Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Thematic (Sector/Industry)

Welcome to the 22nd Edition of the Smartkarma [Guest] Editor's Cut, a weekly summary of the key themes and ideas of the last week's research on Smartkarma along with a little extra that got me interested. Smartkarma is Asia's fastest growing community of Independent and Alternative Investment Research.  In 6 short months Smartkarma has published on ~600 stocks, across 11 GIC sectors, from a community of over 50 insight providers!  Some cool new tools are in the works for Insight providers and I am sure next month will bring even more goodies from the SK team.<div class="side-comment ">  </div>Right - onto the content, there was a lot to choose from this past week..Top Down: Of course, probably the biggest news this week in Asia was on the macro side as the PBOC surprised the investing world with a devaluation of the RMB. Sam Ferraro's <a href="http://www.smartkarma.com/insights/weekly-impressions" target="_blank">Weekly Impressions</a> piece has some great graphs and some clear-cut reasoning. Hao also discusses the RMB devaluation in <a href="http://www.smartkarma.com/insights/on-rmb-what-you-should-know-and-may-expect" target="_blank">On RMB, What You Should Know and May Expect</a>. In <a href="http://www.smartkarma.com/insights/indonesia-s-outlook-marred-by-commodity-prices-and-currency-woes" target="_blank">Indonesia's outlook marred by commodity prices and currency woes</a>, Manu Bhaskaran notes higher than expected GDP but also notes inconsistent policy-making and increasing government spending pressure. Jason Tan notes the gloomy outlook for Thailand in 2015 in <a href="http://www.smartkarma.com/insights/few-joys-in-the-land-of-smiles" target="_blank">Few joys in the Land of Smiles</a> as the Bank of Thailand again downgrades its GDP growth estimates. Sam Ferraro also discusses land values driving net national wealth in <a href="http://www.smartkarma.com/insights/australia-s-land-obsession-reiterate-postive-view-on-discretionary-retailers" target="_blank">Australia's land obsession - Reiterate postive view on discretionary retailers</a>. Finally, in <a href="http://www.smartkarma.com/insights/singapore-4thtelco-progress-update" target="_blank">Singapore 4th Telco Progress Update</a> Raj discusses the launch of a 4th Telco, its effects on incumbents, and who auction winner could be.In Event Driven... <a href="http://www.smartkarma.com/insights/falling-falling-now-let-s-take-it-private" target="_blank">eLONG</a>: On August 3rd, eLong announced it had received a non-binding proposal from shareholder Tencent Holdings, proposing another in a long line of 'going private' transactions. <a href="http://www.smartkarma.com/insight_providers/16" target="_blank">Crispin Francis</a> takes us through this highly opportunistic (sound familiar?) deal.<a href="http://www.smartkarma.com/insights/white-squire-to-white-knight" target="_blank">Vision Eye Institute (VEI AU)</a>:  Crispin also discusses this interesting situation where Pulse Health Group launched a hostile bid for VEI, VEI's directors called it a lowball and sold shares representing 19.9% to <a href="http://en.jangho.com" target="_blank">Jangho Group</a> (601866 CH) creating a block against the PHG deal's conditionality. This past week saw Jangho launch a full deal for VEI at A$1.10 and just after Crispin's piece, PHG announced the lapse of their deal. In IPO's &amp; Placements, a week after ANZ's US$1.8bn placement and lackluster earnings report mentioning a rise in bad and doubtful debts, <a href="http://www.smartkarma.com/insights/cba-follows-anz-to-beef-up-capital-substantial-discount-at-lower-end" target="_blank">CBA came out with a US$3.7bn placement</a> to top up its CET1 Ratio following a $A9bn net profit number. The rights offering came well below TERP so it was going to be well-subscribed (the institutional book build came out for a measly 2.8mm shares). We ran the deal through our M.A.D.S framework, which came out borderline to participate, and recommended bids at the lower end of the range.In Bottom Up situations, <a href="http://www.smartkarma.com/insight_providers/17" target="_blank">Daniel Tabbush</a> came out with a pair of Insights. His first intriguing piece <a href="http://www.smartkarma.com/insights/vietnam-s-banks-are-intriguing" target="_blank">Vietnam's Banks Are Intriguing</a>, noted that while Vietnam's banks are smaller than other emerging countries' banks in the region, Vietnam's growth rate is strong and rising, and there is more good news to come in 2015. The math is impressive. Daniel's other piece, <a href="http://www.smartkarma.com/insights/fringe-banks-in-china-are-telling-us-something" target="_blank">Fringe Banks in China are Telling Us Something</a> is rather less sanguine. Mid-tier banks may be acting as the 'canary in the coalmine.' Raj Kapoor added a note <a href="http://www.smartkarma.com/insights/quicknote-straco-flies-high" target="_blank">Straco flies high</a> in his continuing series on this China tourism asset play. Finally, in a combination top-down/bottom-up <a href="http://www.smartkarma.com/insights/weekly-impressions" target="_blank">Weekly Impressions</a> piece, Sam Ferraro discusses why the PBOC devalued the RMB vs USD, and recommends investors avoid REA AU. All this, a comment on UNY, and much more below the fold!

