Smartkarma Daily Briefs

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

ECM Weekly (6th May 2024) – Aadhar, Indegene, TBO Tek, Super Hi, China Resources Bev, Honasa, Worley

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, a number of deals were launched in India, while HD Hyundai Marine Solution (443060 KS) will list in the coming week.
On the placement front, the two deals in Australia, WorleyParsons Ltd (WOR AU) and Endeavour Group /Australia (EDV AU) delivered opposing results.

TBO Tek IPO – RHP Updates & Quick Thoughts on Valuation

By Ethan Aw

TBO Tek (0395045D IN) is looking to raise approximately US$200m in its upcoming India IPO.
TBO Tek is a global travel distribution platform. Its two-sided technology platform serves companies involved in the travel industry such as hotels, airlines, travel agencies and travel management companies.
In this note, we provide a summary of its RHP updates and share our quick thoughts on valuation.

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May 06

Daily Brief Event-Driven: Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update
CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived
Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri
Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing
HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold
HSCEI Dividend Futures: Sell the 2024/25 Steepener
Hollysys (HOLI US): Further Thoughts on the Widening Spread
CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes
China TCM (570.HK) Update – Despite Doubts, This Privatization Seems “Mandatory”
A/H Premium Tracker (To 3 May 2024): Minimal Moves in 2-Day Week

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
15wks ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 8wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.

CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived

The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.

Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Southern Cross Media (SXL AU), Qantm Intellectual Property (QIP AU), Probiotec Ltd (PBP AU), China TCM.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Jastec Co Ltd (9717 JP).

Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing

By Sanghyun Park

Ssangyong C&E will be excluded in June pre-delisting due to the float rate rule. Replacement will be chosen from the highest market cap existing constituents excluded in the June review.
Likely owing to the recent expansion of macro variables in the local market, a clear correlation between results and price impact is not observed even at the screening period’s conclusion.
There’s a chance of price impact closer to the effective date, suggesting potentially more effective basket trading. However, short instrument absence necessitates using market indices as hedges.

HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold

A-Shares only two days of the week and were up small Monday and Tuesday. H-shares took a breather Wednesday after trailing A-shares, then rallied hard on Thursday and Friday.
Net SOUTHBOUND buying was +HK6.0bn. Net buys every day and now 22 days straight, but buying still appears foreign-led price-taking action.
The only big news this week in China/HK was probably the Politburo’s new stance of trying to do more for the mainland property market, concentrating on unsold homes.

HSCEI Dividend Futures: Sell the 2024/25 Steepener

The HSCEI 2024 dividend futures have moved higher following mainland China banks announcing that they will pay out interim dividends starting this year.
The HSCEI 2025 dividend futures have moved higher too, though they have lagged the HSCEI 2024 dividend futures.
Even though the HSCEI 2024/25 dividend steepener has dropped by around 10 points in the last few weeks, we see further downside in the near-term.

Hollysys (HOLI US): Further Thoughts on the Widening Spread

I have received several questions from readers on Ascendent’s binding proposal for Hollysys Automation Technologies (HOLI US) in the context of the current gross spread of 12.1%.
The questions primarily concerned the Capital Forum article, NSR approvals, timelines, auditor resignation and deal break risks.
Most of the questions concerned regulatory approval risk. The delay in closing is mainly procedural (government red tape) rather than an indication that regulators will block the deal.

CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes

With the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index – Shang (SH000905 INDEX) at the close on 14 June.
We estimate a one-way turnover of 9.3% at the rebalance resulting in a one-way trade of CNY10.88bn (US$1.5bn). The Industrials and Information Technology sectors gain at the expense of Materials.
The potential adds have outperformed the potential deletes by 8% over the last 3 months. There could be further outperformance over the next few weeks.

