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.

Equity Capital Markets

Kuaishou Technology / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Beijing Kuaishou Technology Co Ltd (1496219D CH)</a> is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising <em>Kuaishou Flagship</em>, <em>Kuaishou Express</em> and <em>Kuaishou Concept</em>, which is collectively referred to as the Kuaishou App. Kuaishou is backed by <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> (21.57% shareholder), Morningside Venture Capital, DCM Capital (9.23%), <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> (3.78%), Sequoia Capital (3.20%), Boyu Capital (2.29%) and Temasek (0.86%). In January 2020, Kuaishou raised $3 billion through a Series F round at a valuation of $28 billion, according to press reports. Kuaishou has filed for a Hong Kong IPO to raise up to $5 billion as early as January 2021, according to Reuters. </p><div class="content-highlight"><p>As a key competitor to <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a>’s Douyin, Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive.</p></div>

Beijing Kuaishou Technology Co Ltd (1496219D CH) is the second-largest short video platform by average DAUs (daily active users) in 1H20, according to iResearch. Users access the platform primarily through a family of mobile apps comprising Kuaishou Flagship, Kuaishou Express and Kuaishou Concept, which is collectively referred to as the Kuaishou App. Kuaishou is backed by Tencent Holdings (700 HK) (21.57% shareholder), Morningside Venture Capital, DCM Capital (9.23%), Baidu (BIDU US) (3.78%), Sequoia Capital (3.20%), Boyu Capital (2.29%) and Temasek (0.86%). In January 2020, Kuaishou raised $3 billion through a Series F round at a valuation of $28 billion, according to press reports. Kuaishou has filed for a Hong Kong IPO to raise up to $5 billion as early as January 2021, according to Reuters. As a key competitor to ByteDance (1460967D CH)’s Douyin, Kuaishou offers public market investors the first opportunity to gain direct exposure to China’s short-video platform market. While Kuaishou’s performance over the track record period is distorted due to various factors, we believe that the underlying fundamentals are attractive.

Kuaishou IPO Initiation: Dancing to Its Own Tune

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Back on the 13 September 2019, <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> and Hammer Capital tabled a preliminary non-binding <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-announces-receipt-preliminary-non-binding-going-private" target="_blank" rel="noopener">proposal</a> for <a href="https://www.smartkarma.com/entities/bitauto-holdings-ltd-adr" target="_blank" data-smartkarma-citation="entities:12004:1" rel="noopener">Bitauto Holdings Ltd Adr (BITA US)</a> at US$16/ADS, a ~20.6% premium to last close.</p>
<p>On the 12 June of this year, Bitauto <a href="http://ir.bitauto.com/news-releases/news-release-details/bitauto-enters-definitive-agreement-going-private-transaction" target="_blank" rel="noopener">announced</a> it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in <a href="https://skr.ma/BkDTp" target="_blank" rel="noopener">T<em>encent's Potential Downstream Offer For Yixin</em></a> and <em><a href="https://skr.ma/dCrB8" target="_blank" rel="noopener">Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO</a></em>, the deal was done.</p>
<p>Bitauto shareholders <a href="https://ir.bitauto.com/static-files/e04db9da-f521-4630-9b28-4db300df73a7" target="_blank" rel="noopener">approved</a> the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.</p>
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<p>Bitauto owns ~43.72% of shares out in <a href="https://www.smartkarma.com/entities/yixin-group-ltd" target="_blank" data-smartkarma-citation="entities:26008:1" rel="noopener">Yixin Group Ltd (2858 HK)</a>. Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0615/2020061501449.pdf" target="_blank" rel="noopener">unconditional mandatory general</a> offer (MGO). The downstream Offer will be HK$1.9088/share.</p>
<p><strong>The New News</strong></p>
<p>All conditions to the Bitauto merger were fulfilled on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1106/2020110600073.pdf" target="_blank" rel="noopener">4 November</a>. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.</p>
<p>More below the fold.</p>
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Back on the 13 September 2019, Tencent Holdings (700 HK) and Hammer Capital tabled a preliminary non-binding proposal for Bitauto Holdings Ltd Adr (BITA US) at US$16/ADS, a ~20.6% premium to last close.
On the 12 June of this year, Bitauto announced it had entered into a definitive Merger Agreement with Tencent and Hammer at US$16/ADS. Shareholders holding 55.3% of shares out have agreed to vote in favour of the Merger. The proposal required two-thirds. As discussed in Tencent's Potential Downstream Offer For Yixin and Bitauto (BITA US): Done Deal. Keep An Eye on Yixin's MGO, the deal was done.
Bitauto shareholders approved the merger plan on the 23 October - 88.9% of shares out attended the vote (present or via proxy), 99.9% of which voted for the merger.


