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

<ul>
<li>We analyse the changes of A/H premium on 134 stocks over the last week. </li>
<li>Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. </li>
<li>Industrial sectors are near 52 week high for A/H premium. Top three stocks for the WoW A/H increases are Jingcheng Machinery, Shanghai Haohai, and Dynagreen.</li>
</ul>


We analyse the changes of A/H premium on 134 stocks over the last week. 
Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. 
Industrial sectors are near 52 week high for A/H premium. Top three stocks for the WoW A/H increases are Jingcheng Machinery, Shanghai Haohai, and Dynagreen.


A/H Premium Weekly: Industrial Sector at 52 Week High

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hollysys Automation Technologies / Event-Driven

<a href="https://www.smartkarma.com/entities/hollysys-automation-technolo" target="_blank" data-smartkarma-citation="entities:26078:1" rel="noopener">Hollysys Automation Technology (HOLI US)</a>, a leading automation control system solutions provider in China, has <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115585559&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-02-01&amp;CK=1357450" target="_blank" rel="noopener">announced</a> a consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management, had bumped its Offer to acquire the company to US$17.10/share. 
Back on the <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115490363&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2020-12-10&amp;CK=1357450" target="_blank" rel="noopener">7 December</a>, 2020, the consortium pitched an unsolicited US$15.47/share cash Offer, which was summarily <a href="https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115541784&amp;type=PDF&amp;symbol=HOLI&amp;companyName=Hollysys+Automation+Technologies+Ltd.&amp;formType=6-K&amp;dateFiled=2021-01-08&amp;CK=1357450" target="_blank" rel="noopener">rejected</a> on the 8 January as the Offer "substantially undervalues the Company and is not in the best interest of the Company’s shareholders .... (and that it) would deprive our shareholders of the value inherent in Hollysys for inadequate consideration."
Given US/China tensions and moves last year to force the delisting of US-listed Chinese companies should they be in noncompliance with US accounting standards, there has been a surge in “take private” transactions for these US-listed companies (often expecting to re-list elsewhere at higher valuations) and secondary listings in markets outside of the United States, such as Hong Kong and Shanghai. This was extensively discussed in <a href="https://skr.ma/TDg1T" target="_blank" rel="noopener">Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value</a>.
Hollysys is incorporated in the BVI. This jurisdiction provides four key takeover methods.
Hollysys also has net cash of US$630mn (as at 30 September 2020), accounting for ~71% of its market cap. Dissension rights are available under certain take-private transactions.
As always, more below the fold.

Hollysys Automation Technology (HOLI US), a leading automation control system solutions provider in China, has announced a consortium including co-founder and former Hollysys CEO Baiqing Shao, Ace Funds, and Chinese PE outfit CPE Funds Management, had bumped its Offer to acquire the company to US$17.10/share. 
Back on the 7 December, 2020, the consortium pitched an unsolicited US$15.47/share cash Offer, which was summarily rejected on the 8 January as the Offer "substantially undervalues the Company and is not in the best interest of the Company’s shareholders .... (and that it) would deprive our shareholders of the value inherent in Hollysys for inadequate consideration."
Given US/China tensions and moves last year to force the delisting of US-listed Chinese companies should they be in noncompliance with US accounting standards, there has been a surge in “take private” transactions for these US-listed companies (often expecting to re-list elsewhere at higher valuations) and secondary listings in markets outside of the United States, such as Hong Kong and Shanghai. This was extensively discussed in Homecoming For Chinese Companies: Appraisal Rights &amp; Fair Value.
Hollysys is incorporated in the BVI. This jurisdiction provides four key takeover methods.
Hollysys also has net cash of US$630mn (as at 30 September 2020), accounting for ~71% of its market cap. Dissension rights are available under certain take-private transactions.
As always, more below the fold.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

<ul>
<li>China Industrials attract further inflows from dedicated active China funds.</li>
<li>Machinery and Electrical Equipment industry groups dominate holdings within the sector.</li>
<li>Buying seen in <a href="https://www.smartkarma.com/entities/contemporary-amperex-techn-a" target="_blank" data-smartkarma-citation="entities:24404:1" rel="noopener">CATL (A) (300750 CH)</a>, <a href="https://www.smartkarma.com/entities/sany-heavy-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:20183:1" rel="noopener">Sany Heavy Industry (600031 CH)</a> and <a href="https://www.smartkarma.com/entities/ever-sunshine-lifestyle-services-group-limited" target="_blank" data-smartkarma-citation="entities:28932:1" rel="noopener">Ever Sunshine Lifestyle Services (1995 HK)</a>.  Selling in <a href="https://www.smartkarma.com/entities/zhuzhou-csr-times-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:18:1" rel="noopener">Zhuzhou Csr Times Electric Co, Ltd. (3898 HK)</a> and <a href="https://www.smartkarma.com/entities/beijing-new-building-materials-plc" target="_blank" data-smartkarma-citation="entities:13910:1" rel="noopener">Beijing New Building Materials (000786 CH)</a>
</li>
<li>Industrials move to top sector overweight among active China funds.</li>
</ul>


China Industrials attract further inflows from dedicated active China funds.
Machinery and Electrical Equipment industry groups dominate holdings within the sector.
Buying seen in CATL (A) (300750 CH), Sany Heavy Industry (600031 CH) and Ever Sunshine Lifestyle Services (1995 HK).  Selling in Zhuzhou Csr Times Electric Co, Ltd. (3898 HK) and Beijing New Building Materials (000786 CH)

Industrials move to top sector overweight among active China funds.