China TCM (570.HK) Update – Despite Doubts, This Privatization Seems “Mandatory”

By Xinyao (Criss) Wang

Some investors have concerns that the privatization may fail. We also noticed that Morgan Stanley raised China TCM’s target price to HK$5.4. However, the privatization of China TCM seems “mandatory”.
At this stage, some background information is worth the attention, which will help investors better understand the logic behind this privatization and thus resolve the “confusion”.
According to regulatory requirements, it’s expected that both CNPGC and Taiji will integrate resources in pharmaceutical manufacturing and distribution sectors, so as to solve horizontal competition issue between the two.

A/H Premium Tracker (To 3 May 2024): Minimal Moves in 2-Day Week

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND’s consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.
HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.

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May 06

Most Read: Shinko Electric Industries, Marathon Digital Holdings, ZEEKR, China Merchants Expressway Net, China Traditional Chinese Medicine, Mini Kospi 200 Futures, Tencent, Hang Seng China Enterprises Index, Hollysys Automation Technologies, APT Medical and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update
S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add
ZEEKR (ZK US) IPO: Valuation Insights
CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived
Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri
Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing
HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold
HSCEI Dividend Futures: Sell the 2024/25 Steepener
Hollysys (HOLI US): Further Thoughts on the Widening Spread
CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
15wks ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 8wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.

S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add

Following Exxon Mobil (XOM US)‘s acquisition of Pioneer Natural Resources (PXD), Vistra (VST US) will be added to the S&P 500 INDEX (SPX INDEX) at the close on 7 May.
Marathon Digital Holdings (MARA US) is an add to the S&P SmallCap 600 Index and the stock could move higher till implementation.
Marathon Digital Holdings (MARA US) stock has underperformed its close peers this year and the ratio of Marathon Digital Holdings stock price to Bitcoin (XBTUSD CURNCY) is near the lows.

ZEEKR (ZK US) IPO: Valuation Insights

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived

The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.

Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Southern Cross Media (SXL AU), Qantm Intellectual Property (QIP AU), Probiotec Ltd (PBP AU), China TCM.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Jastec Co Ltd (9717 JP).

Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing

By Sanghyun Park

Ssangyong C&E will be excluded in June pre-delisting due to the float rate rule. Replacement will be chosen from the highest market cap existing constituents excluded in the June review.
Likely owing to the recent expansion of macro variables in the local market, a clear correlation between results and price impact is not observed even at the screening period’s conclusion.
There’s a chance of price impact closer to the effective date, suggesting potentially more effective basket trading. However, short instrument absence necessitates using market indices as hedges.

HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold

A-Shares only two days of the week and were up small Monday and Tuesday. H-shares took a breather Wednesday after trailing A-shares, then rallied hard on Thursday and Friday.
Net SOUTHBOUND buying was +HK6.0bn. Net buys every day and now 22 days straight, but buying still appears foreign-led price-taking action.
The only big news this week in China/HK was probably the Politburo’s new stance of trying to do more for the mainland property market, concentrating on unsold homes.

HSCEI Dividend Futures: Sell the 2024/25 Steepener

The HSCEI 2024 dividend futures have moved higher following mainland China banks announcing that they will pay out interim dividends starting this year.
The HSCEI 2025 dividend futures have moved higher too, though they have lagged the HSCEI 2024 dividend futures.
Even though the HSCEI 2024/25 dividend steepener has dropped by around 10 points in the last few weeks, we see further downside in the near-term.

Hollysys (HOLI US): Further Thoughts on the Widening Spread

I have received several questions from readers on Ascendent’s binding proposal for Hollysys Automation Technologies (HOLI US) in the context of the current gross spread of 12.1%.
The questions primarily concerned the Capital Forum article, NSR approvals, timelines, auditor resignation and deal break risks.
Most of the questions concerned regulatory approval risk. The delay in closing is mainly procedural (government red tape) rather than an indication that regulators will block the deal.

CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes

By Research as a Service (RaaS)

With the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index – Shang (SH000905 INDEX) at the close on 14 June.
We estimate a one-way turnover of 9.3% at the rebalance resulting in a one-way trade of CNY10.88bn (US$1.5bn). The Industrials and Information Technology sectors gain at the expense of Materials.
The potential adds have outperformed the potential deletes by 8% over the last 3 months. There could be further outperformance over the next few weeks.

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May 06

Daily Brief Equity Bottom-Up: Toridoll (3397): Restaurant Chain on a Lege and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Toridoll (3397): Restaurant Chain on a Lege
LRCX. Mounting Tailwinds Bode Well For 2025 & Beyond
KYEC (2449.TT): 1Q24F Was a Seasonal Dip, but 2Q24F Should Be Picking up Below 5% QoQ.
China Healthcare Weekly (May.5) – Overvaluation in Primary Market, RDC to Be Hot Spot, Yiling Pharma
Ginebra San Miguel (GSMI PM): Gleanings From The Last 12 Years of Annual Reports and Q1 2024 Bonanza
Fluence Corp Ltd – New strategy proving up

Toridoll (3397): Restaurant Chain on a Lege

By Michael Allen

Macro trends for restaurant chains are all negative: Food prices rising faster than restaurant unit prices, part-time wages rising faster than full-time.
Toridoll’s same store sales resuming long-term underperformance trend that was broken only briefly during the pandemic.
Stock trades at 3x the market average PBR, despite merely average RoE. Technical support has broken down.

LRCX. Mounting Tailwinds Bode Well For 2025 & Beyond

By William Keating

Q124 revenues of $3.79 billion, pretty much flat sequentially both QoQ and YoY, and also marginally better than guidance.
Looking ahead, the company forecasted Q224 revenues $3.8 billion, i.e. flat QoQ. Still no full year 2024 outlook
Technology transitions such as GAA, Backside Power, molybdenum replacing tungsten & the rise of generative AI will all be growth drivers in 2025 & beyond

KYEC (2449.TT): 1Q24F Was a Seasonal Dip, but 2Q24F Should Be Picking up Below 5% QoQ.

By Patrick Liao

In 1Q24, it was reported that the revenue growth was -3.35% QoQ, slightly exceeding our expectation of a 5% QoQ decline.
For 2Q24, revenue is expected to grow, but the increase is projected to be less than 5% QoQ.
NVIDIA revenue in KYEC is forecasted to reach 15% by the end of 2024F, up from about 2% in 2023, driven by the increasing demand for AI.

China Healthcare Weekly (May.5) – Overvaluation in Primary Market, RDC to Be Hot Spot, Yiling Pharma

By Xinyao (Criss) Wang

Due to the overvaluation of pharmaceutical companies in the primary market, only foreign markets are able to “digest” such high valuation. So, various promising drugs are acquired by foreign investors.
The field of RDC/RLT has attracted our attention, which could become the next hot area. Since nuclides are the most important bottleneck, domestic related enterprises will usher in opportunities.
Shijiazhuang Yiling Pharmaceutical’s performance would continue to be under pressure in 24H1 but would rebound in 24H2 after “destocking”. Valuation/share price have not yet bottomed out. Don’t rush to bottom-fish.

Ginebra San Miguel (GSMI PM): Gleanings From The Last 12 Years of Annual Reports and Q1 2024 Bonanza

By Sameer Taneja

Ginebra San Miguel (GSMI PM) is a monopoly in the gin business in the Philippines with a 97% marketshare trading at 7x PE FY24 ( 10-Yr Revenue CAGR 15% YoY).
After its Q1 results, it has 32% of the market cap in net cash and investments, a dividend yield of>7%, and a 5/10 Yr average ROCE of 37%/22%.
We summarize what we learned from the annual report released on April 15th. We saw a long-term trend of increasing prices, consistent margin growth, balance sheet improvement, etc.

