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/kingston-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:3566:1" rel="noopener">Kingston Financial (1031 HK)</a> entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. </li>
<li>It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.</li>
<li>As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required - an offer at the 1-year average price of HK$0.33 implies a 63% premium.</li>
</ul>



Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. 
It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required - an offer at the 1-year average price of HK$0.33 implies a 63% premium.


Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?

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 analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 113.9% as of Sep 16th.</li>
<li>The average A-H premium changed by -4.6ppt weeok on week, led by financials,  communication services, health care, and offset by consumer staples, consumer discretionary, utilities.</li>
<li>We highlight weekly changes in A-H premium for Angang, CIMC, Zoomlion, Huatai securities, Tianqi Lithium, China Telecom.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 113.9% as of Sep 16th.
The average A-H premium changed by -4.6ppt weeok on week, led by financials,  communication services, health care, and offset by consumer staples, consumer discretionary, utilities.
We highlight weekly changes in A-H premium for Angang, CIMC, Zoomlion, Huatai securities, Tianqi Lithium, China Telecom.


A-H Premium Weekly (Sep 16th): Angang, CIMC, Zoomlion, Huatai, Tianqi Lithium

<ul>
<li>We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 116.6% as of Sep 2nd.</li>
<li>The average A-H premium changed by 4.9ppt, led by Communication Services, Financials, Health Care and offset by Energy, Consumer Staples.</li>
<li>We highlight weekly changes in A-H premium for Remegen, Huaxin, Huatai, Tianqi Lithium, Shandong Gold.</li>
</ul>


We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 116.6% as of Sep 2nd.
The average A-H premium changed by 4.9ppt, led by Communication Services, Financials, Health Care and offset by Energy, Consumer Staples.
We highlight weekly changes in A-H premium for Remegen, Huaxin, Huatai, Tianqi Lithium, Shandong Gold.


A-H Premium Weekly (Sep 2nd): Remegen, Huaxin, Huatai, Tianqi Lithium

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

<ul>
<li>Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.</li>
<li>We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.</li>
<li>The potential adds have outperformed the potential deletes and the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> by a wide margin over the last few months.</li>
</ul>


Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.
We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.
The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) by a wide margin over the last few months.


SSE50 Index Rebalance Preview: Sector Rotation To Continue

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/magic-empire-global" target="_blank" data-smartkarma-citation="entities:36219:1" rel="noopener">Magic Empire Global (MEGL US)</a> shares are currently up 45x since its listing at US$4.00 per share on 5 August. Its market cap currently stands at US$3.6 billion.</li>
<li>Just like <a href="https://www.smartkarma.com/entities/amtd-digital" target="_blank" data-smartkarma-citation="entities:36214:1" rel="noopener">AMTD Digital (HKD US)</a>, it is hard to pinpoint the real reason for MEGL’s share price surge. MEGL’s financials are uninspiring and cannot justify the share price ramp.</li>
<li>MEGL has no unique competitive advantage which could justify it's current large premium multiple compared to larger and better-established peers.    </li>
</ul>



Magic Empire Global (MEGL US) shares are currently up 45x since its listing at US$4.00 per share on 5 August. Its market cap currently stands at US$3.6 billion.
Just like AMTD Digital (HKD US), it is hard to pinpoint the real reason for MEGL’s share price surge. MEGL’s financials are uninspiring and cannot justify the share price ramp.
MEGL has no unique competitive advantage which could justify it's current large premium multiple compared to larger and better-established peers.    


Magic Empire Global: More Trick than Treat

China

Haitong Securities Co., Ltd. offers securities services. The Company provides securities brokerage, asset management, securities investment, share transfer agency, and capital intermediary services. Haitong Securities focuses on  online brokerage, wealth management, and institutional investors.

Haitong Securities Co Ltd (A) (600837 CH)

Huatai Securities Co., Ltd. provides financial company. The Company provides securities brokerage services, research consulting services, investment banking and direct investment services, fixed-income services and asset management services.

China Merchants Securities Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities underwriting, and other services. China Merchants Securities also operates investment management.

China Merchants Securities Co Ltd (A) (600999 CH)

GF Securities Co Ltd. is a securities firm. The Company offers investment banking services including equity and bond underwriting, mergers and acquisitions consulting, financial consulting, brokerage services, and asset management services.

