Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Stories appeared Thursday in China talking about (and showing a picture of) a purported letter from <a href="https://www.smartkarma.com/entities/evergrande-real-estate-group-limited" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> to the Guangdong government dated 24 August asking for assistance in restructuring. The letter is reported to have said that its cashflow would be endangered because of a need to repay RMB 130 billion to strategic investors by end January 2021 if Evergrande did not achieve a backdoor listing of its principal mainland subsidiary Hengda Real Estate (which it has been trying to do for three years by injecting Hengda into Shenzhen-listed Shenzhen Special Economic Zone Real Estate &amp; Properties Group Co. Ltd.), and such asset sales and lack of ability to raise debt would impair the smooth functioning of the real estate and loan market. The letter asks for assistance in moving forward the listing plan, despite the fact that this would break the informal ban on listing new real estate companies on local exchanges.</p><p>I refer to media reports about this story in <a href="https://www.bloomberg.com/news/articles/2020-09-24/evergrande-warns-of-looming-liquidity-crunch-spooking-investors" target="_blank" rel="noopener">Bloomberg</a>, <a href="https://www.caixinglobal.com/2020-09-25/china-developer-evergrande-denies-its-seeking-government-support-101609336.html" target="_blank" rel="noopener">Caixin Global</a>, <a href="https://uk.reuters.com/article/china-evergrande/chinas-no-2-developer-evergrande-pleads-for-government-support-to-avoid-cash-crunch-idINL3N2GL2H9" target="_blank" rel="noopener">Reuters</a>, and others about the purported letter.</p><p>Evergrande issued a <strong>SOLEMN DECLARATION</strong> via the HKEX Friday night. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/716/original/Screenshot%202020-09-25%20at%2012.30.05%20PM.png?1601008218" class="editor-image img-responsive" data-smartkarma-image-id="161716"></figure><p>The story introduced a fair bit of volatility in trading Friday 25 September 2020. The shares fell early, rose to be +6% on the day, then fell sharply - at one point -14.6% on the day.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/768/original/Screenshot%202020-09-25%20at%208.28.09%20PM.png?1601036926" class="editor-image img-responsive" data-smartkarma-image-id="161768"></figure><p>194.7 million shares traded. That is the highest in more than 3 years, and represents over 13% of the Real World Float of the company. The stock ended down 9.5% on the day. </p><p><a href="https://www.smartkarma.com/entities/china-evergrande-new-energy-vehicle-group-ltd" target="_blank" data-smartkarma-citation="entities:713:1" rel="noopener">China Evergrande New Energy Vehicle Group (708 HK)</a> was down 13% on Friday. The whole China real estate developer sector listed in Hong Kong fell in a sea of red. Bloomberg <a href="https://www.bloomberg.com/news/articles/2020-09-25/evergrande-faces-crisis-of-confidence-over-120-billion-debt?sref=ZEpEDN5v" target="_blank" rel="noopener">reported</a> the dollar bonds of Evergrande were the worst performer in the Bloomberg Barclays Asia Dollar Bond index. And the domestic bonds fell sharply, with a yuan bond due 2022 falling 18% to RMB 77.7 and a 2024 dropping 30% to 65.9 yuan, with trading reportedly suspended. </p><p>The company came out again on Friday to say that business was doing OK. But clearly, some people see an issue.</p><p>Much more below the fold.</p><div><p></p></div>

Stories appeared Thursday in China talking about (and showing a picture of) a purported letter from Evergrande Real Estate Group (3333 HK) to the Guangdong government dated 24 August asking for assistance in restructuring. The letter is reported to have said that its cashflow would be endangered because of a need to repay RMB 130 billion to strategic investors by end January 2021 if Evergrande did not achieve a backdoor listing of its principal mainland subsidiary Hengda Real Estate (which it has been trying to do for three years by injecting Hengda into Shenzhen-listed Shenzhen Special Economic Zone Real Estate &amp; Properties Group Co. Ltd.), and such asset sales and lack of ability to raise debt would impair the smooth functioning of the real estate and loan market. The letter asks for assistance in moving forward the listing plan, despite the fact that this would break the informal ban on listing new real estate companies on local exchanges.I refer to media reports about this story in Bloomberg, Caixin Global, Reuters, and others about the purported letter.Evergrande issued a SOLEMN DECLARATION via the HKEX Friday night. The story introduced a fair bit of volatility in trading Friday 25 September 2020. The shares fell early, rose to be +6% on the day, then fell sharply - at one point -14.6% on the day.194.7 million shares traded. That is the highest in more than 3 years, and represents over 13% of the Real World Float of the company. The stock ended down 9.5% on the day. China Evergrande New Energy Vehicle Group (708 HK) was down 13% on Friday. The whole China real estate developer sector listed in Hong Kong fell in a sea of red. Bloomberg reported the dollar bonds of Evergrande were the worst performer in the Bloomberg Barclays Asia Dollar Bond index. And the domestic bonds fell sharply, with a yuan bond due 2022 falling 18% to RMB 77.7 and a 2024 dropping 30% to 65.9 yuan, with trading reportedly suspended. The company came out again on Friday to say that business was doing OK. But clearly, some people see an issue.Much more below the fold.

