Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3>Condo resale prices, volume continue to climb in Aug21; Suburban (OCR) leading the upward trend</h3><p>Demand for resale non-landed private homes remained robust in Aug21 with prices climbing and more units changing hands despite the Hungry Ghost Festival when sales typically slow down. Condominium resale prices climbed 0.5% MoM, albeit at a slower pace than the revised 0.9% jump in Jul21, according to SRX. YoY, resale prices were up 7.9% from Aug20. MoM, homes in the suburbs enjoyed the biggest price increase of 0.9%. Prices in central Singapore went up by 0.3% while homes in the city fringes saw prices dip 0.2%. More condo units were sold for the second straight month, with an estimated 1,860 units resold in Aug21, a 4.9% increase from the 1,773 units in Jul21. Transactions were 40.5% higher YoY, and 79.5% above the five-year average volume for the month of Aug. Most of the transactions were units in the suburbs, representing 60.4% of total volume for the month. About 23% of transactions were in the city fringes, with the remaining 16.5% in the prime districts or core central region. Prices have increased 6.4 % year-to-date and may increase by more than 8% this year.</p>

SingaporeCondo resale prices, volume continue to climb in Aug21; Suburban (OCR) leading the upward trendDemand for resale non-landed private homes remained robust in Aug21 with prices climbing and more units changing hands despite the Hungry Ghost Festival when sales typically slow down. Condominium resale prices climbed 0.5% MoM, albeit at a slower pace than the revised 0.9% jump in Jul21, according to SRX. YoY, resale prices were up 7.9% from Aug20. MoM, homes in the suburbs enjoyed the biggest price increase of 0.9%. Prices in central Singapore went up by 0.3% while homes in the city fringes saw prices dip 0.2%. More condo units were sold for the second straight month, with an estimated 1,860 units resold in Aug21, a 4.9% increase from the 1,773 units in Jul21. Transactions were 40.5% higher YoY, and 79.5% above the five-year average volume for the month of Aug. Most of the transactions were units in the suburbs, representing 60.4% of total volume for the month. About 23% of transactions were in the city fringes, with the remaining 16.5% in the prime districts or core central region. Prices have increased 6.4 % year-to-date and may increase by more than 8% this year.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<div>
<p>In this analysis, we provide a detailed overview of investor positioning among 96 active Asia Ex-Japan funds with combined AUM of $80bn.  Highlights:</p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>The big four of China &amp; HK, Taiwan, South Korea and India dominate holdings in Asia Ex-Japan.  The 4 countries combined account for 85.4% of total allocations, though all but India are held underweight versus the MSCI Asia Ex-Japan index.</li>
<li>China &amp; HK's weight in Asia Ex-Japan funds stands at a 4-year low of 42.96% having fallen heavily from the high of 52% back in August 2020.</li>
<li>Allocations in Indian stocks hit a new all-time high last month of 13.54%.  India has been the go-to overweight holding since the election of Narendra Modi in 2014, though managers are much more closely aligned to benchmark today.</li>
<li>
<p>Indonesian allocations are close to their lowest levels on record.  Only 82.8% of the Asia Ex-Japan managers in our analysis have exposure to Indonesia,  with Comgest, Barings and Vontobel closing exposure over the last 6-months.</p>
</li>
<li>Information Technology dominates the holdings picture, being both the largest sector holding and the largest sector overweight by some distance.  Opposing this are net underweights in Health Care (-1.61%), Materials (-1.25%) and Financials (-1.17%). </li>
<li>The key antagonist in China's tech crackdown, Consumer Discretionary weights have fallen from a high of 21.35% in October 2020 to 16.84% today.  In tandem, active managers have moved from an overweight of 2.18% to an underweight of -0.12%.  Confidence has certainly taken a knock.</li>
</ul>
<p>Also analyzed in more detail:  Thailand, Health Care, Indian Financials, South Korean Consumer Staples, China Financials, <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> , <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> , <a href="https://www.smartkarma.com/entities/midea-group-co-ltd-a" target="_blank" data-smartkarma-citation="entities:16185:1" rel="noopener">Midea Group Co Ltd A (000333 CH)</a> and <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US).</a></p>
<p><em>Analysis taken from our Asia Ex-Japan research, covering 96 active Asia Ex-Japan funds with combined AUM of $80bn. </em></p>
</div>


In this analysis, we provide a detailed overview of investor positioning among 96 active Asia Ex-Japan funds with combined AUM of $80bn.  Highlights:



The big four of China &amp; HK, Taiwan, South Korea and India dominate holdings in Asia Ex-Japan.  The 4 countries combined account for 85.4% of total allocations, though all but India are held underweight versus the MSCI Asia Ex-Japan index.
China &amp; HK's weight in Asia Ex-Japan funds stands at a 4-year low of 42.96% having fallen heavily from the high of 52% back in August 2020.
Allocations in Indian stocks hit a new all-time high last month of 13.54%.  India has been the go-to overweight holding since the election of Narendra Modi in 2014, though managers are much more closely aligned to benchmark today.

