HK/China Equity Long-Short

Osbert Tang, CFA

Equity Capital Markets

Wuxi Lead Intelligent Equipmen / Equity Capital Markets

Wuxi Lead Intelligent Equipmen (300450 CH)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/wuxi-lead-intelligent-equipmen" target="_blank" data-smartkarma-citation="entities:27971:1" rel="noopener">Wuxi Lead Intelligent Equipment (470 HK)</a> has a lukewarm H-share IPO response, but is still priced at the maximum of HK$45.80. This places it on 29.2x PER for FY26F.</li>
<li>We consider an appropriate HA discount to be roughly 25-30%, implying a fair value of HK$45.6-48.8, or 6.6% downside/upside, and it is almost fairly-valued. </li>
<li>At the top-end of our estimated fair value, its multiples do not appear attractive against the A-share and other global peers, so HK$48.8 is the ceiling. </li>
</ul>



Wuxi Lead Intelligent Equipment (470 HK) has a lukewarm H-share IPO response, but is still priced at the maximum of HK$45.80. This places it on 29.2x PER for FY26F.
We consider an appropriate HA discount to be roughly 25-30%, implying a fair value of HK$45.6-48.8, or 6.6% downside/upside, and it is almost fairly-valued. 
At the top-end of our estimated fair value, its multiples do not appear attractive against the A-share and other global peers, so HK$48.8 is the ceiling. 


Wuxi Lead Equipment (470 HK): Almost Fair

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

Index Rebalance

Bluefocus Communication Group Co, Ltd. / Index Rebalance

Bluefocus Communication Group Co, Ltd. (300058 CH)

<ul>
<li>There are 8 changes for the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index (SZ399006 INDEX EQUITY)</a> and 5 changes for the ChiNext 50 Index at the June rebalance.</li>
<li>We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.</li>
<li>Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).</li>
</ul>


There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).


ChiNext/​​ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

Suzhou Maxwell Technologies  / Index Rebalance

<ul>
<li>There is one constituent change for the STAR&amp;CHINEXT 50 Index in June with AVIC Chengdu Aircraft Co (302132 CH) replacing <a href="https://www.smartkarma.com/entities/suzhou-maxwell-technologies-co" target="_blank" data-smartkarma-citation="entities:29819:1" rel="noopener">Suzhou Maxwell Technologies (300751 CH)</a>.</li>
<li>Passive trackers will need to buy 0.15x ADV in AVIC Chengdu Aircraft Co (302132 CH) and sell 0.4x ADV in <a href="https://www.smartkarma.com/entities/suzhou-maxwell-technologies-co" target="_blank" data-smartkarma-citation="entities:29819:1" rel="noopener">Suzhou Maxwell Technologies (300751 CH)</a>. </li>
<li>AVIC Chengdu Aircraft Co (302132 CH) is a <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500 Index</a> to <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-index" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a> migration in June, so there will be more buying in the stock.</li>
</ul>


There is one constituent change for the STAR&amp;CHINEXT 50 Index in June with AVIC Chengdu Aircraft Co (302132 CH) replacing Suzhou Maxwell Technologies (300751 CH).
Passive trackers will need to buy 0.15x ADV in AVIC Chengdu Aircraft Co (302132 CH) and sell 0.4x ADV in Suzhou Maxwell Technologies (300751 CH). 
AVIC Chengdu Aircraft Co (302132 CH) is a CSI 500 Index to CSI 300 Index migration in June, so there will be more buying in the stock.


STAR&CHINEXT 50 Index Rebalance: One Change in June Adds to Other (Larger) Index Flows

Anker Innovations Technology / Index Rebalance

<ul>
<li>There could be 1 constituent change (maybe 2) for the STAR&amp;CHINEXT 50 Index in June. The announcement of the potential change will be made after market close on Friday.</li>
<li>
<a href="https://www.smartkarma.com/entities/anker-innovations-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:36238:1" rel="noopener">Anker Innovations Technology</a> could replace <a href="https://www.smartkarma.com/entities/suzhou-maxwell-technologies-co" target="_blank" data-smartkarma-citation="entities:29819:1" rel="noopener">Suzhou Maxwell Technologies</a> in the index. If AVIC Chengdu Aircraft is added to the index, <a href="https://www.smartkarma.com/entities/wuxi-lead-intelligent-equipmen" target="_blank" data-smartkarma-citation="entities:27971:1" rel="noopener">Wuxi Lead Intelligent Equipment</a> could be deleted.</li>
<li>
<a href="https://www.smartkarma.com/entities/anker-innovations-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:36238:1" rel="noopener">Anker Innovations Technology</a> could have opposite flow and <a href="https://www.smartkarma.com/entities/suzhou-maxwell-technologies-co" target="_blank" data-smartkarma-citation="entities:29819:1" rel="noopener">Suzhou Maxwell Technologies</a> could have same way flow from passive trackers of other indices on the same day.</li>
</ul>


There could be 1 constituent change (maybe 2) for the STAR&amp;CHINEXT 50 Index in June. The announcement of the potential change will be made after market close on Friday.

