Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<p>Roughly 4 years ago, in Sep 2017, Taiwan-based financial services group <a href="https://www.smartkarma.com/entities/china-development-financial" target="_blank" data-smartkarma-citation="entities:13818:1" rel="noopener">China Development Financial (2883 TT)</a> ("CDFHC") became the top shareholder of <a href="https://www.smartkarma.com/entities/china-life-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:603:1" rel="noopener">China Life Insurance (2823 TT)</a> by launching a Tender Offer and acquiring a 25.33% stake for NT$30.8bn. At that time, China Life Insurance was the fifth largest insurance group in Taiwan.</p><p>Almost 3 years later, CDFHC made another Tender Offer to acquire an additional 21.1% stake in China Life Insurance for NT$23.6bn on 27th November 2020 increasing their direct shareholding to 47.3%. This Offer was completed in February 2021 and together with an 8.66% owned by a fully-owned subsidiary -  KGI securities - CDFHC collectively controlled around 56% in China Life Insurance. </p><p>Last week, on 12th August 2021, CDFHC announced a cash and scrip Deal to buy the remaining portion of China Life Insurance to take their ownership to 100% and delist the company from the Taiwan Stock Exchange.  </p><p>Under this Deal, China Life Insurance minority shareholders are expected to receive a combination of 0.80 CDFHC common shares, 0.73 CDFHC preferred shares, and NT$11.5 in cash for each share of China Life Insurance they own. The Deal is conditional on receiving shareholder approvals and regulatory approvals and is expected to complete by the end of this year. </p><div><p><em>More below the fold. </em></p></div><hr><div><div><div class="content-remarks"><p style="text-align: left;"><em>For more information about M&amp;A rules, regulations, and practices in Australia, please refer to <a href="https://www.smartkarma.com/insights/quiddity-taiwan-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:30640" rel="noopener">Quiddity Taiwan M&amp;A Guide 2019</a></em></p></div></div></div>

Roughly 4 years ago, in Sep 2017, Taiwan-based financial services group China Development Financial (2883 TT) ("CDFHC") became the top shareholder of China Life Insurance (2823 TT) by launching a Tender Offer and acquiring a 25.33% stake for NT$30.8bn. At that time, China Life Insurance was the fifth largest insurance group in Taiwan.Almost 3 years later, CDFHC made another Tender Offer to acquire an additional 21.1% stake in China Life Insurance for NT$23.6bn on 27th November 2020 increasing their direct shareholding to 47.3%. This Offer was completed in February 2021 and together with an 8.66% owned by a fully-owned subsidiary -  KGI securities - CDFHC collectively controlled around 56% in China Life Insurance. Last week, on 12th August 2021, CDFHC announced a cash and scrip Deal to buy the remaining portion of China Life Insurance to take their ownership to 100% and delist the company from the Taiwan Stock Exchange.  Under this Deal, China Life Insurance minority shareholders are expected to receive a combination of 0.80 CDFHC common shares, 0.73 CDFHC preferred shares, and NT$11.5 in cash for each share of China Life Insurance they own. The Deal is conditional on receiving shareholder approvals and regulatory approvals and is expected to complete by the end of this year. More below the fold. For more information about M&amp;A rules, regulations, and practices in Australia, please refer to Quiddity Taiwan M&amp;A Guide 2019

