Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<p>This insight re-introduces a weekly monitor for H-Share/A-Share spreads.</p>
<p>The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...</p>
<ul>
<li>H/A Discount,</li>
<li>movement in H/A Discount over 5 and 20 days,</li>
<li>a 52-week Z-score for the spread,</li>
<li>A chart showing evolution of the H/A spread over the last 20 days,</li>
<li>Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, </li>
<li>There is also a chart showing the narrowest and widest spread and the average spread over the last three years. </li>
</ul>
<p>In the example for the H/A spreads in the <strong>Materials</strong> sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> and <a href="https://www.smartkarma.com/entities/ganfeng-lithium-co-ltd" target="_blank" data-smartkarma-citation="entities:26795:1" rel="noopener">Ganfeng Lithium (1772 HK)</a> are spreads at the relatively narrow end of their 52-week ranges, while <a href="https://www.smartkarma.com/entities/maanshan-iron-steel-h" target="_blank" data-smartkarma-citation="entities:204:1" rel="noopener">Maanshan Iron &amp; Steel H (323 HK)</a>, <a href="https://www.smartkarma.com/entities/bbmg-corp-h" target="_blank" data-smartkarma-citation="entities:2821:1" rel="noopener">BBMG Corp H (2009 HK)</a>, <a href="https://www.smartkarma.com/entities/sinopec-shanghai-petrochemical-co-ltd" target="_blank" data-smartkarma-citation="entities:17576:1" rel="noopener">Sinopec Shanghai Petrochemical (338 HK)</a>, and <a href="https://www.smartkarma.com/entities/anhui-conch-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:159:1" rel="noopener">Anhui Conch Cement Co Ltd H (914 HK)</a> are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.</p>
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<p>Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.</p>
<div class="content-highlight">
<p>Recommendations are in highlights like this.</p>
</div>
<section class="figure">
<p>More below the fold.  </p>
<hr>
<p><em>By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).</em></p>
</section>

This insight re-introduces a weekly monitor for H-Share/A-Share spreads.
The monitor will be published every weekend for the data ending the previous week. It includes all stocks where the H-Share has a 90-day average daily value-traded of US$1.0mm or more. It shows basic data per H/A spread stock by sector, with...

H/A Discount,
movement in H/A Discount over 5 and 20 days,
a 52-week Z-score for the spread,
A chart showing evolution of the H/A spread over the last 20 days,
Southbound shares held (millions of shares), Net Change in Southbound (Shanghai and Shenzhen combined) shares held by millions of shares, and contribution of Net Southbound Volume to HK-traded volume over the past five days and 20 days, 
There is also a chart showing the narrowest and widest spread and the average spread over the last three years. 

In the example for the H/A spreads in the Materials sector below, spreads were generally flat over the past five days and were wider by 1.5% over the past 20 days. Southbound were net buyers on average on the H side of each pair over both 5 days and 20 days. Shandong Gold Mining Co., Ltd. (1787 HK) and Ganfeng Lithium (1772 HK) are spreads at the relatively narrow end of their 52-week ranges, while Maanshan Iron &amp; Steel H (323 HK), BBMG Corp H (2009 HK), Sinopec Shanghai Petrochemical (338 HK), and Anhui Conch Cement Co Ltd H (914 HK) are at the wider end of their 52-week ranges. The average spread in the sector widened somewhat dramatically in the month of August as seen on the chart, but stabilized at the beginning of September.






Commentary is offered for the major movers and influences along with market observations on the sector rotation movement and particularly significant changes.

Recommendations are in highlights like this.


More below the fold.  

By the way, there are two versions of the Spread Evolution mini charts. Input is welcomed in the Discussion section as to which one is preferred (bars or lines).


Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

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>With the ongoing COVID-19 cases in the US, its auto sector is unlikely to recover this year that is a drag to <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a> 's earnings but it has recently penetrated the Chinese auto market, supplying to <a href="https://www.smartkarma.com/entities/geely-automobile-holdings-ltd" target="_blank" data-smartkarma-citation="entities:127:1" rel="noopener">Geely Auto (175 HK)</a> for Electric Power Steering component, that could help to increase the company's overall profitability. From a credit perspective, Nexteer's debt-to-equity ratio is also very low compared to the Japanese small-cap peers such as Futaba and KYB and even compared to its two largest customers, <a href="https://www.smartkarma.com/entities/general-motors-co" target="_blank" data-smartkarma-citation="entities:18811:1" rel="noopener">General Motors Co (GM US)</a> and <a href="https://www.smartkarma.com/entities/ford-motor-co" target="_blank" data-smartkarma-citation="entities:19225:1" rel="noopener">Ford Motor Co (F US)</a> at 202% and 390% debt to equity ratio respectively. </p>
<p>Nexteer is trading at a 30-37% discount to its peers and compared to the Chinese auto suppliers such as Minth, Fuyao and Huayu, Nexteer is also trading at a 55% discount in EV/EBITDA, 33% discount in PER, and 61% in PBR. </p>
<p>As the Chinese auto sector recovers earlier compared to the US, the company's earnings should start to recover and its profitability should also increase, therefore, its share price should increase correspondingly. BUY. </p>

