Equity Analyst, Event-driven, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>The index changes and indicative weights for the June 2024 index rebal event will be announced after market close on Friday 17th May 2024.</li>
<li>In this insight, we take a look at the potential index changes and our latest flow expectations.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
The index changes and indicative weights for the June 2024 index rebal event will be announced after market close on Friday 17th May 2024.
In this insight, we take a look at the potential index changes and our latest flow expectations.


Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Surging by 19.4% since the trough on 19-Apr, the HSI is now only 3.2% shy away from the psychological resistance of 20,000. We look at some potential profit-taking names. </li>
<li>Heavy-Weights like <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> are among the best-performing ones YTD and since the trough. Hence they are more exposed, particularly for Meituan.</li>
<li>
<a href="https://www.smartkarma.com/entities/haidilao-international-holding" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao International Holding (6862 HK)</a> and <a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> are another two on the list. Their valuations are no longer inexpensive relative to 3-year earnings CAGR.</li>
</ul>


Surging by 19.4% since the trough on 19-Apr, the HSI is now only 3.2% shy away from the psychological resistance of 20,000. We look at some potential profit-taking names. 
Heavy-Weights like Meituan (3690 HK) and Tencent (700 HK) are among the best-performing ones YTD and since the trough. Hence they are more exposed, particularly for Meituan.

Haidilao International Holding (6862 HK) and ENN Energy (2688 HK) are another two on the list. Their valuations are no longer inexpensive relative to 3-year earnings CAGR.


HK Strategy: To Sell or Not to Sell, that Is the Question

Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

Technical Analysis

Xinyi Solar Holdings / Technical Analysis

<ul><li>The main drivers for Hong Kong stock rallies are short covering, buybacks, and China government real estate support measures announcements.</li><li>Hang Seng Index and most of its constituents continue to read like bear porn. Without a meaningful reversal/impulse rally, it is hard to call for a reversal.</li><li>I hear and agree the case is so bad that it must be a buy signal. The sentiment is precious, BUT it needs a price action supporting the exhaustion thesis.</li></ul>

The main drivers for Hong Kong stock rallies are short covering, buybacks, and China government real estate support measures announcements.Hang Seng Index and most of its constituents continue to read like bear porn. Without a meaningful reversal/impulse rally, it is hard to call for a reversal.I hear and agree the case is so bad that it must be a buy signal. The sentiment is precious, BUT it needs a price action supporting the exhaustion thesis.

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>The medium and long-term prospects of the solar glass market remain promising amid the global transition towards green energy, falling costs, supportive government policies, and technological advancement. </li>
<li>The short-term revenue growth outlook doesn't look optimistic given declining ASPs since 2Q21 which should result in slowing revenue growth, declining margins, and contracting earnings off a high base.</li>
<li>Xinyi Solar is also trading at premium valuation levels, leaving no margin-of-safety, especially considering its poor historical free cash flow generation track record and working capital concerns.</li>
</ul>


The medium and long-term prospects of the solar glass market remain promising amid the global transition towards green energy, falling costs, supportive government policies, and technological advancement. 
The short-term revenue growth outlook doesn't look optimistic given declining ASPs since 2Q21 which should result in slowing revenue growth, declining margins, and contracting earnings off a high base.
Xinyi Solar is also trading at premium valuation levels, leaving no margin-of-safety, especially considering its poor historical free cash flow generation track record and working capital concerns.


Xinyi Solar: Short-Term Headwinds, Cash Flow Concerns, and a Premium Valuation

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

Zijin Mining Group Co Ltd H / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> is a potential deletion in June while <a href="https://www.smartkarma.com/entities/zijin-mining-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:6358:1" rel="noopener">Zijin Mining Group Co Ltd H (2899 HK)</a> is a potential inclusion.</li>
<li>For yet another review, <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene (6160 HK)</a> is a close add with the Velocity Test determining if the stock will be added to the index or not.</li>
<li>Estimated one-way turnover at the rebalance is 2.95% resulting in a one-way trade of HK$1.6bn. Official capping will be based off the close of trading on 4 June.</li>
</ul>



SenseTime Group (20 HK) is a potential deletion in June while Zijin Mining Group Co Ltd H (2899 HK) is a potential inclusion.
For yet another review, BeiGene (6160 HK) is a close add with the Velocity Test determining if the stock will be added to the index or not.
Estimated one-way turnover at the rebalance is 2.95% resulting in a one-way trade of HK$1.6bn. Official capping will be based off the close of trading on 4 June.


HSCEI Index Rebalance Preview: One Change or Two in June?

China

Xinyi Solar Holdings Limited manufactures solar glass.  The Company produces ultra-clear photovoltaic raw glass and ultra-clear photovoltaic processed glass. Xinyi Solar Holdings offers its products to major solar product component manufactures both domestically and internationally.

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Xinyi Solar Holdings (968 HK)

Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow

SenseTime Group (20 HK) and Xinyi Solar Holdings (968 HK) are Expected DELs while Zijin Mining Group Co Ltd H (2899 HK) and PICC Property &...

Janaghan Jeyakumar, CFA

HK Strategy: To Sell or Not to Sell, that Is the Question

HSI surges by 19.4% nearing the 20,000 resistance, potential profit-taking names include Meituan, Tencent, Haidilao, and ENN Energy due to strong...

Osbert Tang, CFA

Xinyi Solar, BYD, and Bank of China

The main drivers for Hong Kong stock rallies are short covering, buybacks, and China government real estate support measures announcements.

Untying The Gordian Knot

Xinyi Solar: Short-Term Headwinds, Cash Flow Concerns, and a Premium Valuation

In this insight, I carry out a deep dive analysis into Xinyi Solar, the outlook for the company, upcoming catalysts, and its current valuation...

Wium Malan, CFA

HSCEI Index Rebalance Preview: One Change or Two in June?

Announcement is in 4 trading days. Among the potential deletes, SenseTime has soared while Xinyi Glass has dropped. Zijin Mining, Beigene and PICC...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow

SenseTime Group (20 HK) and Xinyi Solar Holdings (968 HK) are Expected DELs while Zijin Mining Group Co Ltd H (2899 HK) and PICC Property &...

Janaghan Jeyakumar, CFA

HK Strategy: To Sell or Not to Sell, that Is the Question

​HSI surges by 19.4% nearing the 20,000 resistance, potential profit-taking names include Meituan, Tencent, Haidilao, and ENN Energy due to strong...

Osbert Tang, CFA

Xinyi Solar, BYD, and Bank of China

The main drivers for Hong Kong stock rallies are short covering, buybacks, and China government real estate support measures announcements.

Untying The Gordian Knot

Xinyi Solar: Short-Term Headwinds, Cash Flow Concerns, and a Premium Valuation

In this insight, I carry out a deep dive analysis into Xinyi Solar, the outlook for the company, upcoming catalysts, and its current valuation...

Wium Malan, CFA

HSCEI Index Rebalance Preview: One Change or Two in June?

Announcement is in 4 trading days. Among the potential deletes, SenseTime has soared while Xinyi Glass has dropped. Zijin Mining, Beigene and PICC...

Brian Freitas

HSI surges by 19.4% nearing the 20,000 resistance, potential profit-taking names include Meituan, Tencent, Haidilao, and ENN Energy due to strong...