Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and the HSI Low Carbon Index. Hang Seng is doing a good thing; advancing ESG in Asia.</li>
<li>Both are based on the Hang Seng Index. HSI ESG Screened Index is essentially ESG factor-tilted with a minor exclusionary screen. Straightforward, and with top ESG ratings firms behind it.</li>
<li>I do, however, have a few thoughts about the HSI Low Carbon Index. Call them observations, or experienced-based opinions, or similar. Food for thought kind of stuff, nothing critical.  </li>
</ul>


Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and the HSI Low Carbon Index. Hang Seng is doing a good thing; advancing ESG in Asia.
Both are based on the Hang Seng Index. HSI ESG Screened Index is essentially ESG factor-tilted with a minor exclusionary screen. Straightforward, and with top ESG ratings firms behind it.
I do, however, have a few thoughts about the HSI Low Carbon Index. Call them observations, or experienced-based opinions, or similar. Food for thought kind of stuff, nothing critical.  


Hang Seng's New ESG-Themed Indexes Will Help Promote ESG in Asia (Some Thoughts On the Carbon Index)

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<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

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>After rejecting two earlier proposals, Aussie poles and wires company <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a> entered into a Scheme Implementation Agreement on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02409984-2A1317108?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">23 August</a> with KKR, Ontario Teachers’ Pension Plan Board, and Public Sector Pension Investment Board.</p>
</div>
<div>
<p>The Offer Price of $2.95 cash per stapled security comprised cash of $2.7675, plus Spark's 1H21 interim distribution of 6.25¢, plus a franked special distribution expected of ~12¢. The interim dividend was announced on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390377-2A1306991?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">1 July</a> and went ex on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390377-2A1306991?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">7 July</a>, with a record date of the 8 July, therefore the implied Scheme Consideration is A$2.8875/share.</p>
<p>The Scheme Booklet has now been <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02438132-2A1332160?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">dispatched</a>. The Scheme Meeting will be held on the 22 November, with an expected implementation date on the 22 December. The Independent Expert has concluded that "<em>the Schemes are fair and reasonable and in the best interests of Scheme Securityholders, in the absence of a superior proposal</em>".</p>
<p>This looks done and has not once closed through terms. The Offer remains subject to FIRB approval.</p>
</div>


After rejecting two earlier proposals, Aussie poles and wires company Spark Infrastructure (SKI AU) entered into a Scheme Implementation Agreement on the 23 August with KKR, Ontario Teachers’ Pension Plan Board, and Public Sector Pension Investment Board.


The Offer Price of $2.95 cash per stapled security comprised cash of $2.7675, plus Spark's 1H21 interim distribution of 6.25¢, plus a franked special distribution expected of ~12¢. The interim dividend was announced on the 1 July and went ex on the 7 July, with a record date of the 8 July, therefore the implied Scheme Consideration is A$2.8875/share.
The Scheme Booklet has now been dispatched. The Scheme Meeting will be held on the 22 November, with an expected implementation date on the 22 December. The Independent Expert has concluded that "the Schemes are fair and reasonable and in the best interests of Scheme Securityholders, in the absence of a superior proposal".
This looks done and has not once closed through terms. The Offer remains subject to FIRB approval.


Spark (SKI AU): Scheme Booklet Out. Meeting On The 22 November

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

Sino American Silicon Products / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a>  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT)</a> , <a href="https://www.smartkarma.com/entities/parade-technologies-ltd" target="_blank" data-smartkarma-citation="entities:6987:1" rel="noopener">Parade Technologies (4966 TT)</a> , <a href="https://www.smartkarma.com/entities/actron-technology-corp" target="_blank" data-smartkarma-citation="entities:4989:1" rel="noopener">Actron Technology (8255 TT)</a> and <a href="https://www.smartkarma.com/entities/advanced-wireless-semiconduc" target="_blank" data-smartkarma-citation="entities:16559:1" rel="noopener">Advanced Wireless Semiconduc (8086 TT)</a> with only in Globalwafers - SAS owns more than 51%.</p>
<p>The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.</p>
<p>With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. </p>
<div class="content-highlight">
<p>Besides the above-mentioned reasons, <a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a> remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. </p>
</div>

Sino American Silicon Products (5483 TT)  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including Globalwafers (6488 TT) , Parade Technologies (4966 TT) , Actron Technology (8255 TT) and Advanced Wireless Semiconduc (8086 TT) with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 

Besides the above-mentioned reasons, Sino American Silicon Products (5483 TT) remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 


Sino American Silicon (5483): Entry to Globalwafers and Others

<div>
<p>After <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02395702-2A1310049?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">rejecting</a> two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a> has ostensibly supported the Consortium's improved tilt of $2.95/share.</p>
</div>
<div>
<p>The Consortium (KKR/OTPPB)'s latest proposal, up from the initial Offer of $2.70/share, was considered by Spark's board to be in the interest of its shareholders to engage further. As such, Spark has provided the Consortium with due diligence on a non-exclusive basis.</p>
<p>This Offer remains pre-conditional, and is subject to satisfactory DD, together with board approval from both KKR and OTPPB.</p>
<p>A firm Offer, should one unfold, would be subject to FIRB approval, and the approval from Spark's shareholders at a Scheme Meeting.</p>
<p>Yet this looks like a full (er) Offer than the one rejected on the 15 July.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


After rejecting two take-private proposals from PR outfit firm KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company Spark Infrastructure (SKI AU) has ostensibly supported the Consortium's improved tilt of $2.95/share.


The Consortium (KKR/OTPPB)'s latest proposal, up from the initial Offer of $2.70/share, was considered by Spark's board to be in the interest of its shareholders to engage further. As such, Spark has provided the Consortium with due diligence on a non-exclusive basis.
This Offer remains pre-conditional, and is subject to satisfactory DD, together with board approval from both KKR and OTPPB.
A firm Offer, should one unfold, would be subject to FIRB approval, and the approval from Spark's shareholders at a Scheme Meeting.
Yet this looks like a full (er) Offer than the one rejected on the 15 July.


More below the fold.


Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up

Hong Kong

Power Assets Holdings Limited invests in power generation, transmission and distribution as well as gas distribution. The Company has investments in Hong Kong, Australia, Canada, China, New Zealand and Thailand.

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Power Assets Holdings (6 HK)

Hang Seng's New ESG-Themed Indexes Will Help Promote ESG in Asia (Some Thoughts On the Carbon Index)

Hang Seng Indexes launched two new sustainability/ESG indexes, the HSI ESG Screened Index and HSI Low Carbon Index. Here is a quick look, and a few...

Kyle Rudden

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

Spark (SKI AU): Scheme Booklet Out. Meeting On The 22 November

Trading tight at a 1.5%/9.1% gross/annualised spread. Looks reasonable. If you are a zero-rate taxpayer, or a low-rate payer, who can reclaim the...

David Blennerhassett

Sino American Silicon (5483): Entry to Globalwafers and Others

Sino American Silicon remains a smart way to gain exposure in Globalwafers (24x PER), compared to SAS (13x PER). The other factor is that...

Henry Soediarko

Spark Infrastructure (SKI AU): KKR & OTPPB Pay Up

Assuming ~5 months to complete, this is trading at a gross/annualised return of 5%/12.6%. I don't expect any shareholders to oppose, and FIRB...

David Blennerhassett

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