Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

What is the key question? Are we at the start of another 12-year bull market in value stocks? That's the duration of the last period when the value style of investing out performed growth in the Asia Pacific region.What is the evidence? Over the last 12-months, the balance between growth and value reversed the dominance that growth has held for much of the last 10-years. Whilst in Q1 2021, we remained cautious about a full declaration that the trend is reversing, we feel that the process is indeed underway and that a multi-year reversal is in progress. This is not just positive for value investors, but increasingly so for Small-Mid Cap investors.Why read this screening note? Q1 2021’s screen performance trumped the market delivering relative outperformance of 26.2%. Of the 27 names presented, 18 stocks delivered positive share price performance with an average increase of 21%, whilst the remaining 9 stocks declined 9.4 %. What is presented? 56 names appear in our Q3 2021 Asia Pacific list providing plenty of opportunity for investors. The average EV/FCF multiple of 5.2x in Q3 2021 compared to 6.3x in Q1 2021 and 5.6x in Q2 2020. The average Free Cashflow multiple on equity is 4.6x in Q3 2021 versus 4.2x in Q1 2021.

What is the key question? Are we at the start of another 12-year bull market in value stocks? That's the duration of the last period when the value style of investing out performed growth in the Asia Pacific region.What is the evidence? Over the last 12-months, the balance between growth and value reversed the dominance that growth has held for much of the last 10-years. Whilst in Q1 2021, we remained cautious about a full declaration that the trend is reversing, we feel that the process is indeed underway and that a multi-year reversal is in progress. This is not just positive for value investors, but increasingly so for Small-Mid Cap investors.Why read this screening note? Q1 2021’s screen performance trumped the market delivering relative outperformance of 26.2%. Of the 27 names presented, 18 stocks delivered positive share price performance with an average increase of 21%, whilst the remaining 9 stocks declined 9.4 %. What is presented? 56 names appear in our Q3 2021 Asia Pacific list providing plenty of opportunity for investors. The average EV/FCF multiple of 5.2x in Q3 2021 compared to 6.3x in Q1 2021 and 5.6x in Q2 2020. The average Free Cashflow multiple on equity is 4.6x in Q3 2021 versus 4.2x in Q1 2021.

Screening the Silk Road: Q3 2021 All Cap Screening - Free Cashflow (FCF)

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

In this weeks recap, we look at:<ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul>There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>.

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

Orient Overseas International / Event-Driven

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect <a href="https://www.smartkarma.com/entities/brii-biosciences" target="_blank" data-smartkarma-citation="entities:33014:1" rel="noopener">Brii Biosciences (2137 HK)</a>, <a href="https://www.smartkarma.com/entities/helen-s-international-holdings" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holdings (9869 HK)</a>, <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>, <a href="https://www.smartkarma.com/entities/keymed-biosciences-inc" target="_blank" data-smartkarma-citation="entities:33011:1" rel="noopener">Keymed Biosciences Inc (2162 HK)</a> and <a href="https://www.smartkarma.com/entities/sce-intelligent-commercial-management" target="_blank" data-smartkarma-citation="entities:33500:1" rel="noopener">SCE Intelligent Commercial Management (606 HK)</a> to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.<div>Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.</div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect Brii Biosciences (2137 HK), Helen's International Holdings (9869 HK), Medlive Technology (2192 HK), Keymed Biosciences Inc (2162 HK) and SCE Intelligent Commercial Management (606 HK) to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

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

Orient Overseas International / Equity Capital Markets

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates. However, this will be the fourth placement in the name and will be the largest and is being offered at the tightest discount. None of the past deals held on to the deal price in the near term.

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.We see 28 potential inclusions to the HSCI at the rebalance and 15 potential deletions, plus another 7 close deletions. Only 10 of the potential deletions will be removed from Southbound Stock Connect buy list since the other deletions are either not a part of Stock Connect currently or have listed A-shares.The inclusions to the HSCI outperformed the deletions at the March rebalance from review cut-off to announcement of the changes before giving by some of the gains to implementation and then some more for the 1 month post the implementation of the changes.

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June. The review announcement for the September 2021 review should be made on 13 August and will be effective after the close of trading on 3 September.Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors.We see 28 potential inclusions to the HSCI at the rebalance and 15 potential deletions, plus another 7 close deletions. Only 10 of the potential deletions will be removed from Southbound Stock Connect buy list since the other deletions are either not a part of Stock Connect currently or have listed A-shares.The inclusions to the HSCI outperformed the deletions at the March rebalance from review cut-off to announcement of the changes before giving by some of the gains to implementation and then some more for the 1 month post the implementation of the changes.

HSCI Index Rebalance & Stock Connect: Expected Changes in September

Hong Kong

Orient Overseas International Ltd, through its subsidiaries, owns and leases ships, operates terminals, and provides freight forwarding and container transportation services.  The Company also develops and invests in properties, leases equipment, and invests in securities.

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Orient Overseas International (316 HK)

Screening the Silk Road: Q3 2021 All Cap Screening - Free Cashflow (FCF)

Is it the start of a 12-year bull market in value? That's the duration of the last period when APAC value outperformed growth. Q'1s FCF screen...

David Lepper

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

There could be 5 adds to the HSCI in December. In March, there could be 17 adds and 4 deletes. There will be pre-positioning on the inclusions...

Brian Freitas

Orient Overseas Placement - Fourth Deal This Year. Is the Largest and at the Tightest Discount.

Orient Overseas (OOIL) aims to raise around US$419m via a top-up placement. The stock has been a tear this year owing to the rising freight rates

Sumeet Singh

HSCI Index Rebalance & Stock Connect: Expected Changes in September

Currently we see 28 potential inclusions & 22 deletions from the HSCI at the Sep rebalance. Most of the inclusions will join Stock Connect while...

Brian Freitas

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