Smartkarma Daily Briefs

With the review period complete, Titan Co Ltd (TTAN IN) should replace Indian Oil Corp (IOCL IN) in the Nifty100 Low Volatility 30 Index at the close on 27 March.
Constituent changes, volatility changes and capping changes will result in one-way turnover of 13.2% resulting in a one-way trade of INR 4.2bn.
The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

Macrotech Developers Placement – Large Deal, and Not Cheap Per Se

By Clarence Chu

Macrotech Developers (LODHA IN) is looking to raise around US$398m via a QIP.
The deal here will be a well flagged one with LODHA’s board having announced its intention of raising up to INR50bn via a QIP earlier in Jan 2024.
That being said, while representing just 3% of LODHA’s shares outstanding, the deal would be a large one to digest at 30 days of its three month ADV.

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Mar 05

Daily Brief Japan: Socionext, JSR Corp, ZOZO Inc, Trial Holdings, Sanyo Trading, Srg Takamiya and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What
Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help
Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later
3Q Follow-Up – Takamiya (2445 JP)

Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks

The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected.
Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise.
Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.

JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What

JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR.
Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating.

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

Trial Holdings IPO – Not Wholly Convinced but a Strong Market Should Help

By Sumeet Singh

Trial Holdings (5882 JP) (TH) is now looking to raise up to US$259m in its Japan IPO, after having canceled its prior listing attempt last year.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
We have looked at the company’s past performance in our previous notes. In this note, we talk about implied valuations in the IPO range.

Sanyo Trading (3176 JP) – Small Secondary Offering as Banks Sell, More Later

Sanyo Trading (3176 JP) is a small specialised trading company (rubber, polymers, elastomers, etc). Niche, decent profitability/margins, highish ROE.
Banks in the MUFG and SMBC family are selling. Norinchukin is selling a bit too.
This is small in size but big in impact. 20% of Max RWF. 50d ADV. Unlike other recent, larger, offerings, this has no flow mitigants. But it’s cheap.

3Q Follow-Up – Takamiya (2445 JP)

By Sessa Investment Research

Takamiya announced its 3Q FY24/3 consolidated sales of ¥32,183 mn (+4.9% YoY), operating profit of ¥2,405 mn (+49.7% YoY), ordinary profit of ¥2,526 mn (+46.5% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥1,727 mn (+46.9% YoY).
All the segments, sales business, rental business and overseas business, posted an increase in operating profit YoY.
Especially, rental business became a driving force of the expansion of the whole business.

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Mar 04

Most Read: Nippon Express Holdings, TSE Tokyo Price Index TOPIX, Korea Stock Exchange Kospi Index, Yankuang Energy Group, Air Lease Corp, Flight Centre Travel, China Telecom (H), Great Wall Motor, Bizlink Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nippon Express (9147) Secondary Offering – Banks, Sompo, Others Sell – “2024 Problem” Looms
JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions
Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation
Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
S&P 500/400/600 Index Rebal – It’s Not The Trade You Think
S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)
Nippon Express (9147 JP): A US$260 Million Secondary Offering
A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide
Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!

Nippon Express (9147) Secondary Offering – Banks, Sompo, Others Sell – “2024 Problem” Looms

Today post-close, Nippon Express Holdings (9147 JP) announced a secondary offering. Total size is ~¥30bn before considering where it will price; 11-12 days of ADV, 4.6% of shares out.
Various banks, Toyota-related auto cos, and Sompo Japan will sell. This is a start to the unwind, but it is a very small portion of the total cross-holding position.
NX also announced an on-market buyback of up to ¥10bn to run from 11April -31July 2024. This, and index demand, mitigate some heaviness. But The 2024 Problem looms large.

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation

Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think

On Friday after the close, the S&P DJI Index Committee announced changes to the S&P 100, S&P500, S&P MidCap400, and S&P SmallCap600. Changes happen at the close 15 March 2024.
Super Micro Computer (SMCI US) and Deckers Outdoor (DECK US) replace Zions Bancorporation (ZION US) and Whirlpool Corp (WHR US) in the S&P500. 2 changes to 400, 6 to 600.
The immediate reaction was to send SMCI up 12.5%. That’s shortsighted. It pays to count the pennies involved. There are a LOT of pennies.

