Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<p>This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. </p><p>The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. </p><p>This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. </p><p>Notable new entrants to the top decile this month include bottom-fishing in Chinese education through <a href="https://www.smartkarma.com/entities/new-oriental-education-tech-grp-adr" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education (EDU US)</a>, Russian internet play <a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a>, Brazilian beverages giant <a href="https://www.smartkarma.com/entities/ambev-sa" target="_blank" data-smartkarma-citation="entities:24454:1" rel="noopener">Ambev SA (ABEV3 BZ)</a>, and a rebound call on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>.</p><table class="table table-striped">
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<tbody>
<tr>
<td style="text-align: center; width: 74.9062px;">rank</td>
<td style="width: 262.578px;">Name</td>
<td style="width: 185.766px;">Sector</td>
<td style="width: 147.797px;">Location</td>
<td style="text-align: center; width: 74.9531px;">prev.</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">1</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/tata-consultancy-svcs-ltd" target="_blank" data-smartkarma-citation="entities:18708:1" rel="noopener">Tata Consultancy Svcs (TCS IN)</a> </td>
<td style="width: 185.766px;">Information Technology</td>
<td style="width: 147.797px;">India</td>
<td style="text-align: center; width: 74.9531px;">19</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">2</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a> </td>
<td style="width: 185.766px;">Consumer Discretionary</td>
<td style="width: 147.797px;">China</td>
<td style="text-align: center; width: 74.9531px;">12</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">3</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/new-oriental-education-technology-group" target="_blank" data-smartkarma-citation="entities:32210:1" rel="noopener">New Oriental Education &amp; Technology Group (9901 HK)</a> </td>
<td style="width: 185.766px;">Consumer Discretionary</td>
<td style="width: 147.797px;">China</td>
<td style="text-align: center; width: 74.9531px;">92</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">4</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/yandex-nv-a" target="_blank" data-smartkarma-citation="entities:414:1" rel="noopener">Yandex (YNDX US)</a> </td>
<td style="width: 185.766px;">Communication</td>
<td style="width: 147.797px;">Russian Federation</td>
<td style="text-align: center; width: 74.9531px;">88</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">5</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/china-resources-land-ltd" target="_blank" data-smartkarma-citation="entities:418:1" rel="noopener">China Resources Land (1109 HK)</a> </td>
<td style="width: 185.766px;">Real Estate</td>
<td style="width: 147.797px;">China</td>
<td style="text-align: center; width: 74.9531px;">33</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">6</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/ambev-sa" target="_blank" data-smartkarma-citation="entities:24454:1" rel="noopener">Ambev SA (ABEV3 BZ)</a> </td>
<td style="width: 185.766px;">Consumer Staples</td>
<td style="width: 147.797px;">Brazil</td>
<td style="text-align: center; width: 74.9531px;">56</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">7</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/ncsoft-corp" target="_blank" data-smartkarma-citation="entities:5169:1" rel="noopener">NCSOFT Corp (036570 KS)</a> </td>
<td style="width: 185.766px;">Communication</td>
<td style="width: 147.797px;">Korea (South)</td>
<td style="text-align: center; width: 74.9531px;">18</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">8</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> </td>
<td style="width: 185.766px;">Communication</td>
<td style="width: 147.797px;">China</td>
<td style="text-align: center; width: 74.9531px;">61</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">9</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/hindustan-unilever-ltd" target="_blank" data-smartkarma-citation="entities:13828:1" rel="noopener">Hindustan Unilever (HUVR IN)</a> </td>
<td style="width: 185.766px;">Consumer Staples</td>
<td style="width: 147.797px;">India</td>
<td style="text-align: center; width: 74.9531px;">70</td>
</tr>
<tr>
<td style="text-align: center; width: 74.9062px;">10</td>
<td style="width: 262.578px;">
<a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki India (MSIL IN)</a> </td>
<td style="width: 185.766px;">Consumer Discretionary</td>
<td style="width: 147.797px;">India</td>
<td style="text-align: center; width: 74.9531px;">89</td>
</tr>
<tr><td colspan="5" style="text-align: left; width: 746px;"><em>Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas</em></td></tr>
</tbody>
</table><p><em>As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.</em></p>

