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Smartkarma Daily Briefs

Apr 23
0

Daily Brief Event-Driven: RMB Dual Counter Trading Is Coming – This Changes AH Relationships and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • RMB Dual Counter Trading Is Coming – This Changes AH Relationships
  • Jardine Cycle & Carriage Is A Short
  • Roland DG (6789 JP): Taiyo Mulling Three Options or Is It?
  • Investor Activism Update: Seven & I Sets the Path in Investor Activism Battle
  • Krafton: Block Deal Sale of About 270 Billion Won
  • HK Connect SOUTHBOUND Flows (To 19 Apr 2024); Strong Net Buying on Energy/Finance/Telco SOEs. Again.
  • Quiddity Leaderboard TDIV Jun 24: LONGs up 6% Vs SHORTs in a Month; Time to Update
  • Mr. Choi Goes to Washington
  • A/H Premium Tracker (To 19 Apr 2024):  Liquid AH Premia Even Higher; Lots Of “Carry” In The Market
  • Mainland Connect NORTHBOUND Flows (To 19 Apr 2024): NB Net Seller; Semi-Tech Buys, Renewables Sold

RMB Dual Counter Trading Is Coming – This Changes AH Relationships

By Travis Lundy

  • A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
  • They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
  • RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.

Jardine Cycle & Carriage Is A Short

By David Blennerhassett

Roland DG (6789 JP): Taiyo Mulling Three Options or Is It?

By Arun George

  • On 19 April, Taiyo Co-CEO Brian Heywood told Bloomberg and Reuters they were considering three options to Brother Industries (6448 JP)’s tender for Roland DG Corp (6789 JP). 
  • Taiyo’s options are bumping its offer, walking away or tendering into the Brother’s offer if it bumps and alleviates dis-synergies concerns.
  • All three options are likely a ruse. Taiyo’s primary play is to frustrate and pressure Brother to withdraw its bid if it cannot get the Board’s recommendation.

Investor Activism Update: Seven & I Sets the Path in Investor Activism Battle

By Oshadhi Kumarasiri

  • Value Act’s recent statement might suggest that they have prevailed and Seven & I Holdings (3382 JP) has yielded to their demands. However, the reality might be less straightforward.
  • Value Act sought new market expansion, but Seven & I is focused on reinforcing its presence in existing, well-established markets.
  • Given Value Act’s impatience, their acceptance of Seven & I’s plan for a 2026 Super Stores IPO, contingent on a business transformation, is unexpected.

Krafton: Block Deal Sale of About 270 Billion Won

By Douglas Kim

  • After the market close on 22 April, it was reported that SK Square plans to sell 2.2% stake in Krafton in a block deal sale worth about 270 billion won. 
  • The estimated block deal sales price range is from 243,000 won to 251,000 won, representing a 3.1% to 6.2% discount to the closing price of 259,000 won on 22 April.
  • We would take the deal. The company’s valuations remain attractive and it has been successful in expanding its sales and profits. 

HK Connect SOUTHBOUND Flows (To 19 Apr 2024); Strong Net Buying on Energy/Finance/Telco SOEs. Again.

By Travis Lundy

  • A shares were up on the week, while Hs were down. BIG divergence among liquid names. 
  • Net SOUTHBOUND buying was +HK32.1bn. SOUTHBOUND ended its consecutive post-CNY daily net buy streak on 25 March, then started a new one. No net sell days since.
  • Little market news. More geopolitical news. SOE bank H-shares are seeing relentless net and gross buying, very very little selling.

Quiddity Leaderboard TDIV Jun 24: LONGs up 6% Vs SHORTs in a Month; Time to Update

By Janaghan Jeyakumar, CFA

  • In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
  • Since my last insight, my index change expectations and flow expectations have changed significantly.
  • My latest estimate for one-way flow in June 2024 is US$1.06bn (down from US$1.22bn a month ago).

Mr. Choi Goes to Washington

By Douglas Kim

  • The Deputy Prime Minister Choi Sang Mok reaffirmed the Corporate Value Up program, pushing up the major value driven/low PBR stocks in Korea today.
  • Deputy Prime Minister Choi emphasized that as part of Corporate Value Up program, corporate tax benefits to companies that have made efforts to strengthen shareholder return policy will be provided.
  • The Korean government also plans to revise the law to separate taxation on the dividend income of shareholders of companies that expand dividends.

