Industrials

Under revised terms, Sembcorp (SMM SP) will issue fewer shares to Keppel (KEP SP). It’s now a takeover rather than Scheme. Keppel will deliver more shares to shareholders, keeping less.
Stay cautiously positive on Socionext (6526 JP) until the stock starts trading as if those who bought on momentum look like they are getting out.
With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old-school perspective applying Benjamin Graham’s Net Nets

(Mostly) Asia-Pac Weekly Risk Arb Wrap: ELMO, Kingston Financial, Hitachi Transport, Nearmap, Aruhi

There are 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed on Smartkarma this week: K1’s Offer for Elmo Software (ELO AU), Chu’s Offer for Kingston Financial (1031 HK), KKR’s tilt for Hitachi Transport System (9086 JP).
Key updates took place for Nearmap Ltd (NEA AU), Jinke Smart Services (9666 HK), Lifestyle International Holdings (1212 HK), and Aruhi Corp (7198 JP).

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Oct 29

Daily Brief Industrials: Fanuc Corp, iShares MSCI EAFE ETF and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Japan Weekly | Ibiden, Fanuc, Canon
Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

Japan Weekly | Ibiden, Fanuc, Canon

NKY +0.80%WoW; TOPIX +0.91%WoW; TSE Mothers +3.0%WoW. 3 days up; 2 days down this week as small caps; high valuation and tech stocks rallied
PM Kishida orders additional fiscal stimulus of ¥29.1 trillion. Including other private sector investment and funding, the total stimulus size to exceed ¥71 trillion.
Bank of Japan maintains their ultra looks monetary policy in place at the end of their 2-day policy meeting

Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

We continue to believe that a bearish intermediate-term outlook is appropriate as long as the YTD downtrends remain intact on MSCI ACWI (ACWI-US), MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
We would turn bullish only on reversals of those downtrends. With that said, a bear market rally has officially begun, something that we have discussed since our Sept.29 Int’l Compass
We expect to see rallies to their respective YTD downtrends (ACWX, EFA, etc.). We highlight buys that are likely to outperform on this bear market rally.

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Oct 29

Daily Brief Industrials: Fanuc Corp, iShares MSCI EAFE ETF and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Japan Weekly | Ibiden, Fanuc, Canon
Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

Japan Weekly | Ibiden, Fanuc, Canon

NKY +0.80%WoW; TOPIX +0.91%WoW; TSE Mothers +3.0%WoW. 3 days up; 2 days down this week as small caps; high valuation and tech stocks rallied
PM Kishida orders additional fiscal stimulus of ¥29.1 trillion. Including other private sector investment and funding, the total stimulus size to exceed ¥71 trillion.
Bank of Japan maintains their ultra looks monetary policy in place at the end of their 2-day policy meeting

Bear Market Rally in Progress as DXY, Global Sovereign 10-Yr Yields Fall; Buy Ideas Within Leaders

We continue to believe that a bearish intermediate-term outlook is appropriate as long as the YTD downtrends remain intact on MSCI ACWI (ACWI-US), MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
We would turn bullish only on reversals of those downtrends. With that said, a bear market rally has officially begun, something that we have discussed since our Sept.29 Int’l Compass
We expect to see rallies to their respective YTD downtrends (ACWX, EFA, etc.). We highlight buys that are likely to outperform on this bear market rally.

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Oct 27

Daily Brief Industrials: Taiwan Glass Industry, Samsung C&T, Sinotrans, Raytheon Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk
Samsung C&T: Soundly Beat Consensus Operating Profit Estimates by 68% in 3Q 2022
Sinotrans (598 HK): Showing Its Sustained Resilience
Raytheon Technologies: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (10/22)

Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk

By Travis Lundy

The FTSE Taiwan Dividend+ Index is a fabulously interesting index from an index prediction trading standpoint. Because it works off negative momentum, the bias risk is different from normal indices.
And there is a turn. That turn is where what had been bad becomes good, becomes very good, then turns bad again.
This insight proposes a basket to buy, and a basket to short, and if the basket to buy ends up not going in, it is a high quality problem.

Samsung C&T: Soundly Beat Consensus Operating Profit Estimates by 68% in 3Q 2022

By Douglas Kim

Samsung C&T had outstanding results that soundly beat consensus estimates in 3Q 2022.
Samsung C&T generated operating profit of 796.8 billion won in 3Q 2022, up 465% YoY and 67.7% higher than the consensus estimates.
The strong growth of sales and operating profit was led by the biologics, construction, fashion, and resort businesses.

Sinotrans (598 HK): Showing Its Sustained Resilience

By Osbert Tang, CFA

Sinotrans (598 HK) delivered sustained healthy earnings in 3Q22, with reported profit rose 32.7% and recurring one up 13.2%. They are resilient given the adverse market environment.
Gross margin expansion and higher gross profit showed that lower freight rate has not had significant impact on profitability. DHL-Sinotrans’ contribution also recovered sequentially.
It cancelled the 0.62% of shares that it bought back, providing enhancement to forward EPS. The 9M22 result equals 91% of full-year consensus, suggesting room for earnings upgrade.

Raytheon Technologies: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (10/22)

By Baptista Research

Raytheon Technologies delivered a mixed set of results missing out on Wall Street’s revenue expectations but managed an earnings beat.
The company had a strong quarter for commercial aerospace, and it continues to view quite strong demand for its products and services.
We provided the stock of Raytheon Technologies with a ‘Hold’ rating with a revision in the target price.

