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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

EDP - Energias de Portugal SA / Event-Driven

The changes to the S&amp;P Global Clean Energy Index have been announced. There are 52 additions to the index to take the number of index constituents up to 82. The changes are effective after the close of trading on 16 April.The 52 additions and capping changes will result in a one-way turnover of close to 55% and will require the ETFs tracking the index to trade US$12bn to rebalance their portfolios.The largest buying impact in terms of ADV to trade will be on <a href="https://www.smartkarma.com/entities/edp-energias-de-portugal-sa" target="_blank" data-smartkarma-citation="entities:21362:1" rel="noopener">Edp - Energias De Portugal Sa (EDP PL)</a>, <a href="https://www.smartkarma.com/entities/sse-plc" target="_blank" data-smartkarma-citation="entities:22163:1" rel="noopener">SSE PLC (SSE LN)</a>, <a href="https://www.smartkarma.com/entities/northland-power-inc" target="_blank" data-smartkarma-citation="entities:25480:1" rel="noopener">Northland Power (NPI CN)</a>, <a href="https://www.smartkarma.com/entities/enel-americas-sa-c3a67f8a-ad13-45ff-a676-cbc513b8c458" target="_blank" data-smartkarma-citation="entities:25965:1" rel="noopener">Enel Americas SA (ENIA US)</a>, <a href="https://www.smartkarma.com/entities/drax-group-plc" target="_blank" data-smartkarma-citation="entities:21911:1" rel="noopener">Drax Group PLC (DRX LN)</a>, <a href="https://www.smartkarma.com/entities/meyer-burger-technology-ag" target="_blank" data-smartkarma-citation="entities:25013:1" rel="noopener">Meyer Burger Technology Ag (MBTN SW)</a> and <a href="https://www.smartkarma.com/entities/centrais-eletricas-br-sp-adr" target="_blank" data-smartkarma-citation="entities:28638:1" rel="noopener">Centrais Eletricas Br-Sp Adr (EBR US)</a>.The largest selling impact will be on <a href="https://www.smartkarma.com/entities/meridian-ener-partly-paid-sh" target="_blank" data-smartkarma-citation="entities:4327:1" rel="noopener">Meridian Energy (MEL NZ)</a>, <a href="https://www.smartkarma.com/entities/contact-energy-ltd" target="_blank" data-smartkarma-citation="entities:13136:1" rel="noopener">Contact Energy (CEN NZ)</a>, <a href="https://www.smartkarma.com/entities/verbund-ag" target="_blank" data-smartkarma-citation="entities:22563:1" rel="noopener">Verbund AG (VER AV)</a>, <a href="https://www.smartkarma.com/entities/innergex-renewable-energy-inc" target="_blank" data-smartkarma-citation="entities:25479:1" rel="noopener">Innergex Renewable Energy (INE CN)</a>, <a href="https://www.smartkarma.com/entities/cia-energetica-de-spon-adr" target="_blank" data-smartkarma-citation="entities:28644:1" rel="noopener">Cia Energetica De-Spon Adr (CIG US)</a>, <a href="https://www.smartkarma.com/entities/boralex-inc" target="_blank" data-smartkarma-citation="entities:25478:1" rel="noopener">Boralex Inc (BLX CN)</a> and <a href="https://www.smartkarma.com/entities/scatec-solar-asa" target="_blank" data-smartkarma-citation="entities:25120:1" rel="noopener">Scatec Solar ASA (SSO NO)</a>.Among the current index constituents, there will be buying on <a href="https://www.smartkarma.com/entities/orsted-a-s" target="_blank" data-smartkarma-citation="entities:24765:1" rel="noopener">Orsted A/S (ORSTED DC)</a> and <a href="https://www.smartkarma.com/entities/vestas-wind-systems-a-s" target="_blank" data-smartkarma-citation="entities:22524:1" rel="noopener">Vestas Wind Systems A/S (VWS DC)</a>.We recommend buying the surprise inclusions and unwinding the positions by implementation date. A lot of the stocks that will have a reduction in index weight have been sold off over the last few months and the active positions will be covered leading up to implementation date - we recommend buying these stocks in the days leading up to implementation date since the stocks could rally once the overhang of passive selling has been removed.