A/H Premium Tracker (To 19 Apr 2024):  Liquid AH Premia Even Higher; Lots Of “Carry” In The Market

By Travis Lundy

  • 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. NORTHBOUND has been selling recently (this week and last buying semi tech, selling renewables)
  • Hs fell sharply vs As. AH Premia very wide. Alpha on portfolio vs straight H vs A but a bad week as liquid Hs underperformed liquid As by 2.5+%.

Mainland Connect NORTHBOUND Flows (To 19 Apr 2024): NB Net Seller; Semi-Tech Buys, Renewables Sold

By Travis Lundy

  • 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 SELL RMB 6.7bn of A-shares on decent volume. A-shares out-performed H-shares quite dramatically, taking back H-share gains from the week before, which reversed prior weeks.
  • This week saw net buying of semiconductor/chip names, and net selling of the EV/Solar/Battery space and buying of the Ping Ans, but most notable was liquid A vs H performance.

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Apr 23
0

Daily Brief ECM: Krafton Placement – Stock Has Been Doing Well and more

By | Daily Briefs, ECM

In today’s briefing:

  • Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong
  • Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected
  • Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

Krafton Placement – Stock Has Been Doing Well, Momentum Remains Strong

By Sumeet Singh

  • SK Square is looking to raise around US$198m via selling 2.1% of Krafton (259960 KS).
  • The stock has been doing well over the past few months and its earnings and price momentum remain strong.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

Sichuan Baicha Baidao IPO Trading – Tepid Demand, While Peers Have Corrected

By Sumeet Singh

  • Sichuan Baicha Baidao Industrial (2555 HK) (SBBI) raised around US$330m in its HK IPO.
  • SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
  • We have looked at the company’s performance and valuations in our past note. In this note, we talk about the trading dynamics.

Remegen (9995.HK/688331.CH) – The Placement Won’t Solve the Problem

By Xinyao (Criss) Wang

  • Remegen’s product revenue fails to cover R&D expenses and its sales profit is negative, which means that RemeGen’s cost control is disappointing, and the main problem is high selling expenses.
  • If RemeGen continues to follow the old path, breakeven will be further out of reach. In other words, we don’t think that the A-share placement will materially change the outlook.
  • Remegen’s reasonable market value is RMB12-18 billion. If above RMB18 billion, it’s recommended investors take profits in time. If below RMB12 billion, investors could buy and wait for a rebound.

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Apr 23
0

Daily Brief Equity Bottom-Up: BYD (1211 HK) 1Q24 Preview: No Concern for Slow Quarter and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • BYD (1211 HK) 1Q24 Preview: No Concern for Slow Quarter, To Achieve a Strong Year, 60% Upside
  • A Nasty Power Struggle Between ADOR CEO and HYBE
  • Taiwan Tech Weekly: Semi/AI Darlings Slammed; TSMC Supply Chain Insights; ASE Wins Key IPhone Order
  • China Consumption Weekly (22 Apr 2024): Xiaomi, Transsion, Tims China, Xpeng, Tesla
  • The Business of Hero Moto Corp | Dec 12, 2021
  • CapitaLand Investment (CLI): A Leading Global RE Investment Manager with Asia Presence, BUY
  • The Business of PolicyBazaar | Aug 11, 2021
  • Vf Corp (VFC) – Monday, Jan 22, 2024
  • Sintana Energy Inc. (TSX-V: SEI)
  • Ebay Inc (EBAY) – Monday, Jan 22, 2024

BYD (1211 HK) 1Q24 Preview: No Concern for Slow Quarter, To Achieve a Strong Year, 60% Upside

By Ming Lu

  • We believe the revenue growth will be slow in 1Q24, but it will still be rapid for the full year 2024.
  • We also believe the operating margin will hit the historical high in 1Q24, but it will be just stable for the year 2024.
  • We conclude the stock has an upside of 60% for the year end 2024. Buy.

