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

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<li>
<em><strong>Results Weaker: </strong></em>Tencent Holdings’ (700.HK) [Tencent] 3Q21 GAAP net income declined another CNY 5.2 bn (6.7%) on a linked quarter basis. </li>
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<em><strong>Challenges: </strong></em>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>
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<em><strong>Elephant In Room: </strong></em>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>
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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

<p>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. <br><br>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).</p><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

<p><strong><em>*Kaisa Defaults:</em></strong> 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 25<sup>th</sup> 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</p><p><strong><em>*We Await Evergrande’s Next Payments: </em></strong>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.   </p>

*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.   

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<div><p>Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.</p></div><div><p>We have covered most aspects of the deal in our earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-guided-by-ant-financial-to-be-a-mini-ant" target="_blank" rel="noopener">Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-peer-comparison-local-and-international" target="_blank" rel="noopener">Kakao Pay IPO - Peer comparison - local and international, and</a></li>
</ul></div><div><ul style="list-style-type: disc;"><li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-valuation-and-likely-impact-of-latest-announcement" target="_blank" rel="noopener">Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement</a></li></ul></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-low-end-still-appear-reasonable-but-stock-will-more-likely-be-driven-by-sentiment" target="_blank" rel="noopener">Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment</a></li>
<li><a href="https://www.smartkarma.com/insights/kakao-pay-ipo-comparison-with-kakao-bank-and-an-alternate-look-at-valuation" target="_blank" rel="noopener">Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation</a></li>
</ul></div><p>In this note, we will talk about the deal's trading dynamics.</p>

Kakao Pay (KP), one of South Korea’s largest payment and financial services apps, raised US$1.3bn in its South Korean IPO. Kakao held a 55% stake prior to listing, with Ant Financial holding the balance 45% stake.We have covered most aspects of the deal in our earlier notes:
Kakao Pay IPO - Guided by Ant Financial to be a mini Ant,
Kakao Pay IPO - Peer comparison - local and international, and
Kakao Pay IPO - Valuation and Likely Impact of Latest Announcement
Kakao Pay IPO - Low-End Still Appear Reasonable but Stock Will More Likely Be Driven by Sentiment
Kakao Pay IPO - Comparison with Kakao Bank and an Alternate Look at Valuation
In this note, we will talk about the deal's trading dynamics.

China Pacific Insurance / Equity Bottom-Up

<p><strong><em>*Weak 3Q21 Results: </em></strong>China Pacific Insurance (2601.HK) (CPIC) reported 3Q21 results of CNY 5.4 bn, declining CNY 3.4 bn (38.5%) linked quarter. Profitability was hurt by both the Life and P&amp;C units, which declined CNY 3.9 bn (52.4%) and CNY 156 mn (10.6%), respectively, to CNY 3.6 bn and CNY 1.3 bn; and</p><p><strong><em>*Troubles Continue In Life: </em></strong>During 3Q21, first year premium (FYP) agent per month declined by 41.0% linked quarter largely due to CPIC relying more on online channels to conduct new sales, and intimating agency distribution remained a challenge.The new CEO of CPIC Life mentioned that a new agency restructure will be implemented beginning January 1, 2022.</p>

*Weak 3Q21 Results: China Pacific Insurance (2601.HK) (CPIC) reported 3Q21 results of CNY 5.4 bn, declining CNY 3.4 bn (38.5%) linked quarter. Profitability was hurt by both the Life and P&amp;C units, which declined CNY 3.9 bn (52.4%) and CNY 156 mn (10.6%), respectively, to CNY 3.6 bn and CNY 1.3 bn; and*Troubles Continue In Life: During 3Q21, first year premium (FYP) agent per month declined by 41.0% linked quarter largely due to CPIC relying more on online channels to conduct new sales, and intimating agency distribution remained a challenge.The new CEO of CPIC Life mentioned that a new agency restructure will be implemented beginning January 1, 2022.

China Pacific Insurance – Life Troubles

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)

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

Kakao Pay IPO Trading - Won't Be Chasing

Kakao Pay, one of South Korea’s largest payment and financial services apps, raised around US$1.3bn in its South Korean IPO. Kakao held a 55% stake...

Sumeet Singh

China Pacific Insurance – Life Troubles

CHINA PACIFIC: CPIC reported a 3Q21 QOQ results decline of 38.5%, driven by both the Life and P&C units. The new CEO of CPIC Life mentioned that a...

Thomas J. Monaco

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