Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<ul>
<li>HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive. </li>
<li>The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price. </li>
<li>Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now. </li>
</ul>


HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive. 
The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price. 
Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now. 


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>The June rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.</li>
<li>The largest inflows will be on <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 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/semiconductor-manufacturing-international-corp-smic" target="_blank" data-smartkarma-citation="entities:14231:1" rel="noopener">SMIC (981 HK)</a>, <a href="https://www.smartkarma.com/entities/orient-overseas-international" target="_blank" data-smartkarma-citation="entities:801:1" rel="noopener">Orient Overseas (316 HK)</a>, <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a>, <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>.</li>
<li>The largest outflows will be on <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/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/asm-pacific-technology-ltd" target="_blank" data-smartkarma-citation="entities:15061:1" rel="noopener">ASM Pacific (522 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/china-construction-bank-h" target="_blank" data-smartkarma-citation="entities:45:1" rel="noopener">China Construction Bank (939 HK)</a>, <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>.</li>
</ul>


The June rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).


HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

<ul>
<li>Zero COVID policy calls for another lockdown in Hong Kong as the number of cases rises.</li>
<li>A reduction in the number of services will help to cushion the blow but may not help the overall grim prospect of the firm. </li>
<li>Lower traffic is negative for <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a>transport revenue as well as the commercial business from the station which combined make up to 50% of total revenue.</li>
</ul>


Zero COVID policy calls for another lockdown in Hong Kong as the number of cases rises.
A reduction in the number of services will help to cushion the blow but may not help the overall grim prospect of the firm. 
Lower traffic is negative for MTR Corp (66 HK)transport revenue as well as the commercial business from the station which combined make up to 50% of total revenue.


MTR Corp (66): Lower Traffic from Lockdown.

<ul>
<li>The December rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.</li>
<li>The largest passive outflows as a result of capping will be on <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> due to their weight exceeding 8% in all three indices.</li>
<li>There are large funding outflows (in terms of days of ADV to trade) on quite a few Hong Kong property stocks as well as stocks from the financials sector.</li>
</ul>


The December rebalance of the HSI, HSCEI and HSTECH indices will use today's closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest passive outflows as a result of capping will be on Meituan (3690 HK) and Tencent (700 HK) due to their weight exceeding 8% in all three indices.
There are large funding outflows (in terms of days of ADV to trade) on quite a few Hong Kong property stocks as well as stocks from the financials sector.


HSI, HSCEI, HSTECH: December Rebalance Flows Post Capping

Silver Point

Thomas J. Monaco

Independent Insight Provider

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

*Worries In Both Hong Kong and Mainland China: The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and*Poor Capital Management Becoming A Big Problem: Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling.

*Worries In Both Hong Kong and Mainland China: The Hong Kong retail portfolio's rental reversion rate continued to be challenged YOY in FY 1H22, albeit slightly improving from a negative 1.8% in FY 2H21 to a barely positive low single digits. Not surprisingly, this weakness would appear to be with us for an extended period - especially given the continued border closures amid the COVID-19 disruption.  The mainland Chinese expansion remains worrisome, given the likely carry-on impact of stress seen in the broader mainland Chinese property market and its lenders; and*Poor Capital Management Becoming A Big Problem: Link REIT (823.HK) [Link] management also appears hell-bent on destroying shareholder value with deals which make little financial sense. Link recently announced the acquisition of Happy Valley Shopping Mall in Guangzhou where the current annualized NPI yield barely covering the project’s cost of funding. In order to improve occupancy, it would appear that Link would likely need to offer significant tenant enticements, and investment massively in asset enhancement. Bizarrely instead of weighing buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend shares against short-selling. 

Hong Kong

Transport International Holdings Ltd, through its subsidiaries, operates both franchised and non-franchised public buses in Hong Kong. The Company also provides media sales services.

Transport International Holdings Ltd (62 HK)

Orient Overseas International Ltd, through its subsidiaries, owns and leases ships, operates terminals, and provides freight forwarding and container transportation services.  The Company also develops and invests in properties, leases equipment, and invests in securities.

Cathay Pacific Airways Limited operates scheduled airline services. The Company also provides related services, including airline catering, aircraft handling, and engineering.

China Merchants Holdings International Company Limited, through its subsidiaries and associated companies, operates container and cargo terminals, port transportation, and airport cargo handling.  The Company also manufactures containers, paint, and trailers as well as operates toll road, shipping, property, and dealing securities businesses.

SITC International Holdings Company Ltd. offers marine shipping services.  The Company offers container liner shipping, freight forwarding, customs clearance, shipping agency, and ship brokerage services.  SITC operates in Asia.

