Daily BriefsMost Read

Most Read: CNOOC Ltd, Xpeng, Beijing Kuaishou Technology Co Ltd, Tokyo Electron and more

In today’s briefing:

  • CNOOC – MSCI and FTSE Deletion Looming Along with NYSE Delisting
  • Smartkarma Webinar | 2021 High Conviction – Investment Opportunities in China’s Healthcare Industry
  • Xpeng: The Next Xiaomi?
  • Kuaishou Technology Pre-IPO – Peer Comparison and Thoughts on Valuation
  • StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines’ Buybacks

CNOOC – MSCI and FTSE Deletion Looming Along with NYSE Delisting

By Brian Freitas

Post the US market close on Friday, OFAC updated the Non-SDN Communist Chinese Military Companies List to specifically name China Mobile (941 HK)/ China Mobile Ltd Spon Adr (CHL US), China Telecom Corp Ltd (H) (728 HK)/ China Telecom Corp Ltd (Adr) (CHA US) and China Unicom Hong Kong (762 HK)/ China Unicom Hong Kong (Adr) (CHU US). More importantly, CNOOC Ltd (ADR) (CEO US)/ CNOOC Ltd (883 HK) / CNU CA was also added to the list.

OFAC also issued a General License that authorizes transactions in entities whose name closely matches the name of a Communist Chinese military company identified in the Annex to Executive Order 13959 but that has not been listed on the OFAC’s Non-SDN Communist Chinese Military Companies List, through 9.30am EST on January 28, 2021.

FTSE and MSCI made announcements that they were reviewing the latest OFAC update and would issue further updates in the event of changes to their indices. In FTSE’s case, the announcement will be made in the coming week.

The timing of the CNOOC Ltd (883 HK) deletion is uncertain at the moment. The stock was not included in the Annex to EO 13959 and the latest date it can be deleted is the close of trading on 8 March, though we expect the deletion to happen sooner than that. Impact is pretty big through pre-positions are already being built up on the stock.

The stock is trading cheaper than its peers, both domestic and international. While there could be further downside in the near term due to active and passive selling, there could be upside once the deletion from the MSCI and FTSE indices is out of the way.


Smartkarma Webinar | 2021 High Conviction – Investment Opportunities in China’s Healthcare Industry

By Smartkarma Research

We start off 2021 with a look into China’s healthcare industry and the opportunities therein. For this session, we are excited to be joined by Xinyao (Criss) Wang , who will share her high-conviction ideas for the coming year.

The webinar will be hosted on Wednesday, 13 January 2021, 17:00 SGT/HKT.

Xinyao (Criss) Wang is a HK/China Healthcare Analyst with over 10 years of experience in both finance and healthcare, covering clinic operations, investment, and equity research both in China and overseas.


Xpeng: The Next Xiaomi?

By Victoria Li

If Tesla (TSLA US) is the Apple(AAPL US) of EV sector, Xpeng might be the Xiaomi(XIACY US), in our view. In the short term (before the launch of P5 ), lower prices of new Made in China Tesla Model 3 might have negative impact on P7 sales; but increasing client interest on Tesla would benefit Xpeng P7. On a 10 year view, Xpeng would be the winner among existing Top three Chinese emerging EV brands, by being a follower of Tesla (focusing on making EVs ‘smart’)

Xpeng might turn profitable in 2022 with increasing awareness and acceptance by the customers, launch of P5 and first B-segment SUV.

Reiterate BUY with 12M target price of US$71.


Kuaishou Technology Pre-IPO – Peer Comparison and Thoughts on Valuation

By Sumeet Singh

Kuaishou Technology (KT) is a content community and social platform that is looking to raise around US$5bn in its Hong Kong IPO. The company is backed by Tencent, Sequoia China, Baidu, DST Global, Boyu Capital, Temasek and others.

As of six months ended Jun 2020, it had 302m daily active users (DAUs), who spent 85 mins on average on the app every day. It also had 776m monthly active users (MAUs) and total e-commerce GMV of RMB109.6bn. On an average 1.1bn short videos were uploaded on its app during 1H20.

As per iResearch, Kuaishou was globally the largest live streaming platform by gross billings from virtual gifting and average live streaming MPUs, the second largest short video platform by average DAUs, and the second largest live streaming e-commerce platform by GMV, over six months ended June 30, 2020.

I have covered various aspects of the company’s performance in my previous notes: 

In this note, I’ll undertake a peer comparison, provide earnings forecasts and talk about valuations. 


StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines’ Buybacks

By David Blennerhassett

This week in StubWorld …

Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.

These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent – of at least 20%.


Before it’s here, it’s on Smartkarma