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Share pledging in China: Industrials sector at a greater risk

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The concerns over excessive pledged shares continue to haunt the stock market in China for quite some time. On October 23, the Shanghai Composite index lost 2.26 percent as investors remained pessimistic about risks posed by shares pledged for loans.

Heckyl’s analysis of pledged shares data showed the pledged shareholding for 1,836 (52.7%) out of 3,485 Chinese companies was higher than 10% as on October 19 (Image 1). For 148 companies, the pledged shareholding was greater than 50% based on the latest data at CSDC.

China Pledged Shares 1
[Image 1: Breakup of the number of companies by pledged shares holding]

The 5 most stressed sectors (having a maximum number of companies with pledged shares greater than 10% of shareholding) were Industrials, Technology Hardware & Equipment, Materials, Pharmaceuticals, and Chemicals.

China Pledged Shares 2
[Image 2: Sector-wise breakup of the number of companies by pledged shares holding]

Here, we have highlighted 5 companies with a significant pledged shareholding:

Shanghai Raas Blood Products Co Ltd (71.3%)
Wheelock and Co Ltd (64.1%)
Giant Network Group Co Ltd (61.9%)
Zhejiang Century Huatong Group Co Ltd (61.1%)
China Grand Automotive Services Co Ltd (55.9%)

In our view, substantial pledging of shares by the promoters is a potential red-flag as it is an indication of the stress that has piled up on corporate finances. Moreover, a significant drop in the company’s share price may result in the invocation of pledged shares. This may also lead to loss of management control for the promoters.

Heckyl’s FiND Credit Risk EWS captures company-related red-flags based on a variety of business rules. Our intelligent EWS application can help lenders to get an early warning about the deterioration in corporate borrowers’ financial profile ahead of time.

To know more about FiND Credit Risk EWS, email us at info@heckyl.com

How FiND could have helped Air Asia to zero in on HNR Trading

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Heckyl’s FiND offers a singular repository to carry out deeper levels of due diligence for compliance risk assessment. Our unique alternative data platform allows screening of KMPs, Directors, Companies, and Institutions from compliance perspective by performing a check against:  

Due Diligence - Alerts

Recently, the Central Bureau of Investigation (CBI) summoned AirAsia India head R Venkataramanan to join ongoing probe on July 3 over AirAsia money laundering case. The Enforcement Directorate (ED) is also probing an alleged violation of the Foreign Exchange Management Act involving Air Asia, which is related to the transactions of over Rs. 12 crore with Singapore-based HNR Trading Pte Ltd.

Earlier, the CBI has also named HNR Trading and its director Rajendra Dubey in the Air Asia case as alleged lobbyists who used their influence to secure a permit for international scheduled air transport services. It is also being alleged that owner of the firm, Rajendra Dubey, had a suspected association with an international terrorist Hamid Reza Malakotipour. In June 2014, the US Department of Treasury added Malakotipour in OFAC list as a “Specially Designated Global Terrorist”.

Here, we present a use case of how FiND could have help Air Asia to perform due diligence on HNR Trading Pte Ltd in below.    Read the rest of this entry »

Sun Pharma’s positive news volume jumps in Q1 to highest level in past 4-quarters

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Sun Pharmaceutical Industries witnessed a significant improvement in the positive media coverage during the June 2018 quarter. Regulatory approvals and encouraging earnings led the positive news coverage for Sun Pharma in the June 2018 quarter.

At the same time, the volume of negative news has also dropped sharply in the same period. As a result, the long-term news sentiment has improved towards the end of the quarter.

Moreover, the improvement in news sentiment was also reflected in the recent rally in Sun Pharma’s stock price. Net-net, the news cycle was favorable for India’s leading drug maker in the June 2018 quarter.

