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

Event-Driven

<ul>
<li>The China equity markets have continued to slide and the lower market caps and free float market caps will see a lot of stocks deleted from passive portfolios in February.</li>
<li>We currently estimate selling of around US$1.66bn across 74 stocks listed on the mainland, in HK and the U.S., and that number could increase as markets continue to underperform.</li>
<li>The potential deletes have dropped a lot over the last 4 months and there has been a marked underperformance versus the headline indices over the last month.</li>
</ul>


The China equity markets have continued to slide and the lower market caps and free float market caps will see a lot of stocks deleted from passive portfolios in February.
We currently estimate selling of around US$1.66bn across 74 stocks listed on the mainland, in HK and the U.S., and that number could increase as markets continue to underperform.
The potential deletes have dropped a lot over the last 4 months and there has been a marked underperformance versus the headline indices over the last month.


China: Sliding Market Leads to Passive Selling

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>4Q23 results were inline with management guidance.</li><li>Despite the improved inventory level, we are still conservative on Xtep’s non-running segment, ASP and e-commerce growth in FY24E.</li><li>As a result, we have further cut our NP forecasts by 7-9% in FY24E-25E. But due to its fairly distressed valuation of 8x/ 7x FY23E/ 24E P/E, we maintain BUY.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

4Q23 results were inline with management guidance.Despite the improved inventory level, we are still conservative on Xtep’s non-running segment, ASP and e-commerce growth in FY24E.As a result, we have further cut our NP forecasts by 7-9% in FY24E-25E. But due to its fairly distressed valuation of 8x/ 7x FY23E/ 24E P/E, we maintain BUY.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xtep (1368 HK) – 4Q23 Was Inline but Macro Is Still Challenging

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In <a href="https://www.smartkarma.com/insights/amer-sports-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:124040" rel="noopener">Amer Sports IPO: The Bull Case</a>, we highlighted the key elements of the bull case. In this note, we outline the bear case.</li>
<li>The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.</li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In Amer Sports IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on ball &amp; racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/amer-sports-inc" target="_blank" data-smartkarma-citation="entities:21751:1" rel="noopener">Amer Sports (AS US)</a> is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.</li>
<li>In 2019, a consortium of <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>, FountainVest, Anamered Investments 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> acquired Amer at an EV of €5.5 billion.  </li>
<li>The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. </li>
</ul>



Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.  
The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. 


HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>Amer Sports, 52.7% owned by <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>, has finally filed a US IPO registration. This is positive for Anta Sports as it can realise Amer's value.</li>
<li>Reported losses at Amer have increased YoY for 9M23 due to higher finance cost. But, its gross, operating, and adjusted EBITDA margins have all recorded solid improvements. </li>
<li>Assuming Amer is listed at the sector's average FY23 P/S of 1.6x, Anta Sports may book deemed disposal gain of HK$13.5bn, or about 6.8% of its market capitalisation.</li>
</ul>


Amer Sports, 52.7% owned by Anta Sports Products (2020 HK), has finally filed a US IPO registration. This is positive for Anta Sports as it can realise Amer's value.
Reported losses at Amer have increased YoY for 9M23 due to higher finance cost. But, its gross, operating, and adjusted EBITDA margins have all recorded solid improvements. 
Assuming Amer is listed at the sector's average FY23 P/S of 1.6x, Anta Sports may book deemed disposal gain of HK$13.5bn, or about 6.8% of its market capitalisation.


Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

China

Xtep International Holdings Ltd. designs, manufactures, and markets sportwear. The Company produces footwear, apparel, and accessories.

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Xtep International (1368 HK)

China: Sliding Market Leads to Passive Selling

A rapidly falling market could be upwards of 74 China stocks being deleted from passive portfolios. These stocks have underperformed the headline...

Brian Freitas

Xtep (1368 HK) – 4Q23 Was Inline but Macro Is Still Challenging

Despite the improved inventory level, we are still conservative on Xtep’s non-running segment, ASP and e-commerce growth in FY24E.

CMB International

Amer Sports IPO: The Bear Case

The bear case rests on ball and racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership,...

Arun George

Amer Sports IPO: The Bull Case

The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor...

Arun George

Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China: Sliding Market Leads to Passive Selling

A rapidly falling market could be upwards of 74 China stocks being deleted from passive portfolios. These stocks have underperformed the headline...

Brian Freitas

Xtep (1368 HK) – 4Q23 Was Inline but Macro Is Still Challenging

Despite the improved inventory level, we are still conservative on Xtep’s non-running segment, ASP and e-commerce growth in FY24E.

CMB International

Amer Sports IPO: The Bear Case

The bear case rests on ball and racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership,...

Arun George

Amer Sports IPO: The Bull Case

The bull case rests on the rapid growth and gross margin improvement under the consortium's ownership, along with technical apparel and outdoor...

Arun George

Anta Sports (2020 HK): An Updated Look at Implications of Amer Sports' IPO

​Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...

Osbert Tang, CFA

Amer Sports, 52.7% owned by Anta Sports, files for US IPO. Despite increased losses for 9M23, Amer's margins have improved. Anta Sports could gain...