Bitauto owns ~43.72% of shares out in Yixin Group Ltd (2858 HK). Tencent holds 20.58%, JD.com 10.73%, and Hammer 1.48%. Once the Bitauto proposal completes, there will be a change in statutory control in Yixin, obligating Tencent and concert parties to make an unconditional mandatory general offer (MGO). The downstream Offer will be HK$1.9088/share.
The New News
All conditions to the Bitauto merger were fulfilled on the 4 November. The MGO is now triggered. The Composite Document is expected to be despatched on or before the 11 November, following which the offer will be open to acceptances.
More below the fold.









Yixin (2858 HK)’s Downstream Unconditional MGO

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>With one week left to go for Hang Seng Indexes (HSIL) to announce the changes to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> constituents as part of the December 2020 index review, we take a look at the performance of the expected inclusions and exclusions and try to formulate some trades.</p><p>HSIL will make the index review announcement after the close of trading on 13 November, with all changes becoming effective after the close of trading on 4 December. There are 15 trading days between the announcement of the index review and the implementation date.</p><p>The suspension of the <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> means that we are back our original expectation of 9 inclusions and 9 exclusions at the upcoming review.</p><div>
<p>We see a high probability of <a href="https://www.smartkarma.com/entities/china-overseas-land-invest" target="_blank" data-smartkarma-citation="entities:419:1" rel="noopener">China Overseas Land &amp; Investment Ltd (688 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, <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>, <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a>, <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing (981 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-real-estate-group-limited" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> being included in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a>, and of <a href="https://www.smartkarma.com/entities/china-taiping-insurance-hldgs-co-ltd" target="_blank" data-smartkarma-citation="entities:489:1" rel="noopener">China Taiping Insurance Hldgs (966 HK)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a>, <a href="https://www.smartkarma.com/entities/china-minsheng-banking-h" target="_blank" data-smartkarma-citation="entities:8983:1" rel="noopener">China Minsheng Banking H (1988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke Co Ltd (H) (2202 HK)</a>, <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a>, <a href="https://www.smartkarma.com/entities/china-citic-bank-corp-ltd-ea6c25fd-4b20-45cb-a4a6-df7a60136f03" target="_blank" data-smartkarma-citation="entities:653:1" rel="noopener">China Citic Bank Corp Ltd H (998 HK)</a> and <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua Energy Co H (1088 HK)</a> being deleted from the index.</p>
<p><a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a> and <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> are very close to the buffer zone and could be included in the index, which would see <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a> and <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> being deleted.</p>
<p>In this Insight, we take a look at the updated short interest, the recent performance on the stocks and stocks that could see positions being built up in the week to announcement.</p>
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With one week left to go for Hang Seng Indexes (HSIL) to announce the changes to the Hang Seng China Enterprises Index (HSCEI INDEX) constituents as part of the December 2020 index review, we take a look at the performance of the expected inclusions and exclusions and try to formulate some trades.HSIL will make the index review announcement after the close of trading on 13 November, with all changes becoming effective after the close of trading on 4 December. There are 15 trading days between the announcement of the index review and the implementation date.The suspension of the Ant Group (6688 HK) means that we are back our original expectation of 9 inclusions and 9 exclusions at the upcoming review.
We see a high probability of China Overseas Land &amp; Investment Ltd (688 HK), JD.com (HK) (9618 HK), Alibaba Health Information Technology (241 HK), Haidilao (6862 HK), China Feihe (6186 HK), Semiconductor Manufacturing (981 HK) and Evergrande Real Estate Group (3333 HK) being included in the Hang Seng China Enterprises Index (HSCEI INDEX), and of China Taiping Insurance Hldgs (966 HK), China Telecom Corp Ltd (H) (728 HK), China Minsheng Banking H (1988 HK), China Vanke Co Ltd (H) (2202 HK), Fosun International (656 HK), China Citic Bank Corp Ltd H (998 HK) and China Shenhua Energy Co H (1088 HK) being deleted from the index.
NetEase (9999 HK) and Hansoh Pharmaceutical (3692 HK) are very close to the buffer zone and could be included in the index, which would see Want Want (151 HK) and PICC Property &amp; Casualty H (2328 HK) being deleted.
In this Insight, we take a look at the updated short interest, the recent performance on the stocks and stocks that could see positions being built up in the week to announcement.