Evergrande May Be Facing a Funding Squeeze

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Haidilao International Holding / Event-Driven

<p>The Hang Seng Indexes Company Limited (HSIL) should announce the results of the 2020 Q3 review of the Hang Seng Family of Indexes on 6 November. The constituent changes will be effective after the close of trading on 4 December.</p><p>With only 3 changes permitted in the September <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> review post the methodology change that included WVR securities and Secondary Listings in the eligible Universe, there could be as many as 9 changes in the December review.</p><p>We see a high probability of <a href="https://www.smartkarma.com/entities/china-overseas-land-invest" target="_blank" data-smartkarma-citation="entities:419:1" rel="noopener">China Overseas Land &amp; Investment Ltd (688 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-health-information-technology-ltd" target="_blank" data-smartkarma-citation="entities:453:1" rel="noopener">Alibaba Health Information Technology (241 HK)</a>, <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a>, <a href="https://www.smartkarma.com/entities/china-feihe-ltd" target="_blank" data-smartkarma-citation="entities:24413:1" rel="noopener">China Feihe (6186 HK)</a>, <a href="https://www.smartkarma.com/entities/semiconductor-manufacturing" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">Semiconductor Manufacturing (981 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-real-estate-group-limited" target="_blank" data-smartkarma-citation="entities:479:1" rel="noopener">Evergrande Real Estate Group (3333 HK)</a> being included in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a>, and of <a href="https://www.smartkarma.com/entities/china-taiping-insurance-hldgs-co-ltd" target="_blank" data-smartkarma-citation="entities:489:1" rel="noopener">China Taiping Insurance Hldgs (966 HK)</a>, <a href="https://www.smartkarma.com/entities/china-telecom-corp-ltd-h" target="_blank" data-smartkarma-citation="entities:1015:1" rel="noopener">China Telecom Corp Ltd (H) (728 HK)</a>, <a href="https://www.smartkarma.com/entities/china-minsheng-banking-h" target="_blank" data-smartkarma-citation="entities:8983:1" rel="noopener">China Minsheng Banking H (1988 HK)</a>, <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke Co Ltd (H) (2202 HK)</a>, <a href="https://www.smartkarma.com/entities/fosun-international-ltd" target="_blank" data-smartkarma-citation="entities:433:1" rel="noopener">Fosun International (656 HK)</a>, <a href="https://www.smartkarma.com/entities/china-citic-bank-corp-ltd-ea6c25fd-4b20-45cb-a4a6-df7a60136f03" target="_blank" data-smartkarma-citation="entities:653:1" rel="noopener">China Citic Bank Corp Ltd H (998 HK)</a> and <a href="https://www.smartkarma.com/entities/china-shenhua-energy-co-h" target="_blank" data-smartkarma-citation="entities:382:1" rel="noopener">China Shenhua Energy Co H (1088 HK)</a> being deleted from the index.</p><p>Depending on price movements between now and 30 September, <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a> and <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> could be included in the index, which would see <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a> and <a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> being deleted.</p><p>Estimated one-way turnover for the rebalance is 9.63% which is lower than the turnover at the September rebalance, but significant nonetheless.</p><p>The expected review changes will alter the sectoral composition of the index with an increase in the weight of the Consumer Discretionary, Information Technology and Health Care sectors at the expense of Financials and Energy. There will also be an impact on the HSCEI 2021 dividend futures, a large part of which has already been discounted by the market.</p>

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the 2020 Q3 review of the Hang Seng Family of Indexes on 6 November. The constituent changes will be effective after the close of trading on 4 December.With only 3 changes permitted in the September Hang Seng China Enterprises Index (HSCEI INDEX) review post the methodology change that included WVR securities and Secondary Listings in the eligible Universe, there could be as many as 9 changes in the December review.We see a high probability of China Overseas Land &amp; Investment Ltd (688 HK), JD.com (HK) (9618 HK), Alibaba Health Information Technology (241 HK), Haidilao (6862 HK), China Feihe (6186 HK), Semiconductor Manufacturing (981 HK) and Evergrande Real Estate Group (3333 HK) being included in the Hang Seng China Enterprises Index (HSCEI INDEX), and of China Taiping Insurance Hldgs (966 HK), China Telecom Corp Ltd (H) (728 HK), China Minsheng Banking H (1988 HK), China Vanke Co Ltd (H) (2202 HK), Fosun International (656 HK), China Citic Bank Corp Ltd H (998 HK) and China Shenhua Energy Co H (1088 HK) being deleted from the index.Depending on price movements between now and 30 September, NetEase (9999 HK) and Hansoh Pharmaceutical (3692 HK) could be included in the index, which would see Want Want (151 HK) and PICC Property &amp; Casualty H (2328 HK) being deleted.Estimated one-way turnover for the rebalance is 9.63% which is lower than the turnover at the September rebalance, but significant nonetheless.The expected review changes will alter the sectoral composition of the index with an increase in the weight of the Consumer Discretionary, Information Technology and Health Care sectors at the expense of Financials and Energy. There will also be an impact on the HSCEI 2021 dividend futures, a large part of which has already been discounted by the market.