Indonesian allocations are close to their lowest levels on record.  Only 82.8% of the Asia Ex-Japan managers in our analysis have exposure to Indonesia,  with Comgest, Barings and Vontobel closing exposure over the last 6-months.

Information Technology dominates the holdings picture, being both the largest sector holding and the largest sector overweight by some distance.  Opposing this are net underweights in Health Care (-1.61%), Materials (-1.25%) and Financials (-1.17%). 
The key antagonist in China's tech crackdown, Consumer Discretionary weights have fallen from a high of 21.35% in October 2020 to 16.84% today.  In tandem, active managers have moved from an overweight of 2.18% to an underweight of -0.12%.  Confidence has certainly taken a knock.

Also analyzed in more detail:  Thailand, Health Care, Indian Financials, South Korean Consumer Staples, China Financials, Baidu (BIDU US) , Sea Ltd (SE US) , Midea Group Co Ltd A (000333 CH) and JD.com Inc (ADR) (JD US).
Analysis taken from our Asia Ex-Japan research, covering 96 active Asia Ex-Japan funds with combined AUM of $80bn. 


Asia Ex-Japan Positioning:  India & Tech at Record Highs

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-integrated-commercial-trust" target="_blank" data-smartkarma-citation="entities:105" rel="noopener">Capitaland Integrated Commercial Trust (CICT SP)</a> – Capitalizing on post-Covid trends (BUY; TP S$2.57/unit)</h3><p>The transformative merger between CCT and CMT puts forth stronger value propositions: (i) Largest proxy to SG commercial real estate with a diversified and resilient portfolio; (ii) Potential synergies to unlock and benefit from economies of scale; and (iii) Greater financial flexibility and investment opportunities. With recovery underway, we resume coverage with BUY rating and TP $2.57/unit. CICT currently trades at 5.8% FY22E yield and 1.0x P/B.</p>

SingaporeCapitaland Integrated Commercial Trust (CICT SP) – Capitalizing on post-Covid trends (BUY; TP S$2.57/unit)The transformative merger between CCT and CMT puts forth stronger value propositions: (i) Largest proxy to SG commercial real estate with a diversified and resilient portfolio; (ii) Potential synergies to unlock and benefit from economies of scale; and (iii) Greater financial flexibility and investment opportunities. With recovery underway, we resume coverage with BUY rating and TP $2.57/unit. CICT currently trades at 5.8% FY22E yield and 1.0x P/B.

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>According to the <a href="https://investor.majorcineplex.com/en/business-characteristics/strategic-invesments" target="_blank" rel="noopener">website</a> of Thailand's largest cinema operator <a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a>'s<a href="https://investor.majorcineplex.com/en/business-characteristics/strategic-invesments" target="_blank" rel="noopener"></a>, the rationale for its investment in shopping mall operator <a href="https://www.smartkarma.com/entities/siam-future-development-pcl" target="_blank" data-smartkarma-citation="entities:4373:1" rel="noopener">Siam Future Development (SF TB)</a> (SFD) was synergistic. SFD "<em>is an anchor tenant that generates traffic to the lifestyle malls</em>". </p>
<p>MAJOR initially acquired 77.8mn shares in SFD in 2003 at Bt1.70/share. MAJOR held <a href="https://investor.siamfuture.com/misc/ar/20170308-sf-ar2016-en-01.pdf" target="_blank" rel="noopener">24.89%</a> (422.2mn shares) in 2016 ahead of a Tender Offer (at <a href="http://capital.sec.or.th/webapp/corp_fin/datafile/TO/0676000048247-42016-12-20e01.pdf?ts=1499458214" target="_blank" rel="noopener">Bt6.20/share</a>), <a href="https://investor.siamfuture.com/misc/ar/20190311-sf-ar2018-en.pdf" target="_blank" rel="noopener">26.25%</a> in 2017, 28.09% in 2018 &amp; 2019, and 29.13% as at the 31 Dec <a href="https://investor.siamfuture.com/misc/ar/20210525-sp-ar2020-en.pdf" target="_blank" rel="noopener">2020</a>. It currently holds 647.158mn shares or 30.36%.</p>
<p>On the 5 July, MAJOR's board <a href="https://major.listedcompany.com/newsroom/050720211745440725E.pdf" target="_blank" rel="noopener">approved</a> the entering of a MOU with <a href="https://www.smartkarma.com/entities/central-pattana-pcl-0b7fb113-16e1-4535-be8b-02dce5bbcd92" target="_blank" data-smartkarma-citation="entities:17188:1" rel="noopener">Central Pattana Pub (CPN TB)</a> in relation to its shares in SFD, at a price of Bt12/share.</p>
<p>An IFA was appointed to assess the sale and its opinion on the <a href="https://major.listedcompany.com/newsroom/060820211832280109E.pdf" target="_blank" rel="noopener">19 July</a>, concluded the "<em>Transaction is reasonable with price and conditions that are fair</em>".</p>
<p>A SPA was <a href="https://major.listedcompany.com/newsroom/250820211847500685E.pdf" target="_blank" rel="noopener">entered into</a> yesterday with an expected completion on the 30 August. </p>
<p>In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company. </p>
<p>Therefore CPN is required to make a tender offer for the remaining shares in SFD at the same price of Bt12/each upon the completion of the SPA.  <strong>A mandatory tender offer must be unconditional. </strong></p>
<p>SFD shares gained ~40% in the month prior to the 5 July announcement, on evident news leakage. Bt12/share is also a lifetime high. I would not be surprised if the tender offer leads to a subsequent delisting offer from CPN.</p>
<p>More below the fold.</p>
</div>