Fluence Corp Ltd – New strategy proving up

Fluence Corporation (ASX:FLC) specialises in the delivery of water and wastewater solutions in industrial, municipal and commercial industries across the globe.
The company released an update on Q1 performance (note: FLC has a December balance date), that clearly validates the change in group strategy away from large construction and engineering projects, and towards smaller, higher margin, proprietary solutions, with a clear push into North America.
The company has maintained full year guidance of US$90m-$100m of revenue and EBITDA of US$3.5m-$4.0m, a positive turnaround from the EBITDA breakeven position of FY23.

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May 06

Daily Brief Macro: Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away
Portfolio Watch – Time for liquidity bets
Sell in May & Go Away. In 2024, Should You?
Dovish Fed Policy Statement and Respectable Corporate Profits: Both Supportive for US Equities
What’s Driving Stock Prices?
Iron Ore: 117 USD/Ton and Upwards to 130 Short-Term, Catalysts To Watch and Our Stock Screener
Steno Signals #98 – The recession panic is back right as liquidity is returning!
1st Quarter 2024 Letter to Investors

Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away

By Douglas Kim

In this insight, we discuss the use of Smartkarma Smartscore system to screen stocks in KOSPI 100.
For top 50 companies (in KOSPI 100) in Smartscore rankings, their share prices were up on average 7% YTD. Bottom 50 companies had average share price decline of 7.8% YTD.
In using the Smartkarma Smartscore system, it may be appropriate to describe it in terms of “WHERE THERE IS SMOKE, STAY AWAY.”

Portfolio Watch – Time for liquidity bets

By Andreas Steno

Hello everyone, and welcome back to our weekly portfolio watch.
A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn.
The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run.

Sell in May & Go Away. In 2024, Should You?

By Srinidhi Raghavendra

Stock Trader’s Almanac popularised Sell in May and go away. Repeated underperformance of the Dow Jones index during the six-month period from May to October lent credence to this.
Twenty four years of data (May 2000 to April 2024) confirms the continuation of Nov to Apr outperformance over May to Oct.
This outperformance gets exaggerated during election years. S&P 500 generated outperformance of 7.27% with Dow Jones delivering 9.18% followed by Nasdaq at 0.52%.

Dovish Fed Policy Statement and Respectable Corporate Profits: Both Supportive for US Equities

By Said Desaque

Fed Chairman Powell offered markets a modestly dovish overview of the policy outlook after this week’s FOMC meeting, notably the more aggressive tapering of quantitative tightening.
US corporate profit results for Q1 have been respectable compared to the previous decade, but revenue performance has been below par. Operating margins are holding up well.
Analysts remain buoyant about the profit outlook for 2024 and next year, despite the Fed’s higher for longer approach, thereby suggesting that equity returns will be largely earnings-driven.

What’s Driving Stock Prices?

By Cam Hui

A review of the main short-term drivers of stock prices, namely interest rates, geopolitical risk and the earnings outlook, are all pointing to higher stock prices.
Short-Term technical indicators such as breadth and momentum are also bullish.
The key risk to this bullish outlook is a continued deterioration in banking system liquidity that could pose headwinds to stock prices.

Iron Ore: 117 USD/Ton and Upwards to 130 Short-Term, Catalysts To Watch and Our Stock Screener

By Sameer Taneja

Iron ore continued to lounge around the 117 USD/ton levels, but there is increased optimism for Iron Ore and The China Property/Auto Stimulus Angle
Spreads between 65 and 62 widened to 13.8 USD/ton from 12.6 USD/ton last week, and we expect this spread to build further.
The street now widely anticipates the China TSF number between 9-15th of May, which is expected to grow in April at 14.5% YoY on consensus estimates to 1.4 trillion Yuan.

Steno Signals #98 – The recession panic is back right as liquidity is returning!

By Andreas Steno

Happy Sunday from a wet Copenhagen!Let me just admit to it upfront.
Last week didn’t play out according to my macro thesis.
The US cycle suddenly showed signs of weakness in surveys, which alleviated some of the pressures in USD rates and in USD versus Asian FX.