S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.

HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)

A share indices were up on the week. HK stock indices were down except for HS Tech. H-shares with A-share pairs were up.
Net SOUTHBOUND buying was HK$9.1bn in the second post-holiday week after being +HK$20bn in the first week. LOTS of SOEs on the net buying side. Still.
SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.

Nippon Express (9147 JP): A US$260 Million Secondary Offering

Nippon Express Holdings (9147 JP) has announced a secondary offering of up to 4.8 million shares (including overallotment). There are seven selling shareholders.
The secondary offering comes ahead of the implementation of regulatory restrictions on truck drivers’ overtime in April 2024, which is widely known as the ‘2024 Problem’.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 11 and 13 March (likely 11 March).

A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide

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 and NORTHBOUND flows net positive. NB 5 weeks in a row. AH premia rebounded slightly. AH Premia are still wide on average. Premia curves should still shift flatter.
Two Sessions seems like a good place to make positive public statements but recent speeches from the very top seem more oriented towards “The People Must Endure.”

Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!

By Janaghan Jeyakumar, CFA

The index changes for the March 2024 index rebal event for the T50/100 index family and the TDIV index were confirmed after market close on Friday 1st March 2024.
The confirmed changes for T50 and T100 were captured in our expectations but an additional change we expected did not materialize which adversely affected our flow expectations for March 2024.
In this insight, we take a close look at the breakdown of our final flow expectations for the upcoming Inclusion/Exclusion and Capping events.

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Mar 04

Daily Brief Industrials: Air Lease Corp, Bizlink Holding, Contemporary Amperex Technology (CATL), Nippon Express Holdings, CIMC Vehicles Group , RB Global and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think
Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!
Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names
Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price
CIMC Vehicles (301039 CH): Cheap And Steady Long Term Growth Potential
Rb Global Inc (RBA.) – Sunday, Dec 3, 2023

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think

On Friday after the close, the S&P DJI Index Committee announced changes to the S&P 100, S&P500, S&P MidCap400, and S&P SmallCap600. Changes happen at the close 15 March 2024.
Super Micro Computer (SMCI US) and Deckers Outdoor (DECK US) replace Zions Bancorporation (ZION US) and Whirlpool Corp (WHR US) in the S&P500. 2 changes to 400, 6 to 600.
The immediate reaction was to send SMCI up 12.5%. That’s shortsighted. It pays to count the pennies involved. There are a LOT of pennies.

Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!

By Janaghan Jeyakumar, CFA

The index changes for the March 2024 index rebal event for the T50/100 index family and the TDIV index were confirmed after market close on Friday 1st March 2024.
The confirmed changes for T50 and T100 were captured in our expectations but an additional change we expected did not materialize which adversely affected our flow expectations for March 2024.
In this insight, we take a close look at the breakdown of our final flow expectations for the upcoming Inclusion/Exclusion and Capping events.

Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names

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 23.5bn of A-shares on strong average activity after RMB +49bn the previous four trading weeks. More efforts by authorities to eliminate selling.
No finance names of any kind in the top ten this week after 5/10 the week before. Slight tendencies to trade on reversion.

Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price

By Clarence Chu

A group of shareholders are looking to raise US$220m from selling their stakes in Nippon Express Holdings (9147 JP).
Overall, the deal would be a relatively large one to digest at 11 days of Nippon Express’ three month ADV, and 4.8% of the firm’s total shares outstanding.
Together with the announcement, the firm has also guided towards a share buyback program which should provide some share price support a month post-deal, in our view.