China Funds Increase Industrials Exposure, Moves to Top Overweight

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW but increased by $1,938m (+3.2%) over the preceding four weeks.
Most shorted stocks by aggregate short value of positions are <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a> ($10,037m, -5.7% WoW), <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> ($3,218m, -8.3% WoW), <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan Dianping (3690 HK)</a> ($1,724m, -21.7% WoW), <a href="https://www.smartkarma.com/entities/zhongsheng-group-holdings" target="_blank" data-smartkarma-citation="entities:10573:1" rel="noopener">Zhongsheng Group (881 HK)</a> ($1,277m, -0.5% WoW), <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> ($1,121m, -11.1% WoW).
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/929/original/image_36361465821595753850369.png?1595753851" class="editor-image img-responsive" data-smartkarma-image-id="147929"></figure>

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW but increased by $1,938m (+3.2%) over the preceding four weeks.
Most shorted stocks by aggregate short value of positions are Ping An Insurance (H) (2318 HK) ($10,037m, -5.7% WoW), Tencent Holdings (700 HK) ($3,218m, -8.3% WoW), Meituan Dianping (3690 HK) ($1,724m, -21.7% WoW), Zhongsheng Group (881 HK) ($1,277m, -0.5% WoW), Xiaomi Corp (1810 HK) ($1,121m, -11.1% WoW).


HK Short Report: Evergrande Health, Zhuzhou CRRC

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

China Conch Venture Holdings / Event-Driven

<div>
The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close. The constituent changes will be effective from 9 March 2020 and the rebalancing trades will need to be done at the closing auction on 6 March 2020.
As we expected, <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:19943:1">China Conch Venture Holdings (586 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" rel="noopener" data-smartkarma-citation="entities:13363:1">Sunny Optical (2382 HK)</a> are being added to the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" rel="noopener" data-smartkarma-citation="entities:22900:1">Hang Seng China Enterprises Index (HSCEI INDEX)</a> while <a href="https://www.smartkarma.com/entities/people-s-insurance-co-grou-h" target="_blank" rel="noopener" data-smartkarma-citation="entities:362:1">People'S Insurance Co (Group) Of China (1339 HK)</a> and <a href="https://www.smartkarma.com/entities/crrc-corp-ltd-461535b2-37ac-4589-b4d9-8b71c06c43b8" target="_blank" rel="noopener" data-smartkarma-citation="entities:124:1">CRRC Corp Ltd H (1766 HK)</a> are being deleted from the index.
We estimated over 4-5 days of average volume to sell on the exclusion names, over 6 days to buy on <a href="https://www.smartkarma.com/entities/china-conch-venture-holdings-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:19943:1">China Conch Venture Holdings (586 HK)</a> and 1.5 days to buy on <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" rel="noopener" data-smartkarma-citation="entities:13363:1">Sunny Optical (2382 HK)</a>. 
In this Insight, we look at the expected flows for this rebalance, historical performance of inclusions and exclusions pre- and post-announcement, and ideas to trade the rebalance.
</div><div></div>


The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close. The constituent changes will be effective from 9 March 2020 and the rebalancing trades will need to be done at the closing auction on 6 March 2020.
As we expected, China Conch Venture Holdings (586 HK) and Sunny Optical (2382 HK) are being added to the Hang Seng China Enterprises Index (HSCEI INDEX) while People'S Insurance Co (Group) Of China (1339 HK) and CRRC Corp Ltd H (1766 HK) are being deleted from the index.
We estimated over 4-5 days of average volume to sell on the exclusion names, over 6 days to buy on China Conch Venture Holdings (586 HK) and 1.5 days to buy on Sunny Optical (2382 HK). 
In this Insight, we look at the expected flows for this rebalance, historical performance of inclusions and exclusions pre- and post-announcement, and ideas to trade the rebalance.


HSCEI Rebalance March 2020 - No Surprises, But Trades Are Performing Well

China

Zhuzhou CRRC Times Electric Co., Ltd. provides and integrates train-borne electrical systems for the PRC Railway industry.  The Company also develops, manufactures, and sells train power converters, auxiliary power supply equipment and control systems for trains for urban rail systems

Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK)

Price Gauge
52-week Range	0.00 - 0.00
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Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK)

A/H Premium Weekly: Industrial Sector at 52 Week High

Top sectors in terms of WoW A/H increase were consumer staple, health care and industrial. We also highlight top three stocks for A/H increase:...

Ke Yan, CFA, FRM

Hollysys (HOLI US): Machine Earning

The short turnaround from the consortium in bumping its Offer provides a certain degree of determination. At $17.10/share, this is still being done...

David Blennerhassett

China Funds Increase Industrials Exposure, Moves to Top Overweight

Inflows in to Machinery and Electrical Equipment stocks push the Industrial sector to the top overweight among active China funds.

Steven Holden

HK Short Report: Evergrande Health, Zhuzhou CRRC

Hong Kong SFC reported on today for aggregate short position on Jul 17. The aggregate short value for equities decreased by $-3,569m (-5.5%) WoW...

Ke Yan, CFA, FRM

HSCEI Rebalance March 2020 - No Surprises, But Trades Are Performing Well

The Hang Seng Indexes Company Limited (HSIL) announced the results of its review of the Hang Seng Family of Indexes on Friday post market close....

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)