External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

Yonyou Network Technology A / Equity Bottom-Up

<ul><li>Youyou reported in-line revenue growth of +17% YoY to RMB2.06bn in FY3Q22.</li><li>However, net loss widened unexpectedly to RMB284mn mainly due to margin erosion. </li><li>Yonyou delivered slowest cloud revenue growth of +22% YoY since the company adopted cloud-focus strategy in 2019. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Youyou reported in-line revenue growth of +17% YoY to RMB2.06bn in FY3Q22.However, net loss widened unexpectedly to RMB284mn mainly due to margin erosion. Yonyou delivered slowest cloud revenue growth of +22% YoY since the company adopted cloud-focus strategy in 2019. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yonyou (600588 CH) – Software Localization Adds Uncertainty to Cloud Strategy

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The review period nearly complete, we see 7 potential adds and 9 potential deletes at the December rebalance. However, there can be a maximum of 5 changes at a rebalance.</li>
<li>We estimate a one-way turnover of 4.28% at the December rebalance leading to a one-way trade of CNY 3.42bn. Index arb activity could add to the impact on the stocks.</li>
<li>The potential adds have dropped over the last month while the potential deletes have moved higher over the last couple of weeks.</li>
</ul>


The review period nearly complete, we see 7 potential adds and 9 potential deletes at the December rebalance. However, there can be a maximum of 5 changes at a rebalance.
We estimate a one-way turnover of 4.28% at the December rebalance leading to a one-way trade of CNY 3.42bn. Index arb activity could add to the impact on the stocks.
The potential adds have dropped over the last month while the potential deletes have moved higher over the last couple of weeks.


SSE50 Index Rebalance Preview: Sector Shift as IT and Financials Drop

Thematic (Sector/Industry)

<ul><li>Growing macro concerns related to stagflation, US rate hike, geopolitical tensions and RMB depreciation continue to weigh on growth stocks, especially to software tech. </li><li>We use five criteria including 1) valuation, 2) profitability, 3) cash level, 4) short ratio and 5) RMB/USD depreciation to determine companies that are less vulnerable to market fluctuations. We find Hikvision (BUY), Glodon (BUY) and AsiaInfo (NR) in the best positions under these five criteria.</li><li><div><div><div>Heightened macro uncertainties unfavorable to software tech stocks. </div></div></div></li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Growing macro concerns related to stagflation, US rate hike, geopolitical tensions and RMB depreciation continue to weigh on growth stocks, especially to software tech. We use five criteria including 1) valuation, 2) profitability, 3) cash level, 4) short ratio and 5) RMB/USD depreciation to determine companies that are less vulnerable to market fluctuations. We find Hikvision (BUY), Glodon (BUY) and AsiaInfo (NR) in the best positions under these five criteria.Heightened macro uncertainties unfavorable to software tech stocks. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Software & IT Services - Which Stocks Are Less Vulnerable to Market Volatility?

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

<ul>
<li>Lichen China, niche provider of financial and taxation services, filed for an IPO in the United States, and plans to raise ~$25M. Investment bank Univest Securities is leading the offering. </li>
<li>The company applied to list Class A shares on the Nasdaq Capital Market under the symbol <a href="https://www.smartkarma.com/entities/lichen-china-limited" target="_blank" data-smartkarma-citation="entities:36311:1" rel="noopener">Lichen China (LICN US)</a> and will have Class A shares and Class B shares. </li>
<li>We have a favorable view of the upcoming IPO, and consider an IPO valuation of ~$119M as attractive at ~2x EV/FY22E revenue and a forward P/E of ~14x.  </li>
</ul>


Lichen China, niche provider of financial and taxation services, filed for an IPO in the United States, and plans to raise ~$25M. Investment bank Univest Securities is leading the offering. 
The company applied to list Class A shares on the Nasdaq Capital Market under the symbol Lichen China (LICN US) and will have Class A shares and Class B shares. 
We have a favorable view of the upcoming IPO, and consider an IPO valuation of ~$119M as attractive at ~2x EV/FY22E revenue and a forward P/E of ~14x.  


Lichen China IPO Preview: Your Trusted Provider of Financial and Taxation Services

<ul>
<li>Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.</li>
<li>We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.</li>
<li>The potential adds have outperformed the potential deletes and the <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index (SSE50 INDEX)</a> by a wide margin over the last few months.</li>
</ul>


Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.
We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.
The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) by a wide margin over the last few months.


SSE50 Index Rebalance Preview: Sector Rotation To Continue

China

Yonyou Network Technology Co., Ltd. develops and markets enterprise-wide business applications software, including financial, web-based, management, and security development software. The Company also offers training programs.

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Yonyou Network Technology A (600588 CH)

Yonyou (600588 CH) – Software Localization Adds Uncertainty to Cloud Strategy

Youyou reported in-line revenue growth of +17% YoY to RMB2.06bn in FY3Q22. However, net loss widened unexpectedly to RMB284mn mainly due to margin...

CMB International

SSE50 Index Rebalance Preview: Sector Shift as IT and Financials Drop

We forecast 5 changes in December as Energy, Industrials and Materials weights increase and IT and Financials drop. One-way turnover will be over...

Brian Freitas

China Software & IT Services - Which Stocks Are Less Vulnerable to Market Volatility?

Growing macro concerns related to stagflation, US rate hike, geopolitical tensions and RMB depreciation continue to weigh on growth stocks,...

CMB International

Lichen China IPO Preview: Your Trusted Provider of Financial and Taxation Services

We have a favorable view of the upcoming Lichen China IPO and see potential for sustained growth and profitability expansion over time

Andrei Zakharov

SSE50 Index Rebalance Preview: Sector Rotation To Continue

We forecast 5 changes for the SSE50 Index in December. There are a few names that are close to add/delete zone and price/volume changes can lead to...

Brian Freitas

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