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

FWD Group Holdings / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fwd-group-holdings" target="_blank" data-smartkarma-citation="entities:34332:1" rel="noopener">FWD Group Holdings (FWD US)</a> is seeking to raise $2 billion. We outlined the fundamentals in <a href="https://www.smartkarma.com/insights/fwd-group-ipo-forward-march" target="_blank" data-smartkarma-citation="insights:58263" rel="noopener">FWD Group IPO: Forward March</a> and <a href="https://www.smartkarma.com/insights/fwd-group-vs-aia-vs-prudential" target="_blank" data-smartkarma-citation="insights:58967" rel="noopener">FWD Group Vs AIA Vs Prudential</a>. </li>
<li>FWD has released its 9M21 results. Like <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, the Delta variant had an impact resulting in a lower APE and VNB growth in 3Q21 vs 1H21.  </li>
<li>In light of the weak sentiment for Chinese ADRs, we err on the side of caution and need to see evidence of a return to normalcy to recommend the IPO.</li>
</ul>



FWD Group Holdings (FWD US) is seeking to raise $2 billion. We outlined the fundamentals in FWD Group IPO: Forward March and FWD Group Vs AIA Vs Prudential. 
FWD has released its 9M21 results. Like AIA Group Ltd (1299 HK), the Delta variant had an impact resulting in a lower APE and VNB growth in 3Q21 vs 1H21.  
In light of the weak sentiment for Chinese ADRs, we err on the side of caution and need to see evidence of a return to normalcy to recommend the IPO.


FWD Group IPO: Slow 3Q Due to COVID-19 Disruptions

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

Equity Bottom-Up

<ul>
<li>
Better, But Off A Low Base: AIA Group's (1299.HK) [AIA] limited set of 3Q21 results, where VONB declined 3.5% on a linked quarter basis due weaker new sales volume; </li>
<li>
Many Deal Distractions:AIA has gone on a deal-making spree in 2021, announcing six separate transactions to date; and  </li>
<li>
Suffocating Hong Kong Business: AIA’s core Hong Kong business has been an unmitigated disaster during COVID-19, struggling with mainland Chinese visitors. Further, there is limited clarity on AIA’s legacy agents. </li>
</ul>



Better, But Off A Low Base: AIA Group's (1299.HK) [AIA] limited set of 3Q21 results, where VONB declined 3.5% on a linked quarter basis due weaker new sales volume; 

Many Deal Distractions:AIA has gone on a deal-making spree in 2021, announcing six separate transactions to date; and  

Suffocating Hong Kong Business: AIA’s core Hong Kong business has been an unmitigated disaster during COVID-19, struggling with mainland Chinese visitors. Further, there is limited clarity on AIA’s legacy agents. 


AIA Group – No Word On Massive Deal Risk

<ul>
<li>
Results Weaker: Tencent Holdings’ (700.HK) [Tencent] 3Q21 GAAP net income declined another CNY 5.2 bn (6.7%) on a linked quarter basis. </li>
<li>
Challenges: Results were challenged by a cost of revenue increase; operating expense increase; increased losses in associates; higher impairment charges; a higher tax rate and weaker online advertising; and    </li>
<li>
Elephant In Room: China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". Tencent is following Alibaba in its formation of a financial holding company. </li>
</ul>



Results Weaker: Tencent Holdings’ (700.HK) [Tencent] 3Q21 GAAP net income declined another CNY 5.2 bn (6.7%) on a linked quarter basis. 

Challenges: Results were challenged by a cost of revenue increase; operating expense increase; increased losses in associates; higher impairment charges; a higher tax rate and weaker online advertising; and    

Elephant In Room: China's crackdown on capital markets has rapidly expanded under the broad narrative of "financial stability". Tencent is following Alibaba in its formation of a financial holding company. 


Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

Hong Kong SFC reported aggregate short position as of Oct 29. The aggregate short value for equities decreased by $10,647m (-14.9%) WoW and decreased by $4,955m (-7.5%) over the preceding four weeks. We note that the weekly short covers were the biggest YTD.  Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($2,707m, -27.4% WoW), Tencent Holdings Limited/700 HK($1,644m, -32.5% WoW), Meituan/3690 HK($1,552m, -30.5% WoW), Byd Company Limited/1211 HK($1,448m, -11.2% WoW), Baba-Sw/9988 HK($1,366m, -11.9% WoW).<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/070/original/Hong_Kong_Market_Short_Position_Value_%28line%29_and_1W_Changes_%28bar%29_%28%24m%292021-11-06+10_03_41.png?1636256051" class="editor-image img-responsive" data-smartkarma-image-id="240070"></figure></section>

Hong Kong SFC reported aggregate short position as of Oct 29. The aggregate short value for equities decreased by $10,647m (-14.9%) WoW and decreased by $4,955m (-7.5%) over the preceding four weeks. We note that the weekly short covers were the biggest YTD.   Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($2,707m, -27.4% WoW), Tencent Holdings Limited/700 HK($1,644m, -32.5% WoW), Meituan/3690 HK($1,552m, -30.5% WoW), Byd Company Limited/1211 HK($1,448m, -11.2% WoW), Baba-Sw/9988 HK($1,366m, -11.9% WoW).

HK Short Interest: Biggest Weekly Short Covers YTD

*Kaisa Defaults: On November 4, 2021, Kaisa Group Holdings (1638.HK) [Kaisa], which provided a guarantee on a wealth management product (WMP), disclosed that it had missed a payment - citing that “it is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades”.  While the 25th largest developer by home sales in mainland China may not appear to be significant, Kaisa does have the second largest level of short-term debt due (USD 3.2 bn) after China Evergrande Group (3333.HK) [Evergrande] without any meaningful plan for repayment; and*We Await Evergrande’s Next Payments: We await official word on whether Evergrande’s Scenery Journey met its coupon payment of USD 82.5 mn due November 6, 2021, and we look toward the 30-day grace period expiry on a third set of bond interest payments of USD 148 mn due November 10, 2021.

*Kaisa Defaults: On November 4, 2021, Kaisa Group Holdings (1638.HK) [Kaisa], which provided a guarantee on a wealth management product (WMP), disclosed that it had missed a payment - citing that “it is facing unprecedented liquidity pressure due to a challenging property market and rating downgrades”.  While the 25th largest developer by home sales in mainland China may not appear to be significant, Kaisa does have the second largest level of short-term debt due (USD 3.2 bn) after China Evergrande Group (3333.HK) [Evergrande] without any meaningful plan for repayment; and*We Await Evergrande’s Next Payments: We await official word on whether Evergrande’s Scenery Journey met its coupon payment of USD 82.5 mn due November 6, 2021, and we look toward the 30-day grace period expiry on a third set of bond interest payments of USD 148 mn due November 10, 2021.   

China

Ping An Insurance (Group) Company of China Limited provides products and services through its five ecosystems in financial services, healthcare, auto services, real estate services and Smart City solutions. The Group's insurance business writes property, casualty, and life insurance products.

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Ping An Insurance Group of (601318 CH)

FWD Group IPO: Slow 3Q Due to COVID-19 Disruptions

The Delta variant had an impact resulting in a lower APE and VNB growth in 3Q21 vs 1H21. We err on the side of caution and need to see evidence of...

Arun George

AIA Group – No Word On Massive Deal Risk

AIA: AIA reported a limited set of 3Q21 results, where VONB declined 3.5% on a linked quarter basis due weaker new sales volume. No word on AIA's...

Thomas J. Monaco

Tencent Holdings – Increasing Risk

TENCENT: Tencent's 3Q21 GAAP net income declined 6.7% QOQ, and were challenged by increases in cost of revenue, operating expenses, losses in...

Thomas J. Monaco

HK Short Interest: Biggest Weekly Short Covers YTD

We high weekly short covers for Zhongsheng (881 HK), Ping An (2318 HK), Tencent (700 HK), and Meituan (3690 HK) based on the latest HK SFC short...

Ke Yan, CFA, FRM

China Evergrande Group – Kaisa Rolled

EVERGRANDE: Kaisa missed a bond payment, and has the second largest level of short-term debt due. We await official word Evergrande’s Scenery...

Thomas J. Monaco

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