HSCEI Index Rebalance Preview - December 2020: HUGE Number of Changes and Turnover Expected

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

<div><p><a href="https://www.smartkarma.com/entities/ke-holdings-inc" target="_blank" data-smartkarma-citation="entities:29213:1" rel="noopener">KE Holdings Inc (BEKE US)</a> (BEKE), a company backed by <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>, <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and Hillhouse, raised around US$2.1bn in its US listing.</p></div><div><p>BEKE combines Lianjia, China's leading real estate brokerage brand with more than 18 years of history, and Beike, China's leading integrated online and offline platform for housing transactions and services with two years of history.</p></div><div>
<p>In my previous insight, I have looked at various aspects of the deal:</p>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-the-positives-fast-growth-high-market-share" target="_blank" rel="noopener">KE Holdings/​Beike Pre-IPO - The Positives - Fast Growth, High Market Share</a>, </li>
<li><a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-the-negatives-questions-margins-p2p" target="_blank" rel="noopener">KE Holdings/​​Beike Pre-IPO - The Negatives - Questions, Margins, P2P</a></li>
<li><a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-recent-updates-peer-comparison" target="_blank" rel="noopener">KE Holdings/​​Beike Pre-IPO - Recent Updates, Peer Comparison</a></li>
<li><a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-thoughts-on-valuation-rumoured-valuation-might-be-a-stretch" target="_blank" rel="noopener">KE Holdings/​​​Beike Pre-IPO - Thoughts on Valuation, Rumoured Valuation Might Be a Stretch</a></li>
<li><a href="https://www.smartkarma.com/insights/ke-holdings-beike-ipo-can-t-see-much-upside" target="_blank" rel="noopener">KE Holdings/​​​​Beike IPO - Can’t See Much Upside</a></li>
</ul>
</div><div></div><p>In this note, we will look at the deal dynamics and provide a table with implied valuation at different share price levels.</p>

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, raised around US$2.1bn in its US listing.BEKE combines Lianjia, China's leading real estate brokerage brand with more than 18 years of history, and Beike, China's leading integrated online and offline platform for housing transactions and services with two years of history.
In my previous insight, I have looked at various aspects of the deal:


KE Holdings/​Beike Pre-IPO - The Positives - Fast Growth, High Market Share, 
KE Holdings/​​Beike Pre-IPO - The Negatives - Questions, Margins, P2P
KE Holdings/​​Beike Pre-IPO - Recent Updates, Peer Comparison
KE Holdings/​​​Beike Pre-IPO - Thoughts on Valuation, Rumoured Valuation Might Be a Stretch
KE Holdings/​​​​Beike IPO - Can’t See Much Upside

In this note, we will look at the deal dynamics and provide a table with implied valuation at different share price levels.

KE Holdings/​​​​Beike IPO Trading - We Would Be Sellers if It Pops

<div><p><a href="https://www.smartkarma.com/entities/ke-holdings-inc" target="_blank" data-smartkarma-citation="entities:29213:1" rel="noopener">KE Holdings Inc (BEKE US)</a> (BEKE), a company backed by <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>, <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and Hillhouse, aims to raise up to US$2.01bn in its US listing.</p></div><div><p>BEKE combines Lianjia, China's leading real estate brokerage brand with more than 18 years of history, and Beike, China's leading integrated online and offline platform for housing transactions and services with two years of history.</p></div><div><p>In my previous insight, <a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-the-positives-fast-growth-high-market-share" target="_blank" rel="noopener">KE Holdings/​Beike Pre-IPO - The Positives - Fast Growth, High Market Share</a>, and <a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-the-negatives-questions-margins-p2p" target="_blank" rel="noopener">KE Holdings/​​Beike Pre-IPO - The Negatives - Questions, Margins, P2P</a> I spoke about the positive and negative aspects of the deal. In <a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-recent-updates-peer-comparison" target="_blank" rel="noopener">KE Holdings/​​Beike Pre-IPO - Recent Updates, Peer Comparison</a> I spoke about the recent updates. In <a href="https://www.smartkarma.com/insights/ke-holdings-beike-pre-ipo-thoughts-on-valuation-rumoured-valuation-might-be-a-stretch" target="_blank" rel="noopener">KE Holdings/​​​Beike Pre-IPO - Thoughts on Valuation, Rumoured Valuation Might Be a Stretch</a>, I spoke about valuations.</p></div><div><p>In this insight, I'll talk about deal dynamics and run it through our ECM framework.</p></div>

