Special Situations, Content Strategist, Smartkarma

Crispin Francis

Special Situations, Content Strategist

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Event-Driven

<p><em>We at Smartkarma Special Situations put out this weekly update to highlight trade ideas we like, key events from the week gone by and what to look out for in the week ahead.</em></p><p>Risk arbitrage trades we have our eyes on are:</p><ul class="ember-tether-target ember-tether-element-attached-top ember-tether-element-attached-left ember-tether-target-attached-top ember-tether-target-attached-right"><li><a href="https://www.smartkarma.com/entities/20715" target="_blank" data-smartkarma-citation="entities:20715:1">Shandong Luoxin Pharmaceutical Group (8058 HK)</a> / Liu Baoqi and Ally Bridge Group,</li><li><a href="https://www.smartkarma.com/entities/1249" target="_blank" data-smartkarma-citation="entities:1249:1">Intime Retail Group Co Ltd (1833 HK)</a> / <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding Ltd (BABA US)</a>,</li><li><a href="https://www.smartkarma.com/entities/1735" target="_blank" data-smartkarma-citation="entities:1735:1">Minato Bank Ltd/The (8543 JP)</a> / <a href="https://www.smartkarma.com/entities/9407" target="_blank" data-smartkarma-citation="entities:9407:1">Kansai Urban Banking Corp (8545 JP)</a>.</li></ul><p>Have a great weekend!</p>

We at Smartkarma Special Situations put out this weekly update to highlight trade ideas we like, key events from the week gone by and what to look out for in the week ahead.Risk arbitrage trades we have our eyes on are:Shandong Luoxin Pharmaceutical Group (8058 HK) / Liu Baoqi and Ally Bridge Group,Intime Retail Group Co Ltd (1833 HK) / Alibaba Group Holding Ltd (BABA US),Minato Bank Ltd/The (8543 JP) / Kansai Urban Banking Corp (8545 JP).Have a great weekend!

Smartkarma: Special Situations Weekly Update (3 April 2017)

Differentiated global TMT & Internet Research

New Street Research Insights

New Street Research

Research is provided by our team of experienced analysts. Our work is idea driven, based on independence of thought, sector expertise, and firmly focused on fundamentals and valuation of telecoms and internet names globally. New Street is headquartered in London with offices in New York, Singapore and Australia. 

New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:

Pan European Telecom Services and Cable
US Telecoms, Cable, Satellite and Towers
Global Emerging Market Telecoms
Japan Telecoms
Asian Internet
Pan European Healthcare
US Healthcare
Japanese Healthcare

We also provide debt research on:
Pan European Telecom Services and Cable

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<p>We have been relatively cautious on <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba (BABA US)</a> since prior to listing. Our concerns have centered on corporate governance issues (specifically around Ant Financial and for a time revenue reporting - GMV). We have always admired the scale and growth of the group, and over time have become increasingly optimistic about the potential of BABA as the top line continues to grow rapidly.  We have become more comfortable with eCommerce and Cloud services, helped in part by the introduction of the…</p>

We have been relatively cautious on Alibaba (BABA US) since prior to listing. Our concerns have centered on corporate governance issues (specifically around Ant Financial and for a time revenue reporting - GMV). We have always admired the scale and growth of the group, and over time have become increasingly optimistic about the potential of BABA as the top line continues to grow rapidly.  We have become more comfortable with eCommerce and Cloud services, helped in part by the introduction of the…

Alibaba: Room to Grow from ECommerce and Cloud Services

<p>Early this morning, <a href="https://www.smartkarma.com/entities/1249" target="_blank" data-smartkarma-citation="entities:1249:1">Intime Retail Group Co Ltd (1833 HK)</a> despatched the <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0331/LTN20170331071.pdf" target="_blank">Scheme Document</a> pursuant to the takeover offer from Alibaba. </p><h2>Timetable</h2><table class="table table-striped"><tbody>
<tr>
<td>Date</td>
<td>Event</td>
<td>Status</td>
</tr>
<tr>
<td><span class="aBn" tabindex="0" data-term="goog_113288590"><span class="aQJ">10 January 2017</span></span></td>
<td>Deal announcement</td>
<td>Done</td>
</tr>
<tr>
<td>31 March 2017</td>
<td>Despatch of scheme document</td>
<td>Done</td>
</tr>
<tr>
<td>8 May 2017</td>
<td>Scheme Meeting at 4pm </td>
<td>Pending</td>
</tr>
<tr>
<td>10 May 2017</td>
<td>Last trading day</td>
<td>Pending</td>
</tr>
<tr>
<td>16 May 2017</td>
<td>Cayman Court hearing to sanction scheme</td>
<td>Pending</td>
</tr>
<tr>
<td>26 May 2017</td>
<td>Payment Date</td>
<td>Pending</td>
</tr>
<tr>
<td>31 August 2017</td>
<td>Long Stop Date</td>
<td>Pending</td>
</tr>
</tbody></table><h2>IFA's Opinion</h2><ul><li>The premium implied by Alibaba's offer over 30D average…</li></ul>

