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

<a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> aims to raise around US$10bn via a combination of an equity placement and convertible bond issuance. Along with the US$6.6bn top-up placement, its largest shareholder <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> will chip in another US$400m. In this note, we will run the deal through our framework and talk about deal dynamics.

Meituan (3690 HK) aims to raise around US$10bn via a combination of an equity placement and convertible bond issuance. Along with the US$6.6bn top-up placement, its largest shareholder Tencent Holdings (700 HK) will chip in another US$400m. In this note, we will run the deal through our framework and talk about deal dynamics.

Meituan Placement - Might Not Do a Tencent but Low-End Looks Enticing

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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

Hong Kong SFC reported aggregate short position as of Apr 9. The aggregate short value for equities decreased by $1,745m (-2.5%) WoW and decreased by $806m (-1.1%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($8,423m, -3.6% WoW), Tencent Holdings Limited/700 HK($1,816m, -46.8% WoW), Zhongsheng Group Holdings Limited/881 HK($1,536m, -4.5% WoW), Byd Company Limited/1211 HK($1,417m, -1.7% WoW), Meituan/3690 HK($1,203m, +43.5% WoW).<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/201/454/original/Hong_Kong_Market_Short_Position_Value_%28line%29_and_1W_Changes_%28bar%29_%28%24m%292021-04-19+10_38_07.png?1618799957" class="editor-image img-responsive" data-smartkarma-image-id="201454"></figure></section>

Hong Kong SFC reported aggregate short position as of Apr 9. The aggregate short value for equities decreased by $1,745m (-2.5%) WoW and decreased by $806m (-1.1%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($8,423m, -3.6% WoW), Tencent Holdings Limited/700 HK($1,816m, -46.8% WoW), Zhongsheng Group Holdings Limited/881 HK($1,536m, -4.5% WoW), Byd Company Limited/1211 HK($1,417m, -1.7% WoW), Meituan/3690 HK($1,203m, +43.5% WoW).

HK Short Interest: Meituan Shorts Spiked 49%

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine. Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively.  We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion. In this insight, we will highlight inflows into <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/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing International Corp (SMIC) (981 HK)</a>, <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a>, <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, as well as <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.  Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively.   We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.  In this insight, we will highlight inflows into Tencent Holdings (700 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Li Ning Co Ltd (2331 HK), Anta Sports Products (2020 HK), as well as Meituan (3690 HK).

Hong Kong Connect Flows: Tencent Led the Inflows

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul>
<li>On April 15, Tencent began to reorganize its PCG (Platform and Content Group).</li>
<li>Tencent merged Tencent Video and WeSee, but has not merged Tencent News and Kandian so far.</li>
<li>We believe this is a sequel to the reorganization in 2018.</li>
<li>We also believe this further reorganization will help improve margins in 2022.</li>
</ul>


On April 15, Tencent began to reorganize its PCG (Platform and Content Group).
Tencent merged Tencent Video and WeSee, but has not merged Tencent News and Kandian so far.
We believe this is a sequel to the reorganization in 2018.
We also believe this further reorganization will help improve margins in 2022.


Tencent (700 HK): Further Reorganization as Sequel to 2018

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*One Reorganization Down, One More To Go: Tencent Holdings (700.HK) [Tencent] announced a new round of organizational and employee adjustments in its Platform and Content Group (PCG) - the largest reshuffle since it began in 2018. With Alibaba Holdings (BABA] agreeing to form a financial holding company. Tencent cannot be far behind; and  *Earnings To Decline, Capital Requirements To Increase: For Tencent, WeChat Pay and the broader lending/deposit taking business are likely to be reined-in. At CNY 38.5 bn, FinTech represents a growing 28.8% of revenue – and are key component of Tencent’s current and future results.  No matter what spin that Tencent wants to place on its other businesses, an FHC represents significant downside risks. Earnings will compress, as capital requirements increase.

*One Reorganization Down, One More To Go: Tencent Holdings (700.HK) [Tencent] announced a new round of organizational and employee adjustments in its Platform and Content Group (PCG) - the largest reshuffle since it began in 2018. With Alibaba Holdings (BABA] agreeing to form a financial holding company. Tencent cannot be far behind; and  *Earnings To Decline, Capital Requirements To Increase: For Tencent, WeChat Pay and the broader lending/deposit taking business are likely to be reined-in. At CNY 38.5 bn, FinTech represents a growing 28.8% of revenue – and are key component of Tencent’s current and future results.  No matter what spin that Tencent wants to place on its other businesses, an FHC represents significant downside risks. Earnings will compress, as capital requirements increase.

Tencent Holdings – FHC Restructure On Its Way

China

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

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Tencent Holdings (ADR) (TCEHY US)

Meituan Placement - Might Not Do a Tencent but Low-End Looks Enticing

Meituan aims to raise around US$10bn via a combination of an equity placement and convertible bond issuance. In this note, we will run the deal...

Sumeet Singh

HK Short Interest: Meituan Shorts Spiked 49%

Short interests (measured by shares) of Meituan increased by 48% while shorts on Tencent covered by 44% over one week time.

Ke Yan, CFA, FRM

Hong Kong Connect Flows: Tencent Led the Inflows

We note that there has been weekly net inflows into Tencent in the past five weeks. Last 30 day inflows into Tencent amounted to USD 2.4bn.

Ke Yan, CFA, FRM

Tencent (700 HK): Further Reorganization as Sequel to 2018

Tencent began to reorganize its PCG (Platform and Content Group) We believe this is a sequel to the reorganization in 2018. We also believe this...

Ming Lu

Tencent Holdings – FHC Restructure On Its Way

TENCENT HOLDINGS: Tencent announced a reorganization to its Platform and Content Group (PCG). With Alibaba Holdings (BABA] agreeing to form a...

Thomas J. Monaco

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