The changes to the S&amp;P Global Clean Energy Index have been announced. There are 52 additions to the index to take the number of index constituents up to 82. The changes are effective after the close of trading on 16 April.The 52 additions and capping changes will result in a one-way turnover of close to 55% and will require the ETFs tracking the index to trade US$12bn to rebalance their portfolios.The largest buying impact in terms of ADV to trade will be on Edp - Energias De Portugal Sa (EDP PL), SSE PLC (SSE LN), Northland Power (NPI CN), Enel Americas SA (ENIA US), Drax Group PLC (DRX LN), Meyer Burger Technology Ag (MBTN SW) and Centrais Eletricas Br-Sp Adr (EBR US).The largest selling impact will be on Meridian Energy (MEL NZ), Contact Energy (CEN NZ), Verbund AG (VER AV), Innergex Renewable Energy (INE CN), Cia Energetica De-Spon Adr (CIG US), Boralex Inc (BLX CN) and Scatec Solar ASA (SSO NO).Among the current index constituents, there will be buying on Orsted A/S (ORSTED DC) and Vestas Wind Systems A/S (VWS DC).We recommend buying the surprise inclusions and unwinding the positions by implementation date. A lot of the stocks that will have a reduction in index weight have been sold off over the last few months and the active positions will be covered leading up to implementation date - we recommend buying these stocks in the days leading up to implementation date since the stocks could rally once the overhang of passive selling has been removed.

Global Clean Energy Index: 52 Adds, 55% Index Turnover, US$12bn to Trade

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Longyuan Power Group / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power Group Corp (916 HK)</a> achieved an impressive 39.4% YoY growth in wind power generation in 2M21 on a low base a year ago. However, even as we compared 2M21 generation with 2M19, the CAGR still reach a resilient 18.4%. This suggested that the low base effect is not a key reason for the surge in generation, but instead, the underlying demand is resilient. Longyuan has taken a beating on the back of the concerns on future tariff, on-grid capacity and profitability if the proposal in the consultation paper released by the National Energy Association is fully implemented. However, with its valuation now back to the end-2020 level (10x PER), we see a lot of uncertainties have been discounted. With a 34% plunge in share price in just 5 trading days and 49% from its peak, the market has already turned from overly bullish to overly bearish, in our view.

China Longyuan Power Group Corp (916 HK) achieved an impressive 39.4% YoY growth in wind power generation in 2M21 on a low base a year ago. However, even as we compared 2M21 generation with 2M19, the CAGR still reach a resilient 18.4%. This suggested that the low base effect is not a key reason for the surge in generation, but instead, the underlying demand is resilient. Longyuan has taken a beating on the back of the concerns on future tariff, on-grid capacity and profitability if the proposal in the consultation paper released by the National Energy Association is fully implemented. However, with its valuation now back to the end-2020 level (10x PER), we see a lot of uncertainties have been discounted. With a 34% plunge in share price in just 5 trading days and 49% from its peak, the market has already turned from overly bullish to overly bearish, in our view. 

China Longyuan (916 HK): Things Aren't that Bad

<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power Group Corp (916 HK)</a> has a very strong turnout in Jan as its overall power generation was up by 47.5% YoY, with wind generation (+50.8%) being the most important driver. We do not think that a low base and distortion from timing of the Chinese New Year are the reasons for the impressive growth, and we see underlying momentum very solid. While Jan is a record-breaking month for generation, we believe the peak generation in this year is yet to come.Longyuan has an attractive long term story, supported by factors including: 1.) beneficiary of government support, 2.) access to the A-share market, 3.) acquisition of Pingzhuang renewable assets, and 4.) increased potential from parent injection. Share price has rallied 59.5% YTD but valuations are still not too stretched. We believe any pull-back is opportunity for taking position in this encouraging long-term story of renewable energy development.

