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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For 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>, there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 50.The inclusions are <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>, while <a href="https://www.smartkarma.com/entities/guangdong-investment-ltd" target="_blank" data-smartkarma-citation="entities:12109:1" rel="noopener">Guangdong Investment (270 HK)</a>, <a href="https://www.smartkarma.com/entities/china-unicom-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:1016:1" rel="noopener">China Unicom Hong Kong (762 HK)</a> and <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a> have been deleted from the index. This is exactly in line with our <a href="https://www.smartkarma.com/insights/hscei-june-2021-index-rebalance-preview-three-adds-four-deletes-possible" target="_blank" rel="noopener">forecast</a>.One-way turnover is estimated at 8.37% and will result in a one-way trade of HK$5.98bn. The largest passive inflows will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> as a result of the capping change from 5% to 8%, while the largest outflows will be on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank H (939 HK)</a> and <a href="https://www.smartkarma.com/entities/china-tower-corp-ltd" target="_blank" data-smartkarma-citation="entities:27037:1" rel="noopener">China Tower (788 HK)</a>.There are only 10 trading days to implementation of the changes and there should be some impact on the stocks even though the changes were largely expected (at least by us). <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> was widely expected to be included but <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a> was not on everyone's list. With 4 days ADV to buy on <a href="https://www.smartkarma.com/entities/evergrande-property-services" target="_blank" data-smartkarma-citation="entities:30921:1" rel="noopener">Evergrande Property Services (6666 HK)</a>, the stock could outperform till implementation date.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the Hang Seng China Enterprises Index (HSCEI INDEX), there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 50.The inclusions are BYD (1211 HK) and Evergrande Property Services (6666 HK), while Guangdong Investment (270 HK), China Unicom Hong Kong (762 HK) and China Tower (788 HK) have been deleted from the index. This is exactly in line with our forecast.One-way turnover is estimated at 8.37% and will result in a one-way trade of HK$5.98bn. The largest passive inflows will be on Meituan (3690 HK) and Alibaba Group (9988 HK) as a result of the capping change from 5% to 8%, while the largest outflows will be on Tencent (700 HK), China Construction Bank H (939 HK) and China Tower (788 HK).There are only 10 trading days to implementation of the changes and there should be some impact on the stocks even though the changes were largely expected (at least by us). BYD (1211 HK) was widely expected to be included but Evergrande Property Services (6666 HK) was not on everyone's list. With 4 days ADV to buy on Evergrande Property Services (6666 HK), the stock could outperform till implementation date. 

HSCEI Index Rebalance: BYD's Double Inclusion; Capping Changes Lead to High Turnover

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

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note,<a href="https://www.smartkarma.com/insights/sf-reit-pre-ipo-one-trick-pony-who-s-not-doing-the-trick" target="_blank" rel="noopener"> SF REIT Pre-IPO -One trick pony, who’s not doing the trick</a>.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF Holdings, listed in Shenzhen.We have looked at the background of the deal in our previous note, SF REIT Pre-IPO -One trick pony, who’s not doing the trick.In this note, we’ll run the deal through our ECM framework and talk about valuations.

SF REIT IPO - Don’t See a Clear Reason to Buy

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.

