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 analyse the changes of A/H premium on 134 stocks over the last week.</li>
<li>Consumer discretionary, consumer staple and health care sectors lower the overall A/H premium. </li>
<li>Real estate and industrials sectors are the only two sectors with WoW A/H premium increases.</li>
</ul>


We analyse the changes of A/H premium on 134 stocks over the last week.
Consumer discretionary, consumer staple and health care sectors lower the overall A/H premium. 
Real estate and industrials sectors are the only two sectors with WoW A/H premium increases.


A/H Premium Weekly: Consumer and Health Care Lowered A/H Premium

<ul>
<li>We analyse the changes of A/H premium on 134 stocks over the last week. </li>
<li>Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. </li>
<li>Industrial sectors are near 52 week high for A/H premium. Top three stocks for the WoW A/H increases are Jingcheng Machinery, Shanghai Haohai, and Dynagreen.</li>
</ul>


We analyse the changes of A/H premium on 134 stocks over the last week. 
Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. 
Industrial sectors are near 52 week high for A/H premium. Top three stocks for the WoW A/H increases are Jingcheng Machinery, Shanghai Haohai, and Dynagreen.


A/H Premium Weekly: Industrial Sector at 52 Week High

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hollysys Automation Technologies / Event-Driven

Hollysys Automation Technologies (HOLI US)

<a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a>, a leading automation control system solutions provider in China, has <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115585559&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-02-01&amp;CK=1357450" target="_blank" rel="noopener">announced</a> a consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management, had bumped its Offer to acquire the company to US$17.10/share. 
Back on the <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115490363&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2020-12-10&amp;CK=1357450" target="_blank" rel="noopener">7 December</a>, 2020, the consortium pitched an unsolicited US$15.47/share cash Offer, which was summarily <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115541784&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-01-08&amp;CK=1357450" target="_blank" rel="noopener">rejected</a> on the 8 January as the Offer "substantially undervalues the Company and is not in the best interest of the Company’s shareholders .... (and that it) would deprive our shareholders of the value inherent in Hollysys for inadequate consideration."
Given US/China tensions and moves last year to force the delisting of US-listed Chinese companies should they be in noncompliance with US accounting standards, there has been a surge in “take private” transactions for these US-listed companies (often expecting to re-list elsewhere at higher valuations) and secondary listings in markets outside of the United States, such as Hong Kong and Shanghai. This was extensively discussed in <a href="https://skr.ma/TDg1T" target="_blank" rel="noopener">Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value</a>.
Hollysys is incorporated in the BVI. This jurisdiction provides four key takeover methods.
Hollysys also has net cash of US$630mn (as at 30 September 2020), accounting for ~71% of its market cap. Dissension rights are available under certain take-private transactions.
As always, more below the fold.

Hollysys Automation Technology (HOLI US), a leading automation control system solutions provider in China, has announced a consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management, had bumped its Offer to acquire the company to US$17.10/share. 
Back on the 7 December, 2020, the consortium pitched an unsolicited US$15.47/share cash Offer, which was summarily rejected on the 8 January as the Offer "substantially undervalues the Company and is not in the best interest of the Company’s shareholders .... (and that it) would deprive our shareholders of the value inherent in Hollysys for inadequate consideration."
Given US/China tensions and moves last year to force the delisting of US-listed Chinese companies should they be in noncompliance with US accounting standards, there has been a surge in “take private” transactions for these US-listed companies (often expecting to re-list elsewhere at higher valuations) and secondary listings in markets outside of the United States, such as Hong Kong and Shanghai. This was extensively discussed in Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value.
Hollysys is incorporated in the BVI. This jurisdiction provides four key takeover methods.
Hollysys also has net cash of US$630mn (as at 30 September 2020), accounting for ~71% of its market cap. Dissension rights are available under certain take-private transactions.
As always, more below the fold.

