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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.</li>
<li>An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.</li>
<li>Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.</li>
</ul>


Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.
An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an 'Administrative Issue'. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.
Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.


Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a>, <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> and <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> replace <a href="https://www.smartkarma.com/entities/autohome-inc" target="_blank" data-smartkarma-citation="entities:33492:1" rel="noopener">Autohome (2518 HK)</a>, <a href="https://www.smartkarma.com/entities/weimob-inc" target="_blank" data-smartkarma-citation="entities:27394:1" rel="noopener">Weimob Inc. (2013 HK)</a> and <a href="https://www.smartkarma.com/entities/tongcheng-elong-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27363:1" rel="noopener">Tongcheng-Elong Holdings Ltd (780 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH INDEX</a>. </li>
<li>A few changes have been made from the way stocks are treated to ensure the inclusion of <a href="https://www.smartkarma.com/entities/li-auto-inc-3dbe6187-544f-40dd-b9f9-72fba9c0110e" target="_blank" data-smartkarma-citation="entities:33811:1" rel="noopener">Li Auto (2015 HK)</a> and <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> in the index.</li>
<li>
<a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> has been included at a much higher float than what it should be and this could take the stock higher in the next couple of weeks.</li>
</ul>



SenseTime Group (20 HK), Li Auto (2015 HK) and XPeng (9868 HK) replace Autohome (2518 HK), Weimob Inc. (2013 HK) and Tongcheng-Elong Holdings Ltd (780 HK) in the HSTECH INDEX. 
A few changes have been made from the way stocks are treated to ensure the inclusion of Li Auto (2015 HK) and XPeng (9868 HK) in the index.

SenseTime Group (20 HK) has been included at a much higher float than what it should be and this could take the stock higher in the next couple of weeks.


Hang Seng TECH Index Rebalance: Forced Changes Lead to BIG Turnover

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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oyo-pvt-ltd" target="_blank" data-smartkarma-citation="entities:28861:1" rel="noopener">Oyo (1698548D IN)</a> is a leading hospitality technology platform. Its DRHP aimed for a $1.2 billion raise although <a href="https://economictimes.indiatimes.com/tech/startups/oyo-may-reduce-ipo-size-valuation-may-be-readjusted-too/articleshow/89463277.cms" target="_blank" rel="noopener">recent reports</a> point to a less than $1 billion raise.</li>
<li>The fundamentals are mixed as it remains uncertain if it can deliver profits or cash generation with a return to growth (due to gradual lifting of travel restrictions).</li>
<li>Based on the information in the DRHP, we believe the negatives outweigh the positives and we would give the IPO a pass.</li>
</ul>



Oyo (1698548D IN) is a leading hospitality technology platform. Its DRHP aimed for a $1.2 billion raise although recent reports point to a less than $1 billion raise.
The fundamentals are mixed as it remains uncertain if it can deliver profits or cash generation with a return to growth (due to gradual lifting of travel restrictions).
Based on the information in the DRHP, we believe the negatives outweigh the positives and we would give the IPO a pass.


OYO (Oravel Stays) IPO Initiation: Tripped Up

<div><p><a href="https://www.smartkarma.com/entities/waterdrop-inc" target="_blank" data-smartkarma-citation="entities:33018:1" rel="noopener">Waterdrop Inc (WDH US)</a> is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/swiss-re-ag-1f83dcbc-730e-46fa-82f2-bfe7e8e361a1" target="_blank" data-smartkarma-citation="entities:27914:1" rel="noopener">Swiss Re AG (SREN SW)</a> and <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>.</p></div><div><p>At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/waterdrop-ipo-initiation-going-for-brokers" target="_blank" data-smartkarma-citation="insights:50610" rel="noopener">Waterdrop IPO Initiation: Going for Brokers</a>, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. </p></div></div></div>

