In today’s briefing:
- SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
- ETFs in Stock Connect: List Announced; Effective 4 July
- Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go
- Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation
SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
- SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
- The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
- Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.
ETFs in Stock Connect: List Announced; Effective 4 July
- CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
- There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
- Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.
Tianqi Lithium (9696 HK): Big Discount to A-Shares & Index Inclusion Timeline
- Tianqi Lithium (9696 HK) is looking to sell up to 188.74m shares to raise up to US$1.97bn. Pricing at HK$69-82/share is a 52-43% discount to Tianqi Lithium (002466 CH).
- Between 32-38% of the total offer size is being taken by 7 cornerstone investors and they are locked in for 6 months from listing date (expected 13 July).
- Tianqi Lithium (9696 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in December. Southbound Stock Connect could come online soon after listing.
Tianqi Lithium A/H Listing – Large Deal but Its Been Priced to Go
- Tianqi Lithium (TL) is looking to raise up to US$1.7bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
- TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
- In this note, we take about the deal pricing and run the deal through our ECM framework.
Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation
- Just as the December quarter was flattered by the last minute IPO of SenseTime Group (20 HK), expiration of the lockup six months later has delivered a corresonding valuation hit
- Vision Fund is still up on that investment but the public portfolio is flirting with a $10bn loss for the quarter depending on how US shares trade later
- The discount has improved modestly to 49% from 51% but remains at the high end of the recent range as worries on tech valuations cast a long shadow
Before it’s here, it’s on Smartkarma