Anker Innovations Technology could replace Suzhou Maxwell Technologies in the index. If AVIC Chengdu Aircraft is added to the index, Wuxi Lead Intelligent Equipment could be deleted.

Anker Innovations Technology could have opposite flow and Suzhou Maxwell Technologies could have same way flow from passive trackers of other indices on the same day.


STAR&CHINEXT 50 Index Rebalance Preview: One Set of Change; Maybe Two

<ul>
<li>With the review period complete, we forecast 10 changes for the <a href="https://www.smartkarma.com/entities/chinext-index" target="_blank" data-smartkarma-citation="entities:25483:1" rel="noopener">ChiNext Index (SZ399006 INDEX EQUITY)</a> and 5 changes for the ChiNext 50 Index in June.</li>
<li>The largest flows will be in stocks that are adds/deletes for both indices - and there are a few of those. Plus there are some overlaps with other indices.</li>
<li>While the forecast adds have outperformed the forecast deletes for both indices since January, near-term performance has not been great. That could change as we near the announcement date.</li>
</ul>


With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
The largest flows will be in stocks that are adds/deletes for both indices - and there are a few of those. Plus there are some overlaps with other indices.
While the forecast adds have outperformed the forecast deletes for both indices since January, near-term performance has not been great. That could change as we near the announcement date.


ChiNext/​​​ChiNext50 Index Rebalance Preview: Whole Lotta Change

China

Suzhou Maxwell Technologies Co.,Ltd. provides solar energy equipment. The Company offers developing, manufacturing, and marketing of energy storage and power delivery solutions. Suzhou Maxwell Technologies serves automotive, heavy transportation, renewable energy, backup power, wireless communications and industrial, and consumer electronics applications.

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Suzhou Maxwell Technologies (300751 CH)

Wuxi Lead Equipment (470 HK): Almost Fair

Wuxi Lead Intelligent Equipment's lukewarm IPO response leads to a fair value estimate of HK$45.6-48.8, suggesting it is almost fairly-valued with...

Osbert Tang, CFA

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

There are 8 changes for the ChiNext Index and 5 changes for the ChiNext 50 Index at the June rebalance. The round-trip trade across both indices is...

Brian Freitas

STAR&CHINEXT 50 Index Rebalance: One Change in June Adds to Other (Larger) Index Flows

AVIC Chengdu Aircraft replaces Suzhou Maxwell Technologies. AVIC Chengdu Aircraft is also a CSI500 to CSI300 migration (net inflows) while Suzhou...

Brian Freitas

STAR&CHINEXT 50 Index Rebalance Preview: One Set of Change; Maybe Two

There should be 1 index change in June. Possibly 2. Anker Innovations is a potential CSI300 delete while Suzhou Maxwell is a global index deletion...

Brian Freitas

ChiNext/ChiNext50 Index Rebalance Preview: Whole Lotta Change

There could be 10/5 changes for the Chinext/50 in June with 10 stocks having over 1x ADV to trade from passives. Adds have outperformed the deletes...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Wuxi Lead Equipment (470 HK): Almost Fair

​Wuxi Lead Intelligent Equipment's lukewarm IPO response leads to a fair value estimate of HK$45.6-48.8, suggesting it is almost fairly-valued with...

Osbert Tang, CFA

ChiNext/​​ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

There are 8 changes for the ChiNext Index and 5 changes for the ChiNext 50 Index at the June rebalance. The round-trip trade across both indices is...

Brian Freitas

STAR&CHINEXT 50 Index Rebalance: One Change in June Adds to Other (Larger) Index Flows

AVIC Chengdu Aircraft replaces Suzhou Maxwell Technologies. AVIC Chengdu Aircraft is also a CSI500 to CSI300 migration (net inflows) while Suzhou...

Brian Freitas

STAR&CHINEXT 50 Index Rebalance Preview: One Set of Change; Maybe Two

There should be 1 index change in June. Possibly 2. Anker Innovations is a potential CSI300 delete while Suzhou Maxwell is a global index deletion...

Brian Freitas

ChiNext/​​​ChiNext50 Index Rebalance Preview: Whole Lotta Change

There could be 10/5 changes for the Chinext/50 in June with 10 stocks having over 1x ADV to trade from passives. Adds have outperformed the deletes...

Brian Freitas

Wuxi Lead Intelligent Equipment's lukewarm IPO response leads to a fair value estimate of HK$45.6-48.8, suggesting it is almost fairly-valued with...

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

ChiNext/ChiNext50 Index Rebalance Preview: Whole Lotta Change