Smartkarma Daily Briefs

We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.4% as of Apr 12th.
The average A-H premium changed by -9.4ppt week-on-week, led by health care, utilities, information technology and offset by consumer staples.
We highlight weekly changes in A-H premium for GWM, Beigene, Cansino, First Tractor.

TWSE Short Interest Weekly (Apr 12th): Chung-Hsin, Wt, Tatung, Elite Material, Mediatek

We analyzed the changes in short interest of TWSE Stocks as of Apr 12th which has an aggregated short interest worth USD81.0bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
We highlight short interest changes in Chung-Hsin, Wt, Tatung, Elite Material, Mediatek, Chicony Elec, Ctbc Financial.

Hong Kong Connect Flows (Apr 12th): China Mobile, Xiaomi, Bank Of China

We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of April 12th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for China Mobile, Xiaomi, Bank Of China.

KRX Foreign Holding Weekly (Apr 12th): Samsung Electronics, Hyundai Motor, Sk Hynix

We analyzed the changes in foreign holdings of KRX Stocks as of Apr 12th which has an aggregated holding worth USD534.3bn.
We estimate that foreign flows to be inflows of USD1,200mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight foreign changes in Samsung Electronics, Hyundai Motor, Sk Hynix.

TWSE Foreign Holding Weekly (Apr 12th): TSMC, Hon Hai, ASE, Wiwynn, Eva Airways, Evergreen Marine

We analyzed the changes in foreign holdings of TWSE Stocks as of Apr 12th which has an aggregated holding worth USD4,077.8bn.
We estimate that foreign flows to be outflows of USD473mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign instutions.
We highlight foreign changes in TSMC, Hon Hai, ASE, Wiwynn, Eva Airways, Evergreen Marine, Wistron, Quanta Computer, Wt, Mediatek.

Northbound Flows (Apr 12th): Boe Technology, Moutai, China Tourism, Gree Electric Appliances

We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of April 12th.
We estimate the weekly outflows to be US$1,587.8 million, led by consumer staples, consumer discretionary, health care, and offset by materials.
We highlight flows for Boe Technology, Moutai, China Tourism, Gree Electric Appliances.

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Apr 15

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Expect Weak Open and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Expect Weak Open
Iran-Israel Conflict, Stay on the Sideline First and Wait for a BUYING Opportunity
US Banks – Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen
Understanding Drug Imbursement Price Cuts in China

Ohayo Japan | Expect Weak Open

By Mark Chadwick

Global markets are likely to react cautiously following Israel’s interception of over 200 Iranian drones and missile. Bitcoin saw sharp 5%+ decline
Japan’s greenhouse gas emissions hit a record low in fiscal 2022 at 1.14 billion tons of CO2 equivalent, down 2.5% from fiscal 2021
US Steel shareholders have greenlit Nippon Steel’s proposed acquisition, which offers a 40% premium on the trading price at the time of announcement

Iran-Israel Conflict, Stay on the Sideline First and Wait for a BUYING Opportunity

By Mohshin Aziz

Iran led a direct attack on Israel, prompting fears of a wider war in the Middle East and jittering the global markets
We think the futures market will start rough, but eventually chill towards the end of the day. Iran has stated its objectives are met and is not keen to continue
Western countries are taking the diplomatic route with Antony Blinken saying that the U.S. did “not seek escalation”. This is a positive sign

US Banks – Faltering Net Interest Income Growth Is Well in Place, But This Should Worsen

By Daniel Tabbush

Wells Fargo has seen its net interest income growth move to -8.3% YoY in 1Q24 from +8.3% YoY in 1Q23
The rate of net interest income growth at JPMorgan has nearly halved in the most recent quarter, to +11.4% YoY
Banks’ high-frequency data on balance sheets suggest that there will remain worsening growth rates of net interest income for US banks

Understanding Drug Imbursement Price Cuts in China

By Avien Pillay

China’s pricing process is becoming more predictable. There have been several positive changes that favour innovation.
As a comparison, the already complex European system is becoming more complex, and is implementing further price cuts.
Several other countries including the US are currently implementing or looking to implement price controls.

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Apr 15

Daily Brief ECM: Postage Fraud Case Update: Guilty Plea and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Postage Fraud Case Update: Guilty Plea, Asset Forfeiture, & Restitution Set at a Whopping US$158 Mn!
Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention
ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo
Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Postage Fraud Case Update: Guilty Plea, Asset Forfeiture, & Restitution Set at a Whopping US$158 Mn!