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW but increased by $1,938m (+3.2%) over the preceding four weeks.
Most shorted stocks by aggregate short value of positions are <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> ($10,037m, -5.7% WoW), <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> ($3,218m, -8.3% WoW), <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan Dianping (3690 HK)</a> ($1,724m, -21.7% WoW), <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> ($1,277m, -0.5% WoW), <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> ($1,121m, -11.1% WoW).
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/929/original/image_36361465821595753850369.png?1595753851" class="editor-image img-responsive" data-smartkarma-image-id="147929"></figure>

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW but increased by $1,938m (+3.2%) over the preceding four weeks.
Most shorted stocks by aggregate short value of positions are Ping An Insurance (H) (2318 HK) ($10,037m, -5.7% WoW), Tencent Holdings (700 HK) ($3,218m, -8.3% WoW), Meituan Dianping (3690 HK) ($1,724m, -21.7% WoW), Zhongsheng Group (881 HK) ($1,277m, -0.5% WoW), Xiaomi Corp (1810 HK) ($1,121m, -11.1% WoW).


HK Short Report: Evergrande Health, Zhuzhou CRRC

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div>
The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close. The constituent changes will be effective from 9 March 2020 and the rebalancing trades will need to be done at the closing auction on 6 March 2020.
As we expected, <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:19943:1">China Conch Venture Holdings (586 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" rel="noopener" data-smartkarma-citation="entities:13363:1">Sunny Optical (2382 HK)</a> are being added to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" rel="noopener" data-smartkarma-citation="entities:22900:1">Hang Seng China Enterprises Index (HSCEI INDEX)</a> while <a href="https://www.smartkarma.com/entities/people-s-insurance-co-grou-h" target="_blank" rel="noopener" data-smartkarma-citation="entities:362:1">People'S Insurance Co (Group) Of China (1339 HK)</a> and <a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" rel="noopener" data-smartkarma-citation="entities:124:1">CRRC Corp Ltd H (1766 HK)</a> are being deleted from the index.
We estimated over 4-5 days of average volume to sell on the exclusion names, over 6 days to buy on <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:19943:1">China Conch Venture Holdings (586 HK)</a> and 1.5 days to buy on <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" rel="noopener" data-smartkarma-citation="entities:13363:1">Sunny Optical (2382 HK)</a>. 
In this Insight, we look at the expected flows for this rebalance, historical performance of inclusions and exclusions pre- and post-announcement, and ideas to trade the rebalance.
</div><div></div>


The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close. The constituent changes will be effective from 9 March 2020 and the rebalancing trades will need to be done at the closing auction on 6 March 2020.
As we expected, China Conch Venture Holdings (586 HK) and Sunny Optical (2382 HK) are being added to the Hang Seng China Enterprises Index (HSCEI INDEX) while People'S Insurance Co (Group) Of China (1339 HK) and CRRC Corp Ltd H (1766 HK) are being deleted from the index.
We estimated over 4-5 days of average volume to sell on the exclusion names, over 6 days to buy on China Conch Venture Holdings (586 HK) and 1.5 days to buy on Sunny Optical (2382 HK). 
In this Insight, we look at the expected flows for this rebalance, historical performance of inclusions and exclusions pre- and post-announcement, and ideas to trade the rebalance.


HSCEI Rebalance March 2020 - No Surprises, But Trades Are Performing Well

China

Zhuzhou CRRC Times Electric Co., Ltd. specializes in the research, development, manufacturing, and sales of rail transit equipment, including traction converter systems, railway engineering machinery, and communication signal systems. The company also diversifies into emerging equipment such as power semiconductor devices, new energy vehicle electric drive systems, and marine engineering equipment. It was incorporated in 2005 and is headquartered in Zhuzhou, Hunan Province, China.

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Zhuzhou CRRC Times Electric (3898 HK)

A/H Premium Weekly: Consumer and Health Care Lowered A/H Premium

We highlight that the consumer discretionary, consumer staple and health care sectors are the biggest driver for lower A/H premium WoW.

Ke Yan, CFA, FRM

A/H Premium Weekly: Industrial Sector at 52 Week High

Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. We also highlight top three stocks for A/H increase:...

Ke Yan, CFA, FRM

Hollysys (HOLI US): Machine Earning

The short turnaround from the consortium in bumping its Offer provides a certain degree of determination. At $17.10/share, this is still being done...

David Blennerhassett

HK Short Report: Evergrande Health, Zhuzhou CRRC

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW...

Ke Yan, CFA, FRM

HSCEI Rebalance March 2020 - No Surprises, But Trades Are Performing Well

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close....

Brian Freitas

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52-week Range

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