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 were only 13 new listings on the Main Board of the <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> in the third quarter of the year.</li>
<li>Of those stocks, we only see <a href="https://www.smartkarma.com/entities/midea-group-co-ltd" target="_blank" data-smartkarma-citation="entities:43993:1" rel="noopener">Midea Group (300 HK)</a> having a chance of being added to the HSCI in December.</li>
<li>
<a href="https://www.smartkarma.com/entities/midea-group-co-ltd" target="_blank" data-smartkarma-citation="entities:43993:1" rel="noopener">Midea Group (300 HK)</a> should be added to Southbound Stock Connect next week after the price stabilisation period has ended.</li>
</ul>


There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.

Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.


HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week

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.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> has launched its H Share listing at HK$32.30-36.30 per share. Pricing will be on 25 November, and the listing on 27 November.</li>
<li>We previously discussed the listing in <a href="https://www.smartkarma.com/insights/sf-holding-h-share-listing-updates-point-to-improving-fundamentals" target="_blank" data-smartkarma-citation="insights:166296" rel="noopener">SF Holding H Share Listing: Updates Point to Improving Fundamentals</a> and <a href="https://www.smartkarma.com/insights/sf-holding-h-share-listing-ah-discount-views" target="_blank" data-smartkarma-citation="insights:166687" rel="noopener">SF Holding H Share Listing: AH Discount Views</a>.</li>
<li>Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.</li>
</ul>



S.F. Holding (002352 CH) has launched its H Share listing at HK$32.30-36.30 per share. Pricing will be on 25 November, and the listing on 27 November.
We previously discussed the listing in SF Holding H Share Listing: Updates Point to Improving Fundamentals and SF Holding H Share Listing: AH Discount Views.
Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.


SF Holding H Share Listing (6936 HK): Valuation Insights

<ul>
<li>The <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> H-shares are being offered at a price range of HK$32.3-36.3/share, a discount of 20.2%-29% to the A-shares. The max raise (including oversubscription) is US$912m.</li>
<li>Unlike <a href="https://www.smartkarma.com/entities/midea-group-co-ltd" target="_blank" data-smartkarma-citation="entities:43993:1" rel="noopener">Midea Group (300 HK)</a>, the <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> H-shares will not get Fast Entry to any indices. Southbound Stock Connect inclusion will take place on 23 December.</li>
<li>With no index inclusion in the short-term, the H-shares discount to the A-shares should remain wide. The H-shares could become short sell eligible in February.</li>
</ul>


The S.F. Holding (002352 CH) H-shares are being offered at a price range of HK$32.3-36.3/share, a discount of 20.2%-29% to the A-shares. The max raise (including oversubscription) is US$912m.
Unlike Midea Group (300 HK), the S.F. Holding (002352 CH) H-shares will not get Fast Entry to any indices. Southbound Stock Connect inclusion will take place on 23 December.
With no index inclusion in the short-term, the H-shares discount to the A-shares should remain wide. The H-shares could become short sell eligible in February.


SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide

HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.</li>
<li>
<a href="https://www.smartkarma.com/entities/vesync" target="_blank" data-smartkarma-citation="entities:31067:1" rel="noopener">Vesync (2148 HK)</a>, <a href="https://www.smartkarma.com/entities/chervon-holdings-limited" target="_blank" data-smartkarma-citation="entities:35309:1" rel="noopener">Chervon Holdings (2285 HK)</a>, and <a href="https://www.smartkarma.com/entities/aac-technologies-holdings-inc" target="_blank" data-smartkarma-citation="entities:6544:1" rel="noopener">AAC Technologies Holdings (2018 HK)</a> are more exposed given their significant US sales yet most production is still in China. </li>
<li>While the US generated over 50% of the revenue of <a href="https://www.smartkarma.com/entities/techtronic-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:4561:1" rel="noopener">Techtronic Industries (669 HK)</a> and <a href="https://www.smartkarma.com/entities/nexteer-automotive-group-ltd" target="_blank" data-smartkarma-citation="entities:15483:1" rel="noopener">Nexteer Automotive (1316 HK)</a>, they are less exposed given their worldwide manufacturing presence. </li>
</ul>


Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.

Vesync (2148 HK), Chervon Holdings (2285 HK), and AAC Technologies Holdings (2018 HK) are more exposed given their significant US sales yet most production is still in China. 
While the US generated over 50% of the revenue of Techtronic Industries (669 HK) and Nexteer Automotive (1316 HK), they are less exposed given their worldwide manufacturing presence. 


China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

<ul>
<li>
<a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a>, the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.</li>
<li>In <a href="https://www.smartkarma.com/insights/sf-holding-h-share-listing-updates-point-to-improving-fundamentals" target="_blank" data-smartkarma-citation="insights:166296" rel="noopener">SF Holding H Share Listing: Updates Point to Improving Fundamentals</a>, we noted that SF is in good health, with a return to growth, rising margins, and strong cash generation.</li>
<li>In this note, we examine the likely discount SF Holding will offer its H Shares compared to the A Shares.</li>
</ul>



S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
In SF Holding H Share Listing: Updates Point to Improving Fundamentals, we noted that SF is in good health, with a return to growth, rising margins, and strong cash generation.
In this note, we examine the likely discount SF Holding will offer its H Shares compared to the A Shares.


SF Holding H Share Listing: AH Discount Views

China

Midea Group Co., Ltd. manufactures and distributes home appliances. The Company produces water heaters, air conditioners, ventilation equipment, and consumer appliances. Midea Group also develops robotics and automation systems.

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Midea Group (300 HK)

HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week

Midea Group should be added to the HSCI in Dec. Black Sesame could just miss being added. Midea could be added to Southbound Stock Connect next...

Brian Freitas

SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide

The SF Holding H-share raise is lower than expectations. No Fast Entry could lead to a lackluster listing. Southbound Connect inclusion on 23 Dec....

Brian Freitas

China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

US tariffs may only affect an average of ~10% revenue of HK-listed industrials on a net basis. Vesync, Chervon, and AAC Technologies look exposed...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week

Midea Group should be added to the HSCI in Dec. Black Sesame could just miss being added. Midea could be added to Southbound Stock Connect next...

Brian Freitas

SF Holding H Share Listing (6936 HK): Valuation Insights

SF aims to raise gross proceeds of US$705-792m. Our valuation analysis suggests that the H Share listing range is attractive. We would participate...

Arun George

SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide

The SF Holding H-share raise is lower than expectations. No Fast Entry could lead to a lackluster listing. Southbound Connect inclusion on 23 Dec....

Brian Freitas

China & HK Strategy: Stocks Exposed to the US and Higher Tariffs

​US tariffs may only affect an average of ~10% revenue of HK-listed industrials on a net basis. Vesync, Chervon, and AAC Technologies look exposed...

Osbert Tang, CFA

SF Holding H Share Listing: AH Discount Views

SF Holding is premarketing an H Share listing to raise US$1.0-1.5 billion. In this note, we examine the likely discount SF Holding will offer its H...

Arun George

US tariffs may only affect an average of ~10% revenue of HK-listed industrials on a net basis. Vesync, Chervon, and AAC Technologies look exposed...