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 Sep 10. The aggregate short value for equities increased by $423m (+0.6%) WoW and increased by $741m (+1.1%) over the preceding four weeks.</p><p>Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,720m, -3.3% WoW), China Merchants Bank Co., Ltd./3968 HK($2,745m, +1.9% WoW), Zhongsheng Group Holdings Limited/881 HK($1,960m, +0.1% WoW), Meituan/3690 HK($1,759m, +6.5% WoW), Anta Sports Products Limited/2020 HK($1,647m, +5.7% WoW).</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/230/549/original/Hong_Kong_Market_Short_Position_Value_%28line%29_and_1W_Changes_%28bar%29_%28%24m%292021-09-18+12_47_11.png?1631948396" class="editor-image img-responsive" data-smartkarma-image-id="230549"></figure></section>

Hong Kong SFC reported aggregate short position as of Sep 10. The aggregate short value for equities increased by $423m (+0.6%) WoW and increased by $741m (+1.1%) over the preceding four weeks.Most shorted stocks by aggregate short value of positions are Ping An Insurance (Group) Company Of China, Ltd./2318 HK($3,720m, -3.3% WoW), China Merchants Bank Co., Ltd./3968 HK($2,745m, +1.9% WoW), Zhongsheng Group Holdings Limited/881 HK($1,960m, +0.1% WoW), Meituan/3690 HK($1,759m, +6.5% WoW), Anta Sports Products Limited/2020 HK($1,647m, +5.7% WoW).

HK Short Interest: Short Cover for Dongyue, WH Group

<p>In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.</p><p>Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In 2020, Southbound trading accounted for 22% of the equity market ADT. </p><p>We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.</p><p>In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), Wh Group Limited (288 HK), Kuaishou Technology (1024 HK), as well as outflows from Hong Kong Exchanges And Clearing Limited (388 HK), Semiconductor Manufacturing International Corporation (981 HK), Anta Sports Products Limited (2020 HK).</p>

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In 2020, Southbound trading accounted for 22% of the equity market ADT. We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), Wh Group Limited (288 HK), Kuaishou Technology (1024 HK), as well as outflows from Hong Kong Exchanges And Clearing Limited (388 HK), Semiconductor Manufacturing International Corporation (981 HK), Anta Sports Products Limited (2020 HK).

Hong Kong Connect Flows: Tencent, WH Group, Kuaishou

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>The shares of <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. </p><p>Now we look ahead. </p><p>Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. </p><p>However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. </p><p>And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in <a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud</a>. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? </p><p>If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.</p>

The shares of WH Group (288 HK) to be returned to shareholders after the Buyback Offer have been returned to shareholders as of this morning. Some appeared to have sold yesterday, some today, and some may not "get notice" of the return until tonight, which means they would sell tomorrow or later. Now we look ahead. Based on a pure price-vs-peers basis, the price today is about 3% below where it was compared to a mix of Chinese and global peers as of the day before the announcement. However, that does not include the 15% accretion to EPS from the buyback. That puts the stock a fair bit cheaper than its peer basket since the announcement 3+ months ago. And it has ALWAYS traded cheap on governance concerns (and one reason why showed up last month in a public spat between the spurned first son and the chairman, discussed in WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud. The question investors should ask themselves is.... if the family were ousted, would that be good for the share price? If the answer is yes, then the exposure here probably has some convexity given the shares trade at a multi-year low to Peers on an accretion-adjusted basis.

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/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)  </a>shows some downside pressure to re test key support lows that will set up a value long play but needs to hold 5.28. Overhead resistance will provide headwinds at 6.70-90.</p><p>Big flat bottomed range formation from 2019 shows increasing pressure to the downside.</p><p>6.70/90 is near term resistance that will cap a recovery attempt. Short sellers should focus on this area.</p><p>5.93 is pivot support to crack.</p><p>MACD bull wedge is constructive but needs more time to full mature with buy support outlined.</p><p>Buying a washout low tied to the 2018 low holding.</p>

WH Group (288 HK)  shows some downside pressure to re test key support lows that will set up a value long play but needs to hold 5.28. Overhead resistance will provide headwinds at 6.70-90.Big flat bottomed range formation from 2019 shows increasing pressure to the downside.6.70/90 is near term resistance that will cap a recovery attempt. Short sellers should focus on this area.5.93 is pivot support to crack.MACD bull wedge is constructive but needs more time to full mature with buy support outlined.Buying a washout low tied to the 2018 low holding.