China Longyuan Power Group Corp (916 HK) has a very strong turnout in Jan as its overall power generation was up by 47.5% YoY, with wind generation (+50.8%) being the most important driver. We do not think that a low base and distortion from timing of the Chinese New Year are the reasons for the impressive growth, and we see underlying momentum very solid. While Jan is a record-breaking month for generation, we believe the peak generation in this year is yet to come.Longyuan has an attractive long term story, supported by factors including: 1.) beneficiary of government support, 2.) access to the A-share market, 3.) acquisition of Pingzhuang renewable assets, and 4.) increased potential from parent injection. Share price has rallied 59.5% YTD but valuations are still not too stretched. We believe any pull-back is opportunity for taking position in this encouraging long-term story of renewable energy development. 

China Longyuan (916 HK): Record-Breaking Jan, and Strategically Positioned for the Long Term

China Everbright Environment Group / Equity Bottom-Up

China Everbright Environment Group (257 HK)

We believe there will be more positive policy measures to support the waste treatment industry, especially after China's "Two Meetings" to be held in Mar and <a href="https://www.smartkarma.com/entities/china-everbright-international-limited" target="_blank" data-smartkarma-citation="entities:15946:1" rel="noopener">China Everbright Environment (257 HK)</a> (CEE) is in a good position to benefit. Although its share price has increased by 12.9% YTD, with an undemanding PER of 4.1x for FY21F, there is still more room to go.CEE's project momentum has stayed encouraging, with over Rmb1.5bn of new waste and water treatment projects secured over the last few months. The recent grant of approval to its subsidiary <a href="https://www.smartkarma.com/entities/china-everbright-greentech-0377b31c-5401-466f-987e-9a176b05fb52" target="_blank" data-smartkarma-citation="entities:24085:1" rel="noopener">China Everbright Greentech (1257 HK)</a> to issue asset-backed notes (ABN) represents another major step towards asset securitisation. We also see CEE a prime beneficiary of public infrastructure REIT, which when issues, will both improve its valuation and capital structure.

We believe there will be more positive policy measures to support the waste treatment industry, especially after China's "Two Meetings" to be held in Mar and China Everbright Environment (257 HK) (CEE) is in a good position to benefit. Although its share price has increased by 12.9% YTD, with an undemanding PER of 4.1x for FY21F, there is still more room to go.CEE's project momentum has stayed encouraging, with over Rmb1.5bn of new waste and water treatment projects secured over the last few months. The recent grant of approval to its subsidiary China Everbright Greentech (1257 HK) to issue asset-backed notes (ABN) represents another major step towards asset securitisation. We also see CEE a prime beneficiary of public infrastructure REIT, which when issues, will both improve its valuation and capital structure.  

China Everbright Environment (257 HK): Compelling Story yet to Fully Appreciate

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Equity Capital Markets

Hansoh Pharmaceutical / Equity Capital Markets

At the beginning of this year, we at Aequitas Research wrote on IPO analytics of deals across Asia-Pacific from 2016 to 2018. If you have not read our in-depth reports, you can find the two-part report in the following links:
<ul>
<li><a href="https://www.smartkarma.com/insights/ipo-analytics-cut-your-losses-and-let-your-profits-run-holds-true-for-ipos" target="_blank" rel="noopener">IPO Analytics: Cut Your Losses and Let Your Profits Run, Holds True for IPOs</a></li>
<li><a href="https://www.smartkarma.com/insights/ipo-analytics-corporate-governance-alpha-generator-shortlist-of-bookrunners-to-avoid-keep-happy" target="_blank" rel="noopener">IPO Analytics: Corporate Governance - Alpha Generator, Shortlist of Bookrunners to Avoid/​Keep Happy</a></li>
</ul>
Over the past few years, we have also researched the IPO performance for the Hong Kong market, which can be found in the following links:
<ul>
<li><a href="https://www.smartkarma.com/insights/5-key-charts-to-wrap-up-2015-hk-ipo-broker-sector-and-retail-analytics" target="_blank" rel="noopener">5 Key Charts to Wrap-Up 2015 HK IPO - Broker, Sector, and Retail Analytics</a></li>
<li><a href="https://www.smartkarma.com/insights/broker-sector-and-retail-analytics-of-2016-hk-ipo" target="_blank" rel="noopener">Broker, Sector and Retail Analytics of 2016 HK IPOs</a></li>
<li><a href="https://www.smartkarma.com/insights/2017-hk-ipos-analytics-good-deals-don-t-need-cornerstones" target="_blank" rel="noopener">2017 HK IPOs Analytics: Good Deals Don’t Need Cornerstones</a></li>
</ul>
We have written a short note on the statistic by sectors <a href="https://www.smartkarma.com/insights/hk-ipo-analytics-1h2019-healthcare-and-consumer-discretionary-stand-out" target="_blank" rel="noopener">HK IPO Analytics 1H2019: Healthcare and Consumer Discretionary Stand Out</a>. In this insight, we will do a wrap up of performance for Hong Kong IPO listed in the first half of the year by main brokers running the deal, namely sponsors. Our research suggests that while the deals sponsored by MS did well in 1H2019, deals sponsored by CICC didn't usually perform well immediately after listing. Deals sponsored by GS, BAML and BNP were at the bottom in terms of performance.

