IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Hutchmed China Ltd / Equity Capital Markets

<div>
<a href="https://www.smartkarma.com/entities/hutchmed-china-ltd" target="_blank" data-smartkarma-citation="entities:133:1" rel="noopener">Hutchmed China Ltd (13 HK)</a> has launched a $603 million secondary listing on HKEx by offering 104.0 million ordinary shares at a maximum offer price of HK$45.00 per share. Bookbuilding is scheduled to run until the pricing on 23 June. The net proceeds will be used to fund the late-stage clinical programs (savolitinib, surufatinib, fruquintinib, HMPL-689 and HMPL-523), to support further proof-of-concept studies and strengthen commercialisation capabilities.
HutchMed has primary listings on Nasdaq and on UK AIM. The HKEx secondary listing will be supported by five cornerstone investors which will subscribe for HK$2,535 million ($325 million) of the offer shares (54.17% of the offer shares at the maximum offer price). The cornerstone investors are <a href="https://www.smartkarma.com/entities/carlyle-group-inc" target="_blank" data-smartkarma-citation="entities:33402:1" rel="noopener">Carlyle Group Inc (CG US)</a>, CPP Investments, General Atlantic, <a href="https://www.smartkarma.com/entities/hbm-healthcare-investments-ag" target="_blank" data-smartkarma-citation="entities:22373:1" rel="noopener">HBM Healthcare Investments AG (HBMN SW)</a> and CICC Capital.
HutchMed is a China-based, globally focused, biopharma company, active in discovery, development, manufacturing, and commercialisation. The investment case centres on the success of its oncology/immunology platform, which has several near-term clinical and regulatory catalysts from the novel highly selective small molecule (tyrosine kinase inhibitor) pipeline. Notably, in-house discovered drugs, Elunate (fruquintinib) and Sulanda (surufatinib), together with a likely approval for savolitinib, are transforming China prospects. Elunate is performing well in China, with NRDL inclusion boosting volumes. The first global launch is likely to be surufatinib with a US launch targeted for late 2021 or early 2022.
</div><div><div class="content-highlight">In this note, we will look at HutchMed’s potential HK-ADS premium/(discount). As per the norm, HutchMed will price its H-shares at a discount to its ADSs/UK shares to entice investors to participate in the secondary listing. HutchMed pricing its H-shares at a discount of 2-3% to its ADSs will be reasonable, in our view.</div></div>


Hutchmed China Ltd (13 HK) has launched a $603 million secondary listing on HKEx by offering 104.0 million ordinary shares at a maximum offer price of HK$45.00 per share. Bookbuilding is scheduled to run until the pricing on 23 June. The net proceeds will be used to fund the late-stage clinical programs (savolitinib, surufatinib, fruquintinib, HMPL-689 and HMPL-523), to support further proof-of-concept studies and strengthen commercialisation capabilities.
HutchMed has primary listings on Nasdaq and on UK AIM. The HKEx secondary listing will be supported by five cornerstone investors which will subscribe for HK$2,535 million ($325 million) of the offer shares (54.17% of the offer shares at the maximum offer price). The cornerstone investors are Carlyle Group Inc (CG US), CPP Investments, General Atlantic, HBM Healthcare Investments AG (HBMN SW) and CICC Capital.
HutchMed is a China-based, globally focused, biopharma company, active in discovery, development, manufacturing, and commercialisation. The investment case centres on the success of its oncology/immunology platform, which has several near-term clinical and regulatory catalysts from the novel highly selective small molecule (tyrosine kinase inhibitor) pipeline. Notably, in-house discovered drugs, Elunate (fruquintinib) and Sulanda (surufatinib), together with a likely approval for savolitinib, are transforming China prospects. Elunate is performing well in China, with NRDL inclusion boosting volumes. The first global launch is likely to be surufatinib with a US launch targeted for late 2021 or early 2022.
In this note, we will look at HutchMed’s potential HK-ADS premium/(discount). As per the norm, HutchMed will price its H-shares at a discount to its ADSs/UK shares to entice investors to participate in the secondary listing. HutchMed pricing its H-shares at a discount of 2-3% to its ADSs will be reasonable, in our view.

HutchMed Secondary Listing: HK-ADS Premium/​​​(Discount) Views

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 1 month of trading history by that date are eligible for inclusion 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 September review, we see <a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a> and <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 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>, replacing <a href="https://www.smartkarma.com/entities/shimao-property-holdings-limited" target="_blank" data-smartkarma-citation="entities:8375:1" rel="noopener">Shimao Property Holdings (813 HK)</a> and <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement Co Ltd H (914 HK)</a>.<a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 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> and <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a> are close adds.Estimated one-way turnover at the rebalance is 2.78% and will result in a one-way trade of HK$1.86bn.The expected inclusions will have a higher index weight and a lower dividend yield as compared to the expected exclusions and this could push the HSCEI 2022 dividends and the 2021/22 steepener lower.