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, aims to raise up to US$2.01bn in its US listing.BEKE combines Lianjia, China's leading real estate brokerage brand with more than 18 years of history, and Beike, China's leading integrated online and offline platform for housing transactions and services with two years of history.In my previous insight, KE Holdings/​Beike Pre-IPO - The Positives - Fast Growth, High Market Share, and KE Holdings/​​Beike Pre-IPO - The Negatives - Questions, Margins, P2P I spoke about the positive and negative aspects of the deal. In KE Holdings/​​Beike Pre-IPO - Recent Updates, Peer Comparison I spoke about the recent updates. In KE Holdings/​​​Beike Pre-IPO - Thoughts on Valuation, Rumoured Valuation Might Be a Stretch, I spoke about valuations.In this insight, I'll talk about deal dynamics and run it through our ECM framework.

KE Holdings/​​​Beike IPO - Can't See Much Upside

Ganglong China Property Group / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/ganglong-china-property-group" target="_blank" data-smartkarma-citation="entities:29149:1" rel="noopener">Ganglong China Property Group (6968 HK)</a> (GCPG), a real estate developer in the Yangtze River Delta Region with a focus on development and sales of residential properties, raised around  US$233m (including over-allotment) in its Hong Kong listing.</p><p>I had looked at the company background in my previous note, <a href="https://www.smartkarma.com/insights/ganglong-china-property-ipo-rapid-earnings-growth-has-been-putting-balance-sheet-under-stress" target="_blank" rel="noopener">Ganglong China Property IPO - Rapid Earnings Growth Has Been Putting Balance Sheet Under Stress</a>.</p><p>In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. </p>

Ganglong China Property Group (6968 HK) (GCPG), a real estate developer in the Yangtze River Delta Region with a focus on development and sales of residential properties, raised around  US$233m (including over-allotment) in its Hong Kong listing.I had looked at the company background in my previous note, Ganglong China Property IPO - Rapid Earnings Growth Has Been Putting Balance Sheet Under Stress.In those note, I'll run through the deal dynamics and provide a table with the implied p/e at different share price levels. 

Ganglong China Property IPO Trading - Tepid Demand, Concentrated Shareholding

China

China Vanke Co., Ltd. is a property development company.  The Company develops residential properties in Shenzhen, Shanghai, Beijing, Tianjin, Shenyang, Nanjing, and other big cities in China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Vanke (H) (2202 HK)

Evergrande May Be Facing a Funding Squeeze

Stori

Travis Lundy

HSCEI Index Rebalance Preview - December 2020: HUGE Number of Changes and Turnover Expected

The Hang Seng Indexes Company Limited (HSIL) will announce the results of the 2020 Q2 review of the Hang Seng Family of Indexes in mid August. The...

Brian Freitas

KE Holdings/Beike IPO Trading - We Would Be Sellers if It Pops

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, raised around US$2.1bn in...

Sumeet Singh

KE Holdings/Beike IPO - Can't See Much Upside

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, aims to raise up to...

Sumeet Singh

Ganglong China Property IPO Trading - Tepid Demand, Concentrated Shareholding

Ganglong China Property Group (6968 HK) (GCPG), a real estate developer in the Yangtze River Delta Region with a focus on development and sales of...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Evergrande May Be Facing a Funding Squeeze

Stori

Travis Lundy

HSCEI Index Rebalance Preview - December 2020: HUGE Number of Changes and Turnover Expected

The Hang Seng Indexes Company Limited (HSIL) will announce the results of the 2020 Q2 review of the Hang Seng Family of Indexes in mid August. The...

Brian Freitas

KE Holdings/​​​​Beike IPO Trading - We Would Be Sellers if It Pops

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, raised around US$2.1bn in...

Sumeet Singh

KE Holdings/​​​Beike IPO - Can't See Much Upside

KE Holdings Inc (BEKE US) (BEKE), a company backed by Tencent Holdings (700 HK), Softbank Group (9984 JP) and Hillhouse, aims to raise up to...

Sumeet Singh

Ganglong China Property IPO Trading - Tepid Demand, Concentrated Shareholding

Ganglong China Property Group (6968 HK) (GCPG), a real estate developer in the Yangtze River Delta Region with a focus on development and sales of...

Sumeet Singh

KE Holdings/Beike IPO Trading - We Would Be Sellers if It Pops

KE Holdings/Beike IPO - Can't See Much Upside