CIMC Vehicles (301039 CH): Cheap And Steady Long Term Growth Potential

By Mohshin Aziz

CIMC Vehicles Group (301039 CH) (CIMCV) is a leading global manufacturer of semi-trailers and various truck bodies that is the mainstay of heavy ground goods transport
9M23 earnings surged by 216% and beat consensus, scope for further earnings upgrade as the business and management outlook statement is very positive
Our target price of CNY12.50 (+31% UPSIDE) is based on 2024 PE 15x – a 10% discount against the industry leader Caterpillar

Rb Global Inc (RBA.) – Sunday, Dec 3, 2023

Key points

Ritchie Brothers has faced challenges such as contentious acquisition, activist involvement, dilutive financing, and firing of key executives
Despite these challenges, the company’s profitability has been improving significantly
Author believes RB Global’s earnings power will continue to grow, potentially reaching $5 per share by 2025, presenting a favorable comparison to the current share price in the $60s

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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Mar 04

Daily Brief Energy/Materials: JSR Corp, Shaanxi Coal Industry, Entree Resources, Pembina Pipeline , Teck Resources , Triple Flag Precious Metals and more

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

In today’s briefing:

Merger Arb Mondays (04 Mar) – JSR, Shinko, Outsourcing, APM, Alumina, Adbri, Azure, CSR, Probiotec
China A50 ETF Rebalance: Four Changes in March
Rio: JV Partner in Mongolia Releases Incredible Copper Grades One Month Before Arbitration Deadline
Pembina Pipeline Corporation: Initiation Of Coverage – Major Drivers
Teck Resources Limited: Initiation Of Coverage – 6 Growth Catalysts
Triple Flag Precious Metals (TFPM) – Sunday, Dec 3, 2023

Merger Arb Mondays (04 Mar) – JSR, Shinko, Outsourcing, APM, Alumina, Adbri, Azure, CSR, Probiotec

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: APM Human Services Internation (APM AU), Probiotec Ltd (PBP AU), Alumina Ltd (AWC AU), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), China TCM.
Lowest spreads: Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Yaizu Suisankagaku Industry (2812 JP).

China A50 ETF Rebalance: Four Changes in March

The iShares A50 China (2823 HK) and CSOP China A50 (HKD) (2822 HK) ETFs will rebalance their holdings at the close on 15 March.
Shaanxi Coal Industry, Hygon Information Technology, CGN Power and China Everbright Bank will replace Aier Eye Hospital, Bank Of Ningbo, WuXi AppTec and Jiangsu Yanghe Brewery in the ETFs.
Hygon Information Technology (688041 CH) will also be added to a global index at the same time while CGN Power (1816 HK) will be added to the FXI ETF.

Rio: JV Partner in Mongolia Releases Incredible Copper Grades One Month Before Arbitration Deadline

By Nicolas Van Broekhoven

Rio Tinto Ltd (RIO AU) has one of its most prized assets in Mongolia. The Oyu Tolgoi mine has an 80-year mine-life and will ramp up significantly in coming years.
Entree Resources (ETG CN) is the last remaining hurdle to acquire after the successful integration of Turquoise Hill in late 2022.
Entree just released a batch of 2022 (!) drilling results, one month before an arbitration deadline. Why was it released now? Will Rio finally move on Entree before the deadline?

Pembina Pipeline Corporation: Initiation Of Coverage – Major Drivers

This is our first report on midstream major, Pembina Pipeline Corporation.
The company’s Q4 2023 earnings signaled a robust financial position, with quarterly earnings reaching $698 million and a record adjusted EBITDA of over $1 billion.
This result was bolstered by growing volumes across numerous systems and a strong year from the firm’s marketing business.

Teck Resources Limited: Initiation Of Coverage – 6 Growth Catalysts

This is our first report on natural resource exploration player, Teck Resources Limited.
The company showed a strong fourth quarter performance across their business, advancing operations at QB and reporting a record-breaking quarterly copper production.
This also led to an Adjusted EBITDA of $1.7 billion in Q4 and $6.4 billion for the year.

