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Smartkarma Daily Briefs

Dec 29
0

Daily Brief China: Swire Pacific (A), Li Ning and more

By | China, Daily Briefs

In today’s briefing:

  • StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down
  • HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu

StubWorld: Swire Pac Trading “Rich” As Props Announces Big Write-Down

By David Blennerhassett

  • Swire Pacific (19 HK)‘s NAV discount has narrowed, and implied stub widened, after announcing its latest buyback. Separately, Swire Properties (1972 HK) flagged a HK$4.5bn writedown on its investment property.
  • Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

HK CEO & Director Dealings (29 Dec 2023): Li Ning, Meitu

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stocks mentioned in this regular insight is Li Ning (2331 HK) and Meitu Inc (1357 HK).

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Dec 29
0

Daily Brief Japan: Nikkei 225, Nihon Kohden, Mitsubishi Shokuhin and more

By | Daily Briefs, Japan

In today’s briefing:

  • EQD | The Nikkei Will Pullback Within 1-3 Weeks
  • Nihon Kohden (6849 JP): Apart from Apple Smartwatch Ban, Three More Reasons to Buy Shares
  • Retail Media: A Major New Income Stream Even for Wholesalers

EQD | The Nikkei Will Pullback Within 1-3 Weeks

By Nico Rosti

  • The Nikkei 225 (NKY INDEX) is about to close up for the 3rd consecutive week (CC=+3), it’s towards the Q3 resistance level at 33984: it’s short-term overbought.
  • There is a good chance that the index will pull back in the next 1-3 weeks, at the moment it looks like the rally has “stalled”.
  • The pullback may be an opportunity to buy again, and ride a rebound to previous highs, we will discuss LONG levels in a separated insight.

Nihon Kohden (6849 JP): Apart from Apple Smartwatch Ban, Three More Reasons to Buy Shares

By Tina Banerjee

  • On December 26, Nihon Kohden (6849 JP) shares jumped ~15% as the company was a beneficiary of the ban on Apple (AAPL US)’s latest smartwatch models.
  • Nihon Kohden reported better-than-expected result in H1FY24. The company raised FY24 revenue forecast to ¥221.5B (+7% YoY) from ¥215.0B. The company has also raised FY24 operating and net profit guidance.
  • Currently consensus expects 2% YoY revenue growth for the company in FY25. With strong demand for existing products and new launches, the expectation seems to be conservative.  

Retail Media: A Major New Income Stream Even for Wholesalers

By Michael Causton

  • Seven Eleven and Familymart have already sent panic through the offices of major advertising agencies by setting up their own retail media networks. 
  • Now, Mitsubishi Shokuhin will do the same, using its trading company connections and  its existing ties to 10,000 clients at either end of the supply chain.
  • To personalise ads, it is working with the data analysis of geolocation company Unerry. 

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Dec 29
0

Daily Brief Macro: 5 Things That Could Wrongfoot Consensus in 2024 and more

By | Daily Briefs, Macro

In today’s briefing:

  • 5 Things That Could Wrongfoot Consensus in 2024
  • Mint Macro Roundup: Inflation Cools in US, UK, & Japan Accentuating Central Bank Policy Divergence
  • CX Daily: China’s Cloud Giants Seek Profits Abroad as Domestic Margins Dwindle

5 Things That Could Wrongfoot Consensus in 2024

By Andreas Steno

  • The overwhelming consensus for 2024 continues to be a soft landing in the US with interest rates coming firmly down while growth continues on autopilot, which leaves a very decent, almost goldilocksy, outlook for risk assets.
  • But what if we don’t end in a soft landing, but rather one of the tail-end scenarios of either 1) a boom driven by easier financial conditions, which would force the Fed to push back a bit on rate cuts or 2) a recession, which would imply rates much lower than what consensus currently is.
  • We have chosen 5 “likely unlikely” scenarios for 2024, which are not as unlikely as current market pricing indicates.

Mint Macro Roundup: Inflation Cools in US, UK, & Japan Accentuating Central Bank Policy Divergence

By Suhas Reddy

  • Inflation across the US, UK and Japan slowed sharply on the back of declining goods prices.
  • Rapidly cooling inflation brings into focus the diverging central bank policies – BoJ remains ultra-loose, Fed has turned dovish, while BoE continues to remain hawkish.
  • Personal spending in the US remains strong, providing upside to economic growth in Q4, but also risk of higher inflation.

