Category

Daily Briefs

May 13
0

Daily Brief Financials: Great Eastern Holdings, NIFTY Index, China Jinmao Holdings and more

By | Daily Briefs, Financials

In today’s briefing:

  • Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions
  • EQD / NSE Volatility Update / 06-May-24 to 10-May-24
  • Morning Views Asia: China Jinmao Holdings, Sunny Optical Technology Group, Yuexiu Property

Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions

By Arun George

  • OCBC (OCBC SP) has announced a voluntary unconditional general offer for Great Eastern Holdings (GE SP) at S$25.60 per share, a 36.90% premium to the undisturbed price.
  • OCBC aims to privatise Great Eastern by delisting resolutions or exercising compulsory acquisition rights. The offer has not been declared final.
  • While the offer is reasonable, it is not a knockout bid which would comfortably allow OCBC to privatise through either option. A bump is highly likely.   

EQD / NSE Volatility Update / 06-May-24 to 10-May-24

By Sankalp Singh

  • Election-Related volatility being reflected in options. India VIX has surged 70% over the past two weeks. Quarterly IVs have seen the largest rise as they capture election result date.
  • BankNifty IVs are finally responding as the market plays catch up to the bank regulator’s new-found aggressiveness
  • Elevated Vol-of-vol observed the past few weeks. Vol-regime Switching Model continues to point to “High & Down” state. Odds of switching to a “High & Up” state are increasing.

Morning Views Asia: China Jinmao Holdings, Sunny Optical Technology Group, Yuexiu Property

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.

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May 13
0

Daily Brief Consumer: JD.com , ZEEKR, Dream International and more

By | Consumer, Daily Briefs

In today’s briefing:

  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June
  • ZEEKR IPO: Strong First-Day Return and Upsized Offering
  • Dream International (1126 HK)  Management Concall: 4x PE,11.4% Div Yield,40% of Mkt Cap in Cash

HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June

By Brian Freitas

ZEEKR IPO: Strong First-Day Return and Upsized Offering

By Andrei Zakharov

  • ZEEKR, a rapidly growing premium EV maker, has successfully completed its IPO and raised ~$441M. The offering was priced at the top of the range at $21 per share.
  • The company sold a total of 21M ADSs, up from the initial target of 17.5M shares. ZEEKR’s stock soared more than 30% following its strong debut on NYSE on Friday.
  • Geely Auto, Mobileye and CATL have acquired ~14.3M ADSs and overall investor sentiment was positive. I believe ZEEKR may succeed as a high-volume EV maker worldwide.

Dream International (1126 HK)  Management Concall: 4x PE,11.4% Div Yield,40% of Mkt Cap in Cash

By Sameer Taneja

  • We summarize our gleanings from the conference call with Dream International (1126 HK) to better understand growth opportunities and future expansion plans.
  • The company is expanding in Indonesia to increase its capacity by 30 million USD ( over 830 million USD). (capacity utilization for FY23:83%).
  • Trading at 4x FY24e PE, with an 11.4% dividend yield and a 15-year average ROE of 20%, this is a stock worth exploring. 

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May 12
0

Daily Brief South Korea: Cosmecca Korea , LG Chem and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Cosmecca Korea Plans to Switch Listing from KOSDAQ to KOSPI
  • Underexposed Flow Trading Opportunity: LONG Banks & SHORT LG Chem/Energy on June 14

Cosmecca Korea Plans to Switch Listing from KOSDAQ to KOSPI

By Douglas Kim

  • On 10 May, Cosmecca Korea (241710 KS) announced that it plans to switch its listing from KOSDAQ to KOSPI. 
  • The company plans to convene an extraordinary general meeting of shareholders on 29 August to finalize on the switching of Cosmecca Korea listing from KOSDAQ to KOSPI. 
  • Cosmecca Korea is one of the leading Korean ODM manufacturers of cosmetic products.