Triple Flag Precious Metals (TFPM) – Sunday, Dec 3, 2023

Key points

Gold is reaching all-time highs due to declining real rates
Investing in precious metals royalty and streaming companies, like Triple Flag Precious Metals, is recommended
Triple Flag offers strong qualities and relative valuation discount compared to larger counterparts

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Mar 04

Daily Brief Industrials: Air Lease Corp, Bizlink Holding, Contemporary Amperex Technology (CATL), Nippon Express Holdings, CIMC Vehicles Group , RB Global and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think
Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!
Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names
Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price
CIMC Vehicles (301039 CH): Cheap And Steady Long Term Growth Potential
Rb Global Inc (RBA.) – Sunday, Dec 3, 2023

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think

On Friday after the close, the S&P DJI Index Committee announced changes to the S&P 100, S&P500, S&P MidCap400, and S&P SmallCap600. Changes happen at the close 15 March 2024.
Super Micro Computer (SMCI US) and Deckers Outdoor (DECK US) replace Zions Bancorporation (ZION US) and Whirlpool Corp (WHR US) in the S&P500. 2 changes to 400, 6 to 600.
The immediate reaction was to send SMCI up 12.5%. That’s shortsighted. It pays to count the pennies involved. There are a LOT of pennies.

Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!

By Janaghan Jeyakumar, CFA

The index changes for the March 2024 index rebal event for the T50/100 index family and the TDIV index were confirmed after market close on Friday 1st March 2024.
The confirmed changes for T50 and T100 were captured in our expectations but an additional change we expected did not materialize which adversely affected our flow expectations for March 2024.
In this insight, we take a close look at the breakdown of our final flow expectations for the upcoming Inclusion/Exclusion and Capping events.

Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names

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 23.5bn of A-shares on strong average activity after RMB +49bn the previous four trading weeks. More efforts by authorities to eliminate selling.
No finance names of any kind in the top ten this week after 5/10 the week before. Slight tendencies to trade on reversion.

Nippon Express Placement – Lukewarm Track Record, Although Buyback Could Lift Share Price

By Clarence Chu

A group of shareholders are looking to raise US$220m from selling their stakes in Nippon Express Holdings (9147 JP).
Overall, the deal would be a relatively large one to digest at 11 days of Nippon Express’ three month ADV, and 4.8% of the firm’s total shares outstanding.
Together with the announcement, the firm has also guided towards a share buyback program which should provide some share price support a month post-deal, in our view.

CIMC Vehicles (301039 CH): Cheap And Steady Long Term Growth Potential

By Mohshin Aziz

CIMC Vehicles Group (301039 CH) (CIMCV) is a leading global manufacturer of semi-trailers and various truck bodies that is the mainstay of heavy ground goods transport
9M23 earnings surged by 216% and beat consensus, scope for further earnings upgrade as the business and management outlook statement is very positive
Our target price of CNY12.50 (+31% UPSIDE) is based on 2024 PE 15x – a 10% discount against the industry leader Caterpillar

Rb Global Inc (RBA.) – Sunday, Dec 3, 2023

Key points

Ritchie Brothers has faced challenges such as contentious acquisition, activist involvement, dilutive financing, and firing of key executives
Despite these challenges, the company’s profitability has been improving significantly
Author believes RB Global’s earnings power will continue to grow, potentially reaching $5 per share by 2025, presenting a favorable comparison to the current share price in the $60s

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Mar 04

Daily Brief TMT/Internet: China Telecom (H), Taiwan Semiconductor (TSMC) – ADR, Oobit Technologies UAB, Universal Display, Warner Bros Discovery and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)
Taiwan Dual-Listings Monitor: Long TSMC Taiwan Shares Vs. ADR on Historically High Spread; UMC, ASE
Tether, Solana co-founder back Oobit’s US$25M Series A round | e27
Universal Display Corporation (OLED) – Long-term partnerships with OLED manufacturers & 5 Growth Factors In 2024 & Beyond! – Major Drivers
Warner Bros. Discovery Inc.: Enhanced Content Distribution

HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)

A share indices were up on the week. HK stock indices were down except for HS Tech. H-shares with A-share pairs were up.
Net SOUTHBOUND buying was HK$9.1bn in the second post-holiday week after being +HK$20bn in the first week. LOTS of SOEs on the net buying side. Still.
SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.