HSCEI Dec20 Index Rebalance Preview: One Week to Announcement

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

<p style="text-align: justify;">Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1-year highs -- a positive risk-on signal. Stocks doing business in <strong>China, India, Taiwan</strong>, and <strong>South Korea </strong>continue to be a major focus when it comes to individual stock recommendations.</p>

Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1-year highs -- a positive risk-on signal. Stocks doing business in China, India, Taiwan, and South Korea continue to be a major focus when it comes to individual stock recommendations.

<p><a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> almost raised US$35bn in the largest IPO in history. While the IPO may eventually proceed, we are unsure of the valuations the company could demand the next time around.</p><p>Following the suspension of listing on the STAR Market by the Shanghai Stock Exchange due to a 'major event', <a href="https://www.smartkarma.com/entities/ant-financial-services-group" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Group (6688 HK)</a> announced the suspension of the H-share listing too. The company also said that the refund of the application monies will be made as soon as possible to Hong Kong retail investors.</p><p>This 'major event' will have knock-on implications for a host of other trades/strategies as well. In this Insight, we take a look at some of them.</p>

Ant Group (6688 HK) almost raised US$35bn in the largest IPO in history. While the IPO may eventually proceed, we are unsure of the valuations the company could demand the next time around.Following the suspension of listing on the STAR Market by the Shanghai Stock Exchange due to a 'major event', Ant Group (6688 HK) announced the suspension of the H-share listing too. The company also said that the refund of the application monies will be made as soon as possible to Hong Kong retail investors.This 'major event' will have knock-on implications for a host of other trades/strategies as well. In this Insight, we take a look at some of them.

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)

Kuaishou IPO Initiation: Dancing to Its Own Tune

Kuaishou is a key competitor to ByteDance’s Douyin. While Kuaishou’s performance is distorted due to various factors, we believe that the...

Arun George

Yixin (2858 HK)’s Downstream Unconditional MGO

With Tencent at the helm, investors are playing the back-end. You effectively have a hard floor (or put) on the stock through to early December....

David Blennerhassett

HSCEI Dec20 Index Rebalance Preview: One Week to Announcement

With 6 trading days to go to the announcement of the HSCEI December index review, we take a look at the performance of the expected inclusions/...

Brian Freitas

Emerging Markets Breaking Out

Emerging markets (EEM-US) are breaking above major $46.30 resistance to hit highs not seen since June 2018. Additionally, RS on EEM-US is near 1...

Vermilion Research

Ant Group: IPO Suspension Implications

With Ant Group suspending the H-share listing following SSE's suspension of the A-share listing, there will be multiple implications for trades and...

Brian Freitas

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