Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

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<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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>
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<ul style="list-style-type: disc;">
<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 average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
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<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 3.5% for the week. Individual stock movement in the sector was striking. All five liquid spreads widened, but <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> and <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> widened because the H-shares were down, and the other four widened because of extraordinary gains in the A-Shares. </p>
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<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were net purchasers on the week, especially in the auto-related H-shares. </p>
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<p><a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> and <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> remain at the overbought end of the 52-week range. <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>, <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> are at or near 52-week wides, and Tsingtao is pretty close. </p>
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<p>Last week's recommendation was to continue to unwind the Hisense H/A spread, which widened 6% on the week. I also noted Great Wall and Guangzhou were worth a buy on a spread basis and they widened 2.9% on average. They were worth holding onto as spreads.</p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/168/642/original/Screenshot%202020-11-01%20at%2012.23.49%20PM.png?1604204650" class="editor-image img-responsive" data-smartkarma-image-id="168642"></figure>
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<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>


The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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 average sector spread and the individual spreads within each sector over the last three years. 



The first sector is Consumer, where H/A spreads widened on average 3.5% for the week. Individual stock movement in the sector was striking. All five liquid spreads widened, but Great Wall Motor (2333 HK) and Tsingtao Brewery Co Ltd H (168 HK) widened because the H-shares were down, and the other four widened because of extraordinary gains in the A-Shares. 


Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were net purchasers on the week, especially in the auto-related H-shares. 


Hisense Home Appliances Group Co., Ltd. H (921 HK) and BYD (1211 HK) remain at the overbought end of the 52-week range. Great Wall Motor (2333 HK), Guangzhou Automobile Group (2238 HK) are at or near 52-week wides, and Tsingtao is pretty close. 




Last week's recommendation was to continue to unwind the Hisense H/A spread, which widened 6% on the week. I also noted Great Wall and Guangzhou were worth a buy on a spread basis and they widened 2.9% on average. They were worth holding onto as spreads.









For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.

Quiddity Weekly H/​​A: Share Spread Monitor 30 Oct 2020

<div>
<p>The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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>
</div>
<div>
<ul style="list-style-type: disc;">
<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 average sector spread and the individual spreads within each sector over the last three years. </li>
</ul>
<p>On average, </p>
<p>The first sector is <strong>Consumer</strong>, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  </p>
<p>Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both <a href="https://www.smartkarma.com/entities/tsingtao-brewery-co-ltd-h" target="_blank" data-smartkarma-citation="entities:1296:1" rel="noopener">Tsingtao Brewery Co Ltd H (168 HK)</a> and <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a> where the net selling activity amounted to 15.5% and 22% of volume respectively. </p>
<p>Hisense remains at the overbought end of the 52-week range. <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> and <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> are now at 52-week wides. </p>
<div class="content-highlight">
<p>Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.</p>
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<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/062/original/Screenshot%202020-10-24%20at%202.45.56%20PM.png?1603521970" class="editor-image img-responsive" data-smartkarma-image-id="167062"></figure>
</section>
<p></p>
<p>For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.</p>
</div>


The H-Share/A-Share monitor is published every weekend for the data ending the last trading day of the previous week. It includes all H-Share/A-Share pairs 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 average sector spread and the individual spreads within each sector over the last three years. 

On average, 
The first sector is Consumer, where H/A spreads widened on average 2.7% for the week, more than cancelling out the average 1.7% spread narrowing last week. With the exception of Hisense Home Appliances Group Co., Ltd. H (921 HK), this happened as the H-shares rose strongly and the A-Shares rose even more strongly.  
Southbound investors through the Shenzhen-HK and Shanghai-HK Connect were significant net sellers during the week in both Tsingtao Brewery Co Ltd H (168 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) where the net selling activity amounted to 15.5% and 22% of volume respectively. 
Hisense remains at the overbought end of the 52-week range. Great Wall Motor (2333 HK) and Guangzhou Automobile Group (2238 HK) are now at 52-week wides. 