Waterdrop Inc (WDH US) is the largest independent third-party insurance platform in China as measured by life and health insurance first-year premiums (FYP) distributed in 2020, according to iResearch. Waterdrop is backed by Tencent Holdings (700 HK), Swiss Re AG (SREN SW) and Meituan (3690 HK).At the mid-point of the proposed IPO price range of $10.00-12.00 per ADS, Waterdrop will have a market cap of $4.3 billion. At the mid-point of the IPO price range, the net proceeds are $301.6 million. New and existing shareholders have indicated on $210 million of the IPO, including Boyu Capital ($100 million), HOPU Investments (at least $80 million), and Kevin Sunny Holding ($30 million). The indications of interest represent 63.6% of the ADSs on offer at the mid-point of the IPO price range.In Waterdrop IPO Initiation: Going for Brokers, we opined that as a leading online third-party insurance broker, Waterdrop is well-positioned to benefit from favourable industry trends. The key unknown is whether the changing regulations will throw a spanner in the works. Notwithstanding the regulatory overhang, we concluded that Waterdrop is worth a look. Our analysis suggests that the IPO price range is full at the high-end but has some upside at the low-end. 

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>The leading Chinese travel platform <a href="https://www.smartkarma.com/entities/trip-com-group-ltd" target="_blank" data-smartkarma-citation="entities:180:1" rel="noopener">Trip.com (TCOM US)</a>  has set the terms for its IPO where it plans to issue 31.6m shares at a maximum indicative price of HK$333.00 per share. At the above price, Trip.com will raise net proceeds of HK$10.4bn (approx. US$1.4bn).</p><p>Each ADS represents one ordinary share of the company, and the maximum HK offer price implies approx. US$42.8 per ADS, about 10.3% premium to Trip.com’s last close price of US$38.81 per ADS prior to setting the terms. The Hong Kong offering of 31.6m shares will constitute approx. 5.0% of the extended share capital of the company.</p><p>Trip.com plans to use about 45% of the net proceeds on funding the expansion of the company’s one-stop travel offerings and improve user experiences while it plans to use another 45% of the net proceeds on investing in technology to bolster the company’s leading market position in products and services while also improving operating efficiency.</p><p>In this insight, we examine the company’s current valuation and our view on HKEX/ADR discount/premium.</p>

The leading Chinese travel platform Trip.com (TCOM US)  has set the terms for its IPO where it plans to issue 31.6m shares at a maximum indicative price of HK$333.00 per share. At the above price, Trip.com will raise net proceeds of HK$10.4bn (approx. US$1.4bn).Each ADS represents one ordinary share of the company, and the maximum HK offer price implies approx. US$42.8 per ADS, about 10.3% premium to Trip.com’s last close price of US$38.81 per ADS prior to setting the terms. The Hong Kong offering of 31.6m shares will constitute approx. 5.0% of the extended share capital of the company.Trip.com plans to use about 45% of the net proceeds on funding the expansion of the company’s one-stop travel offerings and improve user experiences while it plans to use another 45% of the net proceeds on investing in technology to bolster the company’s leading market position in products and services while also improving operating efficiency.In this insight, we examine the company’s current valuation and our view on HKEX/ADR discount/premium.

Trip.com Secondary: Further Upside to SOTP Possible with Recovery in Travel and Hospitality Sector

China

Tongcheng Travel Holdings Limited operates as an online travel agency. The Company provides transportation ticketing, accommodation reservation, value added travel products sales, and other services. Tongcheng Travel Holdings provides its services throughout China.

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Tongcheng Travel Holdings (780 HK)

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Hang Seng TECH Index Rebalance: Forced Changes Lead to BIG Turnover

SenseTime, Li Auto and XPeng will join the HSTECH Index, replacing Tongcheng Travel, Weimob and Autohome. We estimate passive trackers will need to...

Brian Freitas

OYO (Oravel Stays) IPO Initiation: Tripped Up

OYO is rumoured to be seeking a lower raise (<$1 bn vs $1.2 bn) at a lower valuation ($7 bn vs $9-12 bn) due to market conditions. The fundamentals...

Arun George

Waterdrop IPO: Valuation Insights

Waterdrop has launched its IPO to raise net proceeds of $301.6 million at the mid-point of the price range of $10-12. The price range is full at...

Arun George

Trip.com Secondary: Further Upside to SOTP Possible with Recovery in Travel and Hospitality Sector

We believe there will be further upside to our SOTP once the global travel market starts recovering from the pandemic and HKEX listing will be...

Shifara Samsudeen, ACMA, CGMA

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