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Smartkarma Daily Briefs

Jan 15
0

Daily Brief China: Irc Ltd, Foxconn Industrial Internet, Alibaba (ADR), Kweichow Moutai, Water Oasis, China Mobile, Wuxi Biologics and more

By | China, Daily Briefs

In today’s briefing:

  • IRC Limited (1029 HK): Closing Date Extended as the Risk/Reward Turns Unattractive
  • Quiddity Leaderboard SSE50/180 Jun 24: US$1.3bn One-Way; Some New Names in the Expected Changes List
  • China Consumption Weekly (15 Jan 2024): Tencent, Douyin, Alibaba, JD.com, Dada, Meituan
  • Mainland Connect NORTHBOUND Flows (To 12 Jan 2024): Renewable Energy-Related Names Sold
  • Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – January 2024
  • HK Connect SOUTHBOUND Flows (To 12 Jan 2024); High Div SOEs Still the Biggest Buys
  • Wuxi Biologics (2269.HK) – Dramatic Changes in Management Forecasts Fail to Bring Back Confidence

IRC Limited (1029 HK): Closing Date Extended as the Risk/Reward Turns Unattractive

By Arun George

  • Irc Ltd (1029 HK) notes that the offeror (Nikolai Levitskii) and acceptances reached 35.77% at the first closing date, materially short of the 50% minimum acceptance condition. 
  • The offeror has extended the closing date by 39 days (30 business days) to 20 February, the last day the offer can become or be declared unconditional. 
  • The rise in iron ore prices and a light offer pose challenges. The risk/reward profile is unfavourable as the upside (5.4% spread) outweighs the downside (20.5% to the undistributed price).

Quiddity Leaderboard SSE50/180 Jun 24: US$1.3bn One-Way; Some New Names in the Expected Changes List

By Janaghan Jeyakumar, CFA

  • SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
  • In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
  • I continue to expect 5 changes for SSE 50 and 18 changes for SSE 180 but some of the names have changed since my last insight.

China Consumption Weekly (15 Jan 2024): Tencent, Douyin, Alibaba, JD.com, Dada, Meituan

By Ming Lu

  • Tencent will allow Douyin to broadcast the game Honor of Kings after a four-year ban.
  • Dada’s stock plunged after the company released its suspicious auditing result.
  • Alibaba’s mobile office app, Dingding, has accumulated 120,000 paying users.

Mainland Connect NORTHBOUND Flows (To 12 Jan 2024): Renewable Energy-Related Names 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 2.4bn of A-shares on decent average activity. 
  • Renewables and Kweichow Moutai (600519 CH) were the big net sells on the week.

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – January 2024

By Sameer Taneja

HK Connect SOUTHBOUND Flows (To 12 Jan 2024); High Div SOEs Still the Biggest Buys

By Travis Lundy

  • SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. 
  • SOUTHBOUND saw HK$6.8bn of net OUT-flows in the week to 12 Jan 2024. Total flows were HK$118bn.
  • SOUTHBOUND saw large net selling of ETFs (unwinding Week 1) and large net buying of high-div SOEs like CNOOC, China Mobile/Telecom/Unicom, and coal names.

Wuxi Biologics (2269.HK) – Dramatic Changes in Management Forecasts Fail to Bring Back Confidence

By Xinyao (Criss) Wang

  • WuXi Bio’s optimism about new orders failed to generated expected surge in its stock price. Many investors raised great doubts about the credibility and professionalism in communication of WuXi Bio.
  • It’s easy/cost-effective for WuXi Bio to “adjust” order number. However, it’s more difficult to inflate revenue/cash flow. We have to wait for future financial results to know the real situation.
  • XBI is essentially “a bond”.Recent surge of XBI is driven by the expectations of Fed’s rate cut + US soft landing, rather than virtual improvement of external environment.Much remains unclear.  

