Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>Vipshop has underperformed, on a 12-month basis, due to a slowdown in active user growth, which has spilt over into slower revenue growth and contracting earnings.</li>
<li>Material equity investments, accompanied by strategic cooperation agreements, by Tencent and JD.com in December 2017 catalysed significant user growth over the subsequent 3 years.</li>
<li>The recent de-rating once again flags Vipshop as an attractive takeover target for its current strategic shareholders and broader eCommerce rivals, including nascent disruptors and live-streaming operators.</li>
</ul>


Vipshop has underperformed, on a 12-month basis, due to a slowdown in active user growth, which has spilt over into slower revenue growth and contracting earnings.
Material equity investments, accompanied by strategic cooperation agreements, by Tencent and JD.com in December 2017 catalysed significant user growth over the subsequent 3 years.
The recent de-rating once again flags Vipshop as an attractive takeover target for its current strategic shareholders and broader eCommerce rivals, including nascent disruptors and live-streaming operators.


Vipshop: With Net Cash at Nearly 50% of Market Cap, Is It a Value Trap or a Takeover Target?

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

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.</li>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> has not declared a dividend yet due to its IPO, while <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a>'s suspension could lead to index deletion in June or July. </li>
<li>Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.</li>
</ul>


Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.

CNOOC Ltd (883 HK) has not declared a dividend yet due to its IPO, while Sunac China Holdings (1918 HK)'s suspension could lead to index deletion in June or July. 
Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.


HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments

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.

<ul>
<li>Kuaishou reported 4Q2021 results yesterday. Revenue grew 35.0% YoY to RMB24.4bn (vs consensus RMB23.1bn) while operating losses for the quarter dropped to 23.7% of revenues to RMB5.8bn (vs consensus RMB5.72bn).</li>
<li>The company’s operating losses widened to 36.1% of revenues in 3Q2021 while revenue from livestreaming further declined during the last quarter.</li>
<li>In our previous insight, we highlighted Kuaishou’s cost cutting measures to help improve operating efficiency and forecasted operating losses to be in the range of 22-25% of revenues in 4Q2021</li>
</ul>


Kuaishou reported 4Q2021 results yesterday. Revenue grew 35.0% YoY to RMB24.4bn (vs consensus RMB23.1bn) while operating losses for the quarter dropped to 23.7% of revenues to RMB5.8bn (vs consensus RMB5.72bn).
The company’s operating losses widened to 36.1% of revenues in 3Q2021 while revenue from livestreaming further declined during the last quarter.
In our previous insight, we highlighted Kuaishou’s cost cutting measures to help improve operating efficiency and forecasted operating losses to be in the range of 22-25% of revenues in 4Q2021


Kuaishou 4Q2021: Strong Quarter with Recovery in Livestreaming and Improvement in Profitability

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.

<ul>
<li>On 8th Mar 2022, Securities Exchange Commission (SEC) added five China ADR names to its provisional list of issuers under the Holding Foreign Companies Accountable Act (HFCAA).</li>
<li>There is nothing new about the list, on 2nd Dec 2021, SEC had issued final amendments to implement the HFCAA which had already spoken about the list and its implications.</li>
<li>In this note, we'll talk about the latest developments its possible timelines and implications.</li>
</ul>


On 8th Mar 2022, Securities Exchange Commission (SEC) added five China ADR names to its provisional list of issuers under the Holding Foreign Companies Accountable Act (HFCAA).
There is nothing new about the list, on 2nd Dec 2021, SEC had issued final amendments to implement the HFCAA which had already spoken about the list and its implications.
In this note, we'll talk about the latest developments its possible timelines and implications.


China ADRs Delisting - SEC Sets the Clock Ticking and Sends China ADRs Tripping

<ul>
<li>
<a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> could replace <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> 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 June rebalance. The review period ends 31 March.</li>
<li>
<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 (9626 HK)</a> is a close add while <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.</li>
<li>Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).</li>
</ul>



Great Wall Motor (2333 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance. The review period ends 31 March.

Bilibili (9626 HK) is a close add while Sunac China Holdings (1918 HK) is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.
Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).


HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)

China

Bilibili Inc. provides online entertainment services. The Company offers a platform that covers a wide array of genres and media formats, including videos, live broadcasting, mobile games, animation, and comics. Bilibili serves customers in China.

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Bilibili (9626 HK)

Vipshop: With Net Cash at Nearly 50% of Market Cap, Is It a Value Trap or a Takeover Target?

In this insight, we analyse Vipshop’s user base growth, financial performance, and earnings outlook, take an updated look at current valuation...

Wium Malan, CFA

HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments

We estimate a fair value of 240.73 DIPS for the HSCEI 2022 dividend futures after adjusting for CNOOC/Sunac/JD.com. We would be sellers of the...

Brian Freitas

Kuaishou 4Q2021: Strong Quarter with Recovery in Livestreaming and Improvement in Profitability

Kuaishou reported 4Q2021 results yesterday. Revenue grew 35.0% YoY to RMB24.4bn (vs consensus RMB23.1bn) while operating losses for the quarter...

Shifara Samsudeen, ACMA, CGMA

China ADRs Delisting - SEC Sets the Clock Ticking and Sends China ADRs Tripping

On 8th Mar 2022, Securities Exchange Commission (SEC) added five China ADR names to its provisional list of issuers under the Holding Foreign...

Sumeet Singh

HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)

Great Wall Motor (2333) should replace Hansoh Pharma (3692) in the HSCEI at the June rebalance. Bilibili is a close add in case Sunac is deleted....

Brian Freitas

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