With the ongoing COVID-19 cases in the US, its auto sector is unlikely to recover this year that is a drag to Nexteer Automotive (1316 HK) 's earnings but it has recently penetrated the Chinese auto market, supplying to Geely Auto (175 HK) for Electric Power Steering component, that could help to increase the company's overall profitability. From a credit perspective, Nexteer's debt-to-equity ratio is also very low compared to the Japanese small-cap peers such as Futaba and KYB and even compared to its two largest customers, General Motors Co (GM US) and Ford Motor Co (F US) at 202% and 390% debt to equity ratio respectively. 
Nexteer is trading at a 30-37% discount to its peers and compared to the Chinese auto suppliers such as Minth, Fuyao and Huayu, Nexteer is also trading at a 55% discount in EV/EBITDA, 33% discount in PER, and 61% in PBR. 
As the Chinese auto sector recovers earlier compared to the US, the company's earnings should start to recover and its profitability should also increase, therefore, its share price should increase correspondingly. BUY. 

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.</p><p>The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.</p><p>With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.</p><p>In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.</p>

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the largest and most liquid mainland China companies with both A-share and H-share listings.The HSAHP Index has fluctuated a lot over the last 10 years, reaching a high of 149.03 (A-shares trading at a 49% premium to H-shares) in July 2015 and a low of 88.97 (A-shares trading at a discount of 11% to H-shares) in July 2014.With retail investors rushing in to equities in China and pushing stocks higher in the mainland versus their Hong Kong line, a correction in markets could see the AH premium revert by around 10% as investors head for the exit. Insurance stocks and brokerages are trading at high AH premiums and near the top of the 5 year range.In this Insight, we look at how the HSAHP index has moved over time and identify trading opportunities where the premium is trading near the high and low end of its historical ranges.

China AH Premium: Trade Ideas As We Near Previous Highs

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Thematic (Sector/Industry)

<div>
<p>In this Smartkarma Webinar, <a href="https://www.smartkarma.com/profiles/victoria-li" target="_blank" data-smartkarma-citation="accounts:780" rel="noopener">Victoria Li</a> will discuss her recent Smartkarma Original titled <a href="https://www.smartkarma.com/insights/china-auto-parts-a-shares-parts-of-the-future" target="_blank" data-smartkarma-citation="insights:37321" rel="noopener">China Auto Parts A Shares: Parts Of The Future</a>, where she touches on the prospects of companies including <a href="https://www.smartkarma.com/entities/changzhou-xingyu-automotive" target="_blank" data-smartkarma-citation="entities:20974:1" rel="noopener">Changzhou Xingyu Automotive (601799 CH)</a>, <a href="https://www.smartkarma.com/entities/ningbo-joyson-electronic-corp" target="_blank" data-smartkarma-citation="entities:4774:1" rel="noopener">Ningbo Joyson Electronic (600699 CH)</a>, <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> and <a href="https://www.smartkarma.com/entities/huayu-automotive-systems-a" target="_blank" data-smartkarma-citation="entities:8317:1" rel="noopener">Huayu Automotive Systems A (600741 CH)</a>. </p>
</div>
<div>
<h3>The webinar was hosted on Wednesday, 22/July/2020, 5.00pm SGT/HKT.</h3>
<p>Watch the webinar here:</p>
<p><iframe src="https://www.youtube.com/embed/zDD90IZ5iIg" width="560" height="315" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></p>
<p>Victoria is an independent Insight Provider with over 18 years experience focused on Chinese autos, industrials and energy, having worked at firms including BNP Paribas, Barclays and Credit Suisse.</p>
</div>


In this Smartkarma Webinar, Victoria Li will discuss her recent Smartkarma Original titled China Auto Parts A Shares: Parts Of The Future, where she touches on the prospects of companies including Changzhou Xingyu Automotive (601799 CH), Ningbo Joyson Electronic (600699 CH), Fuyao Glass Industry Group (3606 HK) and Huayu Automotive Systems A (600741 CH). 