David Blennerhassett

<div>
<div>
<p>Back on the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.</p>
<p>Below is a timeline of events that subsequently unfolded:</p>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 139.871px;">
<h3>Date</h3>
</td>
<td style="width: 606.141px;">
<h3>Data in the Date</h3>
</td>
</tr>
<tr>
<td style="width: 139.871px;">30-Mar-21</td>
<td style="width: 606.141px;">The controlling shareholders of <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN), including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</td>
</tr>
<tr>
<td style="width: 139.871px;">9-Apr-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
</tr>
<tr>
<td style="width: 139.871px;">26-May-21</td>
<td style="width: 606.141px;">At an SGM, KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
</tr>
<tr>
<td style="width: 139.871px;">7-Jun-21</td>
<td style="width: 606.141px;">The free float waiver has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a> from the HKEx.</td>
</tr>
<tr>
<td style="width: 139.871px;">15-Jun-21</td>
<td style="width: 606.141px;">
<p>Approval by the shareholders of <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">obtained</a></p>
</td>
</tr>
<tr>
<td style="width: 139.871px;">29-Jun-21</td>
<td style="width: 606.141px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>
</td>
</tr>
<tr>
<td style="width: 139.871px;">20-Jul-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
</tr>
<tr>
<td style="width: 139.871px;">2-Aug-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</td>
</tr>
<tr>
<td style="width: 139.871px;">9-Aug-21</td>
<td style="width: 606.141px;">Exactly on the Long Stop date, KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. </td>
</tr>
<tr>
<td style="width: 139.871px;">12-Aug-21</td>
<td style="width: 606.141px;">Composite Doc <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0811/2021081101136.pdf" target="_blank" rel="noopener">dispatched</a>
</td>
</tr>
<tr>
<td style="width: 139.871px;">17-Aug-21</td>
<td style="width: 606.141px;">The Record Date for the Special Dividend is expected to be the 1 <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0817/2021081701332.pdf" target="_blank" rel="noopener">September</a>. The Special Dividend is expected to be paid on or about Friday, 17 September 2021</td>
</tr>
<tr>
<td style="width: 139.871px;">18-Aug-21</td>
<td style="width: 606.141px;">Irrevocables <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800881.pdf" target="_blank" rel="noopener">received</a>. Thai MGO waiver received,. </td>
</tr>
<tr>
<td colspan="2" style="width: 746.012px;"><em>Source: HKEx announcements</em></td>
</tr>
</tbody>
</table>
</div>
</div>
<p>All appears to be going to plan.  The first close is the 2 September. </p>
<p>Then KLN announced on the 24 August a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0824/2021082401338.pdf" target="_blank" rel="noopener">delay</a> in the record date for the Special Dividend. KLN estimates:</p>
<blockquote>
<p>that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.</p>
</blockquote>
<p>With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?</p>
</div>
<div>
<p>More below the fold. </p>
<p>Plus updated <em><strong>Ye Olde Arb Grids</strong></em>. </p>
<div>
<div></div>
</div>
</div>



Back on the 9 February, Kerry Logistics Network (636 HK) (KLN) announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.
Below is a timeline of events that subsequently unfolded:





Date


Data in the Date



30-Mar-21
The controlling shareholders of Kerry Logistics Network (636 HK) (KLN), including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.


9-Apr-21
KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


26-May-21
At an SGM, KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver has been received from the HKEx.


15-Jun-21

Approval by the shareholders of Kerry Properties (683 HK) obtained



29-Jun-21
CFIUS approval received



20-Jul-21
KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21
KLN announced NDRC and MoC approval has been received as to the partial offer.


9-Aug-21
Exactly on the Long Stop date, KLN announced all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. 


12-Aug-21
Composite Doc dispatched



17-Aug-21
The Record Date for the Special Dividend is expected to be the 1 September. The Special Dividend is expected to be paid on or about Friday, 17 September 2021


18-Aug-21
Irrevocables received. Thai MGO waiver received,. 


Source: HKEx announcements





All appears to be going to plan.  The first close is the 2 September. 
Then KLN announced on the 24 August a delay in the record date for the Special Dividend. KLN estimates:

that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.

With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?


More below the fold. 
Plus updated Ye Olde Arb Grids. 





Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

Hong Kong

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

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WH Group (288 HK)

HK Short Interest: Short Cover for Dongyue, WH Group

We highlight week-on-week short covers for Dongyue (189 HK) and WH Group (288 HK) based on the latest HK SFC short aggregate position report.

Ke Yan, CFA, FRM

Hong Kong Connect Flows: Tencent, WH Group, Kuaishou

We highlight Hong Kong Connect Southbound inflows into Tencent (700 HK), WH Group (288 HK), Kuaishou (1024 HK), and outflows from HKEx (388 HK),...

Ke Yan, CFA, FRM

WH Group Post-Tender Outlook

Buyback Offer shares are returned. Now we look forward. Of course, we did before in assuming participation rates. The stock is cheap on accretion...

Travis Lundy

WH Group Low Re Test

WH Group (288 HK) shows some downside pressure to re test key support lows that will set up a value long play but needs to hold 5.28. Overhead...

Thomas Schroeder

Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

Assuming that the Irrevocable Agreement signors intend to tender only what they put in their Irrevocable Agreement, then owning the stock around...

David Blennerhassett

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