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Smartkarma Daily Briefs

Mar 18
0

Daily Brief Industrials: Aida Engineering, Evergreen Marine Corp, Ceigall India, AviChina Industry & Technology H and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.
  • Pair Trade Idea: Short Evergreen Against Long Maersk / ZIM
  • Ceigall India Pre-IPO Tearsheet
  • AviChina Industry (2357 HK): Better Look Forward

Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.

By Travis Lundy

  • Late last week, machine tool and press maker Aida Engineering (6118 JP) made an announcement of a share buyback. Up to 2.3mm shs (3.59%) spending up to ¥2bn.
  • The company has filed a policy for “Action to Implement Management That is Conscious of Cost of Capital and Stock Price” in its most recent CorpGov report available (J/E) here. 
  • It will be a little smaller than that, but it is worth taking a closer look at the details, etc.

Pair Trade Idea: Short Evergreen Against Long Maersk / ZIM

By Daniel Hellberg

  • Since October, Evergreen shares have performed well on rising spot rates
  • Over the same period, Maersk and ZIM shares fell on longer-term concerns
  • Pair trade idea: SHORT Evergreen vs LONG Maersk / ZIM position

Ceigall India Pre-IPO Tearsheet

By Ethan Aw

  • Ceigall India (1605242D IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by IIFL Securities, JM Financial and ICICI Securities.
  • Ceigall India is an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. 
  • Its principal business operations are broadly divided into EPC and hybrid annuity model (HAM) projects, which are spread across ten states in India.

AviChina Industry (2357 HK): Better Look Forward

By Osbert Tang, CFA

  • AviChina Industry & Technology H (2357 HK)‘s FY23 earnings growth of 5.5% is affected by dilution and restatement. Its A-share subsidiaries achieved a 24% aggregate earnings growth. 
  • Gross margin expanded and outlook remains decent. Projected growth for these A-shares reached 36.6% in FY24F and 23.8% in FY25F. Net cash equals 40% of the share price.
  • The stock’s 8.5x and 7.3x PERs for FY24F and FY25F are cheap relative to its peers. It also trades at 57% discount to its A-share holdings.

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Mar 18
0

Daily Brief Health Care: Shenyang Xingqi Pharmaceutical, Grifols and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma
  • Liquid Universe of European Ordinary and Preferred Shares: March‘24 Report

China Healthcare Weekly (Mar.15)- New Policy of Innovative Drug, TCM Formula Granules, Xingqi Pharma

By Xinyao (Criss) Wang

  • A document titled “Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain” would completely change the outlook/investment logic of China’s innovative drugs.
  • We predict that due to the early opening of TCM formula granules VBP in some provinces and intensifying competition, the market pattern of TCM formula granules would face reshaping.
  • After the atropine eye drops is approved by the NMPA, Xingqi’s performance growth will accelerate. Supported by favorable policies, its market value is expected to reach above RMB30 billion.

Liquid Universe of European Ordinary and Preferred Shares: March‘24 Report

By Jesus Rodriguez Aguilar

  • Since mid-February, spreads have not followed a clear pattern across our European liquid universe of ordinary and preferred shares (9 have tightened, 9 widened, 1 remained at same level).
  • Recommended trades long preferred / short ordinary shares: Danieli, Grifols, Media-for-Europe, Sixt.
  • Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal, Roche.

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Mar 18
0

Daily Brief Financials: Crixus BH3 Acquisition and more

By | Daily Briefs, Financials

In today’s briefing:

  • Future Fuel Forward

Future Fuel Forward

By subSPAC

  • SPAC Activity returned to full pace in the past week, with several deals being announced, including with a Sustainable Fuels Maker and a Gold Producer from South Africa.
  • Also, Trump tried to sell his stake in his social media company to Elon Musk as his SPAC deal stalled, and Fisker could be the latest EV De-SPAC to run out of cash. Read on to find out the latest about all things SPACs. 

  • Sustainable Aviation Fuel (SAF) and clean biofuels producer XCF Global Capital is merging with SPAC BH3 Acquisition, in a deal valuing the combined company at $1.84 billion. 

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Mar 17
0

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

By | Daily Briefs, South Korea

In today’s briefing:

  • Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation

Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation

By Sanghyun Park

  • Estimating FINANCIAL INVESTMENT’s dividend arbitrage positions’ exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January’s volume (≥₩2T).
  • Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April’s end, likely impacting index negatively, akin to January.
  • Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.

