Smartkarma Daily Briefs

By VRS (Valuation & Research Specialists)

Canara Bank (CBK IN) could replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the March rebalance.
Passive trackers will need to buy 2 days of ADV on Canara Bank (CBK IN) while selling over 1 day of ADV on Bandhan Bank Ltd (BANDHAN IN).
The impact is even higher where passives will need to buy nearly 6x delivery volumes in Canara Bank and sell 3x delivery volumes in Bandhan Bank Ltd.

Comment on Exchange Rate EUR/USD – December 15, 2023

During the period under consideration, i.e. November 15th to December 15th, 2023, the EUR/USD exchange rate fluctuated between 1,084 and 1,095 in the initial period until November 27th, 2023.
After reaching 1,099 on November 28th, the exchange rate followed an immediate downtrend until the 11th of December (except for one session), although it remained higher than the levels seen at the beginning of November.
Conversely on December 12th, the pair recorded an ascent, finally settling at 1.0894.

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Jan 02

Daily Brief Consumer: APR, Zhongsheng Group, Trip.com, Zomato, Denso Corp and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

APR IPO Preview
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
China’s Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower
[Week 15] Namaste India 🙏 | 2023 Bloopers Edition
Necessary to Dissolve Cross Shareholdings While Simultaneously Ensuring the Independence of BoD

APR IPO Preview

By Douglas Kim

APR is getting ready to complete an IPO in KOSPI in February 2024. The IPO price range is from 147,000 won to 200,000 won.
According to the bankers’ valuation, the company’s valuation is expected to range from 1.1 trillion won to 1.6 trillion won post IPO.
The company’s best selling product is its skin care beauty device product called Medicube Age-R.

HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

China’s Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower

By Daniel Hellberg

China’s outbound tourism recovery started much later than others in the region
In particular, Taiwan & Korea began ramping outbound travel earlier (in Q222)
As destinations, Thailand & Vietnam recovered early, but now lag HK’s growth

[Week 15] Namaste India 🙏 | 2023 Bloopers Edition

By Pranav Bhavsar

For this edition, we focus on our 2023 Bloopers, to improvise rather than get embarrassed. We also share some thoughts on potential enhancements that can be anticipated going forward.
On the NIFTY Index (NIFTY INDEX), we are still not bearish but do not find the markets to be very attractive either.
Bloopers in focus include Zomato (ZOMATO IN); CarTrade (CARTRADE IN) ; Hero Motocorp (HMCL IN) and Aavas Financiers Ltd (AAVAS IN).

Necessary to Dissolve Cross Shareholdings While Simultaneously Ensuring the Independence of BoD

By Aki Matsumoto

Toyota’s sale of Denso shares is believed to be aimed at securing cash for full-scale EV production, and it’s premature to expect “governance improvement through the sale of cross-held shares.”
Since Toyota intends to maintain a 20% equity stake in Denso, which is an equity method affiliate, there will be no change in the influence on Denso for a while.
While intercompany shareholdings and board reciprocity based on business relationships were one of Toyota’s strengths, the interests of minority shareholders were at risk of being left behind.

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Jan 01

Most Read: Gresham House PLC, Allkem Ltd, Posco DX, Tongcheng Travel Holdings , Livent, Fujitsu General, Kurabo Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Smartkarma Webinar | Top Trade Ideas in European Event-Driven
Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye
KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
Allkem+Livent=Arcadium : Expected Index Flows
Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue
Kurabo (3106) – Bigly Buyback And Share Cancellation for A Valueful Value Trap With Hidden Value
KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

Smartkarma Webinar | Top Trade Ideas in European Event-Driven

By Smartkarma Research

In the next installment of our Webinar series, we go live with Smartkarma Insight Provider Jesus Rodriguez Aguilar.
He will be sharing with us his top trade ideas and insights in the European event-driven space.
From current opportunities, to what we can expect next in the region, join us as we get the full picture from Jesus.

The webinar will be hosted on Wednesday, 23 August 2023, 17:00 SGT/HKT.

Register for the Webinar here

Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.

