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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<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

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<p><a href="https://www.smartkarma.com/entities/pharmaron-beijing-co-ltd" target="_blank" data-smartkarma-citation="entities:28428:1" rel="noopener">Pharmaron Beijing Co Ltd-H (3759 HK)</a> displays a near term negative tactical bias from the 99 area for a pullback toward favorable risk to reward buy support. Macro trend remains solid as long as trendline support at 82 holds a pullback.</p><p>Tactical weakness stems from the bear flag pattern that is due to break lower with a tactical sell or short zone near 98 and first target at 88.</p><p>Trendline and price support the focus at 84.</p><p>Bull projection above 110 lies at 127.</p>

Pharmaron Beijing Co Ltd-H (3759 HK) displays a near term negative tactical bias from the 99 area for a pullback toward favorable risk to reward buy support. Macro trend remains solid as long as trendline support at 82 holds a pullback.Tactical weakness stems from the bear flag pattern that is due to break lower with a tactical sell or short zone near 98 and first target at 88.Trendline and price support the focus at 84.Bull projection above 110 lies at 127.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Hangzhou Kangji Medical Instrument Co., Ltd. / Event-Driven

Hangzhou Kangji Medical Instrument Co., Ltd.

<p>The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 14 August. The constituent changes will be effective from 7 September 2020 and the rebalancing trades will need to be done at the closing auction on 4 September 2020.</p><p>There are 32 inclusions and 23 exclusions for the Hang Seng Composite Index (HSCI). Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program could see large inflows from mainland investors.</p><p>In this Insight, we take a look at the exclusion names that have high Southbound shareholdings and could see some selling ahead of the move to a 'sell-only' Southbound list, and at inclusion names that could see Southbound inflows over the weeks after inclusion into the Stock Connect buy/sell list.</p>

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 14 August. The constituent changes will be effective from 7 September 2020 and the rebalancing trades will need to be done at the closing auction on 4 September 2020.There are 32 inclusions and 23 exclusions for the Hang Seng Composite Index (HSCI). Although there are almost no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program could see large inflows from mainland investors.In this Insight, we take a look at the exclusion names that have high Southbound shareholdings and could see some selling ahead of the move to a 'sell-only' Southbound list, and at inclusion names that could see Southbound inflows over the weeks after inclusion into the Stock Connect buy/sell list.

HSCI Index Rebalance - Stock Connect Flows Coming Up

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

Hangzhou Tigermed Consulting C / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/hangzhou-tigermed-consulting-h" target="_blank" data-smartkarma-citation="entities:29212:1" rel="noopener">Hangzhou Tigermed Consulting (H) (3347 HK)</a> is a global contract research organisation (CRO). Tigermed is the largest clinical CRO in China with a market share of 8.4% as measured by revenue in China’s clinical CRO market in 2019, according to Frost &amp; Sullivan. Tigermed's H-shares will commence trading on Friday, 7 August. Tigermed priced its IPO at HK$100 per share, at the top end of the indicative price range of HK$88-100 per share. Tigermed raised net proceeds of HK$10,272.5 million ($1.3 billion).</p></div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/tigermed-ipo-initiation-trade-offs" target="_blank" rel="noopener">our initiation note</a>, we stated that Tigermed’s financial performance is creditable on a standalone basis and in comparison, to peers. However, our enthusiasm was tempered by a seemingly aggressive revenue recognition policy. Our <a href="https://www.smartkarma.com/insights/tigermed-ipo-phip-highlights-the-trade-offs" target="_blank" rel="noopener">follow-on note</a> which examined the PHIP suggested that the positives outweigh the negatives. Our <a href="https://www.smartkarma.com/insights/tigermed-ipo-valuation-insights" target="_blank" rel="noopener">valuation analysis</a> suggests that the IPO valuation is attractive at the low-end of the proposed IPO price range. Overall, with the rise in Tigermed's A-share price since the announcement of the price range, Tigermed's H-shares discount to the A-shares is attractive at the IPO price.</p></div></div>

Hangzhou Tigermed Consulting (H) (3347 HK) is a global contract research organisation (CRO). Tigermed is the largest clinical CRO in China with a market share of 8.4% as measured by revenue in China’s clinical CRO market in 2019, according to Frost &amp; Sullivan. Tigermed's H-shares will commence trading on Friday, 7 August. Tigermed priced its IPO at HK$100 per share, at the top end of the indicative price range of HK$88-100 per share. Tigermed raised net proceeds of HK$10,272.5 million ($1.3 billion).In our initiation note, we stated that Tigermed’s financial performance is creditable on a standalone basis and in comparison, to peers. However, our enthusiasm was tempered by a seemingly aggressive revenue recognition policy. Our follow-on note which examined the PHIP suggested that the positives outweigh the negatives. Our valuation analysis suggests that the IPO valuation is attractive at the low-end of the proposed IPO price range. Overall, with the rise in Tigermed's A-share price since the announcement of the price range, Tigermed's H-shares discount to the A-shares is attractive at the IPO price.