CX Daily: China’s Cloud Giants Seek Profits Abroad as Domestic Margins Dwindle

By Caixin Global

  • Cloud / In Depth: China’s cloud giants seek profits abroad as domestic margins dwindle
  • Central bank /Chart of the Day: PBOC gets major leadership reshuffle in 2023
  • Outbound /Year in Review: China’s outbound businesses pivot to Latam, Middle East

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Dec 28
0

Daily Brief Energy/Materials: Kum Yang, Orecorp Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs
  • OreCorp (ORR AU): Silvercorp Switches to a Takeover Offer to Counter Perseus

Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs

By Douglas Kim

  • On 27 December, Kum Yang announced that its shares will be listed on the US stock market in the form of DRs, resulting in its shares rising by 11.7%.
  • The listing of Kum Yang ADRs is likely to have a short-term positive impact on its share price as this is likely to reduce free float of local common shares.
  • Nonetheless, over the next 6-12 months, we expect Kum Yang’s share price to trade much lower (30% or more) as its shares are highly overvalued. 

OreCorp (ORR AU): Silvercorp Switches to a Takeover Offer to Counter Perseus

By Arun George

  • Silvercorp Metals (SVM US) has switched to an off-market takeover offer. The Orecorp Ltd (ORR AU) consideration remains unchanged at A$0.19 cash and 0.0967 SVM shares per ORR share.
  • The takeover offer is conditional on a 50.1% minimum acceptance condition, achievable in the absence of a superior proposal. 
  • The crucial question is whether Perseus Mining (PRU AU) is comfortable with SVM effectively controlling ORR. We think that there is a low probability of Perseus launching a competing proposal. 

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Dec 28
0

Daily Brief Industrials: Grab Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Grab Holdings (GRAB US) – Risks and Rewards in 2024

Grab Holdings (GRAB US) – Risks and Rewards in 2024

By Angus Mackintosh

  • Grab Holdings looks set to move toward cashflow breakeven in 2H2024 having hit adjusted EBITDA breakeven in 3Q2023 as it successfully struck a delicate balance between growth and profitability.
  • The sale of 75% of Tokopedia by GoTo may mean more intense competition in Indonesia as it focuses on online delivery services but Grab is well-positioned to deal with this.
  • 2024 will see the potential completion of the Transcab deal plus a potential acquisition in food delivery increasing scale and competitiveness. Valuations are attractive relative to growth and financial position.

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Dec 28
0

Daily Brief TMT/Internet: Hollysys Automation Technologies, SK Inc, Datamatics Global Services, Whispir Ltd, XL Axiata and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
  • Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco
  • Datamatics Global Services Ltd: Forensic Analysis
  • Whispir (WSP AU) Backs Soprano’s Bump
  • XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence

Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid

By David Blennerhassett

  • On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
  • On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
  • “The Consortium stands ready to engage with the Board“.  The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement. 

Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco

By Douglas Kim

  • It was reported today that SK Pharmteco completed a 660 billion won in pre-IPO funding valuing the company at 4 trillion won.
  • Prior to this investment, SK Inc owned a 100% stake in SK Pharmteco. After this investment, it is estimated that SK Inc will own about 83.5% stake in SK Pharmteco. 
  • Our base case valuation of SK Inc is NAV of 19.0 trillion won (NAV per share of 258,967 won), representing a 47% upside from current levels.

Datamatics Global Services Ltd: Forensic Analysis

By Nitin Mangal

  • Datamatics Global Services (DATA IN) or DGSL has seen a good operational performance especially since F23, on the back of a difficult IT macro environment. 
  • Yet there are some discomforts on the forensic side, especially related to cash component. Low cash yield due to significant current account balances in subsidiaries raises alarm bells. 
  • We find opaqueness regarding some important disclosures including Ind AS 115- Revenues and Ind AS 116- Leases. Decision to increase remuneration cap size also leaves us perplexed.

Whispir (WSP AU) Backs Soprano’s Bump

By David Blennerhassett

  • Soprano has upped its Offer for Whispir Ltd (WSP AU) to A$0.55/share, and has secured board support. 
  • Pendula has a higher (indicative) Offer of A$0.60/share; however Whispir sees Soprano’s terms as superior due to the “conditionality, uncertainty and timing of progressing to a binding transaction with Pendula”.
  • Soprano’s Offer for Whispir closes on the 10 January – unless extended. 

XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence

By Angus Mackintosh

  • XL Axiata (EXCL IJ) continues to stand as the most direct way to play the data demand in Indonesia as well as being the most convergent of the listed telcos.
  • Although it saw some seasonal slowdown in 3Q, the solid growth trajectory remains intact for this year with the completion of the Link Net restructuring driving convergence growth.
  • XL Axiata (EXCL IJ) raised data prices again in November and will continue to ride the wave of price reparation over the coming quarters in a more rational pricing environment. 