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the September 2021 review of the Hang Seng Family of Indexes on 13 August. The constituent changes will be effective after the close of trading on 3 September.The review period for the September rebalance ends on 30 June and stocks that have at least 1 month of trading history by that date are eligible for inclusion in the Hang Seng China Enterprises Index (HSCEI INDEX).At the September review, we see JD Logistics (2618 HK) and Li Ning Co Ltd (2331 HK) being included in the Hang Seng China Enterprises Index (HSCEI INDEX), replacing Shimao Property Holdings (813 HK) and Anhui Conch Cement Co Ltd H (914 HK).Innovent Biologics Inc (1801 HK), Bilibili Inc (9626 HK) and Xinyi Solar Holdings (968 HK) are close adds.Estimated one-way turnover at the rebalance is 2.78% and will result in a one-way trade of HK$1.86bn.The expected inclusions will have a higher index weight and a lower dividend yield as compared to the expected exclusions and this could push the HSCEI 2022 dividends and the 2021/22 steepener lower.

HSCEI Sep 2021 Index Rebalance Preview: JD Logistics, Li Ning Are Potential Adds

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For 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>, there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 30.The inclusions are Autohome (2518 HK) and <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> while the deletions are <a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a>, <a href="https://www.smartkarma.com/entities/fit-hon-teng-ltd" target="_blank" data-smartkarma-citation="entities:22868:1" rel="noopener">Fit Hon Teng (6088 HK)</a> and <a href="https://www.smartkarma.com/entities/archosaur-games" target="_blank" data-smartkarma-citation="entities:28948:1" rel="noopener">Archosaur Games (9990 HK)</a>.The inclusion of Autohome (2518 HK) is a surprise and so is the corresponding deletion of <a href="https://www.smartkarma.com/entities/fit-hon-teng-ltd" target="_blank" data-smartkarma-citation="entities:22868:1" rel="noopener">Fit Hon Teng (6088 HK)</a>. With a large impact on both names, these are the ones to watch for. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn.There are 10 trading days to implementation of the changes. The largest passive flows will go to <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>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> while there will be outflows from <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the Hang Seng Tech Index (HSTECH INDEX), there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 30.The inclusions are Autohome (2518 HK) and Bilibili Inc (9626 HK) while the deletions are ZTE Corp H (763 HK), Fit Hon Teng (6088 HK) and Archosaur Games (9990 HK).The inclusion of Autohome (2518 HK) is a surprise and so is the corresponding deletion of Fit Hon Teng (6088 HK). With a large impact on both names, these are the ones to watch for. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn.There are 10 trading days to implementation of the changes. The largest passive flows will go to Bilibili Inc (9626 HK), Kuaishou Technology (1024 HK), Meituan (3690 HK) and Tencent (700 HK) while there will be outflows from Xiaomi Corp (1810 HK), ZTE Corp H (763 HK), Alibaba Group (9988 HK) and JD Health (6618 HK).

HSTECH Index Rebalance: Back to 30 with 2 Adds and 3 Deletes

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For 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>, there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 50.The inclusions are <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>, while <a href="https://www.smartkarma.com/entities/guangdong-investment-ltd" target="_blank" data-smartkarma-citation="entities:12109:1" rel="noopener">Guangdong Investment (270 HK)</a>, <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a> and <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> have been deleted from the index. This is exactly in line with our <a href="https://www.smartkarma.com/insights/hscei-june-2021-index-rebalance-preview-three-adds-four-deletes-possible" target="_blank" rel="noopener">forecast</a>.One-way turnover is estimated at 8.37% and will result in a one-way trade of HK$5.98bn. The largest passive inflows will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> as a result of the capping change from 5% to 8%, while the largest outflows will be on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <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> and <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a>.There are only 10 trading days to implementation of the changes and there should be some impact on the stocks even though the changes were largely expected (at least by us). <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> was widely expected to be included but <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> was not on everyone's list. With 4 days ADV to buy on <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>, the stock could outperform till implementation date.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the Hang Seng China Enterprises Index (HSCEI INDEX), there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 50.The inclusions are BYD (1211 HK) and Evergrande Property Services (6666 HK), while Guangdong Investment (270 HK), China Unicom Hong Kong (762 HK) and China Tower (788 HK) have been deleted from the index. This is exactly in line with our forecast.One-way turnover is estimated at 8.37% and will result in a one-way trade of HK$5.98bn. The largest passive inflows will be on Meituan (3690 HK) and Alibaba Group (9988 HK) as a result of the capping change from 5% to 8%, while the largest outflows will be on Tencent (700 HK), China Construction Bank H (939 HK) and China Tower (788 HK).There are only 10 trading days to implementation of the changes and there should be some impact on the stocks even though the changes were largely expected (at least by us). BYD (1211 HK) was widely expected to be included but Evergrande Property Services (6666 HK) was not on everyone's list. With 4 days ADV to buy on Evergrande Property Services (6666 HK), the stock could outperform till implementation date. 

