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>There are a bunch of stocks listed in Hong Kong that have underperformed the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI INDEX</a> and their peers and could be deleted from global passive portfolios in August.</li>
<li>The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.</li>
<li>There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.</li>
</ul>


There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.


Hong Kong: Stocks Facing the Passive Boot in August

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hygeia Healthcare Group / Equity Bottom-Up

<ul>
<li>According to Hygeia’s management, the 25% growth in previous guidance for 2024 would be exceeded. 24H1 would maintain a growth rate of 40+%, and the growth in 24H2 would accelerate.</li>
<li>However, progress of some projects is slower than expected, so a growth rate of 25%+ in performance forecast seems aggressive.After all, downward adjustment of performance guidance again is very uncomfortable.</li>
<li>P/E of 30-40 is reasonable range in short term. So, Hygeia is undervalued.In long term, revenue growth could fall to 15-20% because the contribution of M&amp;A to performance would decline.</li>
</ul>


According to Hygeia’s management, the 25% growth in previous guidance for 2024 would be exceeded. 24H1 would maintain a growth rate of 40+%, and the growth in 24H2 would accelerate.
However, progress of some projects is slower than expected, so a growth rate of 25%+ in performance forecast seems aggressive.After all, downward adjustment of performance guidance again is very uncomfortable.
P/E of 30-40 is reasonable range in short term. So, Hygeia is undervalued.In long term, revenue growth could fall to 15-20% because the contribution of M&amp;A to performance would decline.


Hygeia Healthcare Group (6078.HK) - High Growth in 2024 Is Not Guaranteed

<ul>
<li>Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.</li>
<li>Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.</li>
<li>Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. </li>
</ul>


Hygeia’s asset-heavy model leads to a situation of expense “front-loading” and profit “back-loading”.Management's attitude towards profit is “thought-provoking”.It’s best for investors not to have high hope for Hygeia's profit margin.
Hygeia can maintain 30%+ growth in short term, but revenue growth could fall to 15-20% in the future due to lack of high-quality M&amp;A targets and uncertainties brought by anti-corruption.
Revenue forecast is about RMB4 billion in 2023 and RMB5-5.5 billion in 2024. P/E of 30-40 is reasonable range at this stage, which would drop afterwards. Current valuation is expensive. 


Hygeia Healthcare Group (6078.HK) - A Decline in Growth Is Inevitable

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>In 1H23, <a href="https://www.smartkarma.com/entities/hygeia-healthcare-group" target="_blank" data-smartkarma-citation="entities:28875:1" rel="noopener">Hygeia Healthcare Group (6078 HK)</a> reported revenue growth of 15% YoY to RMB1,760 million, mainly driven by a 16% YoY growth in hospital business.</li>
<li>Hygeia’s gross profit margin contracted 20bps YoY to 32.4%. Riding on 5.6x increase in government grant, operating profit jumped 33% YoY to RMB420M, leading to 320bps margin expansion to 23.9%.</li>
<li>In July, Hygeia acquired Chang’an Hospital for RMB1,660 million. The acquisition will provide Hygeia with greater room to expand its business in the northwest region of the PRC.  </li>
</ul>


In 1H23, Hygeia Healthcare Group (6078 HK) reported revenue growth of 15% YoY to RMB1,760 million, mainly driven by a 16% YoY growth in hospital business.
Hygeia’s gross profit margin contracted 20bps YoY to 32.4%. Riding on 5.6x increase in government grant, operating profit jumped 33% YoY to RMB420M, leading to 320bps margin expansion to 23.9%.
In July, Hygeia acquired Chang’an Hospital for RMB1,660 million. The acquisition will provide Hygeia with greater room to expand its business in the northwest region of the PRC.  


Hygeia Healthcare Group (6078 HK): Double-Digit Revenue Growth in 1H23; Business Expansion Continues

<ul>
<li>Based on endogenous development and external M&amp;A, the outlook of Hygeia is full of imagination. Hygeia also start to expand business in northwest region of China by acquiring Chang'an Hospital.</li>
<li>If public hospitals have a role in “guiding patients” to Hygeia, anti-corruption campaign would affect Hygeia's future performance, which is a significant uncertainty that could also shake its investment logic.</li>
<li>There may be short-term chaos. It remains to be seen whether performance can sustain growth of around 30%. The 23H2 revenue growth would be an important guidance for Hygeia's outlook.</li>
</ul>


Based on endogenous development and external M&amp;A, the outlook of Hygeia is full of imagination. Hygeia also start to expand business in northwest region of China by acquiring Chang'an Hospital.
If public hospitals have a role in “guiding patients” to Hygeia, anti-corruption campaign would affect Hygeia's future performance, which is a significant uncertainty that could also shake its investment logic.
There may be short-term chaos. It remains to be seen whether performance can sustain growth of around 30%. The 23H2 revenue growth would be an important guidance for Hygeia's outlook.


Hygeia Healthcare Group (6078.HK) - The Crack in the Egg

China

Hygeia is a China based oncology healthcare group.

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Hygeia Healthcare Group (6078 HK)

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Brian Freitas