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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Hang Seng China Enterprises Index / Event-Driven

The announcement of 2020 full year results is bringing some certainty to the HSCEI 2021 dividend index points. With <a href="https://www.smartkarma.com/entities/bank-of-communications-co-h" target="_blank" data-smartkarma-citation="entities:659:1" rel="noopener">Bank Of Communications Co H (3328 HK)</a>, <a href="https://www.smartkarma.com/entities/ind-comm-bk-of-china-h" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a> and <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> announcing results (and dividends) today, and <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a>, <a href="https://www.smartkarma.com/entities/agricultural-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1120:1" rel="noopener">Agricultural Bank Of China (1288 HK)</a> and <a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank Of China Ltd (H) (3988 HK)</a> announcing on Monday and Tuesday next week, over 85% of the 2021 dividend index points will be known by end of the month.With <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a> 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> at the close of trading on 8 April, potential changes to the index at the June review that will be implemented at the close on 4 June, and capping changes that will be implemented at 8% of the index weight for all stocks at the June review, the dividend ex-date for the stocks (and banks in particular) will play a big role in determining the fair value of the 2021 dividend futures.With the SEC pushing forward with the Holding Foreign Companies Accountable Act, US listed Chinese stocks could look to bring forward their plans to Secondary List on the <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>. <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili Inc (9626 HK)</a> lists on Monday and media indicates that other Chinese companies are evaluating listing in Hong Kong. <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> has already filed papers to list in Hong Kong. Then there are companies like <a href="https://www.smartkarma.com/entities/didi-chuxing-inc" target="_blank" data-smartkarma-citation="entities:27467:1" rel="noopener">DiDi Chuxing (1284375D CH)</a>, <a href="https://www.smartkarma.com/entities/bytedance-technology" target="_blank" data-smartkarma-citation="entities:27936:1" rel="noopener">ByteDance (1460967D CH)</a> and <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> that could primary list in Hong Kong in the near future. While this will have minimal impact on the 2021 dividends, the impact on the 2022 and later dividend futures would be a lot higher.We see little downside from the current market on the HSCEI 2021 dividend futures, but believe that the HSCEI 2021/22 dividend steepener is trading too high. Potential changes to the index constituents should put downward pressure on the 2022 dividends with low dividend yield or zero dividend paying companies joining the index at high index weights, and high dividend paying companies being deleted from the index.

The announcement of 2020 full year results is bringing some certainty to the HSCEI 2021 dividend index points. With Bank Of Communications Co H (3328 HK), ICBC (H) (1398 HK) and China Construction Bank H (939 HK) announcing results (and dividends) today, and Postal Savings Bank of China (1658 HK), Agricultural Bank Of China (1288 HK) and Bank Of China Ltd (H) (3988 HK) announcing on Monday and Tuesday next week, over 85% of the 2021 dividend index points will be known by end of the month.With Baidu (9888 HK) included in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 April, potential changes to the index at the June review that will be implemented at the close on 4 June, and capping changes that will be implemented at 8% of the index weight for all stocks at the June review, the dividend ex-date for the stocks (and banks in particular) will play a big role in determining the fair value of the 2021 dividend futures.With the SEC pushing forward with the Holding Foreign Companies Accountable Act, US listed Chinese stocks could look to bring forward their plans to Secondary List on the HKEX (388 HK). Bilibili Inc (9626 HK) lists on Monday and media indicates that other Chinese companies are evaluating listing in Hong Kong. JD Logistics (JDL HK) has already filed papers to list in Hong Kong. Then there are companies like DiDi Chuxing (1284375D CH), ByteDance (1460967D CH) and Ant Financial Services Group (6688 HK) that could primary list in Hong Kong in the near future. While this will have minimal impact on the 2021 dividends, the impact on the 2022 and later dividend futures would be a lot higher.We see little downside from the current market on the HSCEI 2021 dividend futures, but believe that the HSCEI 2021/22 dividend steepener is trading too high. Potential changes to the index constituents should put downward pressure on the 2022 dividends with low dividend yield or zero dividend paying companies joining the index at high index weights, and high dividend paying companies being deleted from the index.

HSCEI Dividend Futures: June Index Review, Bank Divs, HFCAA - Sell the 2021/22 Steepener

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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 Bottom-Up

<ul>
<li>The stock price has gone down further after we upgraded to Hold.</li>
<li>The market rushed to sell the stock after the 4Q20 result, but we believe that was a wrong action.</li>
<li>The gross margins of all business lines improved yoy in 4Q20.</li>
<li>We believe the revenue growth will accelerate in 2021.</li>
<li>We set an upside of 16% for the end of 2020. Upgrade to Buy.</li>
</ul>


The stock price has gone down further after we upgraded to Hold.
The market rushed to sell the stock after the 4Q20 result, but we believe that was a wrong action.
The gross margins of all business lines improved yoy in 4Q20.
We believe the revenue growth will accelerate in 2021.
We set an upside of 16% for the end of 2020. Upgrade to Buy.