Last week's recommendation was to take off Hisense and the H-share fell 7.3% while the spread widened 0.7%. It is still probably worth unwinding. At this point, Great Wall and Guangzhou are worth a buy on a spread basis.





For Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities, please read on.


Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

David Blennerhassett

Event-Driven

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<p>After <a href="https://www.smartkarma.com/entities/qilu-expressway-co-ltd" target="_blank" data-smartkarma-citation="entities:27431:1" rel="noopener">Qilu Expressway Co Ltd (1576 HK)</a> was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200112.pdf" target="_blank" rel="noopener">suspended</a> yesterday <em>"pursuant to the Code on Takeovers and Mergers</em>", it appeared the shareholder restructuring was the likely rationale.</p>
<p>This was confirmed last night after Qilu <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081201368.pdf" target="_blank" rel="noopener">announced</a> its largest shareholder Qilu Transportation shall be merged and absorbed by Shandong Hi-Speed Group (SHSG).</p>
<p>The absorption simplifies the holding of Shandong SASAC, the ultimate parent of both Qilu Transportation and SHSG, into Qilu.</p>
<p>The restructuring <em>may</em> trigger an obligation for SHSG to make a mandatory general offer for all shares not owned. SHSG and Qilu Transportation will jointly make an application to the SFC to waive this obligation.  </p>
<p>There is also the issue over the resulting free float - as the public float falls below the minimum prescribed percentage of 25% under the restructuring, before any MGO.</p>
<p>But even if the SFC forces an MGO, expect a nil premium. </p>
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<p>More below the fold.</p>
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<p><em>This is a brief insight to discuss the updated announcement. For a more detailed overview of Qilu,  please refer to <a href="https://skr.ma/XZPiJ" target="_blank" rel="noopener">Qilu Expressway: C-REIT Pilot Or Restructuring?</a>.</em></p>
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After Qilu Expressway Co Ltd (1576 HK) was suspended yesterday "pursuant to the Code on Takeovers and Mergers", it appeared the shareholder restructuring was the likely rationale.
This was confirmed last night after Qilu announced its largest shareholder Qilu Transportation shall be merged and absorbed by Shandong Hi-Speed Group (SHSG).
The absorption simplifies the holding of Shandong SASAC, the ultimate parent of both Qilu Transportation and SHSG, into Qilu.
The restructuring may trigger an obligation for SHSG to make a mandatory general offer for all shares not owned. SHSG and Qilu Transportation will jointly make an application to the SFC to waive this obligation.  
There is also the issue over the resulting free float - as the public float falls below the minimum prescribed percentage of 25% under the restructuring, before any MGO.
But even if the SFC forces an MGO, expect a nil premium. 


More below the fold.

This is a brief insight to discuss the updated announcement. For a more detailed overview of Qilu,  please refer to Qilu Expressway: C-REIT Pilot Or Restructuring?.


<p><a href="https://www.smartkarma.com/entities/qilu-expressway-co-ltd" target="_blank" data-smartkarma-citation="entities:27431:1" rel="noopener">Qilu Expressway Co Ltd (1576 HK)</a> is currently <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0812/2020081200112.pdf" target="_blank" rel="noopener">suspended</a> "<em>pursuant to the Code on Takeovers and Mergers</em>".</p>
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<p>Back on the 30 April, the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly <a href="http://www.csrc.gov.cn/pub/zjhpublic/zjh/202004/t20200430_374847.htm" target="_blank" rel="noopener">announced</a> a new pilot for Chinese infrastructure real estate investment trusts (or C-REITs), a directive to fund infrastructure projects such as highways and airports.</p>
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<p>In my insight <em><a href="https://skr.ma/z1xjh" target="_blank" rel="noopener">Chinese Expressways: A Step In The REIT Direction</a></em>, I discussed the nine toll roads listed in Hong Kong, including Qilu, to ascertain which company may pilot this new policy.  </p>
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<p>Located in East China and operational for 3+ years, Qilu ticks the location box and operational duration policy focus under the NDRC/CSRC directive. Is this the first "REIT" candidate?</p>
<p>Or is the suspension due to a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0713/2020071300003.pdf" target="_blank" rel="noopener">restructuring</a> with the Shandong Hi-Speed Group?</p>
<p>More below the fold.</p>

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers".

