Daily Briefs

On October 18, JD denies there is a run on JD Finance.
Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
We believe the event will negatively impact JD and benefit Alibaba.

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion.

Legochem Biosciences (141080 KS): New ADC Deal Enhances Confidence on ConjuAll Technology Platform

By Tina Banerjee

Legochem Biosciences (141080 KS) entered into a license agreement with Ono Pharmaceutical for LCB97, a pre-clinical stage ADC targeting solid tumors for an upfront and milestone payment of $700M.
Legochem is now pursuing high-value package deals, combining platform and product deals or multi-target product deals. The above-mentioned deal with Ono is the first such package deal.
Legochem’s ADC technology platform is seeing rising demand as number of providers decreased (due to recent M&A deals) while big pharmaceutical companies are rapidly expanding their ADC businesses.

CVRX: Great Technology that Now Has a Bright Future

By Pyari Menon

CVRx (CVRX US) was up 19% (including after hours) as the AMA accepted CPT Category I codes for Barostim. Codes are to be implemented on January 1, 2026
With Category I CPT codes CVRX should see the benefits of clinical validation, regulatory de-risking, reimbursement potential, increased market access and significant improvement in revenue potential
Barostim is the only neuromodulation device for heart failure and resistant hypertension, positioning CVRx as a compelling acquisition target due to its unique technology and strong market potential.

China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com

Alibaba is selling Sun Art, a listed supermarket subsidiary, as Sun Art’s revenue is shrinking.
Alibaba gained 6 million new retailers on its Taobao Tmall platform year to date.
In September Tesla’s sales volume increased by 66% YoY and all major Chinese NEV grew strongly.

Singamas (716 HK): Positive Readthrough from CIMC

By Osbert Tang, CFA

With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.

Unloved Japan Roundup: Bracing for Q3

By Michael Allen

Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.

Kaspi.kz: Kazakhstan’s Super-App Acquiring Turkey’s E-Commerce Leader

By Alec Tseung

On Oct 17th, Kaspi.kz, Kazakhstan’s super-app, signed a stock purchase agreement to acquire a 65.4% stake in Hepsiburada, a leading e-commerce platform in Turkey.
The transaction is still subject to regulatory approval; Hepsiburada’s share price in the US increased by ~60% on Friday after the announcement.
The acquisition makes a lot of strategic sense which would elevate Kaspi.kz to a position to target a combined market of >100 million population (vs. currently 20 million).

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Oct 21

Daily Brief Macro: An Ominous Sign for U.S. Equity Returns? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

An Ominous Sign for U.S. Equity Returns?
Peering into Corporate Financing Conditions in 2025
Trump and China: It’s Going to Get Interesting!
Some Preliminary Thoughts on Q3 Earning Season
Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning
Copper Tracker Oct 21st, 2024: The China Malaise Sets In
South Africa: Medium Term Budget Policy Statement to Be Announced on October 30

An Ominous Sign for U.S. Equity Returns?

By Cam Hui

U.S. household equity allocations are becoming extended relative to their own history, which warns of a challenging long-term return outlook.
Demographically adjusted allocations are less extended and similar episodes have resolved in either minor pullbacks or sideways consolidations.
Equity valuations are stretched compared to bonds and the long-term outlook will depend on the future advances in productivity.

Peering into Corporate Financing Conditions in 2025

By Said Desaque

The global economic outlook for 2025 is mixed. Central bank policy rates will be lowered gradually and settle at an underlying level higher than what prevailed before the COVID-19 pandemic.
While US markets are discounting a soft landing, financing conditions for corporations next year will be impacted by the magnitude of the slowdown and the prospective conduct of fiscal policy.
Conditions in the Eurozone are expected to improve next year, while the outlook for refinancing activity in the Asia Pacific remains nuanced, courtesy of differing regional central bank policy outlooks.

Trump and China: It’s Going to Get Interesting!

By David Mudd

China’s trade is growing strongly and has become less dependent on the US. The EU and Mexico now exceed China’s monthly exports to the US.
Taiwan as a flashpoint between the US and China will decline in coming years as each country ramps up its semiconductor manufacturing capabilities.
Tariffs and the Yuan will be important negotiating points between the US and China, but the good news is they will be talking.

