Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<p>Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. </p><p>A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. </p><p>The most widely held stock in the 'Staples sector is <a href="https://www.smartkarma.com/entities/wal-mart-de-mexico-sab-de-cv" target="_blank" data-smartkarma-citation="entities:28373:1" rel="noopener">Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY)</a>, held by 34.6% of the funds in our analysis at an average weight of 0.35%.  <a href="https://www.smartkarma.com/entities/lg-household-health-care" target="_blank" data-smartkarma-citation="entities:6501:1" rel="noopener">LG Household &amp; Health Care (051900 KS),</a><a href="https://www.smartkarma.com/entities/kweichow-moutai-co-ltd-a" target="_blank" data-smartkarma-citation="entities:1553:1" rel="noopener">Kweichow Moutai (600519 CH)</a> and <a href="https://www.smartkarma.com/entities/fomento-de-construcciones-y-co" target="_blank" data-smartkarma-citation="entities:21269:1" rel="noopener">Fomento De Construcciones Y Co (FCC SM)</a> make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.</p><p>The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.</p>

Consumer Staples allocations have fallen to their lowest levels in over a decade.  The Consumer Staples sector is now the 5th largest sector holding among active Global Emerging Market managers, well behind the heavyweights of Tech, Financials and their Discretionary peers. A 5-year decline in Consumer Staples exposure was compounded by negative fund activity over the course of 2021.  Consumer Staples stocks saw average weights decline by 0.41%, overweights decline by 0.16% and 5.4% of managers move to underweight, all aided by a net -$475m in fund outflows from the sector over the period. The most widely held stock in the 'Staples sector is Wal-Mart de Mexico SAB de CV (WALMEX* MM EQUITY), held by 34.6% of the funds in our analysis at an average weight of 0.35%.  LG Household &amp; Health Care (051900 KS),Kweichow Moutai (600519 CH) and Fomento De Construcciones Y Co (FCC SM) make up the 2nd tier.  With all 4 held overweight on average, these stocks are clearly well liked by the active EM investor base.The size and scale of the exodus over a relatively short time-period, the sustained period of underperformance and potentially a dampening of inflation risks could prompt managers to readdress their allocations.

Consumer Staples:  EM Managers Positioned at All-Time Lows

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<p>Kweichow Moutai is China’s most valuable non-technology firm by market capitalisation and the investment thesis held by most long term investors centres on the domestic popularity of the Moutai <em>baijiu, </em>the fiery and potent spirit manufactured by the company.  However, a closer look at the financial disclosures and local media reports reveal potential areas of concern for investors in terms of the continuing financial support to the Guizhou local government, the relatively slow pace of channel reform efforts, and sizeable fund balances held with related parties. While there are no conclusive findings or specific regulatory breaches, investors in Kweichow Moutai should be cognisant of these issues and, where applicable, actively monitor and engage management in respect of such issues.</p>

Kweichow Moutai is China’s most valuable non-technology firm by market capitalisation and the investment thesis held by most long term investors centres on the domestic popularity of the Moutai baijiu, the fiery and potent spirit manufactured by the company.  However, a closer look at the financial disclosures and local media reports reveal potential areas of concern for investors in terms of the continuing financial support to the Guizhou local government, the relatively slow pace of channel reform efforts, and sizeable fund balances held with related parties. While there are no conclusive findings or specific regulatory breaches, investors in Kweichow Moutai should be cognisant of these issues and, where applicable, actively monitor and engage management in respect of such issues.

Kweichou Moutai - A Gift that Keeps Giving

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Weilong Delicious Global Holdi / Equity Capital Markets

<div><p>Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. </p></div><div><p>WDG sells products across three categories: seasoned flour products,  vegetable products and Bean-based and other products. According to Frost &amp; Sullivan (F&amp;S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.</p></div><div>
<p>We covered the positive aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/weilong-delicious-global-pre-ipo-the-positives-fast-growth-strong-backers" target="_blank" rel="noopener">Weilong Delicious Global Pre-IPO - The Positives - Fast Growth, Strong Backers.</a></p>
<p>In this note we will talk about some of the not so flattering aspects of the deal.</p>
</div>

Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. WDG sells products across three categories: seasoned flour products,  vegetable products and Bean-based and other products. According to Frost &amp; Sullivan (F&amp;S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.
We covered the positive aspects of the deal in our earlier note, Weilong Delicious Global Pre-IPO - The Positives - Fast Growth, Strong Backers.
In this note we will talk about some of the not so flattering aspects of the deal.


