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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.</li>
<li>We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and that number will change over the next 3 weeks depending on performance.</li>
</ul>


The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.

Meituan (3690 HK)'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.
We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of Meituan (3690 HK) and that number will change over the next 3 weeks depending on performance.


Meituan (3690 HK): Big Passive Selling in December

Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>We believe that Meituan will exit 2024 on a high note with stronger earnings growth in 2H24.</li>
<li>With moderating rivalry with Douyin and normalizing marketing spending, Meituan’s long-term profitability is on clearer display observed from its 2Q results.</li>
<li>We expect the company to generate ~RMB60 billion adjusted net profit by 2026, implying 25% CAGR and 17x P/E on FY26 earnings.</li>
</ul>


We believe that Meituan will exit 2024 on a high note with stronger earnings growth in 2H24.
With moderating rivalry with Douyin and normalizing marketing spending, Meituan’s long-term profitability is on clearer display observed from its 2Q results.
We expect the company to generate ~RMB60 billion adjusted net profit by 2026, implying 25% CAGR and 17x P/E on FY26 earnings.


Meituan (3690 HK): Assessing Its Long-Term Profitability

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p>Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.</p><ul><li><a href='#lucror-entity-26970'>Meituan</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.Meituan

Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

<ul>
<li>Welcome to Consumer Tales &amp; Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.</li>
<li>
<a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>  reported robust revenue and profit growth amidst  broader struggles in the F&amp;B industry  raises questions on industry dynamics and momentum sustainability.</li>
<li>
<a href="https://www.smartkarma.com/entities/health-and-happiness-h-h-int" target="_blank" data-smartkarma-citation="entities:20582:1" rel="noopener">Health And Happiness (1112 HK)</a>  faced another quarter of declining revenue and profits, but reported a significant rise in cash generated from operations thanks to improved inventory turnover.</li>
</ul>


Welcome to Consumer Tales &amp; Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.

Meituan (3690 HK)  reported robust revenue and profit growth amidst  broader struggles in the F&amp;B industry  raises questions on industry dynamics and momentum sustainability.

Health And Happiness (1112 HK)  faced another quarter of declining revenue and profits, but reported a significant rise in cash generated from operations thanks to improved inventory turnover.


Weekly Consumer Tales: Meituan's Margin Gain, H&H's Pain, PDD's Stock Crash

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>Meituan reported C2Q24 revenue 1.4%/2.3% higher than our estimate/consensus and adjusted net income 17%/28% higher than our estimate/consensus, thanks to lower rider cost and less subsidies to users;</li>
<li>Although poor economy has plunged Meituan's merchant base to the loss-making zone, we expect Meituan's take rate to persist as take-out order represents incremental revenue to offset merchants' fixed cost.</li>
<li>We reiterate BUY rating and raise TP to HK$165/share. Catalysts are reduced competition, expansion of Pinhaofan, and overseas expansion.</li>
</ul>


Meituan reported C2Q24 revenue 1.4%/2.3% higher than our estimate/consensus and adjusted net income 17%/28% higher than our estimate/consensus, thanks to lower rider cost and less subsidies to users;
Although poor economy has plunged Meituan's merchant base to the loss-making zone, we expect Meituan's take rate to persist as take-out order represents incremental revenue to offset merchants' fixed cost.
We reiterate BUY rating and raise TP to HK$165/share. Catalysts are reduced competition, expansion of Pinhaofan, and overseas expansion.


[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution

China

Meituan operates as a web based shopping platform for locally found consumer products and retail services. The Company offers deals of the day by selling vouchers on local services and entertainment, dining, delivery, and other services. Meituan provides its services throughout China.

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Meituan (3690 HK)

Meituan (3690 HK): Big Passive Selling in December

Meituan's outperformance over the last few months has taken its index weight above the cap for the HSI, HSCEI, HSTECH and HSIII. That means passive...

Brian Freitas

Meituan (3690 HK): Assessing Its Long-Term Profitability

We expect accelerating earnings growth for Meituan in 2H24, and see 2Q results offer insights into its long-term profitability. Adjusted net...

Eric Chen

Morning Views Asia: Meituan

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Weekly Consumer Tales: Meituan's Margin Gain, H&H's Pain, PDD's Stock Crash

Weekly include a brief analysis of earnings released by Meituan and Health and Happiness, last week. Also PDD's stock crash following Management's...

Devi Subhakesan

[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution

Meituan beats revenue and net income estimates, despite challenges with merchant base; BUY rating maintained with TP raised to HK$165/share.

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Meituan (3690 HK): Big Passive Selling in December

Meituan's outperformance over the last few months has taken its index weight above the cap for the HSI, HSCEI, HSTECH and HSIII. That means passive...

Brian Freitas

Meituan (3690 HK): Assessing Its Long-Term Profitability

​We expect accelerating earnings growth for Meituan in 2H24, and see 2Q results offer insights into its long-term profitability. Adjusted net...

Eric Chen

Morning Views Asia: Meituan

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Weekly Consumer Tales: Meituan's Margin Gain, H&H's Pain, PDD's Stock Crash

Weekly include a brief analysis of earnings released by Meituan and Health and Happiness, last week. Also PDD's stock crash following Management's...

Devi Subhakesan

[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Better Margin Outlook from Rider Cost and Execution

​Meituan beats revenue and net income estimates, despite challenges with merchant base; BUY rating maintained with TP raised to HK$165/share.

Blue Lotus Research Institute

We expect accelerating earnings growth for Meituan in 2H24, and see 2Q results offer insights into its long-term profitability. Adjusted net...

Meituan beats revenue and net income estimates, despite challenges with merchant base; BUY rating maintained with TP raised to HK$165/share.