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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Orient Overseas International / Event-Driven

<p>Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.</p><p>The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.</p><p>We expect <a href="https://www.smartkarma.com/entities/brii-biosciences" target="_blank" data-smartkarma-citation="entities:33014:1" rel="noopener">Brii Biosciences (2137 HK)</a>, <a href="https://www.smartkarma.com/entities/helen-s-international-holdings" target="_blank" data-smartkarma-citation="entities:34113:1" rel="noopener">Helen's International Holdings (9869 HK)</a>, <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>, <a href="https://www.smartkarma.com/entities/keymed-biosciences-inc" target="_blank" data-smartkarma-citation="entities:33011:1" rel="noopener">Keymed Biosciences Inc (2162 HK)</a> and <a href="https://www.smartkarma.com/entities/sce-intelligent-commercial-management" target="_blank" data-smartkarma-citation="entities:33500:1" rel="noopener">SCE Intelligent Commercial Management (606 HK)</a> to be included in the index at the close of trading on 3 December.</p><p>For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.</p><div><p>Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.</p></div>

Hang Seng Indexes Company (HSIL) reviews the constituents of the Hang Seng Composite Index (HSCI) on a half yearly basis in March and September with data cut-off dates as of the end of December and June.The December review will see the inclusion of stocks that were newly listed from 1 July to 30 September and meet the criteria for joining the index.We expect Brii Biosciences (2137 HK), Helen's International Holdings (9869 HK), Medlive Technology (2192 HK), Keymed Biosciences Inc (2162 HK) and SCE Intelligent Commercial Management (606 HK) to be included in the index at the close of trading on 3 December.For the regular rebalance in March 2022, we see 17 potential inclusions to the index and 4 potential deletions. There are 4 stocks that are close adds and 5 that are close deletes.Although there are no assets indexed to the HSCI, the index forms the basis of stocks that are eligible for Southbound Stock Connect. Stocks that are included in the HSCI and subsequently included in the Stock Connect program get inflows from mainland investors. There is pre-positioning in the stocks in the lead up to the announcement and prior to the stocks being open for purchase by mainland investors.

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Equity Bottom-Up

China Maple Leaf Educational Systems / Equity Bottom-Up

<ul>
<li>The share of Maple Leaf has been sold off following the FY2020 results;</li>
<li>We find little (if any) evidence pointing to the permanent deterioration of business economics, and therefore, would like to maintain our positive long-term stance as described in our previous Insight;</li>
<li>The company has an ambitious medium-term target, which may lead to surprises on the upside over time.</li>
</ul>


The share of Maple Leaf has been sold off following the FY2020 results;
We find little (if any) evidence pointing to the permanent deterioration of business economics, and therefore, would like to maintain our positive long-term stance as described in our previous Insight;
The company has an ambitious medium-term target, which may lead to surprises on the upside over time.


Maple Leaf Educational Systems: Our Takeaways From FY2020 Results

<ul class="">
<li>Maple Leaf Educational Systems caught our attention for its low price multiples and consistently decent returns on capital;</li>
<li>Both the financial track record and the current valuation look favorable, especially compared to peers.</li>
<li>We examine the business fundamentals with our proprietary framework in search of any value trap.</li>
</ul>


Maple Leaf Educational Systems caught our attention for its low price multiples and consistently decent returns on capital;
Both the financial track record and the current valuation look favorable, especially compared to peers.
We examine the business fundamentals with our proprietary framework in search of any value trap.


Maple Leaf Educational Systems: Deep Value or Value Trap?

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

<p><a href="https://www.smartkarma.com/entities/china-yuhua-education" target="_blank" data-smartkarma-citation="entities:23627:1" rel="noopener">China Yuhua Education (6169 HK)</a>has recorded an enviable growth rate through a series of acquisitions, therefore, investors rushed to own the stock even when the founder is selling his shares. The company's PEG ratio has gone up from 0.8x in 2017 to 1.8x currently. </p>
<p>With 7% ROE, 8% net margin, <a href="https://www.smartkarma.com/entities/china-yuhua-education" target="_blank" data-smartkarma-citation="entities:23627:1" rel="noopener">China Yuhua Education (6169 HK)</a> is trading at 49% EV/EBITDA premium, 671% PER premium and 57% PBR premium to its peers although it has 36% lower ROE,  and currently, 71% lower net income margin (<em>after the marked-to-market loss of the convertible bonds</em>). </p>
<p>After an increase of EV/EBITDA +140%, PER +348%, PBR +112% - is this still sustainable? Investors may want to think otherwise. The MSCI inclusion could be the last bull push for the stock but what are there for investors after that? More acquisitions will increase their revenue growth but does not seem to increase their margin. The stock seems to lack concrete growth catalysts to justify its sky-high valuation at 120x earnings. </p>
<div class="content-highlight">
<p><em>Thanks in advance for reading this insight!  Please give this a thumbs up if you find this useful and follow me on Smartkarma for more original and actionable insights; it's free, anonymous, and helpful. Please also feel free to post a comment or message me directly if you have any queries regarding this insight. Your continuing support renders a continuity of more original and actionable insights.  </em></p>
</div>