Quantitative Analysis

This insight provides the output, and an overview of, our proprietary GEM screening model, which takes a three-pronged approached to finding the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for 12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include <a href="https://www.smartkarma.com/entities/gazprom-pjsc" target="_blank" data-smartkarma-citation="entities:23749:1" rel="noopener">Gazprom PJSC (GAZP RX)</a>, <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a>, and <a href="https://www.smartkarma.com/entities/sberbank-of-russia-pjsc" target="_blank" data-smartkarma-citation="entities:24142:1" rel="noopener">Sberbank Of Russia Pjsc (SBER LI)</a>.<table class="table table-striped">
<colgroup>
<col>
<col>
<col>
<col>
<col>
</colgroup>
<tbody>
<tr>
<td style="text-align: center; width: 48pt;">rank</td>
<td style="width: 169pt;">Name</td>
<td style="width: 119pt;">Sector</td>
<td style="width: 95pt;">Location</td>
<td style="text-align: center; width: 48pt;">prev.</td>
</tr>
<tr>
<td style="text-align: center;">1</td>
<td>CNOOC LTD</td>
<td>Energy</td>
<td>China</td>
<td style="text-align: center;">25</td>
</tr>
<tr>
<td style="text-align: center;">2</td>
<td>GAZPROM</td>
<td>Energy</td>
<td>Russian Federation</td>
<td style="text-align: center;">89</td>
</tr>
<tr>
<td style="text-align: center;">3</td>
<td>CHINA RESOURCES LAND LTD</td>
<td>Real Estate</td>
<td>China</td>
<td style="text-align: center;">45</td>
</tr>
<tr>
<td style="text-align: center;">4</td>
<td>PTT NON-VOTING DR PCL</td>
<td>Energy</td>
<td>Thailand</td>
<td style="text-align: center;">39</td>
</tr>
<tr>
<td style="text-align: center;">5</td>
<td>MEDIATEK INC</td>
<td>Information Technology</td>
<td>Taiwan</td>
<td style="text-align: center;">81</td>
</tr>
<tr>
<td style="text-align: center;">6</td>
<td>PAO NOVATEK GDR</td>
<td>Energy</td>
<td>Russian Federation</td>
<td style="text-align: center;">48</td>
</tr>
<tr>
<td style="text-align: center;">7</td>
<td>GEELY AUTOMOBILE HOLDINGS LTD</td>
<td>Consumer Discretionary</td>
<td>China</td>
<td style="text-align: center;">2</td>
</tr>
<tr>
<td style="text-align: center;">8</td>
<td>SBERBANK ROSSII</td>
<td>Financials</td>
<td>Russian Federation</td>
<td style="text-align: center;">59</td>
</tr>
<tr>
<td style="text-align: center;">9</td>
<td>SAMSUNG ELECTRONICS LTD</td>
<td>Information Technology</td>
<td>Korea (South)</td>
<td style="text-align: center;">41</td>
</tr>
<tr>
<td style="text-align: center;">10</td>
<td>FIRSTRAND LTD</td>
<td>Financials</td>
<td>South Africa</td>
<td style="text-align: center;">30</td>
</tr>
<tr><td colspan="5" style="text-align: left;">Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas</td></tr>
</tbody>
</table>As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

This insight provides the output, and an overview of, our proprietary GEM screening model, which takes a three-pronged approached to finding the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for 12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include Gazprom PJSC (GAZP RX), Mediatek Inc (2454 TT), and Sberbank Of Russia Pjsc (SBER LI).









rank
Name
Sector
Location
prev.


1
CNOOC LTD
Energy
China
25


2
GAZPROM
Energy
Russian Federation
89


3
CHINA RESOURCES LAND LTD
Real Estate
China
45


4
PTT NON-VOTING DR PCL
Energy
Thailand
39


5
MEDIATEK INC
Information Technology
Taiwan
81


6
PAO NOVATEK GDR
Energy
Russian Federation
48


7
GEELY AUTOMOBILE HOLDINGS LTD
Consumer Discretionary
China
2


8
SBERBANK ROSSII
Financials
Russian Federation
59


9
SAMSUNG ELECTRONICS LTD
Information Technology
Korea (South)
41


10
FIRSTRAND LTD
Financials
South Africa
30

Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas

As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a division of 58.com which was privatised in 2020 and is now being spun out as its real estate division.It provides online marketing services for new and existing properties under Anjuke and 50 Real Estate brands.  It also operates Aifang, a new property transaction services platform that facilitates developers’ new property sales through brokerage brands and agents. Anjuke also provides property brokerage brands and agents with its cloud-native, purpose-built SaaS solutions through Qiaofang,Based on iResearch’s report, the company was the market leader by average mobile monthly active users (MAU) in 4Q20 at 67m. As of Dec 20, it had over 726,000 paying agents on its platform. Anjuke was also the leader in online marketing service revenue in 2020 with 66.8% market share.Its financial performance has been sort of a mixed bag with Anjuke reporting 21.9% YoY growth in revenue in FY19, 17.6% growth in gross profit, 23% growth in EBITDA and 21% increase in PATMI. However, in FY20, revenue growth slowed down to 6.24% YoY and even though the company managed to grow its gross profit by 7.8%, EBITDA was down 9% YoY, while PATMI was down 15% YoY.In addition, there are also related parties and other issues that one needs to be aware of.