Early this morning, Intime Retail Group Co Ltd (1833 HK) despatched the Scheme Document pursuant to the takeover offer from Alibaba. Timetable

Date
Event
Status


10 January 2017
Deal announcement
Done


31 March 2017
Despatch of scheme document
Done


8 May 2017
Scheme Meeting at 4pm 
Pending


10 May 2017
Last trading day
Pending


16 May 2017
Cayman Court hearing to sanction scheme
Pending


26 May 2017
Payment Date
Pending


31 August 2017
Long Stop Date
Pending

IFA's OpinionThe premium implied by Alibaba's offer over 30D average…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

<p>This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in casinos effective on Jan. 1, 2019, one year later than our existing expectation. Our current forecasts across our narrow moat coverage universe already factor in a negative mid-single-digit percentage point impact to VIP play in 2018, and postponing that one year is not expected to have any significant impact to our fair value estimates. Our current fair value estimates per share are HKD 17 for <a href="https://www.smartkarma.com/entities/472" target="_blank" data-smartkarma-citation="entities:472:1">MGM China Holdings Ltd (2282 HK)</a>, HKD 36 for <a href="https://www.smartkarma.com/entities/182" target="_blank" data-smartkarma-citation="entities:182:1">Sands China Ltd (1928 HK)</a>, HKD 14 for <a href="https://www.smartkarma.com/entities/473" target="_blank" data-smartkarma-citation="entities:473:1">Wynn Macau Ltd (1128 HK)</a>, USD 17 for <a href="https://www.smartkarma.com/entities/810" target="_blank" data-smartkarma-citation="entities:810:1">Melco Crown Entertainment ADR (MPEL US)</a>, HKD 36 for <a href="https://www.smartkarma.com/entities/806" target="_blank" data-smartkarma-citation="entities:806:1">Galaxy Entertainment Group Limited (27 HK)</a>, HKD 6.6 for <a href="https://www.smartkarma.com/entities/805" target="_blank" data-smartkarma-citation="entities:805:1">SJM Holdings Ltd (880 HK)</a>, $133 for <a href="https://www.smartkarma.com/entities/606" target="_blank" data-smartkarma-citation="entities:606:1">Wynn Resorts Ltd (WYNN US)</a>, $56 for <a href="https://www.smartkarma.com/entities/807" target="_blank" data-smartkarma-citation="entities:807:1">Las Vegas Sands Corp (LVS US)</a>, and $29.50 for <a href="https://www.smartkarma.com/entities/16227" target="_blank" data-smartkarma-citation="entities:16227:1">MGM Resorts International (MGM US)</a>. We continue to see Wynn trading at an attractive margin of safety.</p><p>The revised bill creates a level playing field for casino operators. We have confirmed with a Macau legislative assembly member that the revised bill outlines that all VIP smoking gaming areas will be closed and that all casinos will be able to establish smoking lounges on both VIP and mass gaming floors. Therefore, under the proposed bill newer casinos will be able to establish smoking lounges in VIP gaming areas, while the older casinos will lose the smoking premium mass and VIP smoking area. As a result, Cotai casinos as a whole stand to gain market share at the expense of Macau peninsula casinos.</p><p><em>Analyst: Chelsea Tam</em></p>

This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in casinos effective on Jan. 1, 2019, one year later than our existing expectation. Our current forecasts across our narrow moat coverage universe already factor in a negative mid-single-digit percentage point impact to VIP play in 2018, and postponing that one year is not expected to have any significant impact to our fair value estimates. Our current fair value estimates per share are HKD 17 for MGM China Holdings Ltd (2282 HK), HKD 36 for Sands China Ltd (1928 HK), HKD 14 for Wynn Macau Ltd (1128 HK), USD 17 for Melco Crown Entertainment ADR (MPEL US), HKD 36 for Galaxy Entertainment Group Limited (27 HK), HKD 6.6 for SJM Holdings Ltd (880 HK), $133 for Wynn Resorts Ltd (WYNN US), $56 for Las Vegas Sands Corp (LVS US), and $29.50 for MGM Resorts International (MGM US). We continue to see Wynn trading at an attractive margin of safety.The revised bill creates a level playing field for casino operators. We have confirmed with a Macau legislative assembly member that the revised bill outlines that all VIP smoking gaming areas will be closed and that all casinos will be able to establish smoking lounges on both VIP and mass gaming floors. Therefore, under the proposed bill newer casinos will be able to establish smoking lounges in VIP gaming areas, while the older casinos will lose the smoking premium mass and VIP smoking area. As a result, Cotai casinos as a whole stand to gain market share at the expense of Macau peninsula casinos.Analyst: Chelsea Tam

Expected Macau Smoking Ban Creates a Level Playing Field for Operators

Investing in high growth Asian frontier economies., Asia Frontier Capital

Scott Osheroff

Investing in high growth Asian frontier economies.