The webinar was hosted on Wednesday, 22/July/2020, 5.00pm SGT/HKT.
Watch the webinar here:

Victoria is an independent Insight Provider with over 18 years experience focused on Chinese autos, industrials and energy, having worked at firms including BNP Paribas, Barclays and Credit Suisse.


Smartkarma Webinar | China A-Shares Auto Parts: Parts of the Future

China Specialist, Auto and Industrial Specialist

Victoria Li

<p>A recent online survey result from J.D. Power indicates that China's end demand on passenger vehicles would remain weak until June 2020, although the Coronavirus outbreak is under control in China at current moment.</p><p>However, the potential number of new car buyers has significantly increased, and half of people want to buy cars within one year. This indicates that China's auto demand might rebound dramatically in 2H2020.</p><p>Currently dealers inventory level is extremely high. To destock the dealers, OEMs' sales in the next few months would probably remain as weak as in Feb. If this causes any further share price correction, it's a buying opportunity. We suggest investors buy Geely(175.HK), Brilliance China (1114.HK), and Fuyao Glass (3606.HK) on pullbacks. Currently they are trading at 8.82x P/E on 2020E, 4.29x and 10.97x respectively.</p><p>In A share market, we suggest to buy Xingyu (601799.CH), Joyson (600699.CH) and Huayu (600741.CH)  (Please refer to <a href="https://www.smartkarma.com/insights/china-auto-parts-a-shares-parts-of-the-future" target="_blank" rel="noopener">China Auto Parts A Shares: Parts Of The Future</a>)</p>

A recent online survey result from J.D. Power indicates that China's end demand on passenger vehicles would remain weak until June 2020, although the Coronavirus outbreak is under control in China at current moment.However, the potential number of new car buyers has significantly increased, and half of people want to buy cars within one year. This indicates that China's auto demand might rebound dramatically in 2H2020.Currently dealers inventory level is extremely high. To destock the dealers, OEMs' sales in the next few months would probably remain as weak as in Feb. If this causes any further share price correction, it's a buying opportunity. We suggest investors buy Geely(175.HK), Brilliance China (1114.HK), and Fuyao Glass (3606.HK) on pullbacks. Currently they are trading at 8.82x P/E on 2020E, 4.29x and 10.97x respectively.In A share market, we suggest to buy Xingyu (601799.CH), Joyson (600699.CH) and Huayu (600741.CH)  (Please refer to China Auto Parts A Shares: Parts Of The Future)

China Auto: Signs of Pent up Demand that Could Be Unleashed in 2H2020

China

Fuyao Glass Industry Group Co Ltd, through its subsidiaries, manufactures and distributes automobile glass, decorated glassware, and other industrial glassware. The Company also provides glass installation service. Fuyao Glass Industry Group markets its products internationally.

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Fuyao Group Glass Industr A (600660 CH)

Nexteer (1316): China Recovery to Help

As the Chinese auto sector recovers earlier compared to the US, Nexteer's revenues start to recover and its profitability should also increase,...

Henry Soediarko

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Smartkarma Webinar | China A-Shares Auto Parts: Parts of the Future

In this Smartkarma Webinar, Victoria Li will discuss her recent Smartkarma Original titled China Auto Parts A Shares: Parts Of The Future, where...

Smartkarma Research

China Auto: Signs of Pent up Demand that Could Be Unleashed in 2H2020

A recent online survey result from J.D. Power indicates that China's end demand on passenger vehicles would remain weak until June 2020, although...

Victoria Li

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Weekly H/A: Share Spread Monitor 16 Oct 2020

Weekly Monitor for H-Share/A-Share spreads showing spread/discount performance, spread Z-scores, southbound buying and selling and net activity...

Travis Lundy

Nexteer (1316): China Recovery to Help

As the Chinese auto sector recovers earlier compared to the US, Nexteer's revenues start to recover and its profitability should also increase,...

Henry Soediarko

China AH Premium: Trade Ideas As We Near Previous Highs

The Hang Seng Stock Connect China AH Premium Index (HSAHP) measures the absolute price premium or discount of A-shares over H-shares for the...

Brian Freitas

Smartkarma Webinar | China A-Shares Auto Parts: Parts of the Future

In this Smartkarma Webinar, Victoria Li will discuss her recent Smartkarma Original titled China Auto Parts A Shares: Parts Of The Future, where...

Smartkarma Research

China Auto: Signs of Pent up Demand that Could Be Unleashed in 2H2020

A recent online survey result from J.D. Power indicates that China's end demand on passenger vehicles would remain weak until June 2020, although...

Victoria Li