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

<ul>
<li>There are 24 adds and 14 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.</li>
<li>19 of the 24 HSCI inclusions will be added to Southbound Stock Connect, while 12 of the 14 HSCI deletions will be removed from Southbound Stock Connect.</li>
<li>Five of the HSCI constituents could be removed from Southbound Stock Connect only since the average market cap over the last year is less than HK$5bn.</li>
</ul>


There are 24 adds and 14 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
19 of the 24 HSCI inclusions will be added to Southbound Stock Connect, while 12 of the 14 HSCI deletions will be removed from Southbound Stock Connect.
Five of the HSCI constituents could be removed from Southbound Stock Connect only since the average market cap over the last year is less than HK$5bn.


HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>Share price of <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> has been under pressure over the last two weeks due to concern on future offshore wind power project return.</li>
<li>We believe the low tariff of Rmb0.19/kWh won by a Huaneng Power Group consortium in Fujian is more an exceptional case and should not be taken as a new normal.</li>
<li>China Longyuan's growth has been well secured by its project pipeline as well as 21GW potential injection from parent. This round of de-rating is just too excessive. </li>
</ul>


Share price of China Longyuan Power (916 HK) has been under pressure over the last two weeks due to concern on future offshore wind power project return.
We believe the low tariff of Rmb0.19/kWh won by a Huaneng Power Group consortium in Fujian is more an exceptional case and should not be taken as a new normal.
China Longyuan's growth has been well secured by its project pipeline as well as 21GW potential injection from parent. This round of de-rating is just too excessive. 


China Longyuan (916 HK): A De-Rating Too Excessive

China Power International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> will acquire 2.15GW clean energy capacity from its parent SPIC for a total of Rmb7.5bn. This will add 14.3% to its end-FY21 clean energy portfolio.</li>
<li>We think the assets are priced attractively at 12.5x PER for FY21, a discount to peers' average of 14x. The acquired capacity has an impressive 45.8% YoY earnings growth.</li>
<li>CPI targets to have 70% of end-FY23 capacity from clean energy, and this implies a 46.3% CAGR between FY21 and FY23, which is a very exciting momentum. </li>
</ul>



China Power International (2380 HK) will acquire 2.15GW clean energy capacity from its parent SPIC for a total of Rmb7.5bn. This will add 14.3% to its end-FY21 clean energy portfolio.
We think the assets are priced attractively at 12.5x PER for FY21, a discount to peers' average of 14x. The acquired capacity has an impressive 45.8% YoY earnings growth.
CPI targets to have 70% of end-FY23 capacity from clean energy, and this implies a 46.3% CAGR between FY21 and FY23, which is a very exciting momentum. 


China Power International (2380 HK): Another Step in Clean Energy Transition

<ul>
<li>We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.</li>
<li>There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the 'sell-only' Southbound Stock Connect list.</li>
<li>Some of the stocks that remain in the HSCI could move to the 'sell-only' Southbound Stock Connect list since their average market cap drops below HKD 5bn.</li>
</ul>


We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the 'sell-only' Southbound Stock Connect list.
Some of the stocks that remain in the HSCI could move to the 'sell-only' Southbound Stock Connect list since their average market cap drops below HKD 5bn.


HSCI Index Rebalance and Stock Connect: Potential Changes in September

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> will see accelerating earnings momentum in the rest of the year - after a weak start due to high base for YoY comparison.</li>
<li>We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.</li>
<li>Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.</li>
</ul>



China Longyuan Power (916 HK) will see accelerating earnings momentum in the rest of the year - after a weak start due to high base for YoY comparison.
We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.
Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.


China Longyuan (916 HK): On Your Mark, Get Set, Go!

China

China Datang Corporation Renewable Power Company Ltd. generates electricity from renewable resources.  The Company operates wind farms and hydroelectric power plants.

China Datang Corp Renewable Power (1798 HK)

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

China Datang Corp Renewable Power (1798 HK)

HSCI Index Rebalance: 24 Adds, 14 Deletes & Changes to Stock Connect

There are 24 adds and 14 deletes for the HSCI at the September rebalance. 19 stocks will be added to Stock Connect and 12 will be removed. Some of...

Brian Freitas

China Longyuan (916 HK): A De-Rating Too Excessive

The plunge in valuation has more than reflected the concerns on weaker return outlook for offshore wind power projects, but China Longyuan's long...

Osbert Tang, CFA

China Power International (2380 HK): Another Step in Clean Energy Transition

Acquisition of 2.15GW of clean energy capacity from its parent will push ahead CPI's target of having 70% of capacity from clean energy at end...

Osbert Tang, CFA

HSCI Index Rebalance and Stock Connect: Potential Changes in September

We see 28 potential adds and 9 close adds for the HSCI in September. There are 22 potential deletes on market cap, liquidity and prolonged...

Brian Freitas

China Longyuan (916 HK): On Your Mark, Get Set, Go!

Longyuan should see better growth prospects in the rest of the year with drivers from improvement in utilisation hours, increase in capacity,...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)