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Mar 17
0

Daily Brief Singapore: Singtel and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning

Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning

By David Blennerhassett

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Mar 17
0

Daily Brief India: Wipro Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Quiddity Leaderboard BSE/​​​​SENSEX Jun 24: Who Will Replace Wipro?

Quiddity Leaderboard BSE/​​​​SENSEX Jun 24: Who Will Replace Wipro?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
  • As things stand, there could be one index change for the SENSEX index but there is room for these names to change during the remainder of the reference period.
  • Separately, there could be five ADDs/DELs for the BSE 100 index and six ADDs/DELs for the BSE 200 index.

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Mar 17
0

Daily Brief Japan: NEC Corp, TSE Tokyo Price Index TOPIX, JSR Corp and more

By | Daily Briefs, Japan

In today’s briefing:

  • NEC (6701 JP): Generative AI Is the Spark, Not the Driver
  • Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
  • (Mostly) Asia-Pac M&A:QV Equities, TASK, Qantm, Superloop, CIMC Vehicle, JSR, Roland DG, Outsourcing
  • Weekly Deals Digest (17 Mar) – JSR, Roland DG, CIMC Vehicles, Li Ning, Alumina, QV Equities, Japfa

NEC (6701 JP): Generative AI Is the Spark, Not the Driver

By Scott Foster

  • The P/E ratio has risen above 20x this fiscal year from no more than 13x in the previous four years, reflecting successful restructuring and investor enthusiasm for AI. 
  • Profit margins are rising, but remain moderate in absolute terms with room for further improvement. The shares may consolidate, but they do not look overvalued.
  • Management is aiming for generative AI sales of ¥50 billion in three years time. This is less than 2% of total sales, but a positive indicator for NEC’s software business.

Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”

By Travis Lundy

  • In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
  • The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
  • We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

(Mostly) Asia-Pac M&A:QV Equities, TASK, Qantm, Superloop, CIMC Vehicle, JSR, Roland DG, Outsourcing

By David Blennerhassett

Weekly Deals Digest (17 Mar) – JSR, Roland DG, CIMC Vehicles, Li Ning, Alumina, QV Equities, Japfa

By Arun George

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Mar 17
0

Daily Brief China: Tencent, KE Holdings , Contemporary Amperex Technology (CATL), Ganfeng Lithium and more

By | China, Daily Briefs

In today’s briefing:

  • HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
  • [KE Holdings (BEKE US, BUY, TP US$24) Review]: Investor Friendly & Best-In-Class…Reiterate BUY
  • Mainland Connect NORTHBOUND Flows (To 15 Mar 2024): Biggest Net Buying in a While, CATL a Big Buy
  • A/H Premium Tracker (To 15 Mar 2024):  Liquid AH Premia Starting to Narrow

HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs

By Travis Lundy

  • A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
  • Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
  • The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row. 

[KE Holdings (BEKE US, BUY, TP US$24) Review]: Investor Friendly & Best-In-Class…Reiterate BUY

By Eric Wen

  • KE Holdings’ (BEKE) reported C4Q23 revenue 6.2%/7.5% above our est./cons.. Its non-GAAP net income miss our est. by 8.3%, due to bad debt write-off and year-end bonus
  • Although recovery in new home market remains muddy, we view Beike’s commitment to deliver 5% yield through dividend and stock buyback as investor friendly. 
  • We reiterate BUY rating and maintain TP at US$24/ADS . 

Mainland Connect NORTHBOUND Flows (To 15 Mar 2024): Biggest Net Buying in a While, CATL a Big Buy

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 BUY RMB 32.8bn of A-shares on decent volume after one RMB-3bn week following 5 weeks straight of net buying total RMB +63bn. Foreigners are in.
  • The volume now is back to chasing momentum, but given so much net buying, much of it appears to be passive plus a CATL kicker.