HSCEI Index Rebalance: BYD's Double Inclusion; Capping Changes Lead to High Turnover

China and US Equity Analyst

Roger Xie

Equity Bottom-Up

<ul style="list-style-type: disc;">
<li>
<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> April ADT (Average Daily Turnover) re-accelerated from March metrics, delivering amazing 55% year-over-year growth in the month. The outperformance is helped by the rebound of global equity markets and easy comparable from last year. For first 4 months of year 2021, HKEx ADT has accelerated the year-over-year growth rate to 77%. IPO market remains robust. Total raised fund has reached HK$137 billion in 32 IPO deals. New economy and biotech stocks account 95% of IPO deals.</li>
<li>We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021, and believe these are the driver to further lift market activities. HKEx delivered HK$3,840mn profit in 21Q1, up 31% quarter-over-quarter, 70% year-over-year. Total ADT is up 86% year-over-year and reached HK$244 bn. Excluding Southbound Stock Connect, ADT grew 76% year-over-year. Commodity trading volume at LME also rebounded 5% quarter-over-quarter. </li>
<li>We forecast Securities ADT of HK$240bn in FY 21 (excluding Stock Connect Northbound volume) and have TP HKD 550 for <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>. Mr. Nicolas Aguzin will become HKEx new CEO effective next Monday May 24 and will deliver his first public speech as HKEx new CEO at LME Asia2021 Metal Seminar on May 25, 2021.  We expect Mr Aguzin will continue to strengthen HKEx market leading position in China New Economy sector and Stock Connect program.     </li>
</ul>



HKEX (388 HK) April ADT (Average Daily Turnover) re-accelerated from March metrics, delivering amazing 55% year-over-year growth in the month. The outperformance is helped by the rebound of global equity markets and easy comparable from last year. For first 4 months of year 2021, HKEx ADT has accelerated the year-over-year growth rate to 77%. IPO market remains robust. Total raised fund has reached HK$137 billion in 32 IPO deals. New economy and biotech stocks account 95% of IPO deals.
We maintain our sanguine view on trading activities and IPO pipeline in Hong Kong market in 2021, and believe these are the driver to further lift market activities. HKEx delivered HK$3,840mn profit in 21Q1, up 31% quarter-over-quarter, 70% year-over-year. Total ADT is up 86% year-over-year and reached HK$244 bn. Excluding Southbound Stock Connect, ADT grew 76% year-over-year. Commodity trading volume at LME also rebounded 5% quarter-over-quarter. 
We forecast Securities ADT of HK$240bn in FY 21 (excluding Stock Connect Northbound volume) and have TP HKD 550 for HKEX (388 HK). Mr. Nicolas Aguzin will become HKEx new CEO effective next Monday May 24 and will deliver his first public speech as HKEx new CEO at LME Asia2021 Metal Seminar on May 25, 2021.  We expect Mr Aguzin will continue to strengthen HKEx market leading position in China New Economy sector and Stock Connect program.     


HKEx(388.HK): New Economy and Stock Connect to Continue Lift Trading Activities

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

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

Baidu (9888 HK)

HutchMed Secondary Listing: HK-ADS Premium/(Discount) Views

HutchMed has launched a $603 million secondary listing on HKEx. In this note, we will look at HutchMed’s potential HK-ADS premium/(discount).

Arun George

HSCEI Sep 2021 Index Rebalance Preview: JD Logistics, Li Ning Are Potential Adds

There could be 2 sets of changes to the HSCEI at the September review with JD Logistics and Li Ning being included and Shimao Property and Anhui...

Brian Freitas

HSTECH Index Rebalance: Back to 30 with 2 Adds and 3 Deletes

There are 2 adds and 3 deletes for the HSTECH Index. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn. 2518...

Brian Freitas

HSCEI Index Rebalance: BYD's Double Inclusion; Capping Changes Lead to High Turnover

The 2 adds and 3 deletes for the HSCEI are just what we expected. BYD is an inclusion in the HSI too and could move higher over the next 2 weeks....

Brian Freitas

HKEx(388.HK): New Economy and Stock Connect to Continue Lift Trading Activities

HKEx will continue to strengthen its market leading position in China New Economy sector and Stock Connect program. We forecast Securities ADT of...

Roger Xie

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HutchMed Secondary Listing: HK-ADS Premium/​​​(Discount) Views

HutchMed has launched a $603 million secondary listing on HKEx. In this note, we will look at HutchMed’s potential HK-ADS premium/(discount).

Arun George

HSCEI Sep 2021 Index Rebalance Preview: JD Logistics, Li Ning Are Potential Adds

There could be 2 sets of changes to the HSCEI at the September review with JD Logistics and Li Ning being included and Shimao Property and Anhui...

Brian Freitas

HSTECH Index Rebalance: Back to 30 with 2 Adds and 3 Deletes

There are 2 adds and 3 deletes for the HSTECH Index. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn. 2518...

Brian Freitas

HSCEI Index Rebalance: BYD's Double Inclusion; Capping Changes Lead to High Turnover

The 2 adds and 3 deletes for the HSCEI are just what we expected. BYD is an inclusion in the HSI too and could move higher over the next 2 weeks....

Brian Freitas

HKEx(388.HK): New Economy and Stock Connect to Continue Lift Trading Activities

HKEx will continue to strengthen its market leading position in China New Economy sector and Stock Connect program. We forecast Securities ADT of...

Roger Xie

HutchMed Secondary Listing: HK-ADS Premium/(Discount) Views