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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 13 November. The constituent changes will be effective after the close of trading on 4 December.</p><p>For the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a>, there are 3 inclusions and 1 deletion, taking the number of index constituents up to 52.</p><p>The inclusions are <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing Company APAC (1876 HK)</a>, <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, while the sole deletion is <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a>. </p><p>One-way turnover is estimated at 7.38%. That is very high and will result in big turnover at the closing auction on 4 December. We estimate 5 days of ADV to sell on <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> from passive funds, while <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing Company APAC (1876 HK)</a> and <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> have over 4 days and 3 days of ADV to buy respectively. The impact of passive buying on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> is lower at 1.6 days of ADV.</p><p>Following HSIL's announcement at the previous index review, we had expected there would be more additions than deletions in this review. All the 3 stocks added to the index were our highest probability inclusion candidates - the 'surprise' for the market would have to be <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a> followed by <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing Company APAC (1876 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> was probably on everyone's list for inclusion.</p><p>We had picked <a href="https://www.smartkarma.com/entities/swire-pacific-ltd-cl-a" target="_blank" data-smartkarma-citation="entities:10433:1" rel="noopener">Swire Pacific (A) (19 HK)</a> as the most likely deletion candidate, though we did not think that HSIL would actually delete the stock since it derives most of its revenue from Hong Kong and helps reduce the overlap with 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>.</p><p>HSIL announced that they had submitted a study on the composition of the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> to the Advisory Committee and plan to conduct a market consultation this year with the conclusions announced in February 2021. The implementation of the changes will most likely commence at the March 2021/ June 2021 index review. </p>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 13 November. The constituent changes will be effective after the close of trading on 4 December.For the Hong Kong Hang Seng Index (HSI INDEX), there are 3 inclusions and 1 deletion, taking the number of index constituents up to 52.The inclusions are Budweiser Brewing Company APAC (1876 HK), Anta Sports Products (2020 HK) and Meituan (3690 HK), while the sole deletion is Swire Pacific (A) (19 HK). One-way turnover is estimated at 7.38%. That is very high and will result in big turnover at the closing auction on 4 December. We estimate 5 days of ADV to sell on Swire Pacific (A) (19 HK) from passive funds, while Budweiser Brewing Company APAC (1876 HK) and Anta Sports Products (2020 HK) have over 4 days and 3 days of ADV to buy respectively. The impact of passive buying on Meituan (3690 HK) is lower at 1.6 days of ADV.Following HSIL's announcement at the previous index review, we had expected there would be more additions than deletions in this review. All the 3 stocks added to the index were our highest probability inclusion candidates - the 'surprise' for the market would have to be Anta Sports Products (2020 HK) followed by Budweiser Brewing Company APAC (1876 HK). Meituan (3690 HK) was probably on everyone's list for inclusion.We had picked Swire Pacific (A) (19 HK) as the most likely deletion candidate, though we did not think that HSIL would actually delete the stock since it derives most of its revenue from Hong Kong and helps reduce the overlap with the Hang Seng China Enterprises Index (HSCEI INDEX).HSIL announced that they had submitted a study on the composition of the Hong Kong Hang Seng Index (HSI INDEX) to the Advisory Committee and plan to conduct a market consultation this year with the conclusions announced in February 2021. The implementation of the changes will most likely commence at the March 2021/ June 2021 index review. 