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Jan 15
0

Most Read: Fuji Soft Inc, Open House, BYD Electronics, Shinko Electric Industries, Nikkei 225, Posco DX, Samsung Electronics, Strike Energy and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
  • Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
  • Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
  • Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
  • Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
  • EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
  • KOSPI200 Index Rebalance Preview: Four Potential Changes in June
  • ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
  • Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead
  • Costa Group (CGC AU): Potential ASX200 Replacements

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

By Arun George

  • Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds. 
  • A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022. 
  • A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

By Travis Lundy

  • After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation. 
  • The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
  • The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

By Brian Freitas

  • Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
  • Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
  • There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

By Brian Freitas

Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

By Arun George

EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?

By Nico Rosti

  • The Nikkei 225 INDEX experienced a 1-week explosive rally, last week, reaching nearly +6.6% higher than the previous week’s Close.
  • The index is now very overbought, can it continue to rise next week? and and how much higher can it go?
  • Go SHORT in the 36000-38350 price area, but the trade is not without risk.

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

By Brian Freitas

  • Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
  • The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
  • There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, a number of large filings over the holidays is somewhat positive for 2024 prospects.
  • On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead

By Mark Chadwick

  • In the upcoming week, market focus includes U.S. retail sales, bank earnings, Davos discussions on global economic challenges, China’s GDP figures, and volatile oil prices amid geopolitical tensions.
  • Fujitsu faces scrutiny in Britain regarding potential compensation for post office operators falsely accused of embezzlement due to glitches in its accounting system from the 1990s into the 2010s.
  • Yaskawa’s 9M financials show a 6% YoY net profit decline at 34bn yen. Motors and robotics, witnessed profit growth despite Chinese economic uncertainties. Orders may be bottoming

Costa Group (CGC AU): Potential ASX200 Replacements

By Brian Freitas

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Jan 14
0

Daily Brief Industrials: Korean Air Lines and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Korean Air: European Approval for Asiana Merger Reportedly Imminent

Korean Air: European Approval for Asiana Merger Reportedly Imminent

By Neil Glynn

  • Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana’s cargo business.
  • The EC had set a preliminary decision deadline of 14 February.
  • US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.

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Jan 14
0

Daily Brief TMT/Internet: Fuji Soft Inc, Taiwan Semiconductor (TSMC) – ADR, BYD Electronics, Samsung Electronics and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
  • TSMC Finishes 2023 With A Flourish
  • Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
  • ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
  • Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

By Arun George

  • Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds. 
  • A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022. 
  • A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

TSMC Finishes 2023 With A Flourish

By William Keating

  • Q423 revenues amounted to NT$625,529. In US$ terms, using TSMC’s projected exchange rate of 32, this translates to  $19.55 billion, a ~13% increase QoQ, and a 2% decrease YoY.
  • FY 2023 revenues amounted to NT$2,161.74 billion, down 4.5% YoY. In US$ terms, this amounted to $69.1 billion, an 8.8% decrease YoY and the first such YoY decrease since 2009
  • While we foresee Q124 revenues being down 5-10% QoQ, we expect full year 2024 revenues to grow in the range of 5-10% YoY. 

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

By Brian Freitas

ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, a number of large filings over the holidays is somewhat positive for 2024 prospects.
  • On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

By David Blennerhassett

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Jan 14
0

Daily Brief Energy/Materials: T&K Toka Co Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola

Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola

By Arun George

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Jan 14
0

Daily Brief Health Care: Taisho Pharmaceutical Holdin, Hanmi Science, ImmuneOnco Biopharmaceuticals (Shanghai) and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT
  • OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?
  • China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT

By David Blennerhassett

OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?

By Douglas Kim

  • After the market close on 12 January, OCI Holdings (010060 KS) announced that it plans to acquire a 27.03% stake in Hanmi Science (008930 KS) for 770 billion won. 
  • Through this investment and integration between OCI Holdings and Hanmi Science, the OCI Group and Hanmi Pharmaceutical Group plans to establish a joint management system.
  • This deal between OCI Holdings and Hanmi Science is not over and it could lead to an M&A fight for the control of Hanmi Science by its family members. 