Taiwan Dual-Listings Monitor: Long TSMC Taiwan Shares Vs. ADR on Historically High Spread; UMC, ASE

By Vincent Fernando, CFA

TSMC: +22.9% ADR Premium is Near an All-Time High; Long Taiwan Shares vs. Short the ADR
UMC: 2.2% Premium; Flipped Positive From a Discount; Likely to Contract
ASE: +13.3%; Short the Historically High Spread at the Current Level

Tether, Solana co-founder back Oobit’s US$25M Series A round | e27

By e27

Singapore-based crypto payment app Oobit has concluded its US$25 million Series A investment round.
The backers in this round include the investment arm of USDT parent company Tether, CMCC Global’s Titan Fund, 468 Capital, and Solana co-founder Anatoly Yakovenko.
The startup plans to use the funds to expand into Latin America, the UAE, the Asia-Pacific, Canada, and Australia beyond its primary markets in the European Union and the UK.

Universal Display Corporation (OLED) – Long-term partnerships with OLED manufacturers & 5 Growth Factors In 2024 & Beyond! – Major Drivers

Universal Display Corporation (UDC), a leading provider of OLED technology and materials, experienced a revenue of $576 million, operating income of $217 million, and net income of $203 million in 2023.
Its robust display impacted net income per diluted share, which amounted to $4.24.
Several factors on both sides of the company’s balance sheet deserve attention while crafting an investment thesis.

Warner Bros. Discovery Inc.: Enhanced Content Distribution

Warner Bros.
Discovery is striving to create a pathway to growth in an evolving media industry as reflected in the Q4 Earnings.
The company had prioritized achieving a well-grounded financial position and reducing its leverage, successfully lowering its debt by $5.4 billion in 2023 and expecting continued deleveraging in 2024.

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Mar 04

Daily Brief Health Care: Jiangsu Hengrui Medicine, Chongqing Taiji Industry (Group) A, Merck & Co, Biomarin Pharmaceutical, Insulet Corp, Teleflex Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China Healthcare Weekly (Mar.1) – Prioritize Big Pharma, Real Ownership of Pricing Power, Hengrui
Will China TCM (570.HK) Be Incorporated into Taiji Group (600129.CH)? –If Yes, Valuation Will Double
Merck & Co: A Story Of Significant Progress & Execution Across Therapeutic Areas! – Major Drivers
BioMarin Corporation: Will Its Strategic Portfolio Review Work? – Major Drivers
Insulet Corporation: Is Its Strategy Of Connecting With Healthcare Professionals For Penetration In Niche Markets Working? – Major Drivers
Teleflex Incorporated: M&A Focus & 5 Other Strategies Driving Growth! – Financial Forecasts

China Healthcare Weekly (Mar.1) – Prioritize Big Pharma, Real Ownership of Pricing Power, Hengrui

By Xinyao (Criss) Wang

In the current challenging environment, investors should prioritize pharmaceutical companies with abundant cash flow and Biotech with diversified funding sources, as their safety margin is much higher.
After the “clamor of consumer upgrading” fades away, we will eventually realize that the so-called pricing power has never belonged to anyone or any enterprise, but always to consumers.
Hengrui is overvalued. There’re still around RMB5 billion generic drugs yet to enter VBP scope. So, the assumption that all negative effects of VBP have cleared up is not correct.

Will China TCM (570.HK) Be Incorporated into Taiji Group (600129.CH)? –If Yes, Valuation Will Double

By Xinyao (Criss) Wang

In the past few years, a big problem of Taiji is weak performance/low valuation. The main purpose of mixed-ownership reform with CNPGC is to improve operational efficiency and enhance profitability.
CNPGC made a clear commitment to solve the horizontal competition issue. So, after the privatization of China TCM is completed, it’s worth noting whether it will be merged into Taiji.
2024 is expected to see Taiji launch new M&A deals, which would bring a qualitative leap for Taiji. Market value of Taiji is expected to at least double.