Allkem/Livent (AKE AU | LTHM US) Merger Update: MUCH More Than Meets The Eye

The Allkem/Livent “merger of equals” discussed in Allkem/Livent (AKE AU | LTHM US) Merger Of Lithium Equals Has Index Surprises and Allkem/Livent: Enlarged Charging Unit is on track.
As of the end of last month, all approvals are received or are expected to be received. The Scheme Booklet is expected next month. Deal is expected to close end-CY2023.
The deal STILL has interesting side issues with index. Even more interesting than Newcrest/Newmont. This is an update with more detail as we probably have 8-10 weeks left.

KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer

The KRX has preliminarily approved Posco DX (022100 KS)‘s listing transfer from the KOSDAQ Market to the KOSPI Market.
Posco DX (022100 KS) has announced that its stock will start trading on the KOSPI Market from the open on 2 January.
We expect Temc (425040 KS) to replace Posco DX (022100 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 28 December.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).

Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO

It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.

Allkem+Livent=Arcadium : Expected Index Flows

Yesterday during the day, Allkem Ltd (AKE AU) shareholders approved the Scheme and Livent (LTHM US) shareholders approved the merger. The deal is done. Allkem last trades 21 Dec.
NEWCO starts trading 4 January in the US but the Arcadium Lithium CDIs start trading 22 Dec in Australia. S&P/ASX announced they will replace Allkem in the ASX200.
But I have been asked for a breakdown of flows and timing again, so I have put it into a handy table which I hope makes it less confusing.

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

Kurabo (3106) – Bigly Buyback And Share Cancellation for A Valueful Value Trap With Hidden Value

Kurabo announced a bigly buyback on Tuesday. At last price it is equivalent to 8+% of shares out. Most likely to target buybacks from cross-holders.
The company is not cash-rich, but it is financial asset and real estate-rich. And it trades at cheap multiples without even thinking about those assets (themselves worth the market cap).
The TSE’s “PBR1 OR BUST” movement combined with starting low valuation, high payout, excess assets, mean this value trap has room to move.

KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX

Posco DX (022100 KS) will move from the KOSDAQ Market to the KOSPI Market on 2 January. That means KOSDAQ150 Index (KOSDQ150 INDEX) deletion at the close on 28 December.
In line with our forecast, Temc (425040 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) as a replacement.
Short interest increased in Posco DX (022100 KS) following its inclusion in a global index and there should continue to be unwinding over the next week.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

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Jan 01

Daily Brief Australia: ADX Energy Ltd, Sterling Energy PLC and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof
ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme
Auctus on Friday – 08/12/2023

ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof

• The Anshof-2 well encountered high quality Eocene sands with at least 12 metres vertical thickness and porosity of ~20%. • The top of the Eocene sand was encountered ~40-50 m higher than expected, suggesting a much larger and flatter structure than expected in the P50 case. • The better-than-expected reservoir quality and thicker sands suggest better well deliverability and higher flow rates, which result in a higher production plateau and lower development cost with a positive impact on NPV.

ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme

• ADX has farmed out a 50% interest in an exploration area with in the ADX AT I licence to MND in return for a A$0.73 mm back costs payment plus A$7.34 mm funding in exploration drilling. • The exploration area farmed-out to MND includes the LICHT and IRR gas prospects. • The LICHT prospect location (16.2 bcf gross best case prospective resources) has already received a drilling permit including the environmental clearance.

Auctus on Friday – 08/12/2023

________________________________________ ADX Energy (ADX AU)C; target price of A$0.80 per share: Adding further exploration prospects in FY24 – ADX has farmed out a 50% interest in an exploration area within the ADX AT I licence to MND in return for a A$0.73 mm back costs payment plus A$7.34 mm funding in exploration drilling.
The exploration area farmed-out to MND includes the LICHT and IRR gas prospects.
The cash and carry component alone values 10% of the project at US$220 mm or US$440 mm for Chariot’s residual 20% interest (£0.31/sh).

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Jan 01

Daily Brief Thailand: Valeura Energy Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

Valeura Energy (TSX: VLE): Restarting Wassana

Valeura Energy (TSX: VLE): Restarting Wassana