David Blennerhassett

Haier Electronics Group Co / Event-Driven

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<p><a href="https://www.smartkarma.com/entities/haier-electronics-group-co" target="_blank" data-smartkarma-citation="entities:4877:1" rel="noopener">Haier Electronics Group Co (1169 HK)</a> (HEG) was briefly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1213/2019121300104.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Takeovers Code on the 19 December 2019, which was followed by a <a href="http://www.haier.net/en/investor_relations/haier/gsgg/corporatenews/P020191212852299367714.pdf" target="_blank" rel="noopener">press release</a> from Haier's parent <a href="https://www.smartkarma.com/entities/qingdao-haier-co-ltd-a" target="_blank" data-smartkarma-citation="entities:7196:1" rel="noopener">Haier Smart Home (600690 CH)</a> (HSH) that it was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.</p>
<p>Then crickets.</p>
<h3>The Announcement</h3>
<p>This past Friday evening, HEG <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0731/2020073101131.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. </p>
<p>An independent valuer places a fair value for the (as yet unlisted) H shares between RMB16.45-RMB16.90/share. This backs out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point, against HEG's last close of HK$26.85; but a 44.20% premium to the price at the time of the 2019 December suspension. Plus an all-time high. The cash/equity split is 6.2%/93.8%. The A-shares closed last Wednesday (the day before shares were halted) at RMB 18.00, which would be closer to HK$33.95 (including the $1.95 in cash).</p>
<p>The pre-conditions concern CSRC approval with respect to the issuance of the H shares and approval by two-thirds of HSH's shareholders to approve the resolutions.</p>
<p>And then there are the exchangeable bonds to take into account.</p>
<p>More below the fold.</p>
</div>


Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by a press release from Haier's parent Haier Smart Home (600690 CH) (HSH) that it was contemplating taking Haier private with newly issued Hong Kong shares, implying HSH was seeking an H-share listing, either first, or concurrent with the share swap.
Then crickets.
The Announcement
This past Friday evening, HEG announced a pre-conditional Scheme such that HEG shareholder will receive 1.6 new HSH H shares plus HK$1.95 in cash. 
An independent valuer places a fair value for the (as yet unlisted) H shares between RMB16.45-RMB16.90/share. This backs out an indicative value under the Scheme of HK$31.11-HK$31.90 - or $31.51 at the mid-point, against HEG's last close of HK$26.85; but a 44.20% premium to the price at the time of the 2019 December suspension. Plus an all-time high. The cash/equity split is 6.2%/93.8%. The A-shares closed last Wednesday (the day before shares were halted) at RMB 18.00, which would be closer to HK$33.95 (including the $1.95 in cash).
The pre-conditions concern CSRC approval with respect to the issuance of the H shares and approval by two-thirds of HSH's shareholders to approve the resolutions.
And then there are the exchangeable bonds to take into account.
More below the fold.


Haier (1169 HK): Avatar Scrip Offer From Parent

China

Pharmaron Beijing Co., Ltd. engages in discovery, development, and manufacturing spectrum for small molecule drugs, cell therapies, and gene therapies as well as providing testing services for medical devices and clinic research. The Company offers laboratory, clinical development, chemistry manufactory and control, and other services. Pharmaron Beijing conducts businesses based in China.

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Pharmaron Beijing (3759 HK)

Pharmaron Buy Support

Pharmaron Beijing Co Ltd-H (3759 HK) displays a near term negative tactical bias from the 100 area for a pullback toward favorable risk to reward...

Thomas Schroeder

HSCI Index Rebalance - Stock Connect Flows Coming Up

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 14 August....

Brian Freitas

Tigermed IPO: Trading Debut

Hangzhou Tigermed Consulting (H) (3347 HK) is a global contract research organisation (CRO). Tigermed is the largest clinical CRO in China with a...

Arun George

Haier (1169 HK): Avatar Scrip Offer From Parent

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

David Blennerhassett

Price Gauge

52-week Range

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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

Pharmaron Buy Support

Pharmaron Beijing Co Ltd-H (3759 HK) displays a near term negative tactical bias from the 100 area for a pullback toward favorable risk to reward...

Thomas Schroeder

HSCI Index Rebalance - Stock Connect Flows Coming Up

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 14 August....

Brian Freitas

Tigermed IPO: Trading Debut

Hangzhou Tigermed Consulting (H) (3347 HK) is a global contract research organisation (CRO). Tigermed is the largest clinical CRO in China with a...

Arun George

Haier (1169 HK): Avatar Scrip Offer From Parent

Haier Electronics Group Co (1169 HK) (HEG) was briefly suspended pursuant to the Takeovers Code on the 19 December 2019, which was followed by...

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....