By Daniel Hellberg

A week ahead of trial, a defendant in massive fraud case copped a plea
Terms of deal include guilty plea, asset forfeiture, restitution of US$158 mn
US investigation continues; are other Chinese companies involved in case?

Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo

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, the focus remained on HD Hyundai Marine Solution (443060 KS), even as Sichuan Baicha Baidao Industrial is gearing up to launch its IPO.
On the placement front, there were deals across India, South Korea and Australia.

Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

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Apr 15

Daily Brief Credit: Morning Views Asia: Anton Oilfield and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Morning Views Asia: Anton Oilfield, Greentown China

Morning Views Asia: Anton Oilfield, Greentown China

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.

Anton Oilfield
Greentown China

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Apr 15

Daily Brief Equity Bottom-Up: Water Oasis (1161 HK) and more

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

In today’s briefing:

Water Oasis (1161 HK)
8801: Mitsui Fudosan – the Largest Japan RE Developer – Let the Rally Continue
Money Forward (3994) | Net Sales +40%
Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially
CanSino Biologics (688185 CH): Limited Downside Is Seen; Meningococcal Vaccines to Drive Growth
Orient Overseas Intl (316 HK): Spotting Initial Signs of Recovery
China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond
Sa Sa Intl (178 HK): Steady Recovery, but Biased by High Base

Water Oasis (1161 HK)

By Oriental Value

Following the positive response to our article on Perfect Medical , we are keen to introduce our readers to another noteworthy company in the healthcare and beauty industry, Water Oasis.
Despite initial appearances suggesting sluggish revenue growth over the past decade, a deeper examination reveals significant improvements in business quality and consistent shareholder returns through substantial dividends.
This under-the-radar company, we believe, presents an attractive risk-reward profile.

8801: Mitsui Fudosan – the Largest Japan RE Developer – Let the Rally Continue

By Jacob Cheng

With HK/China continue to see risk-off sentiment; we switch our focus to Japan. Nikkei is up 19% YTD, one of the best performing markets in the world
Among Japan real estate names, Mitsui Fudosan is a well held name with the largest market cap. 8801 is up 45% YTD while 8802 is up 57% YTD
Valuation is un-demanding, it is an interesting name to own if investors want exposure to Japan. It is still not too late to chase the rally

Money Forward (3994) | Net Sales +40%

By Mark Chadwick

Money Forward reported Q1 results. Net sales rose 40% YoY to 9.5 billion yen
Money Forward saw a big jump in profitability, which puts the company on track to meet full year guidance
The stock has risen around 30% since January. We still see around 7% upside to our target valuation

Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

By Vincent Fernando, CFA

Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.
Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya’s main Consumer segment.
Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya’s 2024E consensus margin expectations set at a high bar and the stock isn’t cheap.

CanSino Biologics (688185 CH): Limited Downside Is Seen; Meningococcal Vaccines to Drive Growth

By Tina Banerjee

In 2023, CanSino Biologics (688185 CH) generated revenue of RMB561.7 million from the sales of meningococcal conjugate vaccines, up 266% YoY.
This year, consensus is expecting CanSino to report revenue of RMB858 million, up whopping 140% YoY, mainly driven by meningococcal vaccines.
CanSino is expected to add pneumococcal conjugate vaccine (PCV13) vaccine in its revenue stream in 2025. The company’s PCV13i is a potential best-in-class improved PCV13.

Orient Overseas Intl (316 HK): Spotting Initial Signs of Recovery

By Osbert Tang, CFA

Orient Overseas International (316 HK) saw 27.2% QoQ freight rate uptick in 1Q24. This is a positive start and we should not be too concerned about the 12% YoY decline.
Its overall load factor also expanded 0.9pp YoY in the quarter, and this is the first YoY improvement since 2Q22. A better utilisation level is good for unit costs.
At end-FY23, net cash equals 62.4% of the share price, dragging ROE to 7.5% for the next three years. But with such solid financials, its 0.7x P/B is not expensive.

China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond

By Xinyao (Criss) Wang

China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector.
Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.
There is “horizontal competition” issue between Taiji and Shanghai Shyndec Pharmaceutical (600420 CH), which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.

Sa Sa Intl (178 HK): Steady Recovery, but Biased by High Base

By Osbert Tang, CFA

Masked by a high base, 4Q FY24 sales of Sa Sa International Hldgs (178 HK) edged down by 4.1% YoY. However, sales for mainland China have increased by 18.2%.
Overall sales for FY24 are in line with market projections and there is potential for further margin expansion. Its 6.7x and 5.9x PERs for FY25F and FY26F are inexpensive.
The addition of more mainland cities to the Hong Kong individual visit scheme, promotion of Hong Kong tourism, and weaker USD in the medium term are all positive factors.

