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>The December rebalance of the <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-etf" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet ETF (KWEB US)</a> will take place at the close of trading on 13 December.</li>
<li>
<a href="https://www.smartkarma.com/entities/cloud-village-inc" target="_blank" data-smartkarma-citation="entities:33412:1" rel="noopener">Cloud Village (9899 HK)</a> is an add while <a href="https://www.smartkarma.com/entities/lufax-holding-ltd" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax Holding (LU US)</a>, <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology (1833 HK)</a>, <a href="https://www.smartkarma.com/entities/zx-inc" target="_blank" data-smartkarma-citation="entities:36624:1" rel="noopener">ZX (9890 HK)</a> and <a href="https://www.smartkarma.com/entities/ysb-inc" target="_blank" data-smartkarma-citation="entities:35982:1" rel="noopener">YSB (9885 HK)</a> are deletes.</li>
<li>The deletions of <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare (1833 HK)</a>, <a href="https://www.smartkarma.com/entities/zx-inc" target="_blank" data-smartkarma-citation="entities:36624:1" rel="noopener">ZX (9890 HK)</a> and <a href="https://www.smartkarma.com/entities/ysb-inc" target="_blank" data-smartkarma-citation="entities:35982:1" rel="noopener">YSB (9885 HK)</a> were forecast and there will be positioning in the stocks. <a href="https://www.smartkarma.com/entities/lufax-holding-ltd" target="_blank" data-smartkarma-citation="entities:29690:1" rel="noopener">Lufax</a> was a close delete.</li>
</ul>


The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.

Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.


KWEB Index Rebalance: 1 Add & 4 Deletes in December

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

<ul>
<li>Cloud Village Inc. (CVI), also known as NetEase Music, raised around US$420m in its Hong Kong IPO in Dec 21. The IPO was almost entirely taken up by cornerstones.</li>
<li>The company had also earlier obtained investments from Baidu and Alibaba, along with other mainly PE investors. These investors will be released from their lock-up on 1st Jun 2022.</li>
<li>In this note, we will talk about the lock-up dynamics and updates over the past few months.</li>
</ul>


Cloud Village Inc. (CVI), also known as NetEase Music, raised around US$420m in its Hong Kong IPO in Dec 21. The IPO was almost entirely taken up by cornerstones.
The company had also earlier obtained investments from Baidu and Alibaba, along with other mainly PE investors. These investors will be released from their lock-up on 1st Jun 2022.
In this note, we will talk about the lock-up dynamics and updates over the past few months.


Cloud Village IPO Lock-Up - Selling the PE Stock (US$350m) Might Solve the Liquidity Issues

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.

Equity Bottom-Up

<ul><li>Cloud Music announced FY23 financial results: total revenue dropped by 13% YoY to RMB7.87bn in FY23, in line with our/consensus estimate.</li><li>2H23 total revenue was down by 16% YoY to RMB3.96bn, mainly due to the adjustment of social entertainment business (-42% YoY).</li><li>Cloud music recorded adjusted net income of RMB819mn in FY23, beating our/consensus estimate of RMB686/629mn, thanks to the solid GPM improvement (+12.3ppt YoY). </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.

Cloud Music announced FY23 financial results: total revenue dropped by 13% YoY to RMB7.87bn in FY23, in line with our/consensus estimate.2H23 total revenue was down by 16% YoY to RMB3.96bn, mainly due to the adjustment of social entertainment business (-42% YoY).Cloud music recorded adjusted net income of RMB819mn in FY23, beating our/consensus estimate of RMB686/629mn, thanks to the solid GPM improvement (+12.3ppt YoY). 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.

Cloud Music (9899 HK) - Solid Core Music Business and Margin Expansion Outlook

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Tencent Music Entertainment Group / Equity Bottom-Up

<ul>
<li>Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.</li>
<li>
<a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" data-smartkarma-citation="entities:124:1" rel="noopener">CRRC Corp Ltd H (1766 HK)</a> gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.
</li>
<li>
<a href="https://www.smartkarma.com/entities/tencent-music-entertainment-group" target="_blank" data-smartkarma-citation="entities:36601:1" rel="noopener">Tencent Music Entertainment Group (1698 HK)</a> reported solid results as it shifts to a pay-to-stream subscription model. <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> had a blowout quarter with EV sales surging.
</li>
</ul>


Hong Kong market sectors outperforming since the stimulus in September are Consumer Discretionary and Healthcare as Utilities, Telecom and Energy lag.

CRRC Corp Ltd H (1766 HK) gets BUY recommendations as its results point to continued strength in the rail equipment sector with passenger volume surging.


Tencent Music Entertainment Group (1698 HK) reported solid results as it shifts to a pay-to-stream subscription model. Xiaomi Corp (1810 HK) had a blowout quarter with EV sales surging.



BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

<ul>
<li>The weak business, social entertainment, become insignificant in recent quarters.</li>
<li>All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.</li>
<li>We set an upside of 20% and a price target of US$14.80 for the end of 2025.</li>
</ul>


The weak business, social entertainment, become insignificant in recent quarters.
All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
We set an upside of 20% and a price target of US$14.80 for the end of 2025.


Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years

China

CLOUD VILLAGE INC operates as a music company. The Company develops a leading online music paltform which provides community centric online music services, social entertainment services, and other services. Cloud Village provides its services throughout China.

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Cloud Village (9899 HK)

KWEB Index Rebalance: 1 Add & 4 Deletes in December

Cloud Village is an add while Lufax, Ping An Health, ZX and YSB are deletes. There will be capping flow for the large caps. Couple of surprises...

Brian Freitas

Cloud Village IPO Lock-Up - Selling the PE Stock (US$350m) Might Solve the Liquidity Issues

Cloud Village Inc. (CVI), also known as NetEase Music, raised around US$420m in its Hong Kong IPO in Dec 21. Investors will be released from their...

Sumeet Singh

Cloud Music (9899 HK) - Solid Core Music Business and Margin Expansion Outlook

Cloud Music announced FY23 financial results: total revenue dropped by 13% YoY to RMB7.87bn in FY23, in line with our/consensus estimate.

CMB International

BUY/SELL/HOLD: Hong Kong Stock Updates (NOVEMBER 18)

Hong Kong has seen its Consumer Discretionary and Healthcare sectors perform well since the stimulus in September. CRCC has had several buy...

David Mudd

Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years

The weak business, social entertainment, become insignificant in recent quarters. All operating data in music is promising, including paying user...

Ming Lu

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