Merck & Co: A Story Of Significant Progress & Execution Across Therapeutic Areas! – Major Drivers

In the Q4 earnings, Merck & Co.
reported a strong financial performance, underpinned by a robust demand for their innovative portfolio, including Keytruda, Welireg, and Gardasil, among others.
The company has embarked on various collaborations further bolstering its product pipeline with a promising line of innovations.

BioMarin Corporation: Will Its Strategic Portfolio Review Work? – Major Drivers

BioMarin Pharmaceutical recorded a 20% revenue growth in the fourth quarter of 2023 compared to Q4 of 2022.
The company gained total revenue growth of 15% for the whole of 2023 versus the prior year.
Non-GAAP earnings per share rose by 48% in Q4 2023, representing a 36% year-over year increase.

Insulet Corporation: Is Its Strategy Of Connecting With Healthcare Professionals For Penetration In Niche Markets Working? – Major Drivers

Insulet Corporation reported strong Q4 2023 results, marking its eighth straight year of 20-plus percent revenue growth.
The company’s automated insulin delivery system, Omnipod 5, played a significant role in its financial success as it generated $1 billion in revenue in 2023.
The achievement of approximately 425,000 global customers using the Omnipod platform represented a growth of around 25% from the previous year, including almost 250,000 using the Omnipod 5.

Teleflex Incorporated: M&A Focus & 5 Other Strategies Driving Growth! – Financial Forecasts

Teleflex Incorporated’s fourth quarter 2023 earnings were decent.
Firstly, the revenues grew at 2.1% year-over-year, showing the company’s overall financial robustness.
Additionally, Teleflex saw a stable-to-improving environment for material inflation and supply chains, with continued improvements expected through 2024.

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Mar 04

Daily Brief Financials: TSE Tokyo Price Index TOPIX, Korea Stock Exchange Kospi Index, KOSDAQ 150 Index, Chongho Bridge, Philippine Stock Exchange, First Financial Ban, China Jinmao Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions
Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation
What We Need to Know About Speeding Up Delisting in Korea
Chongho Bridge Pre-IPO Tearsheet
Philippines Exchange (PSE PM): Slow Q4 2023, FY24 Catalysts in the Pipeline
Ffb Bancorp (FFBB) – Sunday, Dec 3, 2023
Morning Views Asia: Adaro Energy, China Jinmao Holdings

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation

Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

What We Need to Know About Speeding Up Delisting in Korea

By Sanghyun Park

Korea’s authorities aim to streamline delisting and tighten rules for smooth market funds. 71 companies (17 in KOSPI, 54 in KOSDAQ) under review, about 8 trillion won tied up.
It’s unclear if this ties directly to the FSS chief’s mention of kicking non-compliant firms of the Value-up Program. Rumors hint at FSS-FSC differences. Impact on Value-up trading seems minimal.
Nonetheless, we must explore stocks that may gain from expediting delisting for the 71 companies under review.

Chongho Bridge Pre-IPO Tearsheet

By Ethan Aw

Chongho Bridge (2314866D CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC.
Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.
According to F&S, CB is the largest non-traditional financial institution targeting China’s rural market in terms of total loan balance as of FY22 (31st Dec 22).

Philippines Exchange (PSE PM): Slow Q4 2023, FY24 Catalysts in the Pipeline

By Sameer Taneja

Philippine Stock Exchange (PSE PM) reported a slow Q4 2023/FY23, with revenue down 9.5%/8% YoY and profits down 30% YoY for Q4 FY23 but up 4% YoY for FY23.
We are excited by the recent passing of a bill to reduce the tax on stock transactions and a proposed law for lowering the tax on dividends for non-residents.
Trading at 19x FY24e with a 5% dividend yield, EBITDA/PAT margins >55%/40%, and 25% of the market cap in cash with an acquisition angle, this stock is a must-watch

Ffb Bancorp (FFBB) – Sunday, Dec 3, 2023

Key points

FFB Bancorp is expanding its reach across California by offering remote banking services
The bank has a niche market in payment processing as an acquiring bank, generating additional income
CEO Steve Miller, with a diverse background in banking, is leading the company towards a larger market share role in California and beyond

Morning Views Asia: Adaro Energy, China Jinmao Holdings

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.

