Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

Equity Bottom-Up

<ul>
<li>A U.S. Court deleted Xiaomi from the U.S. Department of Defense’s blacklist.</li>
<li>The revenue growth rates accelerated and the gross margins improved in all main business lines in 1Q21.</li>
<li>Both time-series and cross-sectional valuation methods suggest an upside of 9%. BUY.</li>
</ul>


A U.S. Court deleted Xiaomi from the U.S. Department of Defense’s blacklist.
The revenue growth rates accelerated and the gross margins improved in all main business lines in 1Q21.
Both time-series and cross-sectional valuation methods suggest an upside of 9%. BUY.


Xiaomi (1810 HK): Great Quarter, Successful Strategy, and Good News from U.S.

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

<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> is breaking above 27 resistance that opens the way to the 29.50/30 target outlined in our March 10 bullish insight. 27 is a pivotal level to hold above or will induce a fresh pullback sequence to compelling bull support at 25.50 day and 200 day moving averages converge at the 25 area and will act as a good supports zone in combination with the topside of cleared trendline (backswing) and price support.Global and regional cycle weakness in risk represents the key risk for Xiaomi to fail to hold above 27. Concern also stems for weak buy volume on this upside assault.

Xiaomi Corp (1810 HK) is breaking above 27 resistance that opens the way to the 29.50/30 target outlined in our March 10 bullish insight. 27 is a pivotal level to hold above or will induce a fresh pullback sequence to compelling bull support at 25.50 day and 200 day moving averages converge at the 25 area and will act as a good supports zone in combination with the topside of cleared trendline (backswing) and price support.Global and regional cycle weakness in risk represents the key risk for Xiaomi to fail to hold above 27. Concern also stems for weak buy volume on this upside assault.

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Quantitative Analysis

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 a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. 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 <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <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/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>.

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 a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. 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 (700 HK), Meituan (3690 HK), and Xiaomi Corp (1810 HK).

Hong Kong Connect Flows: Back to TMT, Tencent, Meituan, Xiaomi

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a>, there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 30.The inclusions are Autohome (2518 HK) and <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili Inc (9626 HK)</a> while the deletions are <a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a>, <a href="https://www.smartkarma.com/entities/fit-hon-teng-ltd" target="_blank" data-smartkarma-citation="entities:22868:1" rel="noopener">Fit Hon Teng (6088 HK)</a> and <a href="https://www.smartkarma.com/entities/archosaur-games" target="_blank" data-smartkarma-citation="entities:28948:1" rel="noopener">Archosaur Games (9990 HK)</a>.The inclusion of Autohome (2518 HK) is a surprise and so is the corresponding deletion of <a href="https://www.smartkarma.com/entities/fit-hon-teng-ltd" target="_blank" data-smartkarma-citation="entities:22868:1" rel="noopener">Fit Hon Teng (6088 HK)</a>. With a large impact on both names, these are the ones to watch for. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn.There are 10 trading days to implementation of the changes. The largest passive flows will go to <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili Inc (9626 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <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> while there will be outflows from <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/zte-corp-h" target="_blank" data-smartkarma-citation="entities:6922:1" rel="noopener">ZTE Corp H (763 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>.

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes post market close on 21 May. The constituent changes will be effective after the close of trading on 4 June.For the Hang Seng Tech Index (HSTECH INDEX), there are 2 inclusions and 3 exclusions. This brings the number of index constituents back down to 30.The inclusions are Autohome (2518 HK) and Bilibili Inc (9626 HK) while the deletions are ZTE Corp H (763 HK), Fit Hon Teng (6088 HK) and Archosaur Games (9990 HK).The inclusion of Autohome (2518 HK) is a surprise and so is the corresponding deletion of Fit Hon Teng (6088 HK). With a large impact on both names, these are the ones to watch for. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn.There are 10 trading days to implementation of the changes. The largest passive flows will go to Bilibili Inc (9626 HK), Kuaishou Technology (1024 HK), Meituan (3690 HK) and Tencent (700 HK) while there will be outflows from Xiaomi Corp (1810 HK), ZTE Corp H (763 HK), Alibaba Group (9988 HK) and JD Health (6618 HK).

HSTECH Index Rebalance: Back to 30 with 2 Adds and 3 Deletes

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<a href="https://www.smartkarma.com/entities/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (2618 HK)</a>, the logistics spin-off of <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com Inc. (9618 HK)</a>, will <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0517/2021051700101.pdf" target="_blank" rel="noopener">price</a> its shares between HK$39.36 and HK$43.36 each, raising HK$25.2bn using the half-way price, before over-allotment.
Reportedly the retail proportion was 141x oversubscribed on the opening day.
JD.com's stake will decline to 64.4% (63.5% including the over-allotment) from 71.57% currently.
JD.com's shares are down 35% from its recent high in February as Beijing scrutinises large domestic internet players. That's a significant move - and value at the stub level is emerging.
More below the fold.

JD Logistics (2618 HK), the logistics spin-off of JD.com Inc. (9618 HK), will price its shares between HK$39.36 and HK$43.36 each, raising HK$25.2bn using the half-way price, before over-allotment.
Reportedly the retail proportion was 141x oversubscribed on the opening day.
JD.com's stake will decline to 64.4% (63.5% including the over-allotment) from 71.57% currently.
JD.com's shares are down 35% from its recent high in February as Beijing scrutinises large domestic internet players. That's a significant move - and value at the stub level is emerging.
More below the fold.

JD.com's Stub Trading Cheapish Ahead Of Logistics Spin-Off

China

Xiaomi Corporation manufactures communication equipment and parts. The Company produces and sells mobile phones, smart phone software,  set-top boxes, and related accessories. Xiaomi markets its products worldwide.

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Xiaomi Corp (1810 HK)

Xiaomi (1810 HK): Great Quarter, Successful Strategy, and Good News from U.S.

A U.S. Court deleted Xiaomi from the U.S. Department of Defense’s blacklist. The revenue growth rates accelerated and the gross margins improved in...

Ming Lu

Xiaomi 30 Target Attracts

Xiaomi Corp (1810 HK) is breaking above 27 resistance that opens the way to the 29.50 target. 27 is a pivotal level to hold above or will induce a...

Thomas Schroeder

Hong Kong Connect Flows: Back to TMT, Tencent, Meituan, Xiaomi

In this insight, we highlight inflows into Tencent Holdings Limited (700 HK), Meituan (3690 HK), and Xiaomi Corporation (1810 HK) last week.

Ke Yan, CFA, FRM

HSTECH Index Rebalance: Back to 30 with 2 Adds and 3 Deletes

There are 2 adds and 3 deletes for the HSTECH Index. One-way turnover is estimated at 5.61% and will result in a one-way trade of HK$1.41bn. 2518...

Brian Freitas

JD.com's Stub Trading Cheapish Ahead Of Logistics Spin-Off

Given its reliance on its parent, I'd prefer to play JD.com; yet a 35% discount to NAV doesn't appear overly stretched, and may further widen amid...

David Blennerhassett

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