and possibly have a decent upside in the short term. However, there are some significant risks associated with investing in RLX which investors need to be aware of before deciding to subscribe to the IPO.</p>

RLX Technology Inc (RLX US), China’s number one branded e-vapor company with a market share of 62.6% of the closed-system e-vapor products, has announced its indicative pricing range at $8-10 per ADS which implies an EV between $11.4-14.3bn.At the top end of the IPO price range, our 2022 revenue estimate of $867.7m (Revenue CAGR of 56% through 2019-22) places RLX on 16.5x 2022 EV/Sales. With revenue growth of 93% YoY in 9M20, domestic market share of 62.6% and an overseas footprint in 100 countries by the end of 2020, we believe our revenue estimate is quite reasonable.E-vapor OEM, Smoore International (6969 HK), whose 2019-22 revenue CAGR is 35% is currently trading at 2022 EV/Sales of 19.0x, 15% above RLX’s 2022 EV/Sales multiple. Therefore, RLX’s 16.5x 2022 EV/Sales multiple does not seem so unreasonable, especially considering the current behavior of capital markets.The IPO valuation looks attractive and possibly have a decent upside in the short term. However, there are some significant risks associated with investing in RLX which investors need to be aware of before deciding to subscribe to the IPO.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><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> is the leading branded e-vapour company in China with 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. RLX has launched its IPO at a price range of $8.00-10.00 per ADS. At the mid-point of the IPO price range, RLX will raise net proceeds of $1.0 billion at a market cap of $14.0 billion. </p></div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/rlx-technology-ipo-initiation-smoke-signals" target="_blank" data-smartkarma-citation="insights:46758" rel="noopener">RLX Technology IPO Initiation: Smoke Signals</a>, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. In <a href="https://www.smartkarma.com/insights/rlx-technology-vs-smoore-which-is-a-better-play-on-the-vaping-market" target="_blank" data-smartkarma-citation="insights:46851" rel="noopener">RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?</a>,  we compared 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>’s business model and fundamentals. Our analysis showed that subject to the IPO valuation, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability. </p>
<p>The proposed IPO price range is more than double the valuation of the last raise - Series D-2 at $36.2 per share in September 2020 ($3.62 per share post the 10-for-1 share subdivision effected on 11 January 2021). Each ADS represents one Class A ordinary share. RLX partly justifies the significant bump on the 71% rise in Smoore's share price in 4Q20. RLX will be invariably benchmarked to Smoore on a relative valuation basis which will helpfully provide support for the proposed IPO price range. </p>
<div class="content-highlight"><p>Overall, our valuation analysis suggests that RLX is fully priced at the IPO price range and we would be inclined to participate at most at the low-end of the IPO price range.</p></div>
</div></div>

RLX Technology Inc (RLX US) is the leading branded e-vapour company in China with 62.6% of the market share of closed-system e-vapour products as measured by retail sales value in 9M20, according to CIC. RLX has launched its IPO at a price range of $8.00-10.00 per ADS. At the mid-point of the IPO price range, RLX will raise net proceeds of $1.0 billion at a market cap of $14.0 billion. 
In RLX Technology IPO Initiation: Smoke Signals, we noted that while regulatory uncertainty will remain an overhang, RLX is an attractive play on the rapid growth of the e-vapour market in China. In RLX Technology Vs Smoore: Which Is a Better Play on the Vaping Market?,  we compared RLX and Smoore International (6969 HK)’s business model and fundamentals. Our analysis showed that subject to the IPO valuation, investors largely face a trade-off between RLX’s high growth and lower regulatory risk vs Smoore’s scale and higher profitability. 
The proposed IPO price range is more than double the valuation of the last raise - Series D-2 at $36.2 per share in September 2020 ($3.62 per share post the 10-for-1 share subdivision effected on 11 January 2021). Each ADS represents one Class A ordinary share. RLX partly justifies the significant bump on the 71% rise in Smoore's share price in 4Q20. RLX will be invariably benchmarked to Smoore on a relative valuation basis which will helpfully provide support for the proposed IPO price range. 
Overall, our valuation analysis suggests that RLX is fully priced at the IPO price range and we would be inclined to participate at most at the low-end of the IPO price range.


China

Smoore International is a global leader in atomization technology solutions, specializing in the research, design, and manufacturing of vaping devices, components, and heat-not-burn products for corporate clients and under its own brands like Vaporesso and FEELM. The company also develops beauty atomization products. Headquartered in Shenzhen, China, Smoore International was founded in 2009.

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Smoore International (6969 HK)

Asia Short Interest: Tencent, Xiaomi, GCL Poly, Mobile, BYD, Lasertec, Advantest, Celltrion, Largan

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

RLX Technology IPO Trading - We Won't Be Chasing

RLX Technology Inc (RLX US) raised around US$1.4bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

RLX Technology IPO Valuation: Smoore International May Not Be The Perfect Hedge

RLX’s IPO valuation appears to be at a substantial discount to Smoore, a recent HK IPO in the upstream portion of the e-vapour supply chain....

Oshadhi Kumarasiri

RLX Technology IPO: Risk of Unknowns

RLX Technology, China’s number one branded e-vapor company with a market share of 62.6%, has announced its indicative pricing range at $8-10 per...

Oshadhi Kumarasiri

RLX Technology IPO: Valuation Insights

RLX has launched its IPO to raise net proceeds of $1.0 billion. Overall, RLX is fully priced at the IPO price range and we would be inclined to...

Arun George

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