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

<ul>
<li>We believe the criticism against Nongfu Spring will eventually help the company.</li>
<li>Catching the trend of sugar free, tea revenue surged by 83% in 2023.</li>
<li>The company achieved higher growth and higher margin, but its stock price is still flat.</li>
</ul>


We believe the criticism against Nongfu Spring will eventually help the company.
Catching the trend of sugar free, tea revenue surged by 83% in 2023.
The company achieved higher growth and higher margin, but its stock price is still flat.


Nongfu Spring (9633 HK): Criticism Not a Concern, Strong Performance, But Flat Price, Buy

<ul>
<li>The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.</li>
<li>Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.</li>
<li>We believe the stock has an upside of 41% for yearend 2024.</li>
</ul>


The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.
Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.
We believe the stock has an upside of 41% for yearend 2024.


Nongfu Spring (9633 HK): Tea Revenue Up by 60%, 40% Upside, Buy

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

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> will be added to the <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> at the close on 28 July.</li>
<li>There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.</li>
<li>We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).</li>
</ul>



Mercari Inc (4385 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 28 July.
There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.
We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).


TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The July-end TOPIX FFW Rebalance is larger than most expected, I believe. </li>
<li>There should be US$3.5bn one-way, with only a couple of major buy names.</li>
<li>
<a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/unicharm-corp" target="_blank" data-smartkarma-citation="entities:6246:1" rel="noopener">Unicharm Corp (8113 JP)</a>, <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>, <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group Holdings (2502 JP)</a>, and Shiseido (4911) are each US$170mm+ to sell.</li>
</ul>


The July-end TOPIX FFW Rebalance is larger than most expected, I believe. 
There should be US$3.5bn one-way, with only a couple of major buy names.

Chugai Pharmaceutical (4519 JP), Canon Inc (7751 JP), Unicharm Corp (8113 JP), Kubota Corp (6326 JP), Asahi Group Holdings (2502 JP), and Shiseido (4911) are each US$170mm+ to sell.


TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>One of our long-running thematic ideas has been that Japanese corporates are starting to get to grips with improving productivity. This isn’t a universal trend but we had flagged the Toyota group as a bellwether for Japan and that both Toyota and its group companies were demonstrating increasingly flexible and fast decision making capability and less rigid cultural norms. The <a href="https://asia.nikkei.com/Business/Business-trends/Toyota-named-top-ESG-brand-in-Japan-survey2" target="_blank" rel="noopener">Nikkei has an article citing Toyota as the top ESG pick</a> by consumers and business people, and its contents are worth thinking about.</p>

One of our long-running thematic ideas has been that Japanese corporates are starting to get to grips with improving productivity. This isn’t a universal trend but we had flagged the Toyota group as a bellwether for Japan and that both Toyota and its group companies were demonstrating increasingly flexible and fast decision making capability and less rigid cultural norms. The Nikkei has an article citing Toyota as the top ESG pick by consumers and business people, and its contents are worth thinking about.

Toyota – Topping the Nikkei’s ESG Survey and an Indicator of Labour Reform?

Japan

Suntory Beverage & Food Ltd manufacture and sells beverages and food products worldwide. The company is a part of Suntory Holdings ltd.

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Suntory Beverage & Food (2587 JP)

Nongfu Spring (9633 HK): Criticism Not a Concern, Strong Performance, But Flat Price, Buy

The criticism against Nongfu Spring eventually helps the company. Catching the fashion of sugar free, tea revenue surged by 83% in 2023. But its...

Ming Lu

Nongfu Spring (9633 HK): Tea Revenue Up by 60%, 40% Upside, Buy

Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free. The growth rate of total revenue accelerated to 23% YoY in...

Ming Lu

TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Mercari will be added to the TPX at the close on 28 July. There are a lot of FFW changes that will result in one-way turnover of 0.56% leading to a...

Brian Freitas

TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

The July-end TOPIX rebalance is only have the size of June but that's still big. US$3.5bn a side. There are several large names and lots of names...

Travis Lundy

Toyota – Topping the Nikkei’s ESG Survey and an Indicator of Labour Reform?

Toyota's efforts to reform labour policies bear watching as Japan's change of government and response to COVID's impact on workplaces offer a...

Mio Kato

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