Alpha-Centric ESG Research

Kyle Rudden

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):<ol>
<li>
COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).</li>
<li>
Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated <a href="https://www.hhs.gov/coronavirus/explaining-operation-warp-speed/index.html" target="_blank" rel="noopener">billions</a> to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.</li>
<li>
PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.</li>
</ol>

The Biden-Harris administration recently announced four "Day One" priorities, the first of which is their COVID-19 response plan. COVID-19 response is first, because it is a prerequisite to economic recovery, which is the second of their four "Day One" priorities.Several investment themes are inherent in Biden's COVID-19 plan, some more direct and obvious than others. This Insight overviews more significant themes and their most representative stocks, in three sections (the first two will be expanded on in separate upcoming reports):

COVID-19 Testing: Testing is the largest, most tangible, nearest-term investment opportunity created by Biden's plan. An estimated US$75-100 billion for testing could be windfall for certain stocks, but not all. Selectivity is key, and timing is critical (related to vaccine development).

Vaccine Delivery: Biden's plan emphasises vaccine manufacturing and delivery, versus vaccine development (Trump had allocated billions to vaccine development companies). Some might go to big pharma companies for M&amp;D, but most should benefit other "cold chain" stocks.

PPE Supply/Other: PPE manufacturing, of course, but that is largely old news. I will address it, but do so along with other more interesting collateral themes. For example, retail drugs chains, elder-care, medical technologies, and a few other related industries.


Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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 Capital Markets

<a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and revenue of RMB 9.0 billion (US$1.3 billion).
Last week, the company filed an updated prospectus with the SEC announcing the price range for the NYSE IPO. The price range was set at $16.50-$18.50 per ADS, which translates to $4.125-$4.625 per share.
MINISO plans to raise $502m-$562m via issuing 16.5m new ADS (122m-140m new shares). An overallotment option, if exercised, could increase the IPO by $75m-$84m (4.6m new ADS).
Previously, we discussed MINISO's business model and financials in <a href="https://www.smartkarma.com/insights/miniso-ipo-long-term-growth-prospects-secured-by-a-sustainable-competitive-advantage" target="_blank" rel="noopener">MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage</a> and <a href="https://www.smartkarma.com/insights/miniso-ipo-as-appealing-as-miniso-products" target="_blank" rel="noopener">MINISO IPO: As Appealing As MINISO Products</a>.
This insight will focus on valuation and assess if it is worthwhile subscribing to the IPO.

MINISO Group Holdings (MNSO US) is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and revenue of RMB 9.0 billion (US$1.3 billion).
Last week, the company filed an updated prospectus with the SEC announcing the price range for the NYSE IPO. The price range was set at $16.50-$18.50 per ADS, which translates to $4.125-$4.625 per share.
MINISO plans to raise $502m-$562m via issuing 16.5m new ADS (122m-140m new shares). An overallotment option, if exercised, could increase the IPO by $75m-$84m (4.6m new ADS).
Previously, we discussed MINISO's business model and financials in MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage and MINISO IPO: As Appealing As MINISO Products.
This insight will focus on valuation and assess if it is worthwhile subscribing to the IPO.

MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

August numbers show a spike in container volumes on key routes, but average achieved freight rates were still just so-so (but improving compared to Q2 2020).
Forward data from the Port of Los Angeles (PoLA) shows strength in rest of September and into the October peak season. Carriers are also benefitting from relatively low fuel prices. 
Conclusions: We still have not seen the strong bump in rates reported by the mainstream financial media, but container pricing is better than in Q2 and volumes have clearly firmed and fuel prices are reasonable -- all positives for the carriers. But the biggest gains -- in both carrier profitability and share prices -- are likely already behind us.

August numbers show a spike in container volumes on key routes, but average achieved freight rates were still just so-so (but improving compared to Q2 2020).
Forward data from the Port of Los Angeles (PoLA) shows strength in rest of September and into the October peak season. Carriers are also benefitting from relatively low fuel prices. 
Conclusions: We still have not seen the strong bump in rates reported by the mainstream financial media, but container pricing is better than in Q2 and volumes have clearly firmed and fuel prices are reasonable -- all positives for the carriers. But the biggest gains -- in both carrier profitability and share prices -- are likely already behind us. 