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a division of 58.com which was privatised in 2020 and is now being spun out as its real estate division.It provides online marketing services for new and existing properties under Anjuke and 50 Real Estate brands.  It also operates Aifang, a new property transaction services platform that facilitates developers’ new property sales through brokerage brands and agents. Anjuke also provides property brokerage brands and agents with its cloud-native, purpose-built SaaS solutions through Qiaofang,Based on iResearch’s report, the company was the market leader by average mobile monthly active users (MAU) in 4Q20 at 67m. As of Dec 20, it had over 726,000 paying agents on its platform. Anjuke was also the leader in online marketing service revenue in 2020 with 66.8% market share.Its financial performance has been sort of a mixed bag with Anjuke reporting 21.9% YoY growth in revenue in FY19, 17.6% growth in gross profit, 23% growth in EBITDA and 21% increase in PATMI. However, in FY20, revenue growth slowed down to 6.24% YoY and even though the company managed to grow its gross profit by 7.8%, EBITDA was down 9% YoY, while PATMI was down 15% YoY.In addition, there are also related parties and other issues that one needs to be aware of.

Anjuke Pre-IPO - Mixed (Positive and Negative) Developments

Macrotech Developers / Equity Capital Markets

<div>
Macrotech Developers (Lodha) raised around US$345m in its India IPO and will start trading later today.
<ul>
<li>We have looked at its previous listing attempt and various aspects of the deal in our prior notes: <a href="https://www.smartkarma.com/insights/lodha-developers-pre-ipo-second-time-lucky-but-not-really-that-much-affordable" target="_blank" rel="noopener">Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable</a>.</li>
<li><a href="https://www.smartkarma.com/insights/macrotech-lodha-developers-pre-ipo-new-name-but-up-to-some-of-the-same-old-tricks" target="_blank" rel="noopener">Macrotech (Lodha) developers Pre-IPO - New name but up to some of the same old tricks</a></li>
<li><a href="https://www.smartkarma.com/insights/macrotech-lodha-developers-ipo-one-too-many-issues" target="_blank" rel="noopener">Macrotech (Lodha) Developers IPO - One Too Many Issues</a></li>
</ul>
In this note, we'll talk about deal updates.
</div>


Macrotech Developers (Lodha) raised around US$345m in its India IPO and will start trading later today.

We have looked at its previous listing attempt and various aspects of the deal in our prior notes: Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable.
Macrotech (Lodha) developers Pre-IPO - New name but up to some of the same old tricks
Macrotech (Lodha) Developers IPO - One Too Many Issues

In this note, we'll talk about deal updates.


Macrotech (Lodha) Developers IPO Trading - Locals, Including Employees, Give It a Miss

Hong Kong

China Resources Land Limited, through its subsidiaries, develops and invests in properties.  The Company also provides corporate financing and electrical engineering services.

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China Resources Land (1109 HK)

HSCEI Index Rebalance: BYD's Double Inclusion; Capping Changes Lead to High Turnover

The 2 adds and 3 deletes for the HSCEI are just what we expected. BYD is an inclusion in the HSI too and could move higher over the next 2 weeks....

Brian Freitas

SF REIT IPO - Don’t See a Clear Reason to Buy

SF Real Estate Investment Trust (SFREIT), a logistics-focused REIT, aims to raise around US$345m in its Hong Kong IPO. SF REIT is sponsored by SF...

Sumeet Singh

Screening for GEMs: May 2021

This insight provides an overview of our proprietary GEM screening model which is based on a multifactor screening model, a Deep Neural Network...

Wium Malan, CFA

Anjuke Pre-IPO - Mixed (Positive and Negative) Developments

Anjuke, a real estate information and transaction service provider, is looking to raise around US$1bn in its Hong Kong listing. The company is a...

Sumeet Singh

Macrotech (Lodha) Developers IPO Trading - Locals, Including Employees, Give It a Miss

Macrotech Developers (Lodha) raised around US$345m in its India IPO and will start trading later today. In this note, we'll talk about the trading...

Sumeet Singh

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