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

<ul>
<li>There have only been 7 new listings on the <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> in the third quarter of the year so far.</li>
<li>Of those stocks, only <a href="https://www.smartkarma.com/entities/keep-inc" target="_blank" data-smartkarma-citation="entities:35947:1" rel="noopener">Keep Inc (3650 HK)</a> has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.</li>
<li>
<a href="https://www.smartkarma.com/entities/keep-inc" target="_blank" data-smartkarma-citation="entities:35947:1" rel="noopener">Keep Inc (3650 HK)</a> is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.</li>
</ul>


There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.

Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.


HSCI Index Rebalance Preview: Low Probability Add in December

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Longyuan Power Group / Equity Bottom-Up

<ul>
<li>
<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 (916 HK)</a> is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.</li>
<li>Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.</li>
<li>There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.</li>
</ul>



China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.


China Longyuan (916 HK): Value Has Definitely Emerged

China Power International Development / Equity Bottom-Up

China Power International Development (2380 HK)

<ul>
<li>The Rmb10.8bn acquisition of clean energy assets from parent by <a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> is positive in raising its clean energy proportion to over 70% of total capacity.</li>
<li>The drop in share price reflects concerns about elevation of gearing and the need for potential equity funding. However, even all equity financing scenario will only dilute EPS by 1%.</li>
<li>We think its earnings quality will improve, balance sheet will be enhanced and profitability will be raised. Its 1H23 positive profit alert also showed a recovery in operational performance. </li>
</ul>


The Rmb10.8bn acquisition of clean energy assets from parent by China Power International (2380 HK) is positive in raising its clean energy proportion to over 70% of total capacity.
The drop in share price reflects concerns about elevation of gearing and the need for potential equity funding. However, even all equity financing scenario will only dilute EPS by 1%.
We think its earnings quality will improve, balance sheet will be enhanced and profitability will be raised. Its 1H23 positive profit alert also showed a recovery in operational performance. 


China Power International (2380 HK): A Major Move to Raise Clean Energy Exposure

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.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 9th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We estimate the outflows to be USD 345 million and highlight flows for Tencent, China Mobile, CCB.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 9th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We estimate the outflows to be USD 345 million and highlight flows for Tencent, China Mobile, CCB.


Hong Kong Connect Flows (Jun 9th): Tencent, China Mobile, CCB

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd-49b9d808-e8c9-4049-a85a-5380de9f21ad" target="_blank" data-smartkarma-citation="entities:35558:1" rel="noopener"></a>YTD, <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 (916 HK)</a> has seen its share price weak, but we believe focus should not be on the poor FY22 result and the moderate 1Q23 generation growth.</li>
<li>Based on 5.5-6.5GW planned capacity expansion in FY23, this will mean a solid growth of 17.7-20.9% YoY. Coupled with efficiency improvement, we expect a sharp rebound in FY23 profit.</li>
<li>With impairment on Ukraine mostly made and reversal of exchange and trading losses, there will be a big swing in bottom line. We welcome the improvement in cash flow too.</li>
</ul>



YTD, China Longyuan Power (916 HK) has seen its share price weak, but we believe focus should not be on the poor FY22 result and the moderate 1Q23 generation growth.
Based on 5.5-6.5GW planned capacity expansion in FY23, this will mean a solid growth of 17.7-20.9% YoY. Coupled with efficiency improvement, we expect a sharp rebound in FY23 profit.
With impairment on Ukraine mostly made and reversal of exchange and trading losses, there will be a big swing in bottom line. We welcome the improvement in cash flow too.


China Longyuan (916 HK): We Stay on the Bull Camp

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Xinyi Energy (3868 HK)

HSCI Index Rebalance Preview: Low Probability Add in December

Only Keep (3650 HK) had a chance of being added to the HSCI in Dec. Coming in right at the cutoff, price moves over the next two weeks are...

Brian Freitas

China Longyuan (916 HK): Value Has Definitely Emerged

Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...

Osbert Tang, CFA

China Power International (2380 HK): A Major Move to Raise Clean Energy Exposure

CPI's Rmb10.8bn acquisition from its parent will make clean energy reach 70% of total capacity. The move will enhance earnings by 10% and an all...

Osbert Tang, CFA

Hong Kong Connect Flows (Jun 9th): Tencent, China Mobile, CCB

We analyzed the Hong Kong Connect Scheme for last week and highlight flows for Tencent, China Mobile, and China Construction Bank.

Ke Yan, CFA, FRM

China Longyuan (916 HK): We Stay on the Bull Camp

Capacity expansion of 17.7-20.9% YoY, coupled with efficiency improvement will mean sharp rebound in FY23 profit. Reduction in impairment and...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HSCI Index Rebalance Preview: Low Probability Add in December

Only Keep (3650 HK) had a chance of being added to the HSCI in Dec. Coming in right at the cutoff, price moves over the next two weeks are...

Brian Freitas

China Longyuan (916 HK): Value Has Definitely Emerged

​Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...

Osbert Tang, CFA

China Power International (2380 HK): A Major Move to Raise Clean Energy Exposure

CPI's Rmb10.8bn acquisition from its parent will make clean energy reach 70% of total capacity. The move will enhance earnings by 10% and an all...

Osbert Tang, CFA

Hong Kong Connect Flows (Jun 9th): Tencent, China Mobile, CCB

We analyzed the Hong Kong Connect Scheme for last week and highlight flows for Tencent, China Mobile, and China Construction Bank.

Ke Yan, CFA, FRM

China Longyuan (916 HK): We Stay on the Bull Camp

Capacity expansion of 17.7-20.9% YoY, coupled with efficiency improvement will mean sharp rebound in FY23 profit. Reduction in impairment and...

Osbert Tang, CFA

Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...