According to the website of Thailand's largest cinema operator Major Cineplex Group (MAJOR TB)'s, the rationale for its investment in shopping mall operator Siam Future Development (SF TB) (SFD) was synergistic. SFD "is an anchor tenant that generates traffic to the lifestyle malls". 
MAJOR initially acquired 77.8mn shares in SFD in 2003 at Bt1.70/share. MAJOR held 24.89% (422.2mn shares) in 2016 ahead of a Tender Offer (at Bt6.20/share), 26.25% in 2017, 28.09% in 2018 &amp; 2019, and 29.13% as at the 31 Dec 2020. It currently holds 647.158mn shares or 30.36%.
On the 5 July, MAJOR's board approved the entering of a MOU with Central Pattana Pub (CPN TB) in relation to its shares in SFD, at a price of Bt12/share.
An IFA was appointed to assess the sale and its opinion on the 19 July, concluded the "Transaction is reasonable with price and conditions that are fair".
A SPA was entered into yesterday with an expected completion on the 30 August. 
In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company. 
Therefore CPN is required to make a tender offer for the remaining shares in SFD at the same price of Bt12/each upon the completion of the SPA.  A mandatory tender offer must be unconditional. 
SFD shares gained ~40% in the month prior to the 5 July announcement, on evident news leakage. Bt12/share is also a lifetime high. I would not be surprised if the tender offer leads to a subsequent delisting offer from CPN.
More below the fold.


Siam Future Development (SF TB): Central Pattana MGO As MAJOR Cineplex Exits

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.</p><p>This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.</p><p>Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.</p><p>In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.</p>

The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was Delta Electronics Thai (DELTA TB) - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.

SET50 Index: Change to Free Float Weighting In the Works?

Thailand

Central Pattana Public Company Limited and its subsidiaries develop properties including shopping centers, condominiums, and office, for sale and rental.  The Company's projects include Central Plaza Lardprao, Central Plaza Ram-indra,  Central Plaza Pinklao, Central Festival Center Pattaya, and Central Plaza Ratchada.

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Central Pattana Pub (CPN TB)

ASEAN Builder's Scoop (15Sep21)

Condo resale prices, volume climbing in Aug21; CLI breaks ground on PHP4bn Cebu mixed-use project; CPN launches housing project NIRATI; OUE issuing...

SCCM Asia Research

Asia Ex-Japan Positioning: India & Tech at Record Highs

In this analysis, we provide a detailed overview of investor positioning among 96 active Asia Ex-Japan funds with combined AUM of $80bn.

Steven Holden

ASEAN Builder's Scoop (10Sep21)

CICT capitalizing on post-Covid trends; HDB resale prices only 0.1% below peak; DMAS on-track to meet FY mktg sales target; CPN new Ayutthaya mall;...

SCCM Asia Research

Siam Future Development (SF TB): Central Pattana MGO As MAJOR Cineplex Exits

This is a done deal. Just a question of timing. At Bt11.70/share, you're looking at a gross/annualised spread of 20.6%/10.9%, assuming late...

David Blennerhassett

SET50 Index: Change to Free Float Weighting In the Works?

There is a strong possibility that the SET revises the calculation methodology to more accurately determine the free float of stocks, and changes...

Brian Freitas

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