Welcome to the 22nd Edition of the Smartkarma [Guest] Editor's Cut, a weekly summary of the key themes and ideas of the last week's research on Smartkarma along with a little extra that got me interested. Smartkarma is Asia's fastest growing community of Independent and Alternative Investment Research.  In 6 short months Smartkarma has published on ~600 stocks, across 11 GIC sectors, from a community of over 50 insight providers!  Some cool new tools are in the works for Insight providers and I am sure next month will bring even more goodies from the SK team.  Right - onto the content, there was a lot to choose from this past week..Top Down: Of course, probably the biggest news this week in Asia was on the macro side as the PBOC surprised the investing world with a devaluation of the RMB. Sam Ferraro's Weekly Impressions piece has some great graphs and some clear-cut reasoning. Hao also discusses the RMB devaluation in On RMB, What You Should Know and May Expect. In Indonesia's outlook marred by commodity prices and currency woes, Manu Bhaskaran notes higher than expected GDP but also notes inconsistent policy-making and increasing government spending pressure. Jason Tan notes the gloomy outlook for Thailand in 2015 in Few joys in the Land of Smiles as the Bank of Thailand again downgrades its GDP growth estimates. Sam Ferraro also discusses land values driving net national wealth in Australia's land obsession - Reiterate postive view on discretionary retailers. Finally, in Singapore 4th Telco Progress Update Raj discusses the launch of a 4th Telco, its effects on incumbents, and who auction winner could be.In Event Driven... eLONG: On August 3rd, eLong announced it had received a non-binding proposal from shareholder Tencent Holdings, proposing another in a long line of 'going private' transactions. Crispin Francis takes us through this highly opportunistic (sound familiar?) deal.Vision Eye Institute (VEI AU):  Crispin also discusses this interesting situation where Pulse Health Group launched a hostile bid for VEI, VEI's directors called it a lowball and sold shares representing 19.9% to Jangho Group (601866 CH) creating a block against the PHG deal's conditionality. This past week saw Jangho launch a full deal for VEI at A$1.10 and just after Crispin's piece, PHG announced the lapse of their deal. In IPO's &amp; Placements, a week after ANZ's US$1.8bn placement and lackluster earnings report mentioning a rise in bad and doubtful debts, CBA came out with a US$3.7bn placement to top up its CET1 Ratio following a $A9bn net profit number. The rights offering came well below TERP so it was going to be well-subscribed (the institutional book build came out for a measly 2.8mm shares). We ran the deal through our M.A.D.S framework, which came out borderline to participate, and recommended bids at the lower end of the range.In Bottom Up situations, Daniel Tabbush came out with a pair of Insights. His first intriguing piece Vietnam's Banks Are Intriguing, noted that while Vietnam's banks are smaller than other emerging countries' banks in the region, Vietnam's growth rate is strong and rising, and there is more good news to come in 2015. The math is impressive. Daniel's other piece, Fringe Banks in China are Telling Us Something is rather less sanguine. Mid-tier banks may be acting as the 'canary in the coalmine.' Raj Kapoor added a note Straco flies high in his continuing series on this China tourism asset play. Finally, in a combination top-down/bottom-up Weekly Impressions piece, Sam Ferraro discusses why the PBOC devalued the RMB vs USD, and recommends investors avoid REA AU. All this, a comment on UNY, and much more below the fold!

Best of Smartkarma: The Guest Editor's Cut #22

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

On 6 July 2015, Pulse Health Limited ("PHG") announced a takeover bid for Vision Eye Institute Limited ("VEI")&nbsp;VEI's board did not support their offer and found a "White Squire", Jangho ("601886 CH") , which bought a blocking stake on the 31st of July 2015.The Squire has now turned into a "White Knight", offering AUD 1.10 per VEI share, representing ~ 62% premium to VEI's pre-deal announcement price (3 July 2015).

On 6 July 2015, Pulse Health Limited ("PHG") announced a takeover bid for Vision Eye Institute Limited ("VEI")&nbsp;VEI's board did not support their offer and found a "White Squire", Jangho ("601886 CH") , which bought a blocking stake on the 31st of July 2015.The Squire has now turned into a "White Knight", offering AUD 1.10 per VEI share, representing ~ 62% premium to VEI's pre-deal announcement price (3 July 2015).

Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Macroeconomics

The Government's release&nbsp;of Re:think,&nbsp;its tax discussion paper, is a welcome development, designed to kick-start the conversation with the community on a range of reform options designed to&nbsp;achieve a simpler&nbsp;and&nbsp;streamlined&nbsp;tax system&nbsp;capable of meeting the growing needs of an ageing population.&nbsp;&nbsp;&nbsp;I discuss some of the areas raised in Re:think which are of greatest interest to equity investors: how important income and consumption taxes are to Australia's tax take in a global context,&nbsp;the prospect of the growing drag from bracket creep on household disposable incomes (discretionary retailers), the outlook for the GST (supermarket&nbsp;retailers),&nbsp;the efficacy and viability of the dividend imputation system (high yielders with predominantly domestically oriented operations), the sustainability of the concessional tax treatment of superannuation (asset managers), and the risk associated with companies that have low effective tax rates.

The Government's release&nbsp;of Re:think,&nbsp;its tax discussion paper, is a welcome development, designed to kick-start the conversation with the community on a range of reform options designed to&nbsp;achieve a simpler&nbsp;and&nbsp;streamlined&nbsp;tax system&nbsp;capable of meeting the growing needs of an ageing population.&nbsp;&nbsp;&nbsp;I discuss some of the areas raised in Re:think which are of greatest interest to equity investors: how important income and consumption taxes are to Australia's tax take in a global context,&nbsp;the prospect of the growing drag from bracket creep on household disposable incomes (discretionary retailers), the outlook for the GST (supermarket&nbsp;retailers),&nbsp;the efficacy and viability of the dividend imputation system (high yielders with predominantly domestically oriented operations), the sustainability of the concessional tax treatment of superannuation (asset managers), and the risk associated with companies that have low effective tax rates.

Australia

Pulse Health Ltd is a healthcare company that operates hospitals and runs a nursing agency that provides hospital, home care, nursing, aged care and disability support services.

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Pulse Health (PHG AU)

Best of Smartkarma: The Guest Editor's Cut #22

Welcome to the 22nd Edition of the Smartkarma [Guest] Editor's Cut, a weekly summary of the key themes and ideas of the last week's research on...

Travis Lundy

White Squire to White Knight

On 6 July 2015, Pulse Health Limited ("PHG") announced a takeover bid for Vision Eye Institute Limited ("VEI") VEI's board did not support their...

Crispin Francis

Taxing Times For Australia

The Government's release of Re:think, its tax discussion paper, is a welcome development, designed to kick-start the conversation with the...

Sam Ferraro

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