A Nasty Power Struggle Between ADOR CEO and HYBE

By Douglas Kim

  • A nasty power struggle between ADOR CEO Min Hee-Jin and HYBE has erupted which is likely to continue to negatively impact HYBE’s share price in the next several months.
  • ADOR CEO Min Hee-Jin owns an 18% stake in ADOR which was founded in 2021. HYBE owns the controlling 80% stake in ADOR.
  • Given the nasty fight between ADOR and HYBE, it is likely that the two companies (including ADOR’s CEO Min Hee-Jin) are likely to part their ways.

Taiwan Tech Weekly: Semi/AI Darlings Slammed; TSMC Supply Chain Insights; ASE Wins Key IPhone Order

By Vincent Fernando, CFA

  • Taiwan Tech Shares Fell Sharply Along With Global Selling — Semiconductor and AI Names Most Exposed
  • What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference? 
  • ASE Technology Holding (3711 TT) Wins iPhone 16 System-in-Package Order from Apple (AAPL US)

China Consumption Weekly (22 Apr 2024): Xiaomi, Transsion, Tims China, Xpeng, Tesla

By Ming Lu

  • In 1Q24, Xiaomi and Transsion shipments grew rapidly, while Samsung Electronics (005930 KS) and Apple (AAPL US) shrank.
  • Tims China’s revenue expanded with new openings, which is encouraging in the competitive market.
  • In China, Tesla fired salespeople who had served the company for less than six months.

The Business of Hero Moto Corp | Dec 12, 2021

By Invest Karo India

  • The story of Hero is the story of persistence, collaboration and achieving goals that many would have regarded as impossible.
  • From its humble roots of selling bicycles in 1956 Ludhiana Punjab, to becoming the world’s largest two wheeler company is an extraordinary feat.

  • Maintaining the momentum, protecting its market share and setting sights towards ‘Future of Mobility’ is something special.

CapitaLand Investment (CLI): A Leading Global RE Investment Manager with Asia Presence, BUY

By Jacob Cheng

  • CapitaLand is a real estate investment manager with funds under management of c.S$100b and core markets being Singapore, China and India
  • They reported solid FY2023 results earlier this year.  Singapore and India are showing strong market outlook while China struggles.
  • Valuation is attractive with >50% upside and we view there are multiple catalysts ahead

The Business of PolicyBazaar | Aug 11, 2021

By Invest Karo India

  • Mr. Yashish Dahiya is an impatient man. In one of the interviews with The Ken, he narrated a story of how while in college he used to run home to Noida every Friday and back to college on a Monday morning (both 30kms in one direction) as he found public buses too slow for his liking.
  • Mr. Dahiya, is also persistent and doesn’t give up easy – he is one of the few people in the world who has completed the grueling Ironman triathlon – an intense race that consists of swimming, bicycle ride and a marathon all raced in that order – widely considered one of the most difficult one-day sporting events in the world.
  • It’s these qualities of impatience, persistence and continuously improving oneself that can be found in the business of PolicyBazaar or PBFinTech, the name of the parent company applying for IPO.

Vf Corp (VFC) – Monday, Jan 22, 2024

By Value Investors Club

Key points

  • VFC is a large apparel company with iconic brands such as The North Face and Vans
  • Shares are currently undervalued following a disappointing FY23, with estimated fair value of $40/share
  • Strong brands and opportunities for portfolio rationalization and margin improvement make VFC a potential growth opportunity with new management in place.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Sintana Energy Inc. (TSX-V: SEI)

By Auctus Advisors

  • Multiple tests over multiple zones in multiple horizons were run at the Mopane-1X exploration well.
  • The flows achieved during the well test reached the maximum allowed limits of 14 mboe/d.
  • The flow rate was constrained by the size of the available surface facilities.

Ebay Inc (EBAY) – Monday, Jan 22, 2024

By Value Investors Club

  • eBay has the potential to become a trillion-dollar AI powerhouse in e-commerce
  • Offers anti-inflationary savings and eliminates fraud risks
  • Seen as undervalued with high growth potential compared to Amazon

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Apr 23
0

Daily Brief Macro: Fund Managers Are Long Commodities Again and more

By | Daily Briefs, Macro

In today’s briefing:

  • Fund Managers Are Long Commodities Again
  • Global FX: A Strong Dollar Is Not a US Problem
  • Fed Still Intent on Lowering Policy Rate Despite Inflation Uncertainties
  • The Week That Was in ASEAN@Smartkafarma – Medikaloka Hermina, Avian Paints, and Vinfast
  • Richmond Fed President Tom Barkin On Getting Inflation Under Control
  • The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..
  • Energy Cable: Inflation starting to bite equities
  • BoE Review: Uncomfortable Guidance

Fund Managers Are Long Commodities Again

By The Commodity Report

  • Fund Managers Are Long Commodities Again Be careful if you’re heavily long commodities at the moment.
  • The Bank of America survey usually always works as a great contra sentiment indicator.
  • If fund managers are heavily long commodities – prices tend to top out.