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Apr 15

Daily Brief Event-Driven: Pasona (2168 JP) Special Div – Too Small to Matter and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Pasona (2168 JP) Special Div – Too Small to Matter
Merger Arb Mondays (15 Apr) – Azure, Silver Lake, Genex, Boral, China TCM, C&F Logistics, Roland DG
HK Connect SOUTHBOUND Flows (To 12 Apr 2024); Strong Net Buying. New State Council and CSRC Plans
A/H Premium Tracker (To 12 Apr 2024): Liquid AH Premia Still Very Wide, The Right Spreads Behaving
Tietto Minerals (TIE AU): Zhaojin Mining Secures Reg Approvals. Then Bumps
Mainland Connect NORTHBOUND Flows (To 12 Apr 2024): NB A Net Seller; Flows See Semi/Tech Buys
EQD / NSE Volatility Update / 08-Apr-24 to 12-Apr-24

Pasona (2168 JP) Special Div – Too Small to Matter

On Friday, Pasona Group (2168 JP) announced its expected use of funds into the May 2024 results, including a special dividend plan, investment for growth, and “strengthening the operating platform.”
The plan will disappoint. The stock may get hit hard. The truth is somewhere in the middle. This is where active stewardship matters. So get stewarding.
A special div paid over 5yrs should be paid one-shot, now. If the company has plans worth supporting, set KPIs now, ask for money later. Good plans get good money.

Merger Arb Mondays (15 Apr) – Azure, Silver Lake, Genex, Boral, China TCM, C&F Logistics, Roland DG

By Arun George

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: Qantm Intellectual Property (QIP AU), Southern Cross Media (SXL AU), QV Equities Ltd (QVE AU), Silver Lake Resources (SLR AU), Azure Minerals (AZS AU), China TCM.
Lowest spreads: Tietto Minerals Ltd (TIE AU), Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU).

HK Connect SOUTHBOUND Flows (To 12 Apr 2024); Strong Net Buying. New State Council and CSRC Plans

A shares were down on the week, not maintaining the month-end bounce after the long weekend. H-shares were mixed. HSCEI was slightly up.
Net SOUTHBOUND buying was +HK23bn. SOUTHBOUND ended its consecutive post-CNY daily net buy streak on 25 March, then started a new one. No net sell days since.
This week saw a LOT of news. State Council Nine Points. CSRC draft regs and legislative work plan. Ratings agency action. Lots of movement. None of it hugely positive.

A/H Premium Tracker (To 12 Apr 2024): Liquid AH Premia Still Very Wide, The Right Spreads Behaving

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 started selling (but buying semi tech).
Hs rebounded vs As. AH Premia still wide. Fabulous two-week performance by the Quiddity Portfolio (+2.09% over the two weeks) on a delta 3:1 long H/short A

Tietto Minerals (TIE AU): Zhaojin Mining Secures Reg Approvals. Then Bumps

By David Blennerhassett

On the 30 October 2023, Chinese gold producer Zhaojin Mining Industry (1818 HK) pitched a non-binding off-market Offer for Aussie-listed West African gold miner Tietto Minerals (TIE AU).
Zhaojin held 7.02% of shares out, and sought 50.1%. Tietto subsequently rejected the A$0.58/share cash proposal. The IE backed out a fair value range of A$0.793-A$0.927/share.
Zhaojin has now announced it has secured all Chinese regulatory approvals; and that Côte d’Ivoire government approval is not required. Plus Zhaojin bumped terms to A$0.68/share – best and final.

Mainland Connect NORTHBOUND Flows (To 12 Apr 2024): NB A Net Seller; Flows See Semi/Tech Buys

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 11.5bn of A-shares on low-ish volume. A-shares underperformed H-shares quite dramatically, giving back gains from two weeks ago.
This week saw considerable net buying of semiconductor technology names. I expect that to continue.

EQD / NSE Volatility Update / 08-Apr-24 to 12-Apr-24

By Sankalp Singh

Downtrend in IVs stall as market sentiment deteriorates. Vol Regime Model sticks to “High & Down” state.
Consider Equity Tail hedges/ buying OTM puts in current environment. Roll strikes lower if/when equities weaken further.
Skew compression seen in BankNifty options as preference for out-of-money puts wane. Skew selling an unsuitable strategy at current levels.