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Dec 28
0

Daily Brief Health Care: Sinopharm Group Co Ltd H and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Sinopharm Group (1099.HK) – Performance Pressure May Continue Until 2024H1

Sinopharm Group (1099.HK) – Performance Pressure May Continue Until 2024H1

By Xinyao (Criss) Wang

  • Sinopharm’s 23Q1-Q3 results were below expectations. The main reason for weak performance was due to the anti-corruption campaign, which led to profound and rapid changes in fundamentals and policy end.
  • In Q4, the impact of anti-corruption would weaken and traditional distribution business would recover.So, 23Q4 performance should be better than Q3, but 23H2 performance would still be worse than 23H1.
  • We lowered our forecast for 2023 – Revenue and net profit could achieve single-digit growth. Due to the high base in 23H1, growth in 24H1 could still be under pressure. 

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Dec 28
0

Daily Brief Industrials: Grab Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Grab Holdings (GRAB US) – Risks and Rewards in 2024

Grab Holdings (GRAB US) – Risks and Rewards in 2024

By Angus Mackintosh

  • Grab Holdings looks set to move toward cashflow breakeven in 2H2024 having hit adjusted EBITDA breakeven in 3Q2023 as it successfully struck a delicate balance between growth and profitability.
  • The sale of 75% of Tokopedia by GoTo may mean more intense competition in Indonesia as it focuses on online delivery services but Grab is well-positioned to deal with this.
  • 2024 will see the potential completion of the Transcab deal plus a potential acquisition in food delivery increasing scale and competitiveness. Valuations are attractive relative to growth and financial position.

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Dec 28
0

Daily Brief Financials: Nuvama Wealth Management, JPY and more

By | Daily Briefs, Financials

In today’s briefing:

  • Nuvama: Stellar Start as an Independent Listed Entity
  • Part Two: JGB Yields Spike Cause Yen Mayhem

Nuvama: Stellar Start as an Independent Listed Entity

By Ankit Agrawal, CFA

  • Nuvama reported its first quarterly result since its listing, as a demerged entity. It reported strong growth across all its business segments.
  • Wealth management revenues grew 30% YoY, adjusted for one-off accounting impact. Cyclical recovery in the capital markets segment further helped.
  • Nuvama has potential to scale up rapidly and grow its profitability exponentially led by growth and operating leverage. At the current valuation, an investment in Nuvama has potential to triple.

Part Two: JGB Yields Spike Cause Yen Mayhem

By Untying The Gordian Knot

  • On December 6, 2023, Deputy Gov. Ryozo Himino and other policy board members signalled increasing optimism on price and wage increases.
  • Himino said at a press conference following a meeting on Wednesday that exiting the negative rate policy would have relatively little impact on Japan’s economy.
  • “We will carefully assess the situation and consider the timing and procedure of how to exit” negative rates. 

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Dec 28
0

Daily Brief Consumer: Shenzhou Intl Group Holdings, TSE Tokyo Price Index TOPIX and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Shenzhou Intl (2313 HK):  Nike Guidance Cut Presents An Opportunity
  • Companies Keen to Reduce Administrative Costs, but Reluctant to Provide Convenience to Shareholders

Shenzhou Intl (2313 HK):  Nike Guidance Cut Presents An Opportunity

By Steve Zhou, CFA

  • Nike (NKE US) reported 2QFY24 results last week with a guidance cut, as the company cut FY24 full-year sales guidance to around +1%, compared to +mid-single-digit in the previous guidance. 
  • Shenzhou Intl Group Holdings (2313 HK) saw its stock drop by 8% the following day, given that Nike is Shenzhou’s most important customer, making up 30% of Shenzhou’s sales. 
  • Nike’s inventory is down another 14% yoy, and down high-single-digit compared to the previous quarter 1QFY24. 

Companies Keen to Reduce Administrative Costs, but Reluctant to Provide Convenience to Shareholders

By Aki Matsumoto

  • Not much progress has been made in the early disclosure of convocation notices. The key to even earlier disclosure of convocation notices is the moving up of earnings announcement dates.
  • Overseas investors require that all materials in the notice of convocation be provided translated in English, and only 27.3% of prime market listed companies have responded.
  • Few companies file their annual securities reports prior to AGMs. This can be taken as companies’ intention to provide as little detailed information as possible to shareholders prior to AGMs.

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