Xiaomi (1810 HK): Market Was Wrong After 4Q20 Result, Upgrade to Buy

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

One thing that the Indonesian government did right during 2020 is the strict enforcement of IMEI registration in the country. <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> is the key beneficiary to this and the only listed smartphone retailer in <a href="https://www.smartkarma.com/entities/jakarta-stock-exchange-composite-index" target="_blank" data-smartkarma-citation="entities:22914:1" rel="noopener">Jakarta Stock Exchange Composite Index (JCI INDEX)</a> with a decent market capitalization (USD 610 million). Besides <a href="https://www.smartkarma.com/entities/industri-jamu-dan-farmasi-sido-muncul-tbk-pt" target="_blank" data-smartkarma-citation="entities:6033:1" rel="noopener">Sido Muncul (SIDO IJ)</a> , <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> seems to be another stock that benefited from COVID-19 through work-from-home and home-based-learnings arrangements. 
This year, the share price has been hovering around IDR 2600-2850 level caused by a lack of short-term catalyst.  The IMEI rule has certainly been the key factor for last year's revenue growth but after this, what's next? The short-term outlook for having Erajaya pales in comparison to its long-term prospect therefore after making a 76% return in 6 months, maybe it is time to realized some profit in <a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> . 
The long-term prospect remains bullish. As the smartphone penetration in Indonesia is set to increase from 70 to 89% in 2025, Erajaya is set to benefit from this although it is less appealing compared to the 2015 to 2020 period when the smartphone penetration jumped from 29% to 70% (130%).

One thing that the Indonesian government did right during 2020 is the strict enforcement of IMEI registration in the country. Erajaya Swasembada (ERAA IJ) is the key beneficiary to this and the only listed smartphone retailer in Jakarta Stock Exchange Composite Index (JCI INDEX) with a decent market capitalization (USD 610 million). Besides Sido Muncul (SIDO IJ) , Erajaya Swasembada (ERAA IJ) seems to be another stock that benefited from COVID-19 through work-from-home and home-based-learnings arrangements. 
This year, the share price has been hovering around IDR 2600-2850 level caused by a lack of short-term catalyst.  The IMEI rule has certainly been the key factor for last year's revenue growth but after this, what's next? The short-term outlook for having Erajaya pales in comparison to its long-term prospect therefore after making a 76% return in 6 months, maybe it is time to realized some profit in Erajaya Swasembada (ERAA IJ) . 
The long-term prospect remains bullish. As the smartphone penetration in Indonesia is set to increase from 70 to 89% in 2025, Erajaya is set to benefit from this although it is less appealing compared to the 2015 to 2020 period when the smartphone penetration jumped from 29% to 70% (130%).

Erajaya (ERAA): Lack of Short Term Catalyst but March on Long Term

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>  reported its 4Q2020 results on Wednesday (24th March 2021) which saw revenues growing 24.8% YoY while the reported operating profit more than tripled during the quarter.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/196/833/original/image_54254222321616606696546.png?1616606699" class="editor-image img-responsive" data-smartkarma-image-id="196833"></figure>Source: Company disclosuresThe reported revenue for 2020 was 1.5% below consensus forecasts while Xiaomi’s OP for full-year 2020 beat consensus estimates by 67.2%.

Xiaomi Corp (1810 HK)  reported its 4Q2020 results on Wednesday (24th March 2021) which saw revenues growing 24.8% YoY while the reported operating profit more than tripled during the quarter.Source: Company disclosuresThe reported revenue for 2020 was 1.5% below consensus forecasts while Xiaomi’s OP for full-year 2020 beat consensus estimates by 67.2%.

Xiaomi 4Q: Revenues Surge as Huawei Struggles but a Chip Shortage Could Hurt Top Line and Margins

<ul class="">
<li>The U.S. court suspended the investment ban on Xiaomi.</li>
<li>For the first two months of 2021, China express parcels increased by 100.3% over 2020 and 80% over 2019.</li>
<li>The founder of Pinduoduo (PDD), Colin Huang, resigned as chairman of board.</li>
</ul>


The U.S. court suspended the investment ban on Xiaomi.
For the first two months of 2021, China express parcels increased by 100.3% over 2020 and 80% over 2019.
The founder of Pinduoduo (PDD), Colin Huang, resigned as chairman of board.


China Internet Weekly (Mar 22): U.S. Ban on Xiaomi Lifted, PDD Chair Resigned, China Parcels Up 100%

China

Xiaomi Corporation manufactures communication equipment and parts. The Company produces and sells mobile phones, smart phone software,  set-top boxes, and related accessories. Xiaomi markets its products worldwide.

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Xiaomi Corp (1810 HK)

HSCEI Dividend Futures: June Index Review, Bank Divs, HFCAA - Sell the 2021/22 Steepener

While the HSCEI 2021 dividend futures are trading near our estimated fair, the HSCEI 2021/22 div steepener is not. We recommend selling the...

Brian Freitas

Xiaomi (1810 HK): Market Was Wrong After 4Q20 Result, Upgrade to Buy

The market rushed to sell the stock after the 4Q20 result, but we believe that was a wrong action.The gross margins of all business lines improved....

Ming Lu

Erajaya (ERAA): Lack of Short Term Catalyst but March on Long Term

The short-term outlook for having Erajaya pales in comparison to its long-term prospect therefore after a 76% return in 6 months, maybe it is time...

Henry Soediarko

Xiaomi 4Q: Revenues Surge as Huawei Struggles but a Chip Shortage Could Hurt Top Line and Margins

Xiaomi has a reputation for cheap mid-range smartphones and any increase in prices could impact the company’s market shares.

Shifara Samsudeen, ACMA, CGMA

China Internet Weekly (Mar 22): U.S. Ban on Xiaomi Lifted, PDD Chair Resigned, China Parcels Up 100%

U.S. court suspended the investment ban on Xiaomi. For January and February, China express parcels increased by 80% over 2019.The founder of...

Ming Lu

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