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

Hang Seng China Enterprises Index / Event-Driven

<ul>
<li>Last evening <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> announced a special div of HK$1.18/share - that is higher than market expectations. <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> could announce a special div next week.</li>
<li>Fair value for the HSCEI 2022 dividend futures moves higher to 250 DIPS off the back of <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd</a>'s special div and the estimated <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a> special div.</li>
<li>The HSCEI 2022/23 steepener had dropped to -29 yesterday and should drop even lower today where we could see some covering.</li>
</ul>


Last evening CNOOC Ltd (883 HK) announced a special div of HK$1.18/share - that is higher than market expectations. JD.com Inc. (9618 HK) could announce a special div next week.
Fair value for the HSCEI 2022 dividend futures moves higher to 250 DIPS off the back of CNOOC Ltd's special div and the estimated JD.com Inc. (9618 HK) special div.
The HSCEI 2022/23 steepener had dropped to -29 yesterday and should drop even lower today where we could see some covering.


HSCEI Dividend Futures: CNOOC Special Drives 2022 Fair Value Higher, 22/23 Steepener Lower

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/simcere-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:29186:1" rel="noopener">Simcere Pharmaceutical Group (2096 HK)</a> reported an 11% y/y revenue growth to RMB5 billion, mainly driven by 54% y/y revenue growth from innovative pharmaceuticals.</li>
<li>However, gross margin contracted 160 basis point to 78.4%, reflecting pricing headwind. Heavy R&amp;D and selling and distribution expenses are taking toll on operating profit.</li>
<li>During 2021, Simcere has added six registered clinical trials for phase 3, two trails for phase 2, three trails for phase 1, and obtained 12 clinical trial approvals for drugs.</li>
</ul>



Simcere Pharmaceutical Group (2096 HK) reported an 11% y/y revenue growth to RMB5 billion, mainly driven by 54% y/y revenue growth from innovative pharmaceuticals.
However, gross margin contracted 160 basis point to 78.4%, reflecting pricing headwind. Heavy R&amp;D and selling and distribution expenses are taking toll on operating profit.
During 2021, Simcere has added six registered clinical trials for phase 3, two trails for phase 2, three trails for phase 1, and obtained 12 clinical trial approvals for drugs.


Simcere Pharmaceutical (2096 HK): Double-Digit Topline Growth; Margin Deteriorating Spoils the Party

Hansoh Pharmaceutical Group  / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> is increasingly focusing on innovative drug, with revenue from such drugs contributing 42% of total revenue in 2021. R&amp;D accounted for 18% of revenue in 2021.</li>
<li>Thus far, in this year, Hansoh received approval for one more new rare-disease drug. Its rich pipeline has 25+ clinical programs of innovative drugs.</li>
<li>With its proven execution on innovative portfolio, sound financial positions, and recent business collaboration effort to enrich the pipeline, Hansoh seems to be an undervalued business.</li>
</ul>



Hansoh Pharmaceutical (3692 HK) is increasingly focusing on innovative drug, with revenue from such drugs contributing 42% of total revenue in 2021. R&amp;D accounted for 18% of revenue in 2021.
Thus far, in this year, Hansoh received approval for one more new rare-disease drug. Its rich pipeline has 25+ clinical programs of innovative drugs.
With its proven execution on innovative portfolio, sound financial positions, and recent business collaboration effort to enrich the pipeline, Hansoh seems to be an undervalued business.


Hansoh Pharmaceutical (3692 HK): Bottom-Fishing Idea; Market Is Overlooking Innovative Portfolio

Orient Overseas International / Event-Driven

<ul>
<li>Current at 66 constituents, we expect to reach 80 <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI INDEX</a> constituents by the end of the year before moving higher towards 100 index members in 2023.</li>
<li>We list 10 stocks that could be added to the index in June - with one-way turnover close to 6%, the actual number of inclusions will be lower.</li>
<li>We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.</li>
</ul>


Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
We list 10 stocks that could be added to the index in June - with one-way turnover close to 6%, the actual number of inclusions will be lower.
We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.


HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a> could replace <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> in 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> at the June rebalance to be implemented on 10 June.</li>
<li>If <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> remains suspended, it could be deleted from the index and <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> could be added to the index.</li>
<li>Passive <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> trackers will need to buy around 2.45% of <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>'s real float. Short interest is over 17 days of ADV.</li>
</ul>



Lenovo (992 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance to be implemented on 10 June.
If Sunac China Holdings (1918 HK) remains suspended, it could be deleted from the index and Great Wall Motor (2333 HK) could be added to the index.
Passive Hang Seng China Enterprises Index (HSCEI INDEX) trackers will need to buy around 2.45% of Lenovo (992 HK)'s real float. Short interest is over 17 days of ADV.


HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

China

Hansoh Pharmaceutical Group Company Limited operates as a pharmaceutical company. The Company manufactures and sells anti-infectives, anti-neoplastic agents, diabetes drugs, and other products. Hansoh Pharmaceutical Group markets its products throughout China.

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Hansoh Pharmaceutical Group (3692 HK)

HSCEI Dividend Futures: CNOOC Special Drives 2022 Fair Value Higher, 22/23 Steepener Lower

The CNOOC special div and the potential JD.com special div pushes the fair value for the 2022 div futures higher. With no change to the fair value...

Brian Freitas

Simcere Pharmaceutical (2096 HK): Double-Digit Topline Growth; Margin Deteriorating Spoils the Party

Despite increasing contribution of innovative products, Simcere’s profitability is under pressure, reflecting pricing headwind. Elevated R&D and...

Tina Banerjee

Hansoh Pharmaceutical (3692 HK): Bottom-Fishing Idea; Market Is Overlooking Innovative Portfolio

Hansoh has now six innovative drugs in its portfolio. With 40%+ revenue coming from new drugs, Hansoh has best-in-class margin profile. Rich...

Tina Banerjee

HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?

There could be 5-6 inclusions to the HSI in June as part of the move to 80 members. We list 10 stocks that could be added to the index, and another...

Brian Freitas

HSCEI Index Rebalance Preview: Lenovo Could Replace Hansoh Pharma; Great Wall In/Sunac Out?

Lenovo could replace Hansoh Pharma in the HSCEI in June. Sunac could be deleted if it remains suspended till 20 May, and Great Wall Motor added....

Brian Freitas

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