At the beginning of this year, we at Aequitas Research wrote on IPO analytics of deals across Asia-Pacific from 2016 to 2018. If you have not read our in-depth reports, you can find the two-part report in the following links:

IPO Analytics: Cut Your Losses and Let Your Profits Run, Holds True for IPOs
IPO Analytics: Corporate Governance - Alpha Generator, Shortlist of Bookrunners to Avoid/​Keep Happy

Over the past few years, we have also researched the IPO performance for the Hong Kong market, which can be found in the following links:

5 Key Charts to Wrap-Up 2015 HK IPO - Broker, Sector, and Retail Analytics
Broker, Sector and Retail Analytics of 2016 HK IPOs
2017 HK IPOs Analytics: Good Deals Don’t Need Cornerstones

We have written a short note on the statistic by sectors HK IPO Analytics 1H2019: Healthcare and Consumer Discretionary Stand Out. In this insight, we will do a wrap up of performance for Hong Kong IPO listed in the first half of the year by main brokers running the deal, namely sponsors. Our research suggests that while the deals sponsored by MS did well in 1H2019, deals sponsored by CICC didn't usually perform well immediately after listing. Deals sponsored by GS, BAML and BNP were at the bottom in terms of performance.

HK IPO Analytics 1H2019: MS and CICC Stand Out

China

Xinyi Energy is an investment holding company primarily engaged in the ownership, operation, and management of solar farms in the People's Republic of China. It generates revenue by selling electricity to state-owned grid enterprises and offers intelligent operation platforms including big data, video surveillance, and drone inspection. The company was incorporated in 2015 and is headquartered in Wuhu, People's Republic of China.

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Xinyi Energy (3868 HK)

Global Clean Energy Index: 52 Adds, 55% Index Turnover, US$12bn to Trade

There are 52 additions to the S&P Global Clean Energy Index. One-way turnover is nearly 55% and the ETF benchmarked to the index will need to trade...

Brian Freitas

China Longyuan (916 HK): Things Aren't that Bad

Longyuan has achieved good generation in 2M21, suggesting excellent underlying demand. The recent weakness in share price has largely discounted...

Osbert Tang, CFA

China Longyuan (916 HK): Record-Breaking Jan, and Strategically Positioned for the Long Term

China Longyuan has a strong Jan generation with 50.8% YoY growth in wind generation. We expect it to benefit from China's clean energy initiatives...

Osbert Tang, CFA

China Everbright Environment (257 HK): Compelling Story yet to Fully Appreciate

China Everbright Enviornment continued to demonstrate strong capability to secure new projects and it will also benefit hugely from the...

Osbert Tang, CFA

HK IPO Analytics 1H2019: MS and CICC Stand Out

At the beginning of this year, we at Aequitas Research wrote on IPO analytics of deals across Asia-Pacific from 2016 to 2018. If you have not read...

Ke Yan, CFA, FRM

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