Global FX: A Strong Dollar Is Not a US Problem

By At Any Rate

  • Strong dollar not seen as a problem for the US or the Fed, more concerning for the rest of the world
  • Unlikely to see coordinated global intervention due to high hurdles and lack of exceptional circumstances
  • Dollar CNY stability due to PBOC holding it down, may welcome cooling pressures on the currency from Japan and Korea verbal interventions

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Fed Still Intent on Lowering Policy Rate Despite Inflation Uncertainties

By Said Desaque

  • Investors have become more hawkish about the outlook for Fed policy compared to Federal Open Market Committee (FOMC) members for the first time since the infamous taper tantrum in 2013
  • Engineering a policy pivot away from higher for longer rhetoric towards policy rate cuts will provide a communication challenge if sticky service sector inflation persists.
  • Profligate fiscal policy complicates the Fed’s prospective conduct. The required measures for sustainable fiscal policy are off-limits, raising the possibility of higher inflation to stabilise the debt-to-GDP ratio.    

The Week That Was in ASEAN@Smartkafarma – Medikaloka Hermina, Avian Paints, and Vinfast

By Angus Mackintosh

Richmond Fed President Tom Barkin On Getting Inflation Under Control

By Odd Lots

  • Inflation data has been hotter than expected, remaining stubbornly above 3%
  • Demand in the economy has been robust, with strong retail sales and job reports
  • Richmond Fed President Tom Barkin discusses potential factors influencing inflation and the need for offsetting housing strength in the economy

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..

By Andreas Steno

  • Welcome to our weekly “the week at a glance” publication where we dissect the most important central bank meetings and key figure releases in a short and sweet format.
  • This week we focus on PCE prices, European PMIs and the Bank of Japan.
  • Event 1: European PMIs (Tues): A lukewarm, but positive, surprise.

Energy Cable: Inflation starting to bite equities

By Ulrik Simmelholt

  • Calmness returned to pockets of cross asset markets last week.
  • The long end of the US yield curve got off its highs, crude got back under USD 90 and equities are left as the only truly hurt asset with SPX dipping under 5k for the first time since Feb.
  • Month-to-date, Energy remains the only sector in green, underlining what we have been saying since the inception of this newsletter

BoE Review: Uncomfortable Guidance

By Phil Rush

  • Ben Bernanke’s review of forecasting at the Bank of England raised many suggestions. We hope the BoE doesn’t dodge two aspects critical to improving its guidance.
  • Inflation expectations are poorly captured in forecasts, contributing to misguided market views and leaving MPC members open to attack when critiquing surging wages.
  • MPC rate expectations would best replace the conditioning rate path. Absent that, market rates are better than alternatives so that path should not be de-emphasised.

Note: This is part of an external compendium of responses to the Bernanke review.

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Apr 22
0

Daily Brief Australia: Bell Financial and more

By | Australia, Daily Briefs

In today’s briefing:

  • Bell Financial Group Ltd – Strong start to FY24 with Q1 PBT +60%

Bell Financial Group Ltd – Strong start to FY24 with Q1 PBT +60%

By Research as a Service (RaaS)

  • Bell Financial Group Ltd (ASX:BFG) is a diversified provider of financial products and software solutions within, and increasingly outside, its traditional full-service stockbroking business.
  • A Q1 FY24 trading update provided at the group’s AGM on 19 April points to revenue growth of 17% and PBT growth of 60% to $9.3m, with all divisions said to be profitable.
  • This compares to a RaaS H1 FY24 PBT growth estimate of 69%, placing the group on track to achieve our H1 estimates.

