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

Sunshine Insurance Group  Lt / Equity Capital Markets

<ul>
<li>Sunshine Insurance Group (SIG), a life, health and P&amp;C insurance company, aims to raise up to US$1bn in its HK IPO.</li>
<li>SIG is an integrated insurance provider which offers both life and health (L&amp;H) and property and casualty (P&amp;C) insurance in China.</li>
<li>In this note, we talk about the positive aspects of the deal.</li>
</ul>


Sunshine Insurance Group (SIG), a life, health and P&amp;C insurance company, aims to raise up to US$1bn in its HK IPO.
SIG is an integrated insurance provider which offers both life and health (L&amp;H) and property and casualty (P&amp;C) insurance in China.
In this note, we talk about the positive aspects of the deal.


Sunshine Insurance Group Pre-IPO - The Positives - Steady Headline Growth

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

Zhejiang Leapmotor Technologie / Event-Driven

<ul>
<li>We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.</li>
<li>Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.</li>
<li>Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.</li>
</ul>


We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.


HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There's a Lot!)

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Weak Results in Investment and P&amp;C: Ping An Insurance (2318.HK) [Ping An] reported 3Q21 results of CNY 23.6 bn, declining CNY 7.1 bn (23.2%) linked quarter.  Much of the struggle this quarter remained Ping An’s investment portfolio – likely a long-term thematic, where the net investment yield plummet 30 bp to 4.4%. Excluding Ping An Bank (000001.CH) [PAB] whose results were completely managed, all other business units disappointed linked quarter; and*Concerns Increase At Bank And With Expansion Plans:  PAB reported 3Q21 results of CNY 11.7 bn. Don’t shoot off the streamers just yet, credit quality was abysmal and Ping An clearly pulled on its bank lever. By our analysis, we find that credit remains incredibly challenged as net new NPLs are now accelerating at Indian bank pace of CNY 12.4 bn or 159.8% annualized.  Assuming that the accelerated credit break in the PAB portfolio continues to remain at its current level, we find that PAB’s reserves remain CNY 19 bn light.

*Weak Results in Investment and P&amp;C: Ping An Insurance (2318.HK) [Ping An] reported 3Q21 results of CNY 23.6 bn, declining CNY 7.1 bn (23.2%) linked quarter.  Much of the struggle this quarter remained Ping An’s investment portfolio – likely a long-term thematic, where the net investment yield plummet 30 bp to 4.4%. Excluding Ping An Bank (000001.CH) [PAB] whose results were completely managed, all other business units disappointed linked quarter; and*Concerns Increase At Bank And With Expansion Plans:  PAB reported 3Q21 results of CNY 11.7 bn. Don’t shoot off the streamers just yet, credit quality was abysmal and Ping An clearly pulled on its bank lever. By our analysis, we find that credit remains incredibly challenged as net new NPLs are now accelerating at Indian bank pace of CNY 12.4 bn or 159.8% annualized.  Assuming that the accelerated credit break in the PAB portfolio continues to remain at its current level, we find that PAB’s reserves remain CNY 19 bn light.  

Ping An Insurance – Another Abysmal Result

*Another Weak Number: Waterdrop, Inc. (WDH.US) [Waterdrop] reported its second set of earnings results since its IPO, coming in at a negative CNY 656 mn  - declining CNY 286 mn or 77.3% linked quarter bringing cumulative losses since the IPO to over CNY 1.0 bn or about 38% of IPO funds raised. Challenges came from overall cost growth of CNY 411 mn (30.6%) due primarily to sales and marketing spend; and    *”Notice” To Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders”, aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections. This will be a direct challenge for Waterdrop and other mainland Chinese insurers.

*Another Weak Number: Waterdrop, Inc. (WDH.US) [Waterdrop] reported its second set of earnings results since its IPO, coming in at a negative CNY 656 mn  - declining CNY 286 mn or 77.3% linked quarter bringing cumulative losses since the IPO to over CNY 1.0 bn or about 38% of IPO funds raised. Challenges came from overall cost growth of CNY 411 mn (30.6%) due primarily to sales and marketing spend; and    *”Notice” To Online Insurers: The China Banking and Insurance Regulatory Commission’s (CBIRC) roll out of the internet insurance revision plan “Notice on Carrying out Special Rectification of Internet Insurance Disorders”, aims to scrutinize mainland China’s insurance technology platforms, ordering firms and agencies to end improper marketing and pricing practices, and improve privacy protections. This will be a direct challenge for Waterdrop and other mainland Chinese insurers. 

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

*Regulatory Onslaught Continues: The China Banking and Insurance Regulatory Commission (CBIRC) announced that it is investigating Ping An Insurance’ (2318.HK) [Ping An] property investments. Regulatory scrutiny of Ping An is occurring against the backdrop of the country’s skyrocketing real estate market and excessive leverage to the sector. This is on top of the CBIRC’s roll out of the internet insurance revision plan, which aims to scrutinize mainland China’s insurance technology platforms to which Ping An too has exposure; and*Improving Overall Fundamentals: Ping An’s reported 1H21 results of CNY 58.0 bn, declined CNY 16.4 bn (22.0%) HOH related to the above real estate risk. Excluding the real estate write-downs, we note that Ping An’s HOH operating result would have actually improved CNY 8.2 bn or 11.0% on the back of insurance fundamental improvement nearly across the board.

China

Central China New Life Limited engages in provision of property management services and related value-added services. The Company offers property management and related value-added services, lifestyle services, commercial property management and consultation services, and more. Central China New Life mainly conducts its businesses in China market.

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Central China New Life (9983 HK)

Sunshine Insurance Group Pre-IPO - The Positives - Steady Headline Growth

Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO. In this note, we talk about the...

Sumeet Singh

HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There's a Lot!)

There could be 3 adds in December while there will be MANY more changes in March. The adds should outnumber the deletes, but there will be many...

Brian Freitas

Ping An Insurance – Another Abysmal Result

PING AN: Ping An reported a QOQ 3Q21 results decline of 23.2%, attributed to its investment portfolio. Excluding PAB, whose results were managed,...

Thomas J. Monaco

Waterdrop – Someone Plug The Dike

WATERDROP: WDH reported its second set of earnings since the IPO, coming in at a negative CNY 656 mn - declining 77.3% QOQ bringing cumulative...

Thomas J. Monaco

Ping An Insurance - Ugggh

PING AN INSURANCE: The CBIRC is investigating Ping An's property investments against the backdrop of the country’s skyrocketing real estate market...

Thomas J. Monaco

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