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Apr 15

Daily Brief Macro: Iron Ore Primer: Understanding The Drivers Of the Market and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector
Iran/Israel Debrief: A Very Soft Response from Iran – No Risk of Wider War
Hedging Risk Amidst the Escalating Israel-Iran Conflict
Implications of Immigration on Future Fed Policy Conduct and US Equity Returns
Steno Signals #95 – Is the Next Move a Hike?
Portfolio Watch: The USD Wrecking Ball Is Back
Here Comes the Sentiment Flush
How Expensive Are U.S. Equities?
Inflation Takes Centre Stage – QE Coming?

Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector

By Sameer Taneja

We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run.
We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.
We like Vale (VALE US) for its capital return in large caps, Kumba Iron Ore (KIO SJ) in midcaps, and Mount Gibson Iron (MGX AU) in junior miners.

Iran/Israel Debrief: A Very Soft Response from Iran – No Risk of Wider War

By Mikkel Rosenvold

Good morning everyone – what a dramatic night in the Middle East and what a couple of days we have in front of us.
Just a quick update on our take on things.
Note that this is written Sunday morning CET and that events are still unfolding.

Hedging Risk Amidst the Escalating Israel-Iran Conflict

By Albert Maass

Tensions between Israel and Iran have escalated, potentially leading to a broader conflict involving major global powers, which could significantly impact global financial markets.
Immediate market reactions could include a drop in global stock markets, a surge in oil prices, and increased demand for safe-haven assets like gold and the US dollar.
Multi-Asset portfolio managers need to employ strategies such as reducing risky asset exposure, increasing investments in defensive sectors, and diversifying geographically to mitigate the conflict’s impact on investments.

Implications of Immigration on Future Fed Policy Conduct and US Equity Returns

By Said Desaque

Stronger-Than-Expected data forced financial markets to pare expectations of Fed policy easing in 2024. Increased labour supply reduced wage inflation, allowing the Fed to contemplate policy rate reductions this year.
Immigration can impart short-term economic benefits and assist Fed policy by acting as a safety valve against wage inflation and keeping inflationary expectations well-anchored.
Reductions in legal immigration that curb labour supply will lower the marginal productivity of capital as well as the rate of return on equities, particularly if budget deficits remain elevated.

Steno Signals #95 – Is the Next Move a Hike?

By Andreas Steno

Before getting to the financial word, I just briefly want to reiterate that we find a de-escalation most likely between Iran and Israel after the events unfolding over the weekend.
Our head of geopolitics, Mikkel Rosenvold, released his take earlier.
Quote of the week: Iran’s Chief of Staff: “Our attack is over, and we do not wish to continue it, but we will respond forcefully if Israel targets our interests.

Portfolio Watch: The USD Wrecking Ball Is Back

By Andreas Steno

The USD has been on a roll since the firm US inflation report earlier in the week and we are approaching the point where European trade balances will be impacted substantially by the rally in (energy) commodities.
Even European Nat Gas seems to be on the move and pairing that move with the broader rise in Oil and Copper leads to a likely “flip” in the Eurozone trade balance.
When the Euro-zone trade balance shifts from positive to negative, we typically see an impact on the trend of the EUR, which is probably the last thing the ECB needs right now.

Here Comes the Sentiment Flush

By Cam Hui

The S&P 500 violated an uptrend that began in November. The violation resolved with the index is testing initial support nearby at the 50 dma at about 5110.
Our analysis of market internals concludes that the decline is nearly done. Sentiment is not sufficiently panicked to be contrarian bullish. Technical conditions are oversold but can become more oversold.
We interpret these conditions as a stock market that’s undergoing final flush before an intermediate-term bottom is formed. We believe any pullback should be temporary and shallow in nature.

How Expensive Are U.S. Equities?

By Cam Hui

Should investors worry about the elevated levels of equity valuation? The equity valuation question is a tricky one because it is only useful for investors with long time horizons.
Equity returns depend on the evolution of other factors such as the evolution of inflationary expectations and the bond market’s term premium.
In the short term, stock prices are elevated because of P/E expansion, but as long as earnings estimates continue to rise, downside pressure should be limited.

Inflation Takes Centre Stage – QE Coming?

By Rikki Malik

Inflationary impulses are alive and well, coming through even in “core” US data
The Bank of Japan continues to flounder around a JPY strategy
Are US banks attempting a back-door QE, aided by the Federal Reserve?