Sun Pharma
[Compare screen: Sun Pharma – Share Price, News Volume, and Sentiment]

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FiND Sentiment-based Strategy beats STI companies’ 1-year stock returns

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Heckyl has developed FiND sentiment moving average (MA) strategy for measuring the potential impact of the positive/ negative news flow on the value of equities in real-time. The sentiment MA strategy indicates bullish/bearish signals based on the crossover of fast and slow moving averages of the company’s daily sentiment score.

We back-tested our sentiment MA strategy on 27 companies (excl. banks) from Straits Times index (STI). Our back-testing has proved the potential of sentiment MA strategy to beat STI companies’ stock price performance.

If an investor/a trader was to buy/sell STI stocks as per the bullish/bearish signal and hold the position for the period till the signal reverses, then an equal investment in 27 STI stocks could have yielded 6.3% return over the past 1-year (as against 0.3% price return).

STI Returns
[Image 1: Investment performance based on sentiment signal and stock performance]

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IPCA Laboratories losing market share in anti-malarial products

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Indian pharma market for anti-malarial products has shown declining trend over the last five years. Ipca, a leading player in anti-malarial products in India has also seen a downtrend in sales of these drugs. However, the trend in de-growth has been sharper in the industry when compared with a decline in IPCA’s revenue from anti-malaria products.

IPCA MAT Malaria USD - Small Size
[Image 1: Compare screen shows anti-malarial products sales for the industry and IPCA]

IPCA MAT Malaria - small size
[Image 2: Compare screen shows index for anti-malarial products sales for the industry and IPCA]

IPCA derives over 16% of revenues from anti-malaria products (Image 3). The company has maintained its position as a market leader in the domestic market for anti-malarial products with the share of ~50%. However, in recent months, IPCA’s market share has started dwindling marginally (Image 4).

Anti-malarial products account for 0.44% of the Indian pharma market while the average market share of the companies in this segment is pegged at 0.67%, which is fairly constant.

Ipca segment Market Share
[Image 3: Therapeutic revenue contribution for IPCA]

Ipca Market Share[Image 4: Therapeutic market share for IPCA]

FiND collects, organizes and performs deep-dive analytics on structured and unstructured data sets to provide unique insights into companies, industries, and countries. Some of the key data sets that we offer for Pharmaceutical sector are litigation, new drug opportunity, detailed drug profile and clinical trial data from multiple locations.

To know more about FiND, email us at find@heckyl.com

Singapore Inc’s growth news flow hits 2-year high in Apr’18

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News flow related to growth-oriented business activities of Singapore firms touched the highest level in 2-years in April 2018, according to a study conducted by Heckyl, a leading Fintech engaged in news and financial data analytics. A surge in growth-oriented news flow signals improvement in the business confidence among companies listed in Singapore.

M&A, partnerships, product launch, contracts, and expansion were top 5 categories leading growth news flow for Singapore listed companies in April 2018. At the company level, Singapore Airlines Ltd, IHH Healthcare Bhd, and Comfortdelgro Corp Ltd led the growth news flow during April 2018. 

Heckyl has a clear focus on reduction of the information arbitrage by “discovery and analysis” of the news flow in real time. Heckyl’s FiND News and Sentiment Analytics product analyses news + data from thousands of sources (including social media) in real time. Our proprietary tagging algorithm can tag a specific news category to any news based on the keywords in that news item.

Singapore Growth Sentiment 2-yr - Small size[Image 1: Search by Tags screen for Singapore] Read the rest of this entry »

Did you miss the recent rally in crude oil?

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April 2018 turned out to be a favorable month for crude oil prices. Rising geopolitical tensions in Syria and the Middle East coupled with higher demand and lower inventories aided a 5.6% rally in the crude oil prices in the past month. Moreover, the expectations of amicable resolution on trade war between the United States and China also supported a rise in crude oil prices.

FiND, alternative data platform has captured the key news items which supported rally in crude oil. At the same time, Heckyl platform has accurately captured underlying positive news sentiment around crude oil (Image 1).

Oil News
[Image 1: Crude Oil News Flow during April 2018]  Read the rest of this entry »