Kwoon Chung Bus Holdings Limited, through its subsidiaries, provides designated bus routes services, non-franchised and franchised bus services, and other transportation services.  The Company also provides tour and hotel service.  In addition, Kwoon Chung Bus operates in power generation.

Shenzhen International Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides investment, construction, and operation of logistic infrastructure facilities, as well as offers value-added logistic services. Shenzhen International serves customers worldwide.

COSCO Shipping Ports Limited, through its subsidiaries, provides shipping container leasing services worldwide.  The Company also operates container terminals and provides container handling, storage, transportation and management services, as well as depot handling and stevedoring services.

Kerry Logistics Network Limited provides logistics services in Asia and internationally. The Company offers integrated logistics services, as well as leases warehousing space in Hong Kong and provides international freight forwarding services.

Pacific Basin Shipping Limited, through its subsidiaries, provides marine transportation services and logistical support to its customers through the commercial operation of a large, modern, and uniformly-sized fleet of shallow-draft Handysize dry bulk carriers.

U-Haul Holding Company operates as a holding company. The Company, through its subsidiaries, offers rental of trucks, trailers, and self storage space, as well as provides property and casualty and life insurance products. U-Haul Holding also sells boxes, tapes, and other moving and self-storage products and services to 'do-it-yourself' moving and storage customers.

Daqin Railway Co., Ltd. mainly provides coal transportation service in Northern China. It also operates passenger transportation business.

West Japan Railway Company provides rail transportation services including the shinkansen network (bullet train) in North Kyushu, Kinki, Chugoku, and Hokuriku including Kyoto and Osaka.  The Company also operates ferries in Miyajima, manages real estate, shopping centers, and hotels, and offers leisure-related services such as travel packaging products.

J.B. Hunt Transport Services, Inc. and its subsidiaries provide transportation and logistics services in the United States, Canada, and Mexico.  The Company transports a variety of products including automotive parts, department store merchandise, paper and wood products, food and beverages, plastics, chemicals, and manufacturing materials and supplies.

Saia, Inc. provides trucking transportation to the retail, petrochemical, and manufacturing industries.  The Company offers regional, interregional, and national less-than-truckload services, and selected truckload services across the United States.

Central Japan Railway Company provides rail transportation services between Tokyo and Osaka, including the Tokai region.  The Company, through its subsidiaries, also provides bus transportation services, leases real estate, and operates department stores, hotels, restaurants, and construction businesses.

East Japan Railway Company provides rail transportation services in the Kanto and Tohoku regions, including Tokyo.  The Company's services include the shinkansen (bullet train) network and the Tokyo metropolitan network.  East Japan Railway also leases real estate and operates hotel, travel, and restaurant businesses.

TFI International Inc is in the transportation and logistics industry. The Company  identifies strategic acquisitions and manages a network of subsidiaries. TFI International operates across the United States, Canada and Mexico.

Landstar System, Inc. is a North American truckload carrier.  The Company transports a variety of freight, including iron and steel, automotive products, paper, lumber, chemicals, foodstuffs, and military hardware.  Landstar provides truckload carrier services, intermodal transportation services, and expedited air and truck services to shippers in the US, Canada, and Mexico.

Hitachi Transport System, Ltd. provides freight truck, port harbor, and marine transportation, logistics, cargo handling, warehousing, and customs clearing services.  The Company mainly transports Hitachi Ltd's freight such as industrial machinery and precision equipment.

MTR Corporation Limited provides public transport services in Hong Kong.  The Company owns and operates the Mass Transit Railway.  The Company also develops, sells, and manages residential and commercial properties.  In addition, MTR leases commercial facilities and provides services along the Railway, such as advertising, telecommunication facilities, and provides consultancy services.

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MTR Corp (66 HK)

MTR (66): Open or Closed?

The Chinese government is to reduce the quarantine period may bring some positive sentiment to MTR but the border between China and HK remains...

Henry Soediarko

HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

The June rebalance of the HSI, HSCEI, HSTECH indices will use todays close prices for capping. The one-way trade across all stocks across the three...

Brian Freitas

MTR Corp (66): Lower Traffic from Lockdown.

7.4 million people testing in HK will start in March. HK is closing the city again as part of the zero COVID policy instituted by the Chinese...

Henry Soediarko

HSI, HSCEI, HSTECH: December Rebalance Flows Post Capping

The Dec rebalance of the HK indices will use today's closing prices to cap the stocks at 8%. Meituan and Tencent will see large outflows due to...

Brian Freitas

Link REIT – Looking For Handouts

LINK REIT: The Hong Kong's rental reversion rate remained challenged in FY 1H22 at positive single digits. Mainland expansion likely will be...

Thomas J. Monaco

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