CDFHC - China Life Insurance: US$2bn+ Cash & Scrip Deal to Reach the Finish Line

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a>. Shorts increased in the Communication Services, Consumer Discretionary, Health Care and Real Estate sectors, and decreased in the Financials, Industrials, and Information Technology sectors.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/daito-trust-construct-co-ltd" target="_blank" data-smartkarma-citation="entities:10503:1" rel="noopener">Daito Trust Construct (1878 JP)</a>, <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE Holdings (5411 JP)</a> and <a href="https://www.smartkarma.com/entities/tokyu-fudosan-holdings-corp" target="_blank" data-smartkarma-citation="entities:8355:1" rel="noopener">Tokyu Fudosan Holdings (3289 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/ana-holdings-inc" target="_blank" data-smartkarma-citation="entities:5308:1" rel="noopener">Ana Holdings (9202 JP)</a>, <a href="https://www.smartkarma.com/entities/h-i-s-co-ltd" target="_blank" data-smartkarma-citation="entities:19311:1" rel="noopener">H I S Co Ltd (9603 JP)</a>, <a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> and <a href="https://www.smartkarma.com/entities/euglena-co-ltd" target="_blank" data-smartkarma-citation="entities:8414:1" rel="noopener">Euglena Co Ltd (2931 JP)</a>. Shorts increased in the Real Estate and Consumer Discretionary sectors, and decreased in the Industrials sector.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a> during the week while decreasing on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Hyundai Heavy Industries (009540 KS)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>. The short sell ban has ended today and short selling will be permitted on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> constituents from Monday, 3 May.</p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/china-development-financial" target="_blank" data-smartkarma-citation="entities:13818:1" rel="noopener">China Development Financial (2883 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-lihwa-corp" target="_blank" data-smartkarma-citation="entities:17142:1" rel="noopener">Walsin Lihwa (1605 TT)</a> and <a href="https://www.smartkarma.com/entities/compal-electronics" target="_blank" data-smartkarma-citation="entities:4620:1" rel="noopener">Compal Electronics (2324 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/winbond-electronics-corp" target="_blank" data-smartkarma-citation="entities:9177:1" rel="noopener">Winbond Electronics (2344 TT)</a>, <a href="https://www.smartkarma.com/entities/asmedia-technology-inc" target="_blank" data-smartkarma-citation="entities:15732:1" rel="noopener">Asmedia Technology (5269 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" data-smartkarma-citation="entities:9632:1" rel="noopener">Genius Electronic Optical (3406 TT)</a> and <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Tencent Holdings (700 HK), Meituan (3690 HK), China Merchants Bank H (3968 HK), WuXi AppTec Co. Ltd. (2359 HK) and Sunny Optical (2382 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Baidu (9888 HK), Haier Smart Home Co Ltd (6690 HK), Alibaba Group (9988 HK) and Citic Securities (H) (6030 HK). Shorts increased in the Communication Services, Consumer Discretionary, Health Care and Real Estate sectors, and decreased in the Financials, Industrials, and Information Technology sectors.In Japan, stocks that saw the most shorts were Lasertec Corp (6920 JP), Anritsu Corp (6754 JP), Daito Trust Construct (1878 JP), JFE Holdings (5411 JP) and Tokyu Fudosan Holdings (3289 JP) while shorts decreased on Toshiba Corp (6502 JP), Ana Holdings (9202 JP), H I S Co Ltd (9603 JP), Outsourcing Inc (2427 JP) and Euglena Co Ltd (2931 JP). Shorts increased in the Real Estate and Consumer Discretionary sectors, and decreased in the Industrials sector.In Korea, shorts increased on Celltrion Inc (068270 KS) and Hyundai Motor Co (005380 KS) during the week while decreasing on Samsung Electronics (005930 KS), Hyundai Heavy Industries (009540 KS) and Doosan Infracore (042670 KS). The short sell ban has ended today and short selling will be permitted on Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) constituents from Monday, 3 May.Stocks in Taiwan that saw the highest increase in shorts were China Development Financial (2883 TT), Yang Ming Marine Transport (2609 TT), Evergreen Marine Corp (2603 TT), Walsin Lihwa (1605 TT) and Compal Electronics (2324 TT) while shorts were covered on AU Optronics (2409 TT), Winbond Electronics (2344 TT), Asmedia Technology (5269 TT), Genius Electronic Optical (3406 TT) and Novatek Microelectronics Corp (3034 TT).

Asia Shorts: Tencent, CM Bank, Wuxi Apptec, Baidu, Anritsu, Daito, Ana, Yang Ming, Evergreen Marine

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

<p>Growth as a style has been the “norm” for years, is the “norm” about to end? The continued strategies by Central Bank’s towards a “<em>lower for longer stance around interest rates</em>”, extended the underperformance of value for most of 2020. However, with the value/growth investment style ratio at 20-year lows, we present 27 names which hold characteristics worthy of further review. </p>

Growth as a style has been the “norm” for years, is the “norm” about to end? The continued strategies by Central Bank’s towards a “lower for longer stance around interest rates”, extended the underperformance of value for most of 2020. However, with the value/growth investment style ratio at 20-year lows, we present 27 names which hold characteristics worthy of further review. 