Underexposed Flow Trading Opportunity: LONG Banks & SHORT LG Chem/Energy on June 14

By Sanghyun Park

  • Despite time until screening, predictions likely hold due to market cap gaps; all candidates are banks, benefiting from recent momentum.
  • Historical patterns show profit-taking selling affecting price impact, particularly on additions with significant pre-inclusion price rises. Monitor banks’ pre-June 14th price appreciation to anticipate impact distortions.
  • Shorting LG Chem and LG Energy Solution based on high price cointegration, consider basket-trading them before the rebalancing, using the battery sector as a long hedge.

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May 12
0

Daily Brief Singapore: OCBC and more

By | Daily Briefs, Singapore

In today’s briefing:

  • (Mostly) Asia-Pac M&A: Namoi Cotton, Great Eastern, GAPack, Nihon, Chilled & Frozen, Shinko Electric

(Mostly) Asia-Pac M&A: Namoi Cotton, Great Eastern, GAPack, Nihon, Chilled & Frozen, Shinko Electric

By David Blennerhassett

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May 12
0

Daily Brief United States: Sirius Xm Holdings, Lear Corp, Clorox Company, Ecolab Inc, Eli Lilly & Co, Gartner Inc, Incyte Corp, Corning Inc, Mastercard, Archer Daniels Midland Co and more

By | Daily Briefs, United States

In today’s briefing:

  • Sirius XM Holdings: Improving Conversion
  • Lear Corporation: Industrial Automation
  • The Clorox Company: A Story Of Innovation-Led Growth
  • Ecolab Inc.: Leveraging Digital Capabilities For The Pest Elimination Business! – Major Drivers
  • Eli Lilly & Co: The Story Behind The Increasing Demand vs. Production of Orforglipron & Progress of Other Drugs! – Major Drivers
  • Gartner Inc.: Increasing Interest In Artificial Intelligence (AI) & Its Expected Impact On The Top-Line! – Major Drivers
  • Incyte Corporation: Can It Capitalize On The Potential For Expansion Into Dermatology? – Major Drivers
  • Corning Incorporated: Are The Returns On Its Display Business Good Enough? – Major Drivers
  • Mastercard Incorporated: Cross-Border Travel and Consumer Behaviors Impact! – Major Drivers
  • Archer-Daniels-Midland Company: Strengthening Margins Through Operational Improvements & Renewable Production! – Major Drivers

Sirius XM Holdings: Improving Conversion

By Baptista Research

  • SiriusXM Holdings Inc. delivered a strong financial performance for its first quarter of 2024, with an encouraging 7% year-over-year increase in advertising revenue to over $400 million.
  • This growth in ad revenue, driven by a growing addressable advertising audience and a strengthening ad market, helped offset a slight 1% drop in subscription revenue.
  • The firm’s adjusted EBITDA was up 4% year over-year and delivered a margin of 30%, up 1 percentage point from the previous year.

Lear Corporation: Industrial Automation

By Baptista Research

  • Lear Corporation’s record-setting first quarter revenues of $6 billion show an increase of 3%.
  • Core operating earnings were up 6% at $280 million, while adjusted earnings per share rose 14% to $3.18.
  • Operating cash flow matched that of the same period the previous year.

The Clorox Company: A Story Of Innovation-Led Growth

By Baptista Research

  • The Clorox Company’s third-quarter financial results suggest a continuing recovery from the August cyberattack that affected its operations.
  • Despite lower sales and significant investments in its brands, the company’s adjusted earnings per share exceeded its own expectations in the said quarter.
  • Adjusting for the effects of the cyberattack, the company reported that Q3 sales performance was, for the most part, in line with the management’s expectations.

Ecolab Inc.: Leveraging Digital Capabilities For The Pest Elimination Business! – Major Drivers

By Baptista Research

  • Ecolab Inc.’s first-quarter 2024 earnings showcased strong progress with adjusted earnings per share increasing by 52%.
  • This impressive outcome can be attributed to a 5% growth in organic sales and the expansion of organic operating income margin by 400 basis points.
  • The company is also expected to maintain its long-term earnings growth of 12% to 15%.