Guotai Junan Securities Co.,Ltd. provides financial services. The Company offers corporate finance, fixed income securities, asset management, risk management, and other services. Guotai Junan Securities Company serves clients throughout China.

Shenwan Hongyuan Group Co., Ltd. provides securities services. The Company offers securities brokerage, securities investment consulting, securities investment fund agency, securities asset management, and other services. Shenwan Hongyuan Group provides services in China.

China Galaxy Securities Co., Ltd. provides securities services. The Company provides securities underwriting, securities brokerage, securities investment advisory, securities transaction, and other services. China Galaxy Securities provides its services throughout China.

CITIC Securities Co., Ltd. provides securities brokerage, trading, underwriting, investment banking, asset management, and investment consulting services.

Founder Securities Company Limited's major business includes securities brokerage, securities investment consulting, securities trading, financial advisory on securities investment and trading activities, proprietary trading, securities asset management, investment fund distribution, margin business, and provide intermediate agency services for Founder Futures Limited.


Everbright Securities Co., Ltd. provides securities brokerage, trading, custody, underwriting, asset management, and investment consulting services.

Yuanta Financial Holding Co., Ltd. is a holding company. Its main businesses include brokerage, margin financing, domestic and overseas issuance, financial and M&A advisory, primary listings, corporate financial, securities underwriting and placements, etc. The company also holds the leading position in the derivatives business.

Northern Trust Corporation is a financial holding company that provides investment management, asset and fund administration, fiduciary, and banking solutions for corporations, institutions, and affluent individuals. Northern Trust's banking operations are its primary operations.

Japan Exchange Group Inc is the holding company created through the merger of Tokyo Stock Exchange Group, Inc and Osaka Securities Exchange Co., Ltd. The group provides and operates a marketplace for the trading of equities, futures, and options. The Group manages the trading, as well as administers listed stocks and registered members.

Interactive Brokers Group, Inc. is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures, and foreign exchange instruments.

LPL Financial Holdings, Inc. offers technology, brokerage and investment advisory services through business relationships with all types of financial advisors. Through proprietary technology, custody and clearing platforms, the Company offers access to financial products and services that enable them to provide financial advice and brokerage services to retail investors.

Franklin Resources, Inc. (d.b.a. Franklin Templeton Investments) provides investment advisory services to mutual fund, retirement, institutional/separate accounts and high net worth investors. The Company manages various asset classes including global equity, global institutional and municipal fixed income, money funds, alternative investments, and hedge funds.

Cboe Global Markets, Inc. operates a marketplace for the trading of standardized, listed options on equity securities. The Company is recognized for its role in the trading of options on individual equities, market indexes and exchange-traded funds, their suite of products, their markets and their hybrid trading model.

Amundi SA provides investment management services. The Company offers savings, financial instruments, equity trading, credit activities, and investment solutions. Amundi serves customers worldwide.

Brookfield Asset Management Ltd. operates as an investment management firm. The Company focuses on property development, renewable energy, infrastructure, insurance, and private equity. Brookfield Asset Management serves customers worldwide.

ASX Ltd is a demutualized company which operates Australia's primary national stock exchange and equity derivatives market. The ASX operates markets for equities, derivatives, fixed-interest securities and capital-raising for unlisted companies using advanced computer systems for both trading and settlement.

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Huatai Securities Co Ltd (A) (601688 CH)

Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?

Mrs Chu (CEO and co-founder) is likely seeking to privatise Kingston. A decent premium is required as privatisation through a Bermuda scheme (most...

Arun George

A-H Premium Weekly (Sep 16th): Angang, CIMC, Zoomlion, Huatai, Tianqi Lithium

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Angang, CIMC, Zoomlion, Huatai securities, Tianqi Lithium,...

Ke Yan, CFA, FRM

A-H Premium Weekly (Sep 2nd): Remegen, Huaxin, Huatai, Tianqi Lithium

We analyzed A-H premium last week and highlight weekly changes in A-H premium for Remegen, Huaxin, Huatai, Tianqi Lithium, Shandong Gold.

Ke Yan, CFA, FRM

SSE50 Index Rebalance Preview: Sector Rotation To Continue

We forecast 5 changes for the SSE50 Index in December. There are a few names that are close to add/delete zone and price/volume changes can lead to...

Brian Freitas

Magic Empire Global: More Trick than Treat

It is hard to pinpoint the real reason for MEGL’s share price surge. While it is difficult to predict when the share price will reflect...

Arun George

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