Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

<p>Whilst Q4's list posted strong price performance it was a case that a rising tide floated most boats. As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. In Q1, the Altman Z score is at a market-cap-weighted 1.03 times, a significant decrease on the 1.52 in Q4. This deterioration needs to be monitored since earnings continue to be adjusted by analysts and their limited visibility of any bottoming. 25 stocks appear in our Q1 2021 screen, versus 15 in Q4 2020.</p>

Whilst Q4's list posted strong price performance it was a case that a rising tide floated most boats. As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. In Q1, the Altman Z score is at a market-cap-weighted 1.03 times, a significant decrease on the 1.52 in Q4. This deterioration needs to be monitored since earnings continue to be adjusted by analysts and their limited visibility of any bottoming. 25 stocks appear in our Q1 2021 screen, versus 15 in Q4 2020.

Screening the Silk Road: Q1 2021 High Risk Names to Avoid

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<div><p><span xml:lang="EN-US" data-contrast="auto"><a href="https://www.smartkarma.com/entities/neural-pocket-inc" target="_blank" data-smartkarma-citation="entities:31125:1" rel="noopener">Neural Pocket Inc (4056 JP)</a>  develops and applies Artificial Intelligence (AI) technology that spans the areas of Edge AI and Object/Person Recognition. The company uses advanced proprietary AI libraries on platforms that apply active learning to advance research and development for new applications within their focus areas.</span><span data-ccp-props='{"201341983":0,"335559739":200,"335559740":276}'> </span></p></div><div>
<p><span xml:lang="EN-US" data-contrast="auto">Neural Pocket currently applies its AI technologies to three broad areas: Smart City, Signage, and Fashion. </span></p>
<p><span xml:lang="EN-US" data-contrast="auto">The <strong>Smart City</strong> focus is to digitize physical spaces and add value to urban areas. There are wide-ranging applications to everyday life, spanning energy-saving, supply chains, mobility, rail transportation, distribution, retailing, car parks, and others.</span> <br> <br><span xml:lang="EN-US" data-contrast="auto">The <strong>Signage</strong> business fits into the growing trend towards online advertising by operating digital signage in cities. For example, billboards can send out flexible and targeted ads based on AI-driven pedestrian attribute analysis.</span> <br> <br><span xml:lang="EN-US" data-contrast="auto">Finally, the <strong>Fashion</strong> business, which analyses fashion trends, helps companies by </span><span xml:lang="EN-US" data-contrast="auto">providing</span><span xml:lang="EN-US" data-contrast="auto"> information to address surplus stock problems, discounting, and waste by bringing a science-based approach to merchandising and product planning. </span> </p>
<p><strong><span xml:lang="EN-US" data-contrast="auto">Key Stats</span></strong></p>
<table class="table table-striped"><tbody>
<tr>
<td>Name </td>
<td>Neural Pocket</td>
</tr>
<tr>
<td>Ticker</td>
<td>4056 JP</td>
</tr>
<tr>
<td>Market Cap ($m)</td>
<td>810</td>
</tr>
<tr>
<td>Business</td>
<td>AI Solutions</td>
</tr>
<tr>
<td>LTM Sales ($m)</td>
<td>6</td>
</tr>
<tr>
<td>Sales Growth (MRQ)</td>
<td>104%</td>
</tr>
<tr>
<td>GPM</td>
<td>73%</td>
</tr>
<tr>
<td>EV/Sales (FY2)</td>
<td>118x</td>
</tr>
</tbody></table>
</div>

Neural Pocket Inc (4056 JP)  develops and applies Artificial Intelligence (AI) technology that spans the areas of Edge AI and Object/Person Recognition. The company uses advanced proprietary AI libraries on platforms that apply active learning to advance research and development for new applications within their focus areas. 
Neural Pocket currently applies its AI technologies to three broad areas: Smart City, Signage, and Fashion. 
The Smart City focus is to digitize physical spaces and add value to urban areas. There are wide-ranging applications to everyday life, spanning energy-saving, supply chains, mobility, rail transportation, distribution, retailing, car parks, and others.    The Signage business fits into the growing trend towards online advertising by operating digital signage in cities. For example, billboards can send out flexible and targeted ads based on AI-driven pedestrian attribute analysis.    Finally, the Fashion business, which analyses fashion trends, helps companies by providing information to address surplus stock problems, discounting, and waste by bringing a science-based approach to merchandising and product planning.  
Key Stats