TRACKING TRAFFIC: Containers & Air Cargo: August Volumes Jump | New PoLA Data Firm Through October

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/665/original/BANNER-CARGO.png?1595022259" class="editor-image img-responsive" data-smartkarma-image-id="146665"></figure>
Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our monthly index suggests average rates achieved by carriers declined again in June. 
Having said that, it does appear that container shipping activity in China and on the North American West Coast is beginning to normalize. Both areas showed improved activity in June. 
Elsewhere, Asian air cargo pricing is beginning to moderate, too, but yields for some carriers are still almost double what they were a year ago. However, strong air cargo results won't do much to offset disastrous passenger operations for many carriers. 
Conclusion: Cargo flows across the Pacific have begun to normalize after the severe disruptions caused by Covid19. But we do not envision a 'snap-back' demand scenario in which ocean and air carriers suddenly begin earning outsized returns.


Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our monthly index suggests average rates achieved by carriers declined again in June. 
Having said that, it does appear that container shipping activity in China and on the North American West Coast is beginning to normalize. Both areas showed improved activity in June. 
Elsewhere, Asian air cargo pricing is beginning to moderate, too, but yields for some carriers are still almost double what they were a year ago. However, strong air cargo results won't do much to offset disastrous passenger operations for many carriers. 
Conclusion: Cargo flows across the Pacific have begun to normalize after the severe disruptions caused by Covid19. But we do not envision a 'snap-back' demand scenario in which ocean and air carriers suddenly begin earning outsized returns. 

TRACKING TRAFFIC/Containers & Air Cargo: No, Virginia, Container Rates Are NOT Spiking!

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Surveying the retail landscape over the weekend…we think we could see big reversals in the coming weeks for retail stocks.<div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</div>

Surveying the retail landscape over the weekend…we think we could see big reversals in the coming weeks for retail stocks.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

TMT Weekly:  3 Things that Stood Out (In Retail) The Week of 5/​15/​2020

United States

Target Corporation operates general merchandise discount stores. The Company focuses on merchandising operations which includes general merchandise and food discount stores and a fully integrated online business. Target also offers credit to qualified applicants through its branded proprietary credit cards.

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Target Corp (TGT US)

Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Biden's recently-announced COVID-19 response plan suggests a number of investment themes. This Insight overviews the more significant of those...

Kyle Rudden

MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck

MINISO Group Holdings is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and...

Oshadhi Kumarasiri

TRACKING TRAFFIC: Containers & Air Cargo: August Volumes Jump | New PoLA Data Firm Through October

August numbers show better volumes, rates just so-so (but improving) Forward data from P

Tracking Traffic

TRACKING TRAFFIC/Containers & Air Cargo: No, Virginia, Container Rates Are NOT Spiking!

Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our...

Tracking Traffic

TMT Weekly: 3 Things that Stood Out (In Retail) The Week of 5/15/2020

Surveying the retail landscape over the weekend…we think we could see big reversals in the coming weeks for retail stocks.Obex’s fundamental...

Aaron Gabin

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Biden COVID-19 Response Plan: Overview of Its Inherent Investment Themes

Biden's recently-announced COVID-19 response plan suggests a number of investment themes. This Insight overviews the more significant of those...

Kyle Rudden

MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck

MINISO Group Holdings is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and...

Oshadhi Kumarasiri

TRACKING TRAFFIC: Containers & Air Cargo: August Volumes Jump | New PoLA Data Firm Through October

August numbers show better volumes, rates just so-so (but improving) Forward data from P

Tracking Traffic

TRACKING TRAFFIC/Containers & Air Cargo: No, Virginia, Container Rates Are NOT Spiking!

Contrary to recent media reports, there is no evidence in the June numbers of an alleged spike in container rates in the Pacific. In fact, our...

Tracking Traffic

TMT Weekly: 3 Things that Stood Out (In Retail) The Week of 5/​15/​2020

Surveying the retail landscape over the weekend…we think we could see big reversals in the coming weeks for retail stocks.Obex’s fundamental...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out (In Retail) The Week of 5/15/2020