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Apr 22
0

Daily Brief South Korea: Korea Stock Exchange Kospi Index and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Significant Developments Emerged Today for Korea’s Value-Up

Significant Developments Emerged Today for Korea’s Value-Up

By Sanghyun Park

  • Deputy PM Choi Sang-mok commits to aggressively pursue separate taxation of dividend income, marking a shift towards concrete action for value-up policies.
  • Ever since the introduction of the Value-up policy earlier this year, the primary incentive championed by the local capital market has been the separate taxation of dividend income.
  • Hence, the government’s official commitment to this marks a crucial step in reshaping the Value-up momentum.

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Apr 22
0

Daily Brief Indonesia: Pertamina Geothermal Energy PT and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Morning Views Asia: Pertamina Geothermal Energy PT, Vedanta Resources

Morning Views Asia: Pertamina Geothermal Energy PT, Vedanta Resources

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Apr 22
0

Daily Brief United States: United States Steel and more

By | Daily Briefs, United States

In today’s briefing:

  • Nippon Steel/United States Steel Corp

Nippon Steel/United States Steel Corp

By Jesus Rodriguez Aguilar

  • On 18 April, a White House official said that any review of the deal between Nippon Steel Corporation (5401 JP) and United States Steel (X US) by CFIUS will continue as scheduled.
  • X shares trade at ~5.2x on NTM IBES-consensus EBITDA given priced-in deal risk vs. implied 7x at the time of the winning NSC’s bid, and look attractive relative to comparables.
  • There remains a possibility that Nippon could finalize the takeover after the U.S. presidential election, presenting potential upside.

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Apr 22
0

Daily Brief India: NIFTY Index, Pertamina Geothermal Energy PT and more

By | Daily Briefs, India

In today’s briefing:

  • EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24
  • Morning Views Asia: Pertamina Geothermal Energy PT, Vedanta Resources

EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24

By Sankalp Singh

  • Unprecedented levels of FII option-buying & increasing geo-political risk causing IVs to re-price higher.
  • Skew/ Smile characteristics of the Vol Surface reflect increased risk aversion but not it panic mode – yet.
  • BankNifty IVs exhibiting unusual “kink-in-the-curve”. Enter barbell structures to position for reversion in curve shape.

Morning Views Asia: Pertamina Geothermal Energy PT, Vedanta Resources

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Apr 22
0

Daily Brief Japan: Shinko Electric Industries, Kokusai Electric , Silver, Shift Inc, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto
  • ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar
  • Silver Measured Move to 35.50
  • Shift: On a Road to Recovery
  • Stricter Voting Criteria for Domestic Asset Managers May Aim to Enhance Value Through Engagement

Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto

By Arun George

ECM Weekly (22nd Apr 2024) – Kokusai, J&T, Voda IDEA, ChaPanda, Cloudchain, Johor Plant, Aadhar

By Sumeet Singh

Silver Measured Move to 35.50

By Douglas Busch

  • S&P 500 looks vulnerable. Maintain large cash positions for forseeable future.
  • US Dollar bull flagging and may put pressure on equities in near term.
  • Nikkei at inflection point. Bulls must stand up here to defend.

Shift: On a Road to Recovery

By Shifara Samsudeen, ACMA, CGMA

  • Shift Inc (3697 JP) ’s share price has been down more than 50% YTD with the release of 1QFY08/2024 results in January 2024 which saw a drop in margins.
  • The company’s aggressive investment in HR and system reinforcement led to a decline in margins, however, margins saw a QoQ improvement in 2QFY08/2024.
  • Despite there being an improvement in 2Q and the company expecting the margins to bounce back in 4Q, Shift’s share price has continued to fall.

Stricter Voting Criteria for Domestic Asset Managers May Aim to Enhance Value Through Engagement

By Aki Matsumoto

  • Stricter voting standards for domestic investment managers seem aimed at increasing value through engagement for companies that show little improvement in efforts to improve stock price and return on capital.
  • Stricter voting standards for policy shareholding ratios of domestic investment management companies are expected to push companies to consider reducing cross-shareholdings. Reference to deemed shareholdings is also commendable.
  • Since engagement of overseas investors has been effective in increasing value of companies, engagement by Japanese investment managers more seriously than before will contribute to enhancing the value of companies.

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