Back on the 30 April, the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission (NDRC) jointly announced a new pilot for Chinese infrastructure real estate investment trusts (or C-REITs), a directive to fund infrastructure projects such as highways and airports.


In my insight Chinese Expressways: A Step In The REIT Direction, I discussed the nine toll roads listed in Hong Kong, including Qilu, to ascertain which company may pilot this new policy.  

Located in East China and operational for 3+ years, Qilu ticks the location box and operational duration policy focus under the NDRC/CSRC directive. Is this the first "REIT" candidate?
Or is the suspension due to a restructuring with the Shandong Hi-Speed Group?
More below the fold.

Qilu Expressway: C-REIT Pilot Or Restructuring?

Last Week in Event SPACE: Jardines, Keppel, FamilyMart, Toshiba, Sogo/Sogou, Chinese Toll Roads

China

Jiangsu Expressway Company Ltd. constructs, operates, manages and maintains expressways in China.  The Company also provides passenger transportation and other ancillary services along including fueling stations, restaurants, car maintenance and repair and advertising.

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Jiangsu Expressway (H) (177 HK)

Qilu Expressway: MGO Waiver Sought

After Qilu Expressway Co Ltd (1576 HK) was suspended yesterday "pursuant to the Code on Takeovers and Mergers", it appeared the shareholder...

David Blennerhassett

Qilu Expressway: C-REIT Pilot Or Restructuring?

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers". Back on the 30 April, the China...

David Blennerhassett

Last Week in Event SPACE: Jardines, Keppel, FamilyMart, Toshiba, Sogo/Sogou, Chinese Toll Roads

Last Week in Event SPACE ... At extreme discounts to NAV for both Jardine Matheson Holdings (JM SP) & Jardine Strategic Holdings (JS SP),...

David Blennerhassett

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Quiddity Weekly H/​​A: Share Spread Monitor 30 Oct 2020

The H-Share/​A-Share monitor is published every weekend for the previous week showing the 1wk and 4wk moves in H/A spreads and southbound activity....

Travis Lundy

Quiddity Weekly H/​A: Share Spread Monitor 23 Oct 2020

Quiddity H/A Spread Monitor for the week ending 23 October 2020. Spreads widened in Consumer, narrowed in every other sector. Southbound were...

Travis Lundy

Qilu Expressway: MGO Waiver Sought

After Qilu Expressway Co Ltd (1576 HK) was suspended yesterday "pursuant to the Code on Takeovers and Mergers", it appeared the shareholder...

David Blennerhassett

Qilu Expressway: C-REIT Pilot Or Restructuring?

Qilu Expressway Co Ltd (1576 HK) is currently suspended "pursuant to the Code on Takeovers and Mergers". Back on the 30 April, the China...

David Blennerhassett

Last Week in Event SPACE: Jardines, Keppel, FamilyMart, Toshiba, Sogo/Sogou, Chinese Toll Roads

Last Week in Event SPACE ... At extreme discounts to NAV for both Jardine Matheson Holdings (JM SP) & Jardine Strategic Holdings (JS SP),...

David Blennerhassett

Quiddity Weekly H/A: Share Spread Monitor 30 Oct 2020

The H-Share/A-Share monitor is published every weekend for the previous week showing the 1wk and 4wk moves in H/A spreads and southbound activity....

Quiddity Weekly H/A: Share Spread Monitor 23 Oct 2020