Eli Lilly & Co: The Story Behind The Increasing Demand vs. Production of Orforglipron & Progress of Other Drugs! – Major Drivers

By Baptista Research

  • In Q1 2024, Eli Lilly and Company achieved strong growth and strategic milestones, with revenue growing by 26% and new products increasing by nearly $1.8 billion in comparison to the same period last year.
  • The company’s new products, primarily Mounjaro and Zepbound, primarily drove the growth.
  • Eli Lilly also accomplished various pipeline milestones during this period.

Gartner Inc.: Increasing Interest In Artificial Intelligence (AI) & Its Expected Impact On The Top-Line! – Major Drivers

By Baptista Research

  • In Q1 2024, Gartner delivered strong profitability and free cash flow, which both surpassed expectations, leading the company to increase its guidance for the year.
  • The company proved its resilience in what’s described as a “complex environment”, with contract value growth in the high single digits.
  • However, there remain several challenges to face.

Incyte Corporation: Can It Capitalize On The Potential For Expansion Into Dermatology? – Major Drivers

By Baptista Research

  • Incyte Corp’s first quarter 2024 earnings pointed towards the company’s steady performance during the quarter and provided an update on its ongoing projects.
  • The company’s total revenue grew by 9% in Q1 as compared to the same period last year, with growth driven largely by the drugs Jakafi and Opzelura.
  • In particular, Jakafi’s net product revenue was $572 million, not fully reflecting its demand growth due to an increase in total patients, particularly those with PV and GVHD. Similarly, Opzelura’s net product revenues in the first quarter were $86 million, indicating a 52% growth when compared to the same period last year.

Corning Incorporated: Are The Returns On Its Display Business Good Enough? – Major Drivers

By Baptista Research

  • Based on the Q1 2024 earnings, Corning Incorporated appears to be in a position of growth and profitability.
  • With sales close to $3.3 billion and EPS of $0.38, the company exceeds its guidance predictions.
  • There was a year-over-year gross margin growth of 160 basis points to 36.8%, and a substantial improvement in free cash flow by $300 million.

Mastercard Incorporated: Cross-Border Travel and Consumer Behaviors Impact! – Major Drivers

By Baptista Research

  • Mastercard Inc.’s Q1 2024 earnings showcased the company’s firm position in the payments sector, underpinned by robust revenue and adjusted net income growth on a non-GAAP, currency-neutral basis.
  • The company’s strong results go beyond the uptake in consumer spending, extending to the rapid growth in cross-border volumes.
  • There are several factors at play that make Mastercard attractive from an investment standpoint.

Archer-Daniels-Midland Company: Strengthening Margins Through Operational Improvements & Renewable Production! – Major Drivers

By Baptista Research

  • In its first quarter 2024, Archer-Daniels-Midland (ADM) reported adjusted earnings per share of USD1.46, and an adjusted segment operating profit of USD1.3bn, representing an on-year decrease of 24%.
  • ADM also achieved a trailing 4-quarter average of 11.2% for its adjusted Return on Invested Capital (ROIC) during the same quarter, while maintaining a strong balance sheet and healthy cash flows.
  • Although the global grain and oilseed supply is expected to increase throughout the year amid an anticipated improvement in weather conditions, ADM proactively managed the risk of falling margins by driving the structural earnings, ROIC, and cash flow generation, enabling the company to continue investing in its business and returning cash to its shareholders.

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May 12
0

Daily Brief ESG: Since Cash on Hand Will Not Decrease in FY2024 and more

By | Daily Briefs, ESG

In today’s briefing:

  • Since Cash on Hand Will Not Decrease in FY2024, Shareholder Returns Remain a Hot Topic

Since Cash on Hand Will Not Decrease in FY2024, Shareholder Returns Remain a Hot Topic

By Aki Matsumoto

  • Most large companies initially estimate sales and profits conservatively, and CapEx, which is often planned more than a year in advance, isn’t often above plan.
  • Companies have a cautious earnings outlook, but the market consensus still expects profit growth in FY2024. CapEx growth in the BOJ Tankan is expected to be slightly higher than profits.
  • Assuming an 8.5% increase in CapEx for large manufacturing companies and a low single-digit growth in the recurring profit outlook, the level of cash on hand is unlikely to decrease.