Weilong Delicious Global Pre-IPO - The Negatives - Spicy Valuation

<p>Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. </p><p>WDG sells products across three categories: seasoned flour products,  vegetable products and Bean-based and other products. According to Frost &amp; Sullivan (F&amp;S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.</p><p>Overall revenue growth has been strong at 23% YoY in 2019 and 21.7% in 2020 driven both by an increase in volumes and prices over 2019-20. Vegetable products have been the fastest growing category with a CAGR of 98% over FY18-20.</p><p>Along with strong revenue growth, WDG gross profit growth has been even stronger, with gross profit growing by 25-31% YoY over 2018-20. PAT grew at 25-38% over 2018-20.</p>

Weilong Delicious Global (WDG), a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. WDG sells products across three categories: seasoned flour products,  vegetable products and Bean-based and other products. According to Frost &amp; Sullivan (F&amp;S), in terms of retail sales value in 2020, WDG ranked first among all spicy snack food enterprises in China, with a market share of 5.7%, and ranked first in each of the seasoned flour product and spicy vegetable snack product categories.Overall revenue growth has been strong at 23% YoY in 2019 and 21.7% in 2020 driven both by an increase in volumes and prices over 2019-20. Vegetable products have been the fastest growing category with a CAGR of 98% over FY18-20.Along with strong revenue growth, WDG gross profit growth has been even stronger, with gross profit growing by 25-31% YoY over 2018-20. PAT grew at 25-38% over 2018-20.

Weilong Delicious Global Pre-IPO - The Positives - Fast Growth, Strong Backers

<div>
<p><a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a> had one of the best debuts for large IPOs last year. Despite the recent correction, the stock is still trading 92.5% above its listing price. </p>
<p>In this note, we will talk about the prospects of large trades triggered by the lock-up expiry.</p>
</div><div>
<div><p>We have covered various aspects of the company in our earlier IPO notes:</p></div>
<div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-positives-leaves-one-thirsty-for-more" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-negatives-doesn-t-need-to-list-or-expand-production-facilities" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-peer-comparison-superior-margins-and-growth" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-first-stab-at-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - First Stab at Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-phip-updates" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - PHIP Updates</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-updates-to-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Updates to Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-ipo-not-cheap-by-any-measure-but-is-a-quality-name" target="_blank" rel="noopener">Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-ipo-trading-update-strong-subscription-levels-in-a-league-of-its-own" target="_blank" rel="noopener">Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own</a></li>
</ul></div>
</div>


Nongfu Spring (9633 HK) had one of the best debuts for large IPOs last year. Despite the recent correction, the stock is still trading 92.5% above its listing price. 
In this note, we will talk about the prospects of large trades triggered by the lock-up expiry.

We have covered various aspects of the company in our earlier IPO notes:

Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More
Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities
Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth
Nongfu Spring Pre-IPO - First Stab at Valuation
Nongfu Spring Pre-IPO - PHIP Updates
Nongfu Spring Pre-IPO - Updates to Valuation
Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name
Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own



Nongfu Spring Lock-Up Could Correct the Tiny Float and Limited Trading

China

Kweichow Moutai Co., Ltd. manufactures spirits.  The Company's spirit products are distilled from sorghum and wheat.  Kweichow Moutai markets its products worldwide.

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Kweichow Moutai (600519 CH)

Consumer Staples: EM Managers Positioned at All-Time Lows

Consumer Staples allocations have fallen to their lowest levels in over a decade. A 5-year decline in Consumer Staples exposure was compounded by...

Steven Holden

Kweichou Moutai - A Gift that Keeps Giving

Kweichou Moutai - A Gift that Keeps Giving. This article expounds on topical issues such as shareholder donations, channel reform and related...

Jason Yap, CFA

Weilong Delicious Global Pre-IPO - The Negatives - Spicy Valuation

Weilong Delicious Global, a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. The company was recently backed by...

Sumeet Singh

Weilong Delicious Global Pre-IPO - The Positives - Fast Growth, Strong Backers

Weilong Delicious Global, a spicy snack food company in China, aims to raise around US$1bn in its Hong Kong IPO. It recently undertook a pre-IPO...

Sumeet Singh

Nongfu Spring Lock-Up Could Correct the Tiny Float and Limited Trading

Nongfu Spring had one of the best debuts for large IPOs last year. The stock is still trading 92.5% above its listing price. We talk about the...

Sumeet Singh

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