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>With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it's been a year later than originally planned to reach 80 index constituents.</li>
<li>We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.</li>
<li>There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.</li>
</ul>


With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it's been a year later than originally planned to reach 80 index constituents.
We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.


Hang Seng Index Rebalance Preview: A Year Later Than Planned - 80 Members at Last?

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

JD Health International  / Equity Bottom-Up

<ul>
<li>JD Health’s 2022 results were more optimistic than expected. We think the past three-year pandemic as well as the broadening of service scenarios are main drivers for rapid performance/user growth.</li>
<li>If turning losses into profits is “a phased victory”,striving for higher profit margins and healthier revenue structure is the key task in next stage,but JD Health may fail this transformation. </li>
<li>After China reopens, JD Health's user scale could be difficult to maintain such rapid growth in 2023 and onwards. Without breakthrough in service revenue, its valuation expansion potential could be limited. </li>
</ul>


JD Health’s 2022 results were more optimistic than expected. We think the past three-year pandemic as well as the broadening of service scenarios are main drivers for rapid performance/user growth.
If turning losses into profits is “a phased victory”,striving for higher profit margins and healthier revenue structure is the key task in next stage,but JD Health may fail this transformation. 
After China reopens, JD Health's user scale could be difficult to maintain such rapid growth in 2023 and onwards. Without breakthrough in service revenue, its valuation expansion potential could be limited. 


JD Health (6618.HK) - Business Transformation Is Still Difficult

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.</li>
<li>In <a href="https://www.smartkarma.com/insights/quiddity-leaderboard-for-hang-seng-index-mar-23-healthcare-names-could-dominate" target="_blank" data-smartkarma-citation="insights:94998" rel="noopener">Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate</a>, we expected some healthcare names to be added but there were no index changes in March 2023. </li>
<li>Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. </li>
</ul>


The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.
In Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate, we expected some healthcare names to be added but there were no index changes in March 2023. 
Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June. 


Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting

<ul>
<li>ClouDr had outstanding performance in 2022, which was mainly due to its unique but effective development model - starting from To B business first and then expanding To C business. </li>
<li>ClouDr may become the first company to develop a successful profit model of online medical services. The integration of AI and medical care enables ClouDr to enjoy more policy dividends/catalysts </li>
<li>
<a href="https://www.smartkarma.com/entities/cloudr-group-limited" target="_blank" data-smartkarma-citation="entities:34459:1" rel="noopener">ClouDr Group (9955 HK)</a> has high growth potential with big investment value, and it could even surpass JD Health in the future. The Company is undervalued and deserve investors’ attention.</li>
</ul>


ClouDr had outstanding performance in 2022, which was mainly due to its unique but effective development model - starting from To B business first and then expanding To C business. 
ClouDr may become the first company to develop a successful profit model of online medical services. The integration of AI and medical care enables ClouDr to enjoy more policy dividends/catalysts 

ClouDr Group (9955 HK) has high growth potential with big investment value, and it could even surpass JD Health in the future. The Company is undervalued and deserve investors’ attention.


ClouDr Group (9955.HK) -  “A Dark Horse” to Beat JD Health

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

<ul>
<li>One may presume that <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> moved their <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> shares received from their non-CCASS holdings of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>. It does not tell us much else. </li>
<li>Allocation in the <a href="https://www.smartkarma.com/entities/s-m-entertainment-co" target="_blank" data-smartkarma-citation="entities:3500:1" rel="noopener">S.M.Entertainment Co (041510 KS)</a> partial Offer was 44.14%. With shares trading ~₩95k, that was a pretty good outcome. </li>
<li>
<a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> has asked the Japanese government to investigate YFO's alleged breaches of FEFTA. Expect YFO to say they did no wrong. Expect Toyo to complain about it. </li>
</ul>


One may presume that Prosus (PRX NA) moved their Meituan (3690 HK) shares received from their non-CCASS holdings of Tencent (700 HK). It does not tell us much else. 
Allocation in the S.M.Entertainment Co (041510 KS) partial Offer was 44.14%. With shares trading ~₩95k, that was a pretty good outcome. 

Toyo Construction (1890 JP) has asked the Japanese government to investigate YFO's alleged breaches of FEFTA. Expect YFO to say they did no wrong. Expect Toyo to complain about it. 


Last Week in Event SPACE: Meituan, S.M.Entertainment, Toyo, Mincor, JD.com, AAG

China

JD Health International Inc. operates drug stores. The Company retails Chinese and Western medicines, nutrition products, health care products, and other products. JD Health International markets its products throughout China.

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JD Health International (6618 HK)

Hang Seng Index Rebalance Preview: A Year Later Than Planned - 80 Members at Last?

We highlight 10 potential adds in June. Adding all 10 stocks will result in one-way turnover of 5%, so fewer stocks (some large, some small) will...

Brian Freitas

JD Health (6618.HK) - Business Transformation Is Still Difficult

JD Health had high performance growth in 2022, but user growth may face decline in post-COVID period. Gross profit margin and revenue structure are...

Xinyao (Criss) Wang

Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting

I have presented 24 Names from Healthcare, Consumer Discretionary, Properties, Utilities, and Conglomerates as high-likelihood names. Quiddity's...

Janaghan Jeyakumar, CFA

ClouDr Group (9955.HK) - “A Dark Horse” to Beat JD Health

ClouDr could be the first company to develop a successful profit model of online medical services, changing the game rule. ClouDr has big potential...

Xinyao (Criss) Wang

Last Week in Event SPACE: Meituan, S.M.Entertainment, Toyo, Mincor, JD.com, AAG

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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