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Apr 15

Daily Brief Energy/Materials: Azure Minerals, China Nonferrous Mining Corp, Tietto Minerals Ltd, Iron Ore and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Merger Arb Mondays (15 Apr) – Azure, Silver Lake, Genex, Boral, China TCM, C&F Logistics, Roland DG
HK Connect SOUTHBOUND Flows (To 12 Apr 2024); Strong Net Buying. New State Council and CSRC Plans
Tietto Minerals (TIE AU): Zhaojin Mining Secures Reg Approvals. Then Bumps
Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector

Merger Arb Mondays (15 Apr) – Azure, Silver Lake, Genex, Boral, China TCM, C&F Logistics, Roland DG

By Arun George

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: Qantm Intellectual Property (QIP AU), Southern Cross Media (SXL AU), QV Equities Ltd (QVE AU), Silver Lake Resources (SLR AU), Azure Minerals (AZS AU), China TCM.
Lowest spreads: Tietto Minerals Ltd (TIE AU), Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU).

HK Connect SOUTHBOUND Flows (To 12 Apr 2024); Strong Net Buying. New State Council and CSRC Plans

A shares were down on the week, not maintaining the month-end bounce after the long weekend. H-shares were mixed. HSCEI was slightly up.
Net SOUTHBOUND buying was +HK23bn. SOUTHBOUND ended its consecutive post-CNY daily net buy streak on 25 March, then started a new one. No net sell days since.
This week saw a LOT of news. State Council Nine Points. CSRC draft regs and legislative work plan. Ratings agency action. Lots of movement. None of it hugely positive.

Tietto Minerals (TIE AU): Zhaojin Mining Secures Reg Approvals. Then Bumps

By David Blennerhassett

On the 30 October 2023, Chinese gold producer Zhaojin Mining Industry (1818 HK) pitched a non-binding off-market Offer for Aussie-listed West African gold miner Tietto Minerals (TIE AU).
Zhaojin held 7.02% of shares out, and sought 50.1%. Tietto subsequently rejected the A$0.58/share cash proposal. The IE backed out a fair value range of A$0.793-A$0.927/share.
Zhaojin has now announced it has secured all Chinese regulatory approvals; and that Côte d’Ivoire government approval is not required. Plus Zhaojin bumped terms to A$0.68/share – best and final.

Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector

By Sameer Taneja

We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run.
We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.
We like Vale (VALE US) for its capital return in large caps, Kumba Iron Ore (KIO SJ) in midcaps, and Mount Gibson Iron (MGX AU) in junior miners.

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Apr 15

Daily Brief TMT/Internet: Money Forward , BOE Technology Group , Nanya Technology, Vodafone Idea and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Money Forward (3994) | Net Sales +40%
Mainland Connect NORTHBOUND Flows (To 12 Apr 2024): NB A Net Seller; Flows See Semi/Tech Buys
Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially
Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Money Forward (3994) | Net Sales +40%

By Mark Chadwick

Money Forward reported Q1 results. Net sales rose 40% YoY to 9.5 billion yen
Money Forward saw a big jump in profitability, which puts the company on track to meet full year guidance
The stock has risen around 30% since January. We still see around 7% upside to our target valuation

Mainland Connect NORTHBOUND Flows (To 12 Apr 2024): NB A Net Seller; Flows See Semi/Tech Buys

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 11.5bn of A-shares on low-ish volume. A-shares underperformed H-shares quite dramatically, giving back gains from two weeks ago.
This week saw considerable net buying of semiconductor technology names. I expect that to continue.

Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

By Vincent Fernando, CFA

Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.
Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya’s main Consumer segment.
Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya’s 2024E consensus margin expectations set at a high bar and the stock isn’t cheap.

Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

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Apr 15

Daily Brief Industrials: Pasona Group, HD Hyundai Marine Solution , Orient Overseas International and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Pasona (2168 JP) Special Div – Too Small to Matter
ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo
Orient Overseas Intl (316 HK): Spotting Initial Signs of Recovery

Pasona (2168 JP) Special Div – Too Small to Matter

On Friday, Pasona Group (2168 JP) announced its expected use of funds into the May 2024 results, including a special dividend plan, investment for growth, and “strengthening the operating platform.”
The plan will disappoint. The stock may get hit hard. The truth is somewhere in the middle. This is where active stewardship matters. So get stewarding.
A special div paid over 5yrs should be paid one-shot, now. If the company has plans worth supporting, set KPIs now, ask for money later. Good plans get good money.

ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo