APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC 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

Chongqing Hongjiu Fruit   / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chongqing-hongjiu-fruit-co-ltd" target="_blank" data-smartkarma-citation="entities:36023:1" rel="noopener">Chongqing Hongjiu Fruit (6689 HK)</a> was listed on 5th Sep 2022, where it raised around US$71m in its Hong Kong IPO. Its one-year lockup will expire on 4th Sep 2023. </li>
<li>Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. As per CIC, it was the largest fruit distributor by revenue in 2022. </li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Chongqing Hongjiu Fruit (6689 HK) was listed on 5th Sep 2022, where it raised around US$71m in its Hong Kong IPO. Its one-year lockup will expire on 4th Sep 2023. 
Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. As per CIC, it was the largest fruit distributor by revenue in 2022. 
In this note, we will talk about the lock-up dynamics and updates since our last note.


Chongqing Hongjiu Fruit Lockup Expiry - Price Has Come Back Down to Earth but Expect More Selling

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.</li><li>Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.</li><li>In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with positive momentum over 2Q.Considering the price gap between beer and other alcoholic drinks, and also the growing preference of low alcoholic content, in our view, breweries still offer a multi-year story that looks to be sustainable in the next 4-5 years.In the contrary, we continue to see near-term drags in baijiu, dairies and condiments that not only led to a lacklustre 2Q but also a possible slow 2H. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Consumer Staples – Divergence continues

Equity Bottom-Up

Chongqing Hongjiu Fruit   / Equity Bottom-Up

<ul><li>An in-line 2022 reaffirms our belief, and we continue to project Hongjiu to deliver a 40.5% 3-year revenue CAGR between 2022-24E, outgrowing 7.8% of the industry, per CIC.</li><li>In our view, an accelerating branded fruits sales mix, from 75.9% in 2019 to 90.5% in 2024E, drives the outperformance.</li><li>Alternatively, we envisage the growth will be underpinned by faster growth in durian, longan, and mangosteen etc, in which Hongjiu is unchallengedly leading the segment.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

An in-line 2022 reaffirms our belief, and we continue to project Hongjiu to deliver a 40.5% 3-year revenue CAGR between 2022-24E, outgrowing 7.8% of the industry, per CIC.In our view, an accelerating branded fruits sales mix, from 75.9% in 2019 to 90.5% in 2024E, drives the outperformance.Alternatively, we envisage the growth will be underpinned by faster growth in durian, longan, and mangosteen etc, in which Hongjiu is unchallengedly leading the segment.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hongjiu Fruits (6689 HK) – A Solid and Robust 2022

<ul><li>Hongjiu is China’s largest fruit distributor with operations extending into Southeast Asia.</li><li>Leveraging its cross-region business model, Hongjiu has successfully morphed into a consolidator with industry-beating growth that stems from its competitive advantages, including 1) a multi-brand portfolio that enables the creation of brand equity and hence brand premium that sustains price markups, 2) direct procurement from place of origin that ensures supply stability and best-of-breed quality.</li><li>On the back end, these initiatives are backboned by a cost efficient end-to-end supply chain and a nation-wide distribution network that facilitates data circulation and value monetization. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hongjiu is China’s largest fruit distributor with operations extending into Southeast Asia.Leveraging its cross-region business model, Hongjiu has successfully morphed into a consolidator with industry-beating growth that stems from its competitive advantages, including 1) a multi-brand portfolio that enables the creation of brand equity and hence brand premium that sustains price markups, 2) direct procurement from place of origin that ensures supply stability and best-of-breed quality.On the back end, these initiatives are backboned by a cost efficient end-to-end supply chain and a nation-wide distribution network that facilitates data circulation and value monetization. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hongjiu Fruits (6689 HK) – Harvesting the low-hanging fruits

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 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.</li>
<li>We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.</li>
<li>19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.</li>
</ul>


There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.


HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

China

Chongqing Hongjiu Fruit Co., Limited operates fresh fruit wholesale businesses. The Company distributes durian, mangosteen, longan, dragon fruit, cherry and grapes  and other products. Chongqing Hongjiu Fruit conducts businesses in China.

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Chongqing Hongjiu Fruit (6689 HK)

Chongqing Hongjiu Fruit Lockup Expiry - Price Has Come Back Down to Earth but Expect More Selling

Chongqing Hongjiu Fruit (6689 HK) was listed on 5th Sep 2022, where it raised around US$71m in its Hong Kong IPO. Its one-year lockup will expire...

Ethan Aw

China Consumer Staples – Divergence continues

We had diverging takeaways from our distributor chancel check after the Dragon Boat Festival holiday, with beer being the only segment with...

CMB International

Hongjiu Fruits (6689 HK) – A Solid and Robust 2022

An in-line 2022 reaffirms our belief, and we continue to project Hongjiu to deliver a 40.5% 3-year revenue CAGR between 2022-24E, outgrowing 7.8%...

CMB International

Hongjiu Fruits (6689 HK) – Harvesting the low-hanging fruits

Leveraging its cross-region business model, Hongjiu has successfully morphed into a consolidator with industry-beating growth that stems from its...

CMB International

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds & 28 deletes for the HSCI in March leading to 29 adds & 20 deletes for Stock Connect. 19 index constituents could be dropped from...

Brian Freitas

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