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Oct 27

Daily Brief Industrials: Taiwan Glass Industry, Samsung C&T, Sinotrans, Raytheon Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk
Samsung C&T: Soundly Beat Consensus Operating Profit Estimates by 68% in 3Q 2022
Sinotrans (598 HK): Showing Its Sustained Resilience
Raytheon Technologies: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (10/22)

Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk

By Travis Lundy

The FTSE Taiwan Dividend+ Index is a fabulously interesting index from an index prediction trading standpoint. Because it works off negative momentum, the bias risk is different from normal indices.
And there is a turn. That turn is where what had been bad becomes good, becomes very good, then turns bad again.
This insight proposes a basket to buy, and a basket to short, and if the basket to buy ends up not going in, it is a high quality problem.

Samsung C&T: Soundly Beat Consensus Operating Profit Estimates by 68% in 3Q 2022

By Douglas Kim

Samsung C&T had outstanding results that soundly beat consensus estimates in 3Q 2022.
Samsung C&T generated operating profit of 796.8 billion won in 3Q 2022, up 465% YoY and 67.7% higher than the consensus estimates.
The strong growth of sales and operating profit was led by the biologics, construction, fashion, and resort businesses.

Sinotrans (598 HK): Showing Its Sustained Resilience

By Osbert Tang, CFA

Sinotrans (598 HK) delivered sustained healthy earnings in 3Q22, with reported profit rose 32.7% and recurring one up 13.2%. They are resilient given the adverse market environment.
Gross margin expansion and higher gross profit showed that lower freight rate has not had significant impact on profitability. DHL-Sinotrans’ contribution also recovered sequentially.
It cancelled the 0.62% of shares that it bought back, providing enhancement to forward EPS. The 9M22 result equals 91% of full-year consensus, suggesting room for earnings upgrade.

Raytheon Technologies: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (10/22)

By Baptista Research

Raytheon Technologies delivered a mixed set of results missing out on Wall Street’s revenue expectations but managed an earnings beat.
The company had a strong quarter for commercial aerospace, and it continues to view quite strong demand for its products and services.
We provided the stock of Raytheon Technologies with a ‘Hold’ rating with a revision in the target price.

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Oct 26

Daily Brief Industrials: Sunac Services Holdings, Keppel Corp, S&P 500 and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Hong Kong Stocks Priced For Liquidation
Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes
Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

Hong Kong Stocks Priced For Liquidation

With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
Keppel DC REIT (KDCREIT SP) is currently the lowest ranked index constituent and could get kicked out when Sembcorp Marine (SMM SP) gets added.
Olam Group (OLG SP) and SATS (SATS SP) are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.

Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

The bear market rally we have been discussing since our Sept. 27 Compass report has begun.
Over half of the Sectors and all the major indexes (S&P 500, Nasdaq 100, DJIA, and S&P 600 Small Caps) display bullish 2+ month inflections.
As referenced last week, we expect the aforementioned indexes to rally to their 200-day MAs; longer-term, this is still a bear market until they can break above their 200-day MAs.

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Oct 26

Daily Brief Industrials: Sunac Services Holdings, Keppel Corp, S&P 500 and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Hong Kong Stocks Priced For Liquidation
Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes
Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

Hong Kong Stocks Priced For Liquidation

With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
Keppel DC REIT (KDCREIT SP) is currently the lowest ranked index constituent and could get kicked out when Sembcorp Marine (SMM SP) gets added.
Olam Group (OLG SP) and SATS (SATS SP) are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.

Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

The bear market rally we have been discussing since our Sept. 27 Compass report has begun.
Over half of the Sectors and all the major indexes (S&P 500, Nasdaq 100, DJIA, and S&P 600 Small Caps) display bullish 2+ month inflections.
As referenced last week, we expect the aforementioned indexes to rally to their 200-day MAs; longer-term, this is still a bear market until they can break above their 200-day MAs.

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Oct 25

Daily Brief Industrials: Nidec Corp, Arwana Citramulia and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nidec (6594) | Solid Traction
Arwana Citramulia (ARNA IJ) – Grand Master of Tiles

Nidec (6594) | Solid Traction

Positive impression of Q2 results: sales +28% YoY beat consensus, OP +16% in-line.
Near term headwinds for the precision motors and appliance businesses, but FX will significantly offset downside risk
We remain bullish on the stock given solid progress in the e-Axle business. We see the division turning a profit next year

Arwana Citramulia (ARNA IJ) – Grand Master of Tiles

By Angus Mackintosh

Arwana Citramulia (ARNA IJ) booked yet another positive set of earnings in 3Q2022 driven by increased efficiency and cost reduction leading to 32% YoY growth in profits above consensus.
There are a number of potential positives in 4Q related to new capacity coming on stream which should help to boost sales of the company’s higher end products.
Consensus has caught up with the company’s projects profit growth forecast of +30% for FY2022 but this may prove conservative, with valuations looking attractive on a 9x forward PER multiple.

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Oct 25

Daily Brief Industrials: Nidec Corp, Arwana Citramulia and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nidec (6594) | Solid Traction
Arwana Citramulia (ARNA IJ) – Grand Master of Tiles

Nidec (6594) | Solid Traction