Adaro Energy
China Jinmao Holdings

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Mar 04

Daily Brief Consumer: Flight Centre Travel, Great Wall Motor, Emperador, Trial Holdings, Meituan, TSE Tokyo Price Index TOPIX, Carvana , Altria Group, Wayfair Inc Class A, Cash Converters Intl and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide
STTF Index Rebalance: The Widening Emperador Spread
Trial Holdings IPO: Valuation Thoughts
ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct
3/4 of the Companies Are Giving up the Opportunity to Communicate Their Value to Overseas Investors
Carvana Co: Initiation Of Coverage – AI & 5 Major Growth Drivers! – Financial Forecasts
Altria Group: Promotion Of Smoke-Free Products & 5 Other Factors Driving Growth! – Financial Forecasts
Wayfair Inc: Innovation In Customer Experience & Loyalty Programs Revolutionizing Growth? – Major Drivers
H1 FY24 a milestone result

S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.

A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide

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 and NORTHBOUND flows net positive. NB 5 weeks in a row. AH premia rebounded slightly. AH Premia are still wide on average. Premia curves should still shift flatter.
Two Sessions seems like a good place to make positive public statements but recent speeches from the very top seem more oriented towards “The People Must Endure.”

STTF Index Rebalance: The Widening Emperador Spread

The SPDR Straits Times Index ETF (STTF SP) will need to sell Emperador (EMI SP) at the close of trading on 15 March.
Other global index trackers will need to sell Emperador (EMP PM) at the close on 15 March.
There will be around US$55m to sell across both lines and varying liquidity has opened up a huge spread between the listings.

Trial Holdings IPO: Valuation Thoughts

Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$236 million at the IPO reference price of JPY1,550 per share.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case.
In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY1,550. We would participate in the IPO.

ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct

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, we took an early look at the possible summer 2024 listing of Tokyo Metro.
For placements, there was another large selldown in Renesas Electronics (6723 JP), while ITC Ltd (ITC IN) could see one as well soon from British American Tobacco (BATS LN).

3/4 of the Companies Are Giving up the Opportunity to Communicate Their Value to Overseas Investors

By Aki Matsumoto

About half of the prime market companies were able to communicate to investors that they are aware of their cost of capital and are committed to share price conscious management.
Half of the companies are reluctant to engage in constructive dialogue with investors, sustainable growth and medium-to-long-term improvement of corporate value, which is the concept of prime market listing criteria.
A quarter of prime market listed companies disclosed in English. Since TSE requires disclosure of this information in Corporate Governance Report, disclosure in English of this document becomes more important.

Carvana Co: Initiation Of Coverage – AI & 5 Major Growth Drivers! – Financial Forecasts

This is our first report on e-commerce player, Carvana.
The company’s Fourth Quarter 2023 Earnings included an optimistic forecast regarding the company’s economic performance.
The company’s fiscal year GPU (Gross Profit per Unit) augmented by nearly $1,000, setting a fresh record and exceeding their previous best in 2021.

Altria Group: Promotion Of Smoke-Free Products & 5 Other Factors Driving Growth! – Financial Forecasts

Altria Group’s recent earnings call has raised important topics worth considering for investors.
The company, known for its strong position in the tobacco industry, showed a clear intent to diversify into smoke-free product categories, such as heated tobacco, oral tobacco, and e-vapor.
These steps are seen as a strategic move to cushion the company from declining cigarette volumes and broaden its consumer base, thereby improving its long-term growth prospects.

Wayfair Inc: Innovation In Customer Experience & Loyalty Programs Revolutionizing Growth? – Major Drivers