This insight provides the output, and an overview of our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index. The model is based on 1) a typical quantitative multifactor screening model, enhanced by two Artificial Intelligence Technology-based approaches using 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model. This model, which has been developed and tweaked over the past 24 months (and implemented in its current state for &gt;12 months), has a solid real-world performance track record, which I set out in the detail below. Notable new entrants to the top decile this month include bottom-fishing in Chinese education through New Oriental Education (EDU US), Russian internet play Yandex (YNDX US), Brazilian beverages giant Ambev SA (ABEV3 BZ), and a rebound call on Tencent (700 HK).









rank
Name
Sector
Location
prev.


1

Tata Consultancy Svcs (TCS IN) 
Information Technology
India
19


2

Shenzhou Intl Group Holdings (2313 HK) 
Consumer Discretionary
China
12


3

New Oriental Education &amp; Technology Group (9901 HK) 
Consumer Discretionary
China
92


4

Yandex (YNDX US) 
Communication
Russian Federation
88


5

China Resources Land (1109 HK) 
Real Estate
China
33


6

Ambev SA (ABEV3 BZ) 
Consumer Staples
Brazil
56


7

NCSOFT Corp (036570 KS) 
Communication
Korea (South)
18


8

Tencent (700 HK) 
Communication
China
61


9

Hindustan Unilever (HUVR IN) 
Consumer Staples
India
70


10

Maruti Suzuki India (MSIL IN) 
Consumer Discretionary
India
89

Source: FactSet financial data and analytics, my estimates and calculations, Tensorflow, Keras, Google Colaboratory, pandas

As usual, please feel free to reach out for the full output table, any questions, clarifications needed or suggestions.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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

<p>CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg Pincus and Temasek.</p>
<p>CarTrade Tech (CTT) is an online auto portal for sale of cars and two-wheelers in India. It is a multichannel auto platform with coverage and presence across vehicle types and value-added services through its various brands, namely: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.</p>
<p>In 4Q21 (period ending March 21), its platforms had an average of 31.99m unique visitors per month and 814,316 vehicles were listed for auction in FY 2021. </p>
<p>Overall reported revenue grew by 96.9% in FY19 and was up another 22.6% in FY20. While 9M21 revenue points towards a YoY decline in revenue, its user growth has been progressively getting better throughout FY21 showing a strong rebound from COVID-19.</p>
<p>Although, most of the prior growth appears to have come via acquisitions. Were one to adjust for the acquisitions, the underlying growth doesn’t appear to be very strong.</p>

CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg Pincus and Temasek.
CarTrade Tech (CTT) is an online auto portal for sale of cars and two-wheelers in India. It is a multichannel auto platform with coverage and presence across vehicle types and value-added services through its various brands, namely: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz.
In 4Q21 (period ending March 21), its platforms had an average of 31.99m unique visitors per month and 814,316 vehicles were listed for auction in FY 2021. 
Overall reported revenue grew by 96.9% in FY19 and was up another 22.6% in FY20. While 9M21 revenue points towards a YoY decline in revenue, its user growth has been progressively getting better throughout FY21 showing a strong rebound from COVID-19.
Although, most of the prior growth appears to have come via acquisitions. Were one to adjust for the acquisitions, the underlying growth doesn’t appear to be very strong.

CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>Maruti reported 1Q results yesterday missing consensus as the company narrowly avoided generating an operating loss. OP was just INR0.78bn and in addition to material cost inflation we pointed to, labour cost was also surprisingly high, illustrating Maruti’s negative sensitivity to inflationary pressures.</p>

Maruti reported 1Q results yesterday missing consensus as the company narrowly avoided generating an operating loss. OP was just INR0.78bn and in addition to material cost inflation we pointed to, labour cost was also surprisingly high, illustrating Maruti’s negative sensitivity to inflationary pressures.

