Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of June 30th.</li>
<li>We estimate the weekly outflows to be US$1,252.3 million, led by consumer staples, financials, and offset by materials, consumer discretionary, industrials.</li>
<li>We highlight flows for Midea, Kunlun Tech, Tcl Technology Group, Moutai, Wuliangye, China Tourism, CATL, Longi Green.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of June 30th.
We estimate the weekly outflows to be US$1,252.3 million, led by consumer staples, financials, and offset by materials, consumer discretionary, industrials.
We highlight flows for Midea, Kunlun Tech, Tcl Technology Group, Moutai, Wuliangye, China Tourism, CATL, Longi Green.


Northbound Flows (Jun 30th): Moutai, Wuliangye, China Tourism, CATL, Longi Green

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of June 2nd.</li>
<li>We estimate the weekly inflows to be US$899.7 million, led by information technology, materials, health care sectors, and offset by financials, consumer staples.</li>
<li>We highlight flows for Nantong Fujitsu Microelectronics, Xinjiang Daqo New Energy, Zhejiang Dahua Technology, Moutai, Wuliangye, China Tourism, Ping An Insurance, Sany Heavy Industry, Foxconn Industrial Internet, Haitian Flavouring.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of June 2nd.
We estimate the weekly inflows to be US$899.7 million, led by information technology, materials, health care sectors, and offset by financials, consumer staples.
We highlight flows for Nantong Fujitsu Microelectronics, Xinjiang Daqo New Energy, Zhejiang Dahua Technology, Moutai, Wuliangye, China Tourism, Ping An Insurance, Sany Heavy Industry, Foxconn Industrial Internet, Haitian Flavouring.


Northbound Flows (Jun 2nd): Moutai, Wuliangye, China Tourism, Ping An Insurance, Sany Heavy

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<ul>
<li>In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. </li>
<li>The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).</li>
<li>The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).</li>
</ul>


In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. 
The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).
The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).


MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

<ul>
<li>We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 24th.</li>
<li>We estimate the weekly inflows to be US$1,685.1 million, led by industrials, information technology, health care sectors, and offset by energy, financials.</li>
<li>We highlight flows for Boe Technology, Contemporary Amperex Technology, Kweichow Moutai, Shenzhen Inovance Technology, Luxshare Precision Industry, Hithink Royalflush Information Network, China Shenhua Energy, Foxconn Industrial Internet, Ping An Insurance.</li>
</ul>


We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 24th.
We estimate the weekly inflows to be US$1,685.1 million, led by industrials, information technology, health care sectors, and offset by energy, financials.
We highlight flows for Boe Technology, Contemporary Amperex Technology, Kweichow Moutai, Shenzhen Inovance Technology, Luxshare Precision Industry, Hithink Royalflush Information Network, China Shenhua Energy, Foxconn Industrial Internet, Ping An Insurance.


Northbound Flows (Mar 24th): Boe, CATL, Moutai, Shenzhen Inovance, Luxshare

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Tonly Electronics Holdings / Event-Driven

Back on the 2 October 2019, via a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1002/ltn201910021175.pdf" target="_blank" rel="noopener">restructuring agreement</a>, T.C.L. Industries Holdings (H.K.) Limited. (TCLH), a wholly-owned subsidiary of TCL Industries (TCLI) acquired all of the issued capital in the "Divested Segment", a segment spun-off from  <a href="https://www.smartkarma.com/entities/tcl-corp-a" target="_blank" data-smartkarma-citation="entities:13497:1" rel="noopener">TCL Corp (A) (000100 CH)</a>. As this Segment held 48.68% of issued shares in <a href="https://www.smartkarma.com/entities/tonly-electronics-holdings-ltd" target="_blank" data-smartkarma-citation="entities:1320:1" rel="noopener">Tonly Electronics Holdings (1249 HK)</a> (TEH), TCLH was obligated to make a conditional MGO for all other shares not held. The Offer Price was HK$5.89/share, a 7.1% premium to last close. 
The Composite Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1122/2019112200005.pdf" target="_blank" rel="noopener">despatched</a> on the 22 November 2019. The IFA (Somerley)  concluded the Offer Price was fair and reasonable (which just goes to show that IFAs can be quite useless, given the Offer Price 12 months later). The Offer became unconditional on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1212/2019121201125.pdf" target="_blank" rel="noopener">12 December</a>.
The Offer <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1227/2019122701263.pdf" target="_blank" rel="noopener">closed</a> on the 27 December 2019 with the free float of 22.06%, breaching the public float requirement under Rule 8.08(1)(a) of the Listing Rules. The float was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0313/2020031300960.pdf" target="_blank" rel="noopener">restored</a> (25.1%) on the 13 March this year after TCLH placed out some shares.
<h3>The New News</h3>
After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1030/2020103000210.pdf" target="_blank" rel="noopener">suspended</a> ahead of trading on the 30 October "in relation to the Code on Takeovers and Mergers", that evening TEH <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1030/2020103002084.pdf" target="_blank" rel="noopener">announced</a> a proposed privatisation from TCLH by way of a Scheme.
The Scheme consideration is HK$12/share, a 19% premium to last close and 28% above the 30-day average close. The price will NOT be increased. No dividends have been declared, nor are any expected to be declared.
Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.531% of shares out. The headcount applies as TEH is Cayman incorporated.
Under a rollover agreement., shareholders (compromising senior management of TEH)  holding 11.81% of share out - and 30.5% of the total Scheme shares - have entered into an agreement affording these shareholders a subscription into an unlisted backend company. 
The rollover agreement requires independent shareholder approval, by way of a simple majority vote, and the IFA concluding the agreement is fair and reasonable.
The headline premium to last close appears okay. But TEH spiked 55% on the 13 August, on decent volume, to close coincidentally at $12/share.
There looks like enough here for the deal to get up.
More below the fold.