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May 12
0

Daily Brief China: Greatview Aseptic Packaging, Yichang HEC Changjiang Pharma, China Traditional Chinese Medicine, China Citic Bank Corp Ltd H, BYD , China International Capital Corporation and more

By | China, Daily Briefs

In today’s briefing:

  • Greatview Aseptic (468 HK): Shandong Xinjufeng VGO Could Force Mengniu to Act
  • HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder
  • Weekly Deals Digest (12 May) – China TCM, GA Pack, HEC CJ Pharma, CPMC, Alps Logistics, Infocom
  • HK Connect SOUTHBOUND Flows (To 10 May 2024); Banks, Coal, and High-Div Energy/Materials Names
  • Mainland Connect NORTHBOUND Flows (To 10 May 2024): So-So Volumes, As Did Not Play Catchup
  • A/H Premium Tracker (To 10 May 2024):  Excellent Quiddity Portfolio Gains as Hs Rally Huge Vs As

Greatview Aseptic (468 HK): Shandong Xinjufeng VGO Could Force Mengniu to Act

By Arun George

HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

By Arun George

  • Yichang HEC Changjiang Pharma (1558 HK)‘s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).
  • The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). 
  • There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   

Weekly Deals Digest (12 May) – China TCM, GA Pack, HEC CJ Pharma, CPMC, Alps Logistics, Infocom

By Arun George

HK Connect SOUTHBOUND Flows (To 10 May 2024); Banks, Coal, and High-Div Energy/Materials Names

By Travis Lundy

  • A-Shares only two days of the week and were up small Monday and Tuesday. H-shares took a breather Wednesday after trailing A-shares, then rallied hard on Thursday and Friday.
  • Net SOUTHBOUND buying was +HK11.3bn. Thursday saw a break of the SOUTHBOUND buying streak. 
  • The big news in China markets this week was the idea that mainland investors through SOUTHBOUND would no longer be hit with a 20% w/h tax on dividends.

Mainland Connect NORTHBOUND Flows (To 10 May 2024): So-So Volumes, As Did Not Play Catchup

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 BUY RMB 4.8bn of A-shares on high gross low net volume in the two days. NORTHBOUND bought Kweichow Moutai, banks, Haier Smarthome, etc.
  • HUGE week in H vs A (since the 30 April close). This may be colouring foreigner activity in As quite a bit. 

A/H Premium Tracker (To 10 May 2024):  Excellent Quiddity Portfolio Gains as Hs Rally Huge Vs As

By Travis Lundy

  • 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’s buy streak was interrupted again this past week, but they still net bought, as did NORTHBOUND. HK stocks continued bouncing VERY hard. Hs outperformed As very strongly.
  • As had a chance to catch up. Did not. Liquid Hs outperformed their As by 4.8% from 30-April through 10-May. Wide premia narrowed more than narrow premia.

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May 12
0

Daily Brief India: Gravita India, SBI Cards & Payment Services and more

By | Daily Briefs, India

In today’s briefing:

  • Gravita India Ltd- Forensic Analysis
  • Quiddity Leaderboard NIFTY Sep 24: Strong Flow Rationale for LONG Jio Financial – SHORT SBI Cards

Gravita India Ltd- Forensic Analysis

By Nitin Mangal

  • In FY24, Gravita India (GRAV IN) had faced qualified opinion from the auditors regarding its accounting pertaining to share based payments, which in a way boosted the earnings. 
  • However, the unusual accounting behaviour is not for the company. We have seen some irregular line items in the past as well, w.r.t. gains and losses on commodities and forex. 
  • Other key takeaways include negative free cash flows and difficulty in cash generation, revenues from traded goods not being in sync, fresh contingent liabilities, etc.