Hang Seng Index Rebalance: Three Adds, One Delete, High Turnover, and More Changes to Come

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a> is uniquely positioned as a Thai company listed in <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">SGX (SGX SP)</a> with an exposure to the reopening of tourism in Thailand. The Thai government has proposed to exempt Chinese tourists from the required 14-day quarantine by 2021 and replace that with an app or token to trace their whereabouts during their holiday in Thailand. With the positive vaccine announcement, this initiative will be rolled out sooner rather than later and possibly be expanded for other countries too which means the number of tourists in Thailand will soon resume to the almost pre-COVID-19 level. </p>
<p>At 16x PER, 2.8x PBR, and 13.4 EV/EBITDA, Thai Beverage is trading at a  <strong>63% PER discount, 76% PBR discount, and 36% EV/EBITDA discount </strong>to the regional brewery peers<strong> and a 65% PER discount, 53% PBR discount, and 50% EV/EBITDA discount to the </strong>other Thai tourism-related stocks. </p>

Thai Beverage (THBEV SP) is uniquely positioned as a Thai company listed in SGX (SGX SP) with an exposure to the reopening of tourism in Thailand. The Thai government has proposed to exempt Chinese tourists from the required 14-day quarantine by 2021 and replace that with an app or token to trace their whereabouts during their holiday in Thailand. With the positive vaccine announcement, this initiative will be rolled out sooner rather than later and possibly be expanded for other countries too which means the number of tourists in Thailand will soon resume to the almost pre-COVID-19 level. 
At 16x PER, 2.8x PBR, and 13.4 EV/EBITDA, Thai Beverage is trading at a  63% PER discount, 76% PBR discount, and 36% EV/EBITDA discount to the regional brewery peers and a 65% PER discount, 53% PBR discount, and 50% EV/EBITDA discount to the other Thai tourism-related stocks. 

Thai Beverage (Thbev): Brewing for Reopening

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Vedanta, Evergrande Auto, Cocokara, Leyou, Mitsu Lease/Hitachi Cap

<p>The Hang Seng Indexes Company Limited (HSIL) should announce the results of the 2020 Q3 review of the Hang Seng Family of Indexes on 6 November. The constituent changes will be effective after the close of trading on 4 December.</p>
<p>Following the announcement made in August, we feel there is a high probability that the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> December review will only have inclusions, taking the number of constituents above 50. All current index constituents pass the turnover requirements, so there is no need to delete any of the names.</p>
<p>Based on market value, turnover, sector skew vs the HSCI and company financial performance, our top 5 picks for inclusion in the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> at the December review are <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan Dianping (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/budweiser-brewing-co-apac-ltd" target="_blank" data-smartkarma-citation="entities:28077:1" rel="noopener">Budweiser Brewing Company APAC (1876 HK)</a>, <a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>, <a href="https://www.smartkarma.com/entities/china-resources-beer-holdings" target="_blank" data-smartkarma-citation="entities:399:1" rel="noopener">China Resources Beer Holdings (291 HK)</a> and <a href="https://www.smartkarma.com/entities/longfor-properties" target="_blank" data-smartkarma-citation="entities:8149:1" rel="noopener">Longfor Properties (960 HK)</a>.</p>
<p>With the Index Committee having a fair amount of discretion in choosing stocks for index inclusion and exclusion, they could choose to go further down the list to add diversity to the index and differentiate it from 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> but this would reduce index liquidity affecting the trading of derivative products on the index.</p>
<p>One-way turnover with all 5 inclusions is just north of 8% and the funding trade will see substantial selling on the current index constituents, exceeding over 1 day of ADV in quite a few cases. HSIL could add a fewer number of stocks to control turnover and keep it at a more manageable level.</p>

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the 2020 Q3 review of the Hang Seng Family of Indexes on 6 November. The constituent changes will be effective after the close of trading on 4 December.
Following the announcement made in August, we feel there is a high probability that the Hong Kong Hang Seng Index (HSI INDEX) December review will only have inclusions, taking the number of constituents above 50. All current index constituents pass the turnover requirements, so there is no need to delete any of the names.
Based on market value, turnover, sector skew vs the HSCI and company financial performance, our top 5 picks for inclusion in the Hong Kong Hang Seng Index (HSI INDEX) at the December review are Meituan Dianping (3690 HK), Budweiser Brewing Company APAC (1876 HK), Anta Sports Products (2020 HK), China Resources Beer Holdings (291 HK) and Longfor Properties (960 HK).
With the Index Committee having a fair amount of discretion in choosing stocks for index inclusion and exclusion, they could choose to go further down the list to add diversity to the index and differentiate it from the Hang Seng China Enterprises Index (HSCEI INDEX) but this would reduce index liquidity affecting the trading of derivative products on the index.
One-way turnover with all 5 inclusions is just north of 8% and the funding trade will see substantial selling on the current index constituents, exceeding over 1 day of ADV in quite a few cases. HSIL could add a fewer number of stocks to control turnover and keep it at a more manageable level.