Screening the Silk Road: Q1 2021 All Cap Screening - Free Cashflow (FCF)

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>* Decent 2019 Results:</em></strong>Chailease Holding (5871.TT) [Chailease], Taiwan’s top leasing services provider,  reported 2019 net income of NTD 15.5 bn, increasing 15.7% YOY – as lower credit costs and non-operating gains more than offset the accounting changes which negatively impact fee revenues;  </p><p><strong><em>* Recovering Results in March: </em></strong>Chailease reported preliminary revenue of NTD 4.8 bn for March 2020, up 2% YOY and 8% MOM. Taiwan, mainland China and ASEAN reported 1Q20 revenue grew by 21%, negative 8%, and 18% YOY, respectively. Mainland Chinese revenue resumed growth at 14% MOM, as most of the impact from the COVID-19 pandemic occurred in February; and</p><p><em><strong>* Mainland China Credit Watch:</strong></em>According to management, 2% of mainland China clients have asked for a grace period (maximum of 3 months) and 1% will need to restructure repayment terms. We estimate that this would bring the mainland Chinese delinquency ratio to between 4.8%-5.0%. </p>

* Decent 2019 Results:Chailease Holding (5871.TT) [Chailease], Taiwan’s top leasing services provider,  reported 2019 net income of NTD 15.5 bn, increasing 15.7% YOY – as lower credit costs and non-operating gains more than offset the accounting changes which negatively impact fee revenues;  * Recovering Results in March: Chailease reported preliminary revenue of NTD 4.8 bn for March 2020, up 2% YOY and 8% MOM. Taiwan, mainland China and ASEAN reported 1Q20 revenue grew by 21%, negative 8%, and 18% YOY, respectively. Mainland Chinese revenue resumed growth at 14% MOM, as most of the impact from the COVID-19 pandemic occurred in February; and* Mainland China Credit Watch:According to management, 2% of mainland China clients have asked for a grace period (maximum of 3 months) and 1% will need to restructure repayment terms. We estimate that this would bring the mainland Chinese delinquency ratio to between 4.8%-5.0%. 

Chailease Holding – Return to Growth In 1Q20

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<p>This report highlights actionable themes across the EM universe, including: bullish inflections in the Russian and Thai markets, and a pullback opportunity in India's SENSEX.  We also highlight actionable setups in MSCI EM Energy and Materials sectors and within Taiwanese Financials/Banks.  Finally we uncover a number of attractive bottoms-up opportunities, sorted by sector and market-cap.</p>

This report highlights actionable themes across the EM universe, including: bullish inflections in the Russian and Thai markets, and a pullback opportunity in India's SENSEX.  We also highlight actionable setups in MSCI EM Energy and Materials sectors and within Taiwanese Financials/Banks.  Finally we uncover a number of attractive bottoms-up opportunities, sorted by sector and market-cap.

EM Strategy: Russia and Thailand Bullishly Inflecting; Pullback Opportunity in India

Taiwan

KGI Financial Holding Co. Ltd. operates a publicly listed financial holding company in Taiwan. The Company initially focuses on venture capital investments evolving comprehensive financial institutions. KGI Financial Holding, though its subsidiaries, maintains solid capital positions and offers a full spectrum of financial services, especially venture capital and private equity services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

KGI Financial Holding (2883 TT)

CDFHC - China Life Insurance: US$2bn+ Cash & Scrip Deal to Reach the Finish Line

Taiwan-based China Development Financial's US$2bn+ Deal to acquire the remaining 44% in consolidated subsidiary China Life Insurance is trading...

Janaghan Jeyakumar, CFA

Asia Shorts: Tencent, CM Bank, Wuxi Apptec, Baidu, Anritsu, Daito, Ana, Yang Ming, Evergreen Marine

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

Screening the Silk Road: Q1 2021 All Cap Screening - Free Cashflow (FCF)

With the value/growth investment style ratio at 20-year lows, we present 27 names which hold characteristics worthy of further review.

David Lepper

Chailease Holding – Return to Growth In 1Q20

* Decent 2019 Results:Chailease Holding (5871.TT) [Chailease], Taiwan’s top leasing services provider, reported 2019 net income of NTD 15.5 bn,...

Thomas J. Monaco

EM Strategy: Russia and Thailand Bullishly Inflecting; Pullback Opportunity in India

This report highlights actionable themes across the EM universe, including: bullish inflections in the Russian and Thai markets, and a pullback...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)