Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.</li>
<li>We highlight inflows into Tencent, Meituan, China Mobile, ICBC, Bilibili, and outflows from CCB, Geely, Sunny Optical.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.
We highlight inflows into Tencent, Meituan, China Mobile, ICBC, Bilibili, and outflows from CCB, Geely, Sunny Optical.


Hong Kong Connect Flows Monthly: 1Y High Inflows in March

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.</li>
<li>The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying. </li>
<li>The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread. </li>
</ul>



Aag Energy Holdings (2686 HK) scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.
The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying. 
The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread. 


AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> noted that the pre-condition for <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai Natural Gas (603393 CH)</a> privatisation offer at HK$1.85 per share has been satisfied (which was expected). </li>
<li>The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.</li>
<li>It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. </li>
</ul>



Aag Energy Holdings (2686 HK) noted that the pre-condition for Xinjiang Xintai Natural Gas (603393 CH) privatisation offer at HK$1.85 per share has been satisfied (which was expected). 
The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.
It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. 


AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> released solid FY22 results which magnify the scheme risk of <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai Natural Gas (603393 CH)</a>'s pre-conditional privatisation offer of HK$1.85 per share.</li>
<li>The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.</li>
<li>The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.</li>
</ul>



Aag Energy Holdings (2686 HK) released solid FY22 results which magnify the scheme risk of Xinjiang Xintai Natural Gas (603393 CH)'s pre-conditional privatisation offer of HK$1.85 per share.
The FY22 metrics show that the offer values AAG at a lower EV/1P Reserve and EV/Production vs the 2018 offer. It is unattractive in comparison to historical and peer multiples.
The solid FY22 results and lack of dividends amplify the risk that minorities vote NO. The downside is capped as the shares are trading below the undisturbed price.


AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The oil majors - <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a>, <a href="https://www.smartkarma.com/entities/china-petroleum-chemical-h" target="_blank" data-smartkarma-citation="entities:369:1" rel="noopener">China Petroleum &amp; Chemical (386 HK)</a> and <a href="https://www.smartkarma.com/entities/petrochina-co-ltd-h" target="_blank" data-smartkarma-citation="entities:262:1" rel="noopener">PetroChina (857 HK)</a> - are interesting plays on government's plan to boost capital market valuations.</li>
<li>Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders are just some example of supporting tactics.</li>
<li>The government may possibly mobilise more offshore funds of SOEs to add stakes. We think ROE expansion and capital market valuations to gain importance in senior management KPIs.</li>
</ul>


The oil majors - CNOOC Ltd (883 HK), China Petroleum &amp; Chemical (386 HK) and PetroChina (857 HK) - are interesting plays on government's plan to boost capital market valuations.
Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders are just some example of supporting tactics.
The government may possibly mobilise more offshore funds of SOEs to add stakes. We think ROE expansion and capital market valuations to gain importance in senior management KPIs.


China Oil Sector: A Look from SOE Valuation Enhancement Angle

China

CNOOC Limited, through its subsidiaries, explores, develops, produces, and sells crude oil and natural gas. The Company focuses in the areas such as Bohai, Western South China Sea, Eastern South China Sea and East China Sea in offshore China. Internationally, the Group has oil and gas assets in Asia, Africa, North America, South America, and Oceania.

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CNOOC Ltd (883 HK)

Hong Kong Connect Flows Monthly: 1Y High Inflows in March

We analyzed the Hong Kong Connect Scheme for March and highlight flows for Tencent, Meituan, China Mobile, ICBC, Bilibili, CCB, Geely, Sunny Optical.

Ke Yan, CFA, FRM

AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge

The quick despatch of the scheme document suggests that the offeror is worried. The vote is on a knife edge. While the deal-break downside is...

Arun George

AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In

There is an overhang of dissatisfied retail minorities. However, the widening spread and the volatile markets could nudge minorities towards the...

Arun George

AAG Energy (2686 HK): Solid Results Amplify the Risk of the NO Vote

The solid FY22 results could be a wake-up call for minorities to take action. The downside is capped due to the low offer premium and shares...

Arun George

China Oil Sector: A Look from SOE Valuation Enhancement Angle

Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders can...

Osbert Tang, CFA

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