Name 
Neural Pocket


Ticker
4056 JP


Market Cap ($m)
810


Business
AI Solutions


LTM Sales ($m)
6


Sales Growth (MRQ)
104%


GPM
73%


EV/Sales (FY2)
118x




Japan Small Cap Growth: Neural Pocket - Making Cities Smarter

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p>Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.</p><ul><li><a href='#lucror-entity-18054'>China Fortune Land</a></li><li><a href='#lucror-entity-6159'>China SCE</a></li><li><a href='#lucror-entity-315'>Softbank Group</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.China Fortune LandChina SCESoftbank Group

Morning Views Asia: China Fortune Land, China SCE, Softbank Group

APAC IPOs & Placements

Zhen Zhou, Toh

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 Capital Markets

<div>
<p>In this note, we aim to highlight the Asia Pacific IPO pipeline for 2021. This list has been compiled on a best effort basis from tracking the company filings and through various media and other sources.</p>
</div>
<div>
<p>For readers who are not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea and A-shares), including China ADRs. Hence, our pipeline will only include companies that fit these criterion.</p>
</div>
<div>
<p><strong>Feel free to drop us a message for additional information (bookrunners and coverage) on these IPOs</strong></p>
</div>


In this note, we aim to highlight the Asia Pacific IPO pipeline for 2021. This list has been compiled on a best effort basis from tracking the company filings and through various media and other sources.


For readers who are not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific (ex-Korea and A-shares), including China ADRs. Hence, our pipeline will only include companies that fit these criterion.


Feel free to drop us a message for additional information (bookrunners and coverage) on these IPOs


Aequitas 2021 Asia IPO Pipeline - More Mega IPOs to Come

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On Friday after the close, the TSE belatedly released its annual TSE Free Float Weight adjustments for stocks with fiscal year ends in March. Normally this comes out in October, and is executed at the end of October, but for the 2020 Free Float Weight Rebalance, as per an announcement made by the TSE on 22 June 2020, special measures were taken in light of the covid-19 pandemic, and the rebalance was delayed by 3 months. </p>
<p>There are no major surprises that I see. Some buybacks from the market have led to slightly lower FFW coefficients. Some secondary offerings have led to increases in FFW coefficients. As discussed in <a href="https://www.smartkarma.com/insights/japan-post-insurance-update-three-reasons-to-buy-any-overhang-slightly-higher" target="_blank" data-smartkarma-citation="insights:46862" rel="noopener">Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher</a> on Friday, one of the big names to the buy side is indeed <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a>.</p>
<p>For more on the rebalance, read on.</p>
<p><em>[A spreadsheet of all names and impacts is attached at the bottom of the insight]</em></p>

On Friday after the close, the TSE belatedly released its annual TSE Free Float Weight adjustments for stocks with fiscal year ends in March. Normally this comes out in October, and is executed at the end of October, but for the 2020 Free Float Weight Rebalance, as per an announcement made by the TSE on 22 June 2020, special measures were taken in light of the covid-19 pandemic, and the rebalance was delayed by 3 months. 
There are no major surprises that I see. Some buybacks from the market have led to slightly lower FFW coefficients. Some secondary offerings have led to increases in FFW coefficients. As discussed in Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher on Friday, one of the big names to the buy side is indeed Japan Post Insurance (7181 JP).
For more on the rebalance, read on.
[A spreadsheet of all names and impacts is attached at the bottom of the insight]

The Delayed TOPIX FFW Rebalance: $32bn To Trade

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (9984 JP)

Screening the Silk Road: Q1 2021 High Risk Names to Avoid

As in the previous few quarters, we are on the watch for the risk of deteriorating credit metrics, but in particular during H1 2021. 25 stocks...

David Lepper

Japan Small Cap Growth: Neural Pocket - Making Cities Smarter

Neural Pocket creates AI services that contribute to society through the use of image and video analysis based on proprietary AI altos. In short,...

Mark Chadwick

Morning Views Asia: China Fortune Land, China SCE, Softbank Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Aequitas 2021 Asia IPO Pipeline - More Mega IPOs to Come

We aim to highlight the Asia Pacific IPO pipeline for 2021. This list has been compiled on a best effort basis from tracking the company filings...

Zhen Zhou, Toh

The Delayed TOPIX FFW Rebalance: $32bn To Trade

The Big Annual TOPIX FFW Rebalance of October 2020 was delayed until January. The results were not terribly surprising. Nevertheless, it is a big...

Travis Lundy

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