Back on the 2 October 2019, via a restructuring agreement, T.C.L. Industries Holdings (H.K.) Limited. (TCLH), a wholly-owned subsidiary of TCL Industries (TCLI) acquired all of the issued capital in the "Divested Segment", a segment spun-off from  TCL Corp (A) (000100 CH). As this Segment held 48.68% of issued shares in Tonly Electronics Holdings (1249 HK) (TEH), TCLH was obligated to make a conditional MGO for all other shares not held. The Offer Price was HK$5.89/share, a 7.1% premium to last close. 
The Composite Document was despatched on the 22 November 2019. The IFA (Somerley)  concluded the Offer Price was fair and reasonable (which just goes to show that IFAs can be quite useless, given the Offer Price 12 months later). The Offer became unconditional on the 12 December.
The Offer closed on the 27 December 2019 with the free float of 22.06%, breaching the public float requirement under Rule 8.08(1)(a) of the Listing Rules. The float was restored (25.1%) on the 13 March this year after TCLH placed out some shares.
The New News
After shares were suspended ahead of trading on the 30 October "in relation to the Code on Takeovers and Mergers", that evening TEH announced a proposed privatisation from TCLH by way of a Scheme.
The Scheme consideration is HK$12/share, a 19% premium to last close and 28% above the 30-day average close. The price will NOT be increased. No dividends have been declared, nor are any expected to be declared.
Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.531% of shares out. The headcount applies as TEH is Cayman incorporated.
Under a rollover agreement., shareholders (compromising senior management of TEH)  holding 11.81% of share out - and 30.5% of the total Scheme shares - have entered into an agreement affording these shareholders a subscription into an unlisted backend company. 
The rollover agreement requires independent shareholder approval, by way of a simple majority vote, and the IFA concluding the agreement is fair and reasonable.
The headline premium to last close appears okay. But TEH spiked 55% on the 13 August, on decent volume, to close coincidentally at $12/share.
There looks like enough here for the deal to get up.
More below the fold.

Tonly Electronics (1249 HK): Fair Scheme Offer

China

TCL Corporation manufactures electronic products, telecommunication products, home appliances, and electrical products.  The Company's products include televisions, mobile phones, personal computers, air-conditioners, washing machines, refrigerators, and other related products.

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TCL Corp (A) (000100 CH)

Northbound Flows (Jun 30th): Moutai, Wuliangye, China Tourism, CATL, Longi Green

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlight flows for Midea, Kunlun Tech, Tcl Technology Group, Moutai,...

Ke Yan, CFA, FRM

Northbound Flows (Jun 2nd): Moutai, Wuliangye, China Tourism, Ping An Insurance, Sany Heavy

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlight flows for Moutai, Wuliangye, China Tourism, Ping An...

Ke Yan, CFA, FRM

MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Signs continue to point to a topping $DXY, and a declining DXY has historically resulted in EM outperformance (vs. $EAFE). Many ideas in China/Hong...

Vermilion Research

Northbound Flows (Mar 24th): Boe, CATL, Moutai, Shenzhen Inovance, Luxshare

We analyzed northbound Shanghai/Shenzhen connect flows in the past week and highlight flows for Boe, CATL, Moutai, Shenzhen Inovance, Luxshare.

Ke Yan, CFA, FRM

Tonly Electronics (1249 HK): Fair Scheme Offer

This time the TCL Group means business with what appears to be a fair offer for Tonly (1249 HK) by way of a Scheme at HK$12/share.

David Blennerhassett

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