1st Quarter 2024 Letter to Investors

By Massif Capital Research

Outperformance of Metals and Mining sector: The fund’s gold, copper, and lithium investments outperformed their respective industry performance.
Interesting trends in the gold market: We examine gold prices and propose a shift from wealth-driven to fear-driven consumption patterns. We also identify several events that could reduce fear and slow gold price momentum.
The evolving situation at OCI: The fund holds a 6% position in OCI, a global fertilizer business that announced two significant asset sales in December 2023, from which we expect to receive a substantial capital return in 2024.

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May 06

Daily Brief Industrials: ZEEKR, China Merchants Expressway Net, Contemporary Amperex Technology (CATL), HD Hyundai Marine Solution , Fluence Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

ZEEKR (ZK US) IPO: Valuation Insights
CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived
Mainland Connect NORTHBOUND Flows (To 30-Apr/3-May 2024): Big Volumes, Low Net; As Will Play Catchup
ECM Weekly (6th May 2024) – Aadhar, Indegene, TBO Tek, Super Hi, China Resources Bev, Honasa, Worley
Fluence Corp Ltd – New strategy proving up

ZEEKR (ZK US) IPO: Valuation Insights

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived

The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.

Mainland Connect NORTHBOUND Flows (To 30-Apr/3-May 2024): Big Volumes, Low Net; As Will Play Catchup

By Research as a Service (RaaS)

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 2.3bn of A-shares on high gross low net volume in the two days. NORTHBOUND bought CATL, Shenzhen Mindray, some financials.
As outperformed Hs on Monday and Tuesday (when both were open), then Hs rocketed on Thursday and Friday. As will have to catch up early in the week.

ECM Weekly (6th May 2024) – Aadhar, Indegene, TBO Tek, Super Hi, China Resources Bev, Honasa, Worley

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, a number of deals were launched in India, while HD Hyundai Marine Solution (443060 KS) will list in the coming week.
On the placement front, the two deals in Australia, WorleyParsons Ltd (WOR AU) and Endeavour Group /Australia (EDV AU) delivered opposing results.

Fluence Corp Ltd – New strategy proving up

Fluence Corporation (ASX:FLC) specialises in the delivery of water and wastewater solutions in industrial, municipal and commercial industries across the globe.
The company released an update on Q1 performance (note: FLC has a December balance date), that clearly validates the change in group strategy away from large construction and engineering projects, and towards smaller, higher margin, proprietary solutions, with a clear push into North America.
The company has maintained full year guidance of US$90m-$100m of revenue and EBITDA of US$3.5m-$4.0m, a positive turnaround from the EBITDA breakeven position of FY23.

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May 06

Daily Brief TMT/Internet: Shinko Electric Industries, Tencent, Hollysys Automation Technologies, Lam Research, King Yuan Electronics Co, Ltd., TBO Tek and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update
HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold
Hollysys (HOLI US): Further Thoughts on the Widening Spread
LRCX. Mounting Tailwinds Bode Well For 2025 & Beyond
KYEC (2449.TT): 1Q24F Was a Seasonal Dip, but 2Q24F Should Be Picking up Below 5% QoQ.
TBO Tek IPO – RHP Updates & Quick Thoughts on Valuation

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
15wks ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 8wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.

HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold

A-Shares only two days of the week and were up small Monday and Tuesday. H-shares took a breather Wednesday after trailing A-shares, then rallied hard on Thursday and Friday.
Net SOUTHBOUND buying was +HK6.0bn. Net buys every day and now 22 days straight, but buying still appears foreign-led price-taking action.
The only big news this week in China/HK was probably the Politburo’s new stance of trying to do more for the mainland property market, concentrating on unsold homes.

Hollysys (HOLI US): Further Thoughts on the Widening Spread