A/H Premium Tracker (To 15 Mar 2024):  Liquid AH Premia Starting to Narrow

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 a net buyer every day since the end of Chinese New Year. NORTHBOUND a huge net buyer this week, now net buyers in size (RMB +93bn) over 7 weeks.
  • For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

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Mar 17
0

Daily Brief Quantitative Analysis: A-H Premium Weekly (Mar 15th): Air China and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • A-H Premium Weekly (Mar 15th): Air China, QHD Port, Datang Intl, Wuxi Apptec, PetroChina, CGN Power
  • HK Short Interest Weekly: Zijin Mining, Techtronic Ind, CNOOC, Kuaishou, HSBC, Trip.Com
  • Hong Kong Connect Flows (Mar 15th): BOC, Tencent, CNOOC, Zto Express, Kuaishou, Anta Sports
  • Northbound Flows (Mar 15th): $5bn of Inflows Last Week
  • TWSE Short Interest Weekly (Mar 15th): Wistron, Hon Hai, Asia Vital, Wt, Umc, Unimicron Tech, Wiwynn

A-H Premium Weekly (Mar 15th): Air China, QHD Port, Datang Intl, Wuxi Apptec, PetroChina, CGN Power

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.2% as of Mar 15th.
  • The average A-H premium changed by -0.1ppt week-on-week, led by communication services, utilities, energy and offset by consumer staples, real estate, health care.
  • We highlight weekly changes in A-H premium for Air China, QHD Port, Datang Intl, Wuxi Apptec, PetroChina, CGN Power.

HK Short Interest Weekly: Zijin Mining, Techtronic Ind, CNOOC, Kuaishou, HSBC, Trip.Com

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Mar 8th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight short changes in Zijin Mining, Techtronic Ind, CNOOC, Kuaishou, HSBC, Trip.Com.

Hong Kong Connect Flows (Mar 15th): BOC, Tencent, CNOOC, Zto Express, Kuaishou, Anta Sports

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 15th.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for Bank Of China, Tencent, CNOOC, Zto Express, Kuaishou Technology, Anta Sports Products.

Northbound Flows (Mar 15th): $5bn of Inflows Last Week

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 15th.
  • We estimate the weekly inflows to be US$5,038.2 million, led by industrials, consumer discretionary, consumer staples sectors.
  • We highlight flows for CATL, Wuliangye, China Tourism, Moutai, Midea.

TWSE Short Interest Weekly (Mar 15th): Wistron, Hon Hai, Asia Vital, Wt, Umc, Unimicron Tech, Wiwynn

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Mar 15th which has an aggregated short interest worth USD70.1bn.
  • 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 Wistron, Hon Hai, Asia Vital, Wt, Umc, Unimicron Tech, Wiwynn, Mediatek.

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Mar 17
0

Daily Brief Thematic (Sector/Industry): India’s Mutual Fund Stress Testing Is Not the Solution Which Is Need of Hour. and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • India’s Mutual Fund Stress Testing Is Not the Solution Which Is Need of Hour.
  • [Blue Lotus Daily]9926HK/1801HK/1877HK/BGNE/ZLAB/9995HK/1211HK/XPEV/1810HK/Chery Automobile/LI/NIO
  • [Blue Lotus Daily – TMT Update]:BABA/002352 SZ/1519 HK/3690 HK/META/700 HK/259960 KRX

India’s Mutual Fund Stress Testing Is Not the Solution Which Is Need of Hour.

By Nimish Maheshwari

  • What is a stress test? How it is being calculated?
  • Key Takeaways of Mutual Fund’s Stress Test Results. What should investors know?  
  • Flaws in SEBI’s Stress Testing Results and Way Ahead for investors

[Blue Lotus Daily]9926HK/1801HK/1877HK/BGNE/ZLAB/9995HK/1211HK/XPEV/1810HK/Chery Automobile/LI/NIO

By Eric Wen

  • 9926 HK /1801 HK /1877 HK/ BGNE/ ZLAB/9995 HK: US lobbying group distanced itself from Wuxi AppTec after being accused（/）
  • 1211 HK/ XPEV/ 1810 HK：GAC AION orders surged after price cuts（/）
  • Chery Automobile:It Is Reported that Chery Automobile Is in Talks with the Italian government to build a factory（/）

[Blue Lotus Daily – TMT Update]:BABA/002352 SZ/1519 HK/3690 HK/META/700 HK/259960 KRX

By Ying Pan

  • BABA/002352.SZ/1519.HK: Taobao/Tmall adjusts algorithm to favor merchants with better service capabilities (+/+/-)
  • 3690 HK: Meituan QuanQuan shift from direct operating into third party operating, and cut nearly 200 BD job positions(+)
  • 700 HK/259960 KRX:The development team of <PUBG> has unveiled its major game update plan for 2024.(+)  

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