Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Hon Hai results slightly beat on revenue and slightly missed on EPS, but overall the result was decent since China COVID margin impact was well managed.</li>
<li>The company has reiterated its 2025 target for gross margin to rise to 10% and over NT$1 trillion of revenue by 2025 from its new Electric Vehicle platform business. </li>
<li>While 2023E revenue was guided to be flat YoY, this was already roughly expected. We maintain our structural Long view on the shares.</li>
</ul>


Hon Hai results slightly beat on revenue and slightly missed on EPS, but overall the result was decent since China COVID margin impact was well managed.
The company has reiterated its 2025 target for gross margin to rise to 10% and over NT$1 trillion of revenue by 2025 from its new Electric Vehicle platform business. 
While 2023E revenue was guided to be flat YoY, this was already roughly expected. We maintain our structural Long view on the shares.


Hon Hai Results: Managed Q4 COVID Issues Well, Reiterates Margin Expansion & EV Targets; Stay Long

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Thematic (Sector/Industry)

<ul>
<li>Svb Financial has collapsed and Credit Suisse is on the verge of collapse. We discuss a trading strategy on Korean banks amid the ongoing turbulence on the global banking system.</li>
<li>Our trading strategy is to go long on a basket of three largest banks in Korea (KB, Shinhan, Hana) and go short on a basket of five smaller banks. </li>
<li>Post collapse of SVB Financial, one clear signal appears to be increasing global capital allocation to the "too big to fail banks" and reduced capital allocation to regional banks.</li>
</ul>


Svb Financial has collapsed and Credit Suisse is on the verge of collapse. We discuss a trading strategy on Korean banks amid the ongoing turbulence on the global banking system.
Our trading strategy is to go long on a basket of three largest banks in Korea (KB, Shinhan, Hana) and go short on a basket of five smaller banks. 
Post collapse of SVB Financial, one clear signal appears to be increasing global capital allocation to the "too big to fail banks" and reduced capital allocation to regional banks.


Investors' Capital Allocation Shift Among Korean Banks Post Collapse of SVB Financial

Event-Driven

<ul>
<li>In this insight, we provide a proration analysis of the S.M.Entertainment Co (041510 KS) tender offer by Kakao Corp (035720 KS).</li>
<li>Our base case assumes 71.4% of outstanding shares will participate in the tender offer, including HYBE, NPS, KB Asset Mgmt, Com2Us, and 70% of the remaining local and overseas investors.</li>
<li>There is a very high probability of a successful tender offer of SM Entertainment shares by Kakao. Post end of tender offer, its share price could fall about 5-10%, however. </li>
</ul>


In this insight, we provide a proration analysis of the S.M.Entertainment Co (041510 KS) tender offer by Kakao Corp (035720 KS).
Our base case assumes 71.4% of outstanding shares will participate in the tender offer, including HYBE, NPS, KB Asset Mgmt, Com2Us, and 70% of the remaining local and overseas investors.
There is a very high probability of a successful tender offer of SM Entertainment shares by Kakao. Post end of tender offer, its share price could fall about 5-10%, however. 


SM Entertainment: Kakao's Tender Offer Proration Analysis

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

<ul>
<li>The failure of the US-based Silicon Valley Bank is unlikely to degenerate into a major financial crisis. </li>
<li>Asian markets are set, though, to continue suffering asset price corrections and currency depreciations in the near term. </li>
<li>Nevertheless, the metrics of Asian resilience such as strong bank capitalisation and external accounts will ensure that these spillovers will be limited in scale and duration.</li>
</ul>


The failure of the US-based Silicon Valley Bank is unlikely to degenerate into a major financial crisis. 
Asian markets are set, though, to continue suffering asset price corrections and currency depreciations in the near term. 
Nevertheless, the metrics of Asian resilience such as strong bank capitalisation and external accounts will ensure that these spillovers will be limited in scale and duration.


Silicon Valley Bank a Stern Reminder but No Cause for Panic in Asia

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

SBI Sumishin Net Bank  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sbi-sumishin-net-bank" target="_blank" data-smartkarma-citation="entities:34572:1" rel="noopener">SBI Sumishin Net Bank (7163 JP)</a> has introduced a price range of JPY1,200-1,260 per share in the wake of a sell-off in bank shares. Offer shares and timelines are unchanged.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/sbi-sumishin-net-bank-ipo-the-investment-case" target="_blank" data-smartkarma-citation="insights:96979" rel="noopener">SBI Sumishin Net Bank IPO: The Investment Case</a> and <a href="https://www.smartkarma.com/insights/sbi-sumishin-net-bank-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:97161" rel="noopener">SBI Sumishin Net Bank IPO: Valuation Insights</a>. The shares will be listed on 29 March.</li>
<li>Our analysis suggests that SBI Sumishin Net Bank is fairly valued at the new IPO price range. We would participate in the IPO.</li>
</ul>



SBI Sumishin Net Bank (7163 JP) has introduced a price range of JPY1,200-1,260 per share in the wake of a sell-off in bank shares. Offer shares and timelines are unchanged.
We previously discussed the IPO in SBI Sumishin Net Bank IPO: The Investment Case and SBI Sumishin Net Bank IPO: Valuation Insights. The shares will be listed on 29 March.
Our analysis suggests that SBI Sumishin Net Bank is fairly valued at the new IPO price range. We would participate in the IPO.


SBI Sumishin Net Bank IPO: An IPO Price Range in the Wake of the Bank Share Sell-Off

United States

SVB Financial Group is the holding company for Silicon Valley Bank.  The Bank is a commercial bank that serves emerging growth and middle-market growth companies in targeted niches, focusing on the technology and life sciences industries.  Silicon Valley operates offices throughout the Silicon Valley and other areas of California, as well as in other states.

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SVB Financial (SIVB US)

Hon Hai Results: Managed Q4 COVID Issues Well, Reiterates Margin Expansion & EV Targets; Stay Long

The company has reiterated its 2025 target for gross margin to rise to 10% and over NT$1 trillion of revenue by 2025 from its new Electric Vehicle...

Vincent Fernando, CFA

Investors' Capital Allocation Shift Among Korean Banks Post Collapse of SVB Financial

Svb Financial has collapsed and Credit Suisse is on the verge of collapse. We discuss a trading strategy on Korean banks amid the ongoing...

Douglas Kim

SM Entertainment: Kakao's Tender Offer Proration Analysis

In this insight, we provide a proration analysis of the S.M.Entertainment Co (041510 KS) tender offer by Kakao Corp (035720 KS).

Douglas Kim

Silicon Valley Bank a Stern Reminder but No Cause for Panic in Asia

Events surrounding the collapse of Silicon Valley Bank yields important lessons for Asia, but should not be a cause of major economic damage.

Manu Bhaskaran

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hon Hai Results: Managed Q4 COVID Issues Well, Reiterates Margin Expansion & EV Targets; Stay Long

The company has reiterated its 2025 target for gross margin to rise to 10% and over NT$1 trillion of revenue by 2025 from its new Electric Vehicle...

Vincent Fernando, CFA

Investors' Capital Allocation Shift Among Korean Banks Post Collapse of SVB Financial

Svb Financial has collapsed and Credit Suisse is on the verge of collapse. We discuss a trading strategy on Korean banks amid the ongoing...

Douglas Kim

SM Entertainment: Kakao's Tender Offer Proration Analysis

In this insight, we provide a proration analysis of the S.M.Entertainment Co (041510 KS) tender offer by Kakao Corp (035720 KS).

Douglas Kim

Silicon Valley Bank a Stern Reminder but No Cause for Panic in Asia

Events surrounding the collapse of Silicon Valley Bank yields important lessons for Asia, but should not be a cause of major economic damage.

Manu Bhaskaran

SBI Sumishin Net Bank IPO: An IPO Price Range in the Wake of the Bank Share Sell-Off

Despite the bank sell-off, SBI Sumishin Net Bank is fairly valued at the new IPO price range of JPY1,200-1,260 per share. We would participate in...

Arun George