Suzuki – Maruti Weakness Makes Our Predicted Miss Likely

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Maruti Suzuki India / Equity Capital Markets

<p>In this Insight, we present commentary from our interactions with one of the largest dealers of <a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki India (MSIL IN)</a> , Store Manager of Royal Enfield from <a href="https://www.smartkarma.com/entities/eicher-motors-ltd" target="_blank" data-smartkarma-citation="entities:18316:1" rel="noopener">Eicher Motors (EIM IN)</a> , Dealership owners of <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a> and an Electric Vehicle (EV) of <a href="https://www.smartkarma.com/entities/greaves-cotton-ltd" target="_blank" data-smartkarma-citation="entities:11664:1" rel="noopener">Greaves Cotton (GRV IN)</a>. We also share anecdotal commentary that we have gathered about <a href="https://www.smartkarma.com/entities/tata-motors-ltd" target="_blank" data-smartkarma-citation="entities:216:1" rel="noopener">Tata Motors Ltd (TTMT IN)</a> .</p>
<div>
<div>
<h3>About India Channel Insight </h3>
</div>
</div>
<div>
<p>Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets emerging out of these interactions and have been aiding us to generate interesting trade ideas and have often proven to be reliable sources of qualitative alpha.</p>
</div>

In this Insight, we present commentary from our interactions with one of the largest dealers of Maruti Suzuki India (MSIL IN) , Store Manager of Royal Enfield from Eicher Motors (EIM IN) , Dealership owners of Hyundai Motor Co (005380 KS) and an Electric Vehicle (EV) of Greaves Cotton (GRV IN). We also share anecdotal commentary that we have gathered about Tata Motors Ltd (TTMT IN) .


About India Channel Insight 



Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets emerging out of these interactions and have been aiding us to generate interesting trade ideas and have often proven to be reliable sources of qualitative alpha.


India Channel Insight | Maruti, Hyundai, Tata Motors, Eicher, Ola Electric

Sona Blw Precision Forgings Lt / Equity Capital Markets

<div><p>Sona Comstar (Sona) raised around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.</p></div><div><p>Sona is an automotive technology company, designing, manufacturing and supplying highly engineered, mission critical automotive systems and components to automotive OEMs across US, Europe, India and China, for both electrified and non-electrified powertrain segments.</p></div><div></div><div>
<p>We have covered the deal background in our earlier notes:</p>
<ul>
<li><a href="https://www.smartkarma.com/insights/sona-comstar-pre-ipo-inconsistent-growth-patchy-disclosures" target="_blank" rel="noopener">Sona Comstar Pre-IPO - Inconsistent growth, patchy disclosures </a></li>
<li><a href="https://www.smartkarma.com/insights/sona-comstar-has-its-positives-but-we-remain-unconvinced" target="_blank" rel="noopener">Sona Comstar - Has Its Positives, but We Remain Unconvinced</a></li>
</ul>
</div><div><p>In this note, we will talk about the trading dynamics.</p></div>

Sona Comstar (Sona) raised around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.Sona is an automotive technology company, designing, manufacturing and supplying highly engineered, mission critical automotive systems and components to automotive OEMs across US, Europe, India and China, for both electrified and non-electrified powertrain segments.
We have covered the deal background in our earlier notes:

Sona Comstar Pre-IPO - Inconsistent growth, patchy disclosures 
Sona Comstar - Has Its Positives, but We Remain Unconvinced

In this note, we will talk about the trading dynamics.

Sona Comstar IPO Trading - Strong Anchors but Tepid Demand

India

Maruti Suzuki India Limited manufactures and exports automobiles. Maruti collaborated with Suzuki of Japan to produce affordable cars for the average Indian.

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Maruti Suzuki India (MSIL IN)

Screening for GEMs: August 2021

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

CarTrade Tech aims to raise around US$300m in its India IPO. The company is backed by Warburg and Temasek, and claims to be the most popular auto...

Sumeet Singh

Suzuki – Maruti Weakness Makes Our Predicted Miss Likely

Maruti results showed that in addition to the material cost inflation we pointed to, labour cost was also surprisingly high, illustrating the...

Mio Kato

India Channel Insight | Maruti, Hyundai, Tata Motors, Eicher, Ola Electric

In this Insight, we present commentary from our interactions with dealers of Maruti, Hyundai, Royal Enfield. We also present anecdotal commentary...

Pranav Bhavsar

Sona Comstar IPO Trading - Strong Anchors but Tepid Demand

Sona Comstar (Sona) raised around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.

Sumeet Singh

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