China Yuhua Education (6169 HK)has recorded an enviable growth rate through a series of acquisitions, therefore, investors rushed to own the stock even when the founder is selling his shares. The company's PEG ratio has gone up from 0.8x in 2017 to 1.8x currently. 
With 7% ROE, 8% net margin, China Yuhua Education (6169 HK) is trading at 49% EV/EBITDA premium, 671% PER premium and 57% PBR premium to its peers although it has 36% lower ROE,  and currently, 71% lower net income margin (after the marked-to-market loss of the convertible bonds). 
After an increase of EV/EBITDA +140%, PER +348%, PBR +112% - is this still sustainable? Investors may want to think otherwise. The MSCI inclusion could be the last bull push for the stock but what are there for investors after that? More acquisitions will increase their revenue growth but does not seem to increase their margin. The stock seems to lack concrete growth catalysts to justify its sky-high valuation at 120x earnings. 

Thanks in advance for reading this insight!  Please give this a thumbs up if you find this useful and follow me on Smartkarma for more original and actionable insights; it's free, anonymous, and helpful. Please also feel free to post a comment or message me directly if you have any queries regarding this insight. Your continuing support renders a continuity of more original and actionable insights.  


China Yuhua (6169): Enough Steam for Growth?

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

China East Education  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/27843" target="_blank" data-smartkarma-citation="entities:27843:1">China East Education (CEE HK)</a> (CEE) is the largest vocational training education provider in China, as measured by average student enrolments in 2017, according to Frost &amp; Sullivan. It announced its IPO price range of HK$9.80-12.26 per share. At the mid-point of the IPO price range, CEE will raise net proceeds of HK$4.7 billion ($600 million), resulting in a market cap of HK$24.0 billion ($3.1 billion).</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-east-education-ipo-preview-a-question-of-capital-allocation" target="_blank">our IPO initiation note</a>, we noted that CEE is an amalgamation of brands with different prospects and a less than ideal capital allocation strategy. Overall, we would participate in the CEE IPO at most at the low-end of the proposed IPO price range. </p></div>

China East Education (CEE HK) (CEE) is the largest vocational training education provider in China, as measured by average student enrolments in 2017, according to Frost &amp; Sullivan. It announced its IPO price range of HK$9.80-12.26 per share. At the mid-point of the IPO price range, CEE will raise net proceeds of HK$4.7 billion ($600 million), resulting in a market cap of HK$24.0 billion ($3.1 billion).In our IPO initiation note, we noted that CEE is an amalgamation of brands with different prospects and a less than ideal capital allocation strategy. Overall, we would participate in the CEE IPO at most at the low-end of the proposed IPO price range. 

China East Education IPO: Valuation Insights

China

Wisdom Education International Holdings Co., Ltd. provides educational services. The Company offers educational services in mathematics, arts, languages, music, and sports. Wisdom Education International Holdings serves students in China and Hong Kong.

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Wisdom Education (6068 HK)

HSCI Index Rebalance and Stock Connect: Potential Changes in December and March

There could be 5 adds to the HSCI in December. In March, there could be 17 adds and 4 deletes. There will be pre-positioning on the inclusions...

Brian Freitas

Maple Leaf Educational Systems: Our Takeaways From FY2020 Results

Seeing little (if any) evidence of permanent deterioration of business economics, we would like to maintain our positive long-term stance as...

Steven Chen

Maple Leaf Educational Systems: Deep Value or Value Trap?

With an all-time-low valuation and decent financial track records, does Maple Leaf Educational Systems offers a long-term alpha opportunity?

Steven Chen

China Yuhua (6169): Enough Steam for Growth?

China Yuhua Education (6169 HK)has recorded an enviable growth rate through a series of acquisitions, therefore, investors rushed to own the stock...

Henry Soediarko

China East Education IPO: Valuation Insights

China East Education (CEE HK) (CEE) is the largest vocational training education provider in China, as measured by average student enrolments in...

Arun George

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