Hang Seng Index Rebalance Preview: December 2020 - Do We Go Above 50?

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

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<p><a href="https://www.smartkarma.com/entities/nongfu-spring" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (NON HK)</a> raised around US$1bn in its Hong Kong listing. The company is the market leader in packaged drinking water in China.</p>
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<p>In my earlier notes, I spoke about the company, its past performance and undertook a peer comparison and valuation analysis:</p>
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<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-positives-leaves-one-thirsty-for-more" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-the-negatives-doesn-t-need-to-list-or-expand-production-facilities" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-peer-comparison-superior-margins-and-growth" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-first-stab-at-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - First Stab at Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-phip-updates" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - PHIP Updates</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-pre-ipo-updates-to-valuation" target="_blank" rel="noopener">Nongfu Spring Pre-IPO - Updates to Valuation</a></li>
<li><a href="https://www.smartkarma.com/insights/nongfu-spring-ipo-not-cheap-by-any-measure-but-is-a-quality-name" target="_blank" rel="noopener">Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name</a></li>
</ul>
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<div>In this note, I'll look at the deal dynamics and provide a table with implied valuation at different share price levels.</div>


Nongfu Spring (NON HK) raised around US$1bn in its Hong Kong listing. The company is the market leader in packaged drinking water in China.


In my earlier notes, I spoke about the company, its past performance and undertook a peer comparison and valuation analysis:



Nongfu Spring Pre-IPO - The Positives - Leaves One Thirsty for More
Nongfu Spring Pre-IPO - The Negatives - Doesn’t Need to List or Expand Production Facilities
Nongfu Spring Pre-IPO - Peer Comparison - Superior Margins and Growth
Nongfu Spring Pre-IPO - First Stab at Valuation
Nongfu Spring Pre-IPO - PHIP Updates
Nongfu Spring Pre-IPO - Updates to Valuation
Nongfu Spring IPO - Not Cheap by Any Measure but Is a Quality Name


In this note, I'll look at the deal dynamics and provide a table with implied valuation at different share price levels.

Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own

Hong Kong

China Resources Beer (Holdings) Company Limited is an alcoholic beverage retailer.

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China Resources Beer Holdings (291 HK)

Hang Seng Index Rebalance: Three Adds, One Delete, High Turnover, and More Changes to Come

There are 3 adds and 1 delete to the HSI in the Dec20 index review with a one-way turnover of 7.68%. The upcoming market consultation means there...

Brian Freitas

Thai Beverage (Thbev): Brewing for Reopening

Thai Beverage is uniquely positioned as a Thai company listed in Singapore with an exposure to the reopening of tourism in Thailand.

Henry Soediarko

Last Week in Event SPACE: Vedanta, Evergrande Auto, Cocokara, Leyou, Mitsu Lease/Hitachi Cap

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

Hang Seng Index Rebalance Preview: December 2020 - Do We Go Above 50?

The Hang Seng Indexes Company Limited (HSIL) should announce the results of the 2020 Q3 review of the Hang Seng Family of Indexes on 6 November....

Brian Freitas

Nongfu Spring IPO Trading Update - Strong Subscription Levels, in a League of Its Own

Nongfu Spring (NON HK) is looking to raise up to US$1bn in its Hong Kong listing. The company is the market leader in packaged drinking water in...

Sumeet Singh

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