China

In this briefing:

1. Tencent (700 HK): In Fact Benefited from License Suspension
2. Petrochina Breakout and Laggard Play
3. Chinese Telcos: Rising 5G Capex Risk Leads to Another Downgrade
4. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations
5. HLX02: Innovation Could Overtake

1. Tencent (700 HK): In Fact Benefited from License Suspension

• Tencent’s market share as measured by the number of active users increased during the the period license suspension.
• We believe that Tencent’s market share as measured by active users will bring increased market share as measured by revenues.
• We also believe that during the hard times small companies always die.

2. Petrochina Breakout and Laggard Play

Petrochina Co Ltd H (857 HK) has remains suppressed but with oil perking up there is a laggard upside play taking shape as we begin to see distribution in HK upside leaders. On weakness we like positioning on the long side and can be used as a pair with an index short or one of the steel counters.

Given stock leaders are showing deteriorating upside momentum, we expect laggards to attract more attention.

RSI and MACD breakout patterns outlined as well as the price breakout at 5.10.

A bigger descending wedge also shows promise as a secondary breakout trigger.

MACD pattern resistance will help define the trending capability post breakout.

3. Chinese Telcos: Rising 5G Capex Risk Leads to Another Downgrade

We recently downgraded the Chinese telcos on rising concerns that the telcos will be required to do “national service” to support China’s technological leadership in 5G.  The closure of many overseas markets to Chinese equipment suppliers (esp Huawei, but also Zte Corp H (763 HK)) means the risk of a more aggressive 5G roll-out has increased.  Markets have started to take notice but the initial reaction has been positive on excitement over the 5G opportunity. Given the lack of a strong business case for 5G currently, we don think additional capex is a positive. We model what an extreme roll-out could look like and the impact on the telcos. Along with a weakening macro outlook, we have further downgraded target prices for all three operators and cut China Mobile (941 HK) and China Telecom (728 HK) to Reduce and China Unicom (762 HK) to Neutral.

4. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations

Best World International (BEST SP) is a direct-selling company that distributes premium skincare and wellness products. On Monday, The Business Times claimed that it is difficult to verify Best World’s strong sales in China based on “an unimpressive online and offline footprint.” On the back of the Business Times article, Best World shares slid 17% before the company was granted a trading halt pending a clarification announcement.

5. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

In this briefing:

1. Chinese Telcos: Rising 5G Capex Risk Leads to Another Downgrade
2. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations
3. HLX02: Innovation Could Overtake
4. January Headline Data for China
5. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

1. Chinese Telcos: Rising 5G Capex Risk Leads to Another Downgrade

We recently downgraded the Chinese telcos on rising concerns that the telcos will be required to do “national service” to support China’s technological leadership in 5G.  The closure of many overseas markets to Chinese equipment suppliers (esp Huawei, but also Zte Corp H (763 HK)) means the risk of a more aggressive 5G roll-out has increased.  Markets have started to take notice but the initial reaction has been positive on excitement over the 5G opportunity. Given the lack of a strong business case for 5G currently, we don think additional capex is a positive. We model what an extreme roll-out could look like and the impact on the telcos. Along with a weakening macro outlook, we have further downgraded target prices for all three operators and cut China Mobile (941 HK) and China Telecom (728 HK) to Reduce and China Unicom (762 HK) to Neutral.

2. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations

Best World International (BEST SP) is a direct-selling company that distributes premium skincare and wellness products. On Monday, The Business Times claimed that it is difficult to verify Best World’s strong sales in China based on “an unimpressive online and offline footprint.” On the back of the Business Times article, Best World shares slid 17% before the company was granted a trading halt pending a clarification announcement.

3. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

4. January Headline Data for China

Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.

5. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

In this briefing:

1. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations
2. HLX02: Innovation Could Overtake
3. January Headline Data for China
4. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
5. Baking in a Trade Deal and China Fade the Fact Levels

1. Best World (BEST SP): Not the Best Financials to Disprove The Business Times Allegations

Best World International (BEST SP) is a direct-selling company that distributes premium skincare and wellness products. On Monday, The Business Times claimed that it is difficult to verify Best World’s strong sales in China based on “an unimpressive online and offline footprint.” On the back of the Business Times article, Best World shares slid 17% before the company was granted a trading halt pending a clarification announcement.

2. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

3. January Headline Data for China

Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.

4. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

5. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

In this briefing:

1. HLX02: Innovation Could Overtake
2. January Headline Data for China
3. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
4. Baking in a Trade Deal and China Fade the Fact Levels
5. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

1. HLX02: Innovation Could Overtake

The oncology treatment landscape in China is evolving rapidly as the government has prioritized access to innovative drugs to meet this significant unmet need. In particular, investors considering the Shanghai Henlius Biotech (1566213D HK) listing should be aware of the emergence of a drug that potentially is superior to Roche Holding AG (ROG SW)‘s Herceptin (and Shanghai Henlius’ HLX02) for the treatment of patients with HER2-positive breast cancer (and ultimately HER2-positive gastric cancer). While there should be good demand for cheaper alternatives to Herceptin, the availability of a superior alternative potentially shortens the lifecycle of Herceptin biosimilars. 

China has only recently “modernized” its drug approval and reimbursement, so there is little precedent to rely upon to estimate the speed and magnitude of changes in the market. As brokers rollout forecasts for the company and HLX02, investors should ask if the numbers somehow reflect this risk.

We do not have a view of the offering, but tag this Insight as Bearish because we are highlighting a potential risk.

2. January Headline Data for China

Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.

3. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

4. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

5. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, 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 week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

In this briefing:

1. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds
2. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds

China News That Matters

• Will tariff hike be delayed to May?
• Like rugby without the All Blacks!
• Funding the farmers – with better financial services
• Good signs, bad signs
• High time for a check-up

2. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Reliance General Insurance (re-filed, India)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. January Headline Data for China
2. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
3. Baking in a Trade Deal and China Fade the Fact Levels
4. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)
5. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

1. January Headline Data for China

Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.

2. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

3. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

4. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, 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 week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

5. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

In this version of the GER weekly research wrap, we assess the bump prospects in the Australian Pharma Industries (API AU) / Sigma Healthcare (SIG AU) potential merger. Arun updates on M1 Ltd (M1 SP) which could be delisted following an unconditional offer. In addition, we dig into the trading update for Eclipx (ECX AU) and assess the risks that Mcmillan Shakespeare (MMS AU) could walk away from the deal. Finally, we initiate on the IPO of Hansoh Pharmaceutical (HANSOH HK). A calendar of upcoming catalysts is also attached. 

More details can be found below. 

Best of luck for the new week – Rickin, Venkat and Arun

In this briefing:

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Reliance General Insurance (re-filed, India)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
2. Baking in a Trade Deal and China Fade the Fact Levels
3. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)
4. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO
5. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds

1. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

2. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

3. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, 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 week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

4. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

In this version of the GER weekly research wrap, we assess the bump prospects in the Australian Pharma Industries (API AU) / Sigma Healthcare (SIG AU) potential merger. Arun updates on M1 Ltd (M1 SP) which could be delisted following an unconditional offer. In addition, we dig into the trading update for Eclipx (ECX AU) and assess the risks that Mcmillan Shakespeare (MMS AU) could walk away from the deal. Finally, we initiate on the IPO of Hansoh Pharmaceutical (HANSOH HK). A calendar of upcoming catalysts is also attached. 

More details can be found below. 

Best of luck for the new week – Rickin, Venkat and Arun

5. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds

China News That Matters

• Will tariff hike be delayed to May?
• Like rugby without the All Blacks!
• Funding the farmers – with better financial services
• Good signs, bad signs
• High time for a check-up

In this briefing:

1. Baking in a Trade Deal and China Fade the Fact Levels
2. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)
3. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO
4. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds
5. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

2. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, 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 week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

3. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

In this version of the GER weekly research wrap, we assess the bump prospects in the Australian Pharma Industries (API AU) / Sigma Healthcare (SIG AU) potential merger. Arun updates on M1 Ltd (M1 SP) which could be delisted following an unconditional offer. In addition, we dig into the trading update for Eclipx (ECX AU) and assess the risks that Mcmillan Shakespeare (MMS AU) could walk away from the deal. Finally, we initiate on the IPO of Hansoh Pharmaceutical (HANSOH HK). A calendar of upcoming catalysts is also attached. 

More details can be found below. 

Best of luck for the new week – Rickin, Venkat and Arun

4. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds

China News That Matters

• Will tariff hike be delayed to May?
• Like rugby without the All Blacks!
• Funding the farmers – with better financial services
• Good signs, bad signs
• High time for a check-up

5. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Reliance General Insurance (re-filed, India)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma

In this briefing:

1. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)
2. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO
3. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds
4. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

1. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, 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 week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

2. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

In this version of the GER weekly research wrap, we assess the bump prospects in the Australian Pharma Industries (API AU) / Sigma Healthcare (SIG AU) potential merger. Arun updates on M1 Ltd (M1 SP) which could be delisted following an unconditional offer. In addition, we dig into the trading update for Eclipx (ECX AU) and assess the risks that Mcmillan Shakespeare (MMS AU) could walk away from the deal. Finally, we initiate on the IPO of Hansoh Pharmaceutical (HANSOH HK). A calendar of upcoming catalysts is also attached. 

More details can be found below. 

Best of luck for the new week – Rickin, Venkat and Arun

3. Trade Talks/Tech Trouble/ Rural Revival/Data Digest /Bad Bonds

China News That Matters

• Will tariff hike be delayed to May?
• Like rugby without the All Blacks!
• Funding the farmers – with better financial services
• Good signs, bad signs
• High time for a check-up

4. ECM Weekly (16 February 2019) – ByteDance, Embassy Office REIT, AB InBev Asia, CStone, Dexin

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

Accuracy Rate:

Our overall accuracy rate is 72.1% for IPOs and 63.8% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

• Reliance General Insurance (re-filed, India)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

News on Upcoming IPOs

• PineBridge-backed Uniparts gets SEBI nod to float IPO
• Cal-Comp Philippines eyes IPO by third quarter
• JERA new president says IPO is an option
• Singapore’s Zalora explores listing to fuel expansion
• S. Korea’s Homeplus files for up to $1.5 bln REIT IPO
• Korean bio unicorn in the making, Voronoi, to join the Kosdaq this year

Smartkarma Community’s this week Analysis on Upcoming IPO

• Homeplus REIT IPO – The Largest Ever REIT IPO in Korea
• Ecopro BM IPO: Valuation Analysis
• Embassy Office Parks REIT – Good Assets but Projections Might Be a Tad Too Bullish
• CStone Pharma (基石药业) IPO: Thoughts on Valuation (Part 2)
• Hansoh Pharma IPO Preview: A Decent Story Tarnished by a Huge Pre-IPO Dividend
• Ab InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China 
• ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)
• ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)
• Dreamtech IPO: Valuation Analysis
• Dexin China (德信中国) IPO Review – Key Issues Remain but 9M Results Showed Strong Growth

List of pre-IPO Coverage on Smartkarma