China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

By Xinyao (Criss) Wang

  • The entire R&D cycle involves multi-party cooperation, leveraging one’s strengths. So, it is not difficult to understand some of the choices made by domestic pharmaceutical companies (e.g. Innovent, BeiGene).
  • Due to outdated technology, investment value of Sirnaomics is low, which means the likelihood of the company being acquired is also not high. We remain conservative about the outlook. 
  • ImmuneOnco’s stock price has performed much better-than-expected after IPO on HKEX. However, the endgame of ImmuneOnco’s market value could be only about RMB1.5 billion, which means large potential downside ahead.

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Jan 14
0

Daily Brief Industrials: Korean Air Lines and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Korean Air: European Approval for Asiana Merger Reportedly Imminent

Korean Air: European Approval for Asiana Merger Reportedly Imminent

By Neil Glynn

  • Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana’s cargo business.
  • The EC had set a preliminary decision deadline of 14 February.
  • US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.

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Jan 14
0

Daily Brief Consumer: Genting Singapore, TSE Tokyo Price Index TOPIX and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024
  • TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024

By Howard J Klein

  • Parent Genting  Berhad Malaysia flagship properties doing well but many  of its global holdings spur questions about asset allocation strategy.
  • Genting Singapore, its integrated resort property Sentosa presents a strong buy story not only because it is  undervalued here but because its prospects post covid  are strong.
  • GB’s US footprint by  contrast poses questions  about the  hurdle rate of those huge investments to date given the intense competitive pressures in  mature gaming  markets.

TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

By Aki Matsumoto

  • Parent-Subsidiary listings present several problems: the disadvantages to parent company’s shareholders that drain subsidiary’s profits, the distortion of market capitalization between subsidiary and parent company, and independence of subsidiary’s management.
  • While it’s an improvement for TSE to ask companies to disclose their purpose and policy of listing subsidiaries and affiliates, it doesn’t ensure the complete independence of subsidiaries and affiliates.
  • More than 30% of listed companies are listed subsidiaries or affiliates. Investors are forced to look for investment targets while worrying about management independence in 70% of the companies.

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Jan 14
0

Daily Brief Quantitative Analysis: TWSE Foreign Holding Weekly (Jan 12th): Asia Vital and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • TWSE Foreign Holding Weekly (Jan 12th): Asia Vital, Alchip Tech, Wistron, Quanta Computer
  • TWSE Short Interest Weekly (Jan 12th): Evergreen Marine, Yang Ming Marine, Gigabyte Tech, Auo

TWSE Foreign Holding Weekly (Jan 12th): Asia Vital, Alchip Tech, Wistron, Quanta Computer

By Ke Yan, CFA, FRM

  • We analyzed the changes in foreign holdings of TWSE Stocks as of Jan 12th which has an aggregated holding worth USD701.3bn.
  • We estimate that foreign flows to be inflows of USD273mln. 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 Asia Vital, Alchip Tech, Wistron, Quanta Computer, Global Unichip, Hon Hai, Delta Elec, Yang Ming Marine.

TWSE Short Interest Weekly (Jan 12th): Evergreen Marine, Yang Ming Marine, Gigabyte Tech, Auo

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Jan 12th which has an aggregated short interest worth USD13.4bn.
  • 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 Evergreen Marine, Yang Ming Marine, Gigabyte Tech, Auo, Bora Pharma.

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Jan 14
0

Daily Brief ESG: TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement and more

By | Daily Briefs, ESG

In today’s briefing:

  • TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

By Aki Matsumoto

  • Parent-Subsidiary listings present several problems: the disadvantages to parent company’s shareholders that drain subsidiary’s profits, the distortion of market capitalization between subsidiary and parent company, and independence of subsidiary’s management.
  • While it’s an improvement for TSE to ask companies to disclose their purpose and policy of listing subsidiaries and affiliates, it doesn’t ensure the complete independence of subsidiaries and affiliates.
  • More than 30% of listed companies are listed subsidiaries or affiliates. Investors are forced to look for investment targets while worrying about management independence in 70% of the companies.

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