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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Shimao Services Holdings Limited / 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 review announcement for the March 2021 review should be made on 12 February and will be effective after the close of trading on 5 March.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.Secondary Listings and Biotech stocks listed under Chapter 18A of the Listing Rules are not eligible for inclusion in the Stock Connect program.There are a lot of stocks that will join the HSCI and subsequently included as a part of the Southbound Stock Connect program - these stocks will see buying from mainland investors and could outperform their peers and the market.There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list. There are other stocks that will remain a part of the HSCI but will be removed from the Southbound Stock Connect buy list since their average market cap drops below HKD 5bn.Read on for more details and stocks affected by 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 March 2021 review should be made on 12 February and will be effective after the close of trading on 5 March.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.Secondary Listings and Biotech stocks listed under Chapter 18A of the Listing Rules are not eligible for inclusion in the Stock Connect program.There are a lot of stocks that will join the HSCI and subsequently included as a part of the Southbound Stock Connect program - these stocks will see buying from mainland investors and could outperform their peers and the market.There are stocks that will be deleted from the HSCI and consequently deleted from the Southbound Stock Connect buy list. There are other stocks that will remain a part of the HSCI but will be removed from the Southbound Stock Connect buy list since their average market cap drops below HKD 5bn.Read on for more details and stocks affected by the changes.

HSCI Index Rebalance and Stock Connect: Early Look at Potential Changes

Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

The spectacular sale of Elevators has transformed TKA’s balance sheet and the performance problems are finally being addressed. The cash from the sale will more than cover COVID losses, the restructuring and restore TKA to health. A management prioritising productivity and margin over revenue should transform both P&amp;L and cashflow. We estimated 16-19,000 job cuts, but with the new plan, 23,000 jobs and E6bn of revenue will be off-loaded. The supervisory board has a poor track record, but the shareholder appointees have been renewed so they may deliver. Investors can buy cash at a discount with a free option on a turnaround. On 2.5x EV/fEBITDA, it is time to BUY:

The spectacular sale of Elevators has transformed TKA’s balance sheet and the performance problems are finally being addressed. The cash from the sale will more than cover COVID losses, the restructuring and restore TKA to health. A management prioritising productivity and margin over revenue should transform both P&amp;L and cashflow. We estimated 16-19,000 job cuts, but with the new plan, 23,000 jobs and E6bn of revenue will be off-loaded. The supervisory board has a poor track record, but the shareholder appointees have been renewed so they may deliver. Investors can buy cash at a discount with a free option on a turnaround. On 2.5x EV/fEBITDA, it is time to BUY:

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

The overall expectation at the start of H1 2019, was that following a decade of seeing growth as the key focus (as ultra-accommodative global monetary policies provided cheap capital), the world would see a return to value. However, as we sit amid H1 2020 and Covid-19 expectation has not materialised.As part of the Covid-19 response, Interest rates are decreasing en-masse without a clear time frame on their reversal, investors in value orientated stocks are now being forced to adjust further to the new fiscal environment. However, as the Asia Pacific value / growth ratio nears a minus 2 standard deviation to the longer-term average, the probability of a reversal increases.We select 16 key names primed to continue our out performing screen, which delivered on average a 120bps of out performance since October 2019 <a href="https://www.smartkarma.com/insights/screening-the-silk-road-small-mid-cap-free-cash-flow" target="_blank" data-smartkarma-citation="insights:28877" rel="noopener">Screening the Silk Road: (Small-)Mid Cap Free Cash Flow</a> .

The overall expectation at the start of H1 2019, was that following a decade of seeing growth as the key focus (as ultra-accommodative global monetary policies provided cheap capital), the world would see a return to value. However, as we sit amid H1 2020 and Covid-19 expectation has not materialised.As part of the Covid-19 response, Interest rates are decreasing en-masse without a clear time frame on their reversal, investors in value orientated stocks are now being forced to adjust further to the new fiscal environment. However, as the Asia Pacific value / growth ratio nears a minus 2 standard deviation to the longer-term average, the probability of a reversal increases.We select 16 key names primed to continue our out performing screen, which delivered on average a 120bps of out performance since October 2019 Screening the Silk Road: (Small-)Mid Cap Free Cash Flow . 

Screening the Silk Road: (Small) Mid Cap Free Cash Flow

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Hitachi/Honda, AOF, Unizo, SVI, Maanshan, Osram, Genting, KCC

Quantitative Analysis

In keeping with the 'spirit' of Halloween, we look at some charts of short interest and price for stocks listed in Hong Kong.These stocks have seen a large upward move in short interest from the beginning of the year accompanied by big price moves and could be candidates for a stock collapse or squeeze.

In keeping with the 'spirit' of Halloween, we look at some charts of short interest and price for stocks listed in Hong Kong.These stocks have seen a large upward move in short interest from the beginning of the year accompanied by big price moves and could be candidates for a stock collapse or squeeze.

China

Angang Steel Company Limited produces steel products which include cold rolled sheets, steel rail, pipe billets, wire rods, thick plates, and other steel products.

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Angang Steel Co Ltd (H) (347 HK)

HSCI Index Rebalance and Stock Connect: Early Look at Potential Changes

While the HSCI does not have assets benchmarked to it, the index review is closely watched since the index forms the basis of stocks that are a...

Brian Freitas

Thyssenkrupp: Turnaround Underway

The spectacular sale of Elevators has transformed TKA’s balance sheet and the performance problems are finally being addressed. The cash from the...

Bucephalus Research Partnership

Screening the Silk Road: (Small) Mid Cap Free Cash Flow

The overall expectation at the start of H1 2019, was that following a decade of seeing growth as the key focus (as ultra-accommodative global...

David Lepper

Last Week in Event SPACE: Hitachi/Honda, AOF, Unizo, SVI, Maanshan, Osram, Genting, KCC

Last Week in Event SPACE ... The Tender Offers for Honda Motor (7267 JP)'s three large auto parts affiliates Showa Corp (7274 JP), Keihin Corp...

David Blennerhassett

Halloween Fear Fest Charts - HK Edition

In keeping with the 'spirit' of Halloween, we look at some charts of short interest and price for stocks listed in Hong Kong.These stocks have seen...

Brian Freitas

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