Asia Frontier Capital

Asia Frontier Capital Ltd. is a pioneering fund management company based in Hong Kong that specializes in investing in high growth Asian frontier economies by managing the AFC Asia Frontier Fund , AFC Iraq Fund and the AFC Vietnam Fund.

The AFC Asia Frontier Fund invests in public equities of Asian frontier countries that are seeing increasing consumption due to favorable demographic trends, rising incomes and high GDP growth. The fund invests in listed equities of companies that have their principal business activities in Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar (Burma), Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam. The AFC Asia Frontier Fund is positioned to take advantage of the continuing economic shifts in these countries and offers high returns combined with significant diversification opportunities. This fund is directed by the founder and CEO of Asia Frontier Capital, Thomas Hugger, who has been investing in frontier markets across Asia and Africa for more than 20 years.

The AFC Iraq Fund was launched on the 26th June 2015 and aims to achieve long-term capital appreciation for investors by capturing value and growth potential in the post conflict high-growth & resource rich Iraq market. The fund emphasises long term investment horizon to truly capture the opportunity in Iraq. The fund's investable universe consists of locally listed companies that have their principal business activities in Iraq as well as foreign listed companies that have the majority of the business in Iraq as a whole including the prosperous Kurdish Region of Iraq (KRI). The AFC Iraq Fund offers access to investments in post conflict recovery potential of Iraq, including the KRI, and/or stability in its territory. The AFC Iraq Fund is managed by Asia Frontier Capital (Iraq) Limited, Cayman Islands under the executive leadership team of Thomas Hugger (CEO & Fund Manager) and Ahmed Tabaqchali (CIO) who have more than 47 years of investment experience as well as an extensive background covering global, emerging, frontier and MENA markets.

The AFC Vietnam Fund invests exclusively in listed Vietnamese equities to capture value in growth companies with a focus on the small to medium size companies. This market segment offers a unique investment opportunity as the valuation gap between large- and small-cap stocks in Vietnam is presently much wider than in comparable neighboring markets and the valuations are significantly depressed versus their regional peers. The fund adopts a fundamental-quantitative approach and employs an in-house earnings model to identify attractive companies where we see high growth opportunities. In conjunction with targeting the maximum upside potential the portfolio has been structured to mitigate corporate government and liquidity risks. The fund invests in a diversified portfolio of 70-90 attractively valued companies to carefully control concentration risk.  This approach allows the fund to sell, or buy, positions without having a significant market impact. The fund is directed under the executive leadership of Thomas Hugger and Andreas Vogelsanger who have more than 50 years combined experience managing investments in frontier markets, Asia and around the world.

For more information about the fund, management team and investment strategy please contact us at info@asiafrontiercapital.com.

<p><em>In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.</em></p>

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos to visit portfolio companies and other companies on our shortlist. The photos in this article are all by AFC.

Asia Frontier Capital Travel Report: Laos

China

Intime Retail Group Company Limited operates a department store chain. The Company retails a wide range of consumer products, including apparel, cosmetics, jewelry, footwear, luggage, athletic apparel, home furnishings, electronics, and appliances.

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Intime Retail Group (1612890D HK)

Smartkarma: Special Situations Weekly Update (3 April 2017)

We at Smartkarma Special Situations put out this weekly update to highlight trade ideas we like, key events from the week gone by and what to look...

Crispin Francis

Alibaba: Room to Grow from ECommerce and Cloud Services

We have been relatively cautious on Alibaba (BABA US) since prior to listing. Our concerns have centered on corporate governance issues...

New Street Research

Intime Retail: Scheme Document

Early this morning, Intime Retail Group Co Ltd (1833 HK) despatched the Scheme Document pursuant to the takeover offer from Alibaba. TimetableIFA's...

Crispin Francis

Expected Macau Smoking Ban Creates a Level Playing Field for Operators

This week the Macau government proposed to the Second Standing Committee of Macau Legislative Assembly to allow smoking only in smoking lounges in...

Morningstar, Inc.

Asia Frontier Capital Travel Report: Laos

In line with our process of being on the ground in the countries we invest in, Scott Osheroff, Analyst at Asia Frontier Capital, traveled to Laos...

Asia Frontier Capital

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