Quiddity Leaderboard NIFTY Sep 24: Strong Flow Rationale for LONG Jio Financial – SHORT SBI Cards

By Janaghan Jeyakumar, CFA

  • NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
  • In this insight, we take a look at the names leading the race to become ADDs/DELs during the September 2024 index rebal event.
  • More than 50% of the 6-month reference period is now complete. There are a couple of changes to the expected ADDs/DELs list since my last insight.

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May 12
0

Daily Brief Japan: Alps Logistics, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • Last Week in Event SPACE: Alps Logistics, L’Occitane, Hanon Systems, Perpetual Ltd
  • Since Cash on Hand Will Not Decrease in FY2024, Shareholder Returns Remain a Hot Topic

Last Week in Event SPACE: Alps Logistics, L’Occitane, Hanon Systems, Perpetual Ltd

By David Blennerhassett

Since Cash on Hand Will Not Decrease in FY2024, Shareholder Returns Remain a Hot Topic

By Aki Matsumoto

  • Most large companies initially estimate sales and profits conservatively, and CapEx, which is often planned more than a year in advance, isn’t often above plan.
  • Companies have a cautious earnings outlook, but the market consensus still expects profit growth in FY2024. CapEx growth in the BOJ Tankan is expected to be slightly higher than profits.
  • Assuming an 8.5% increase in CapEx for large manufacturing companies and a low single-digit growth in the recurring profit outlook, the level of cash on hand is unlikely to decrease.

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May 12
0

Daily Brief Thematic (Sector/Industry): [Blue Lotus Daily – TMT Update]:PDD US/SHEIN/AMZN US/TCOM US/3690 HK/ ATAT US/700 HK and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • [Blue Lotus Daily – TMT Update]:PDD US/SHEIN/AMZN US/TCOM US/3690 HK/ ATAT US/700 HK
  • [Blue Lotus Daily]:ATATUS/TCOMUS/1211HK/LIUS/NIO US/XPEVUS/1810HK/300274SZ/300750 SZ/BEKEUS
  • GEMWeekly (3 May 2024): Indonesia, China, Philippines Macro; Huawei, Naver

[Blue Lotus Daily – TMT Update]:PDD US/SHEIN/AMZN US/TCOM US/3690 HK/ ATAT US/700 HK

By Ying Pan

  • PDD US/SHEIN/AMZN US: Temu opens up platform to brand merchants (+/-/-)
  • TCOM US/3690 HK/ATAT US  :  Visa-free policy for 12 countries including France extended until December 31, 2025.(+/+/+)
  • 700 HK: After the release of new limited skins for <League of Legends: Wild Rift>, there has been a noticeable rebound in grossing rankings.(+)

[Blue Lotus Daily]:ATATUS/TCOMUS/1211HK/LIUS/NIO US/XPEVUS/1810HK/300274SZ/300750 SZ/BEKEUS

By Eric Wen

  • ATAT US/TCOM US : The international hotel management group maintains a cautious attitude towards China throughout the year.（-/-）
  • 1211HK/LIUS/NIOUS/XPEVUS/1810HK:EV sales solid in the 5th week of April 2024, NIO continues to benefit from SU7 overflow, BYD continues to be strong, and Xiaomi deliveries decline for three consecutive weeks.(+/+/+/-/-)
  • 300274 SZ / 300750 SZ/ 1211 HK : Tesla’s Shanghai energy storage gigafactory was approved, mainly producing energy storage for export, benefiting China’s supply chain.(+/+/ -)

GEMWeekly (3 May 2024): Indonesia, China, Philippines Macro; Huawei, Naver

By Wium Malan, CFA

  • The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
  • Macro data points: Indonesian and Philippine GDP growth, and Chinese exports data.
  • Companies mentioned:Huawei Technology (40978Z CH), Naver Corp (035420 KS)

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