Some Preliminary Thoughts on Q3 Earning Season

By Cam Hui

The tactical bullish set-up that we outlined last week has triggered a buy signal.
Diverse leadership by financial, industrial and technology stocks points to further gains in stock prices.
Investors should be aware of the key risk of earnings disappointment during Q3 earnings season, and signs of resurgent inflation that puts upward pressure on interest rates.

Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning

After a brief spell of iron ore prices rising to 108 USD/ton, prices have retraced to 102 USD/ton (-3% WoW) but remain broadly in the 95-130 USD/ton band.
Investors were disappointed with China’s announced stimulus measures, citing their vagueness and lack of a specific timetable, resulting in the positive sentiment waning over the last two weeks.
We update investors on Vale’s (VALE US) recent proposal to the government to settle the Mariana Dam disaster.

Copper Tracker Oct 21st, 2024: The China Malaise Sets In

Copper prices were down slightly, WoW, by 0.3% YoY, as the effect of China’s stimulus plan announcements waned, with investors viewing them more skeptically.
With 58% of the metal’s demand arising from China, we expect the short-term malaise to be felt unless China makes punchier fiscal stimulus announcements soon.
We believe high-quality equities like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) will continue to be resilient and prefer exposure to copper in those names.

South Africa: Medium Term Budget Policy Statement to Be Announced on October 30

By Alex Ng

The coalition government will announce its first Medium-Term Budget Policy Statement (MTBPS) in Parliament on October 30.
It is anticipated to set government policy goals and priorities and forecast macroeconomic trajectory and the fiscal framework over the next three years.
We continue to think the fiscal deficit in South Africa is projected to remain elevated contributing both to the GDP and inflation prospects, given rising debt service.

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Oct 21

Daily Brief Australia: Iron Ore and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning

Iron Ore Tracker (21-Oct-2024): China Positive Sentiment Waning

After a brief spell of iron ore prices rising to 108 USD/ton, prices have retraced to 102 USD/ton (-3% WoW) but remain broadly in the 95-130 USD/ton band.
Investors were disappointed with China’s announced stimulus measures, citing their vagueness and lack of a specific timetable, resulting in the positive sentiment waning over the last two weeks.
We update investors on Vale’s (VALE US) recent proposal to the government to settle the Mariana Dam disaster.

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Oct 21

Daily Brief South Korea: Shinhan Financial, Legochem Biosciences and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming
Legochem Biosciences (141080 KS): New ADC Deal Enhances Confidence on ConjuAll Technology Platform

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming

The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

Legochem Biosciences (141080 KS): New ADC Deal Enhances Confidence on ConjuAll Technology Platform

By Tina Banerjee

Legochem Biosciences (141080 KS) entered into a license agreement with Ono Pharmaceutical for LCB97, a pre-clinical stage ADC targeting solid tumors for an upfront and milestone payment of $700M.
Legochem is now pursuing high-value package deals, combining platform and product deals or multi-target product deals. The above-mentioned deal with Ono is the first such package deal.
Legochem’s ADC technology platform is seeing rising demand as number of providers decreased (due to recent M&A deals) while big pharmaceutical companies are rapidly expanding their ADC businesses.

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Oct 21

Daily Brief United States: CVRx , Copper and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

CVRX: Great Technology that Now Has a Bright Future
Copper Tracker Oct 21st, 2024: The China Malaise Sets In

CVRX: Great Technology that Now Has a Bright Future

By Pyari Menon

CVRx (CVRX US) was up 19% (including after hours) as the AMA accepted CPT Category I codes for Barostim. Codes are to be implemented on January 1, 2026
With Category I CPT codes CVRX should see the benefits of clinical validation, regulatory de-risking, reimbursement potential, increased market access and significant improvement in revenue potential
Barostim is the only neuromodulation device for heart failure and resistant hypertension, positioning CVRx as a compelling acquisition target due to its unique technology and strong market potential.

Copper Tracker Oct 21st, 2024: The China Malaise Sets In

Copper prices were down slightly, WoW, by 0.3% YoY, as the effect of China’s stimulus plan announcements waned, with investors viewing them more skeptically.
With 58% of the metal’s demand arising from China, we expect the short-term malaise to be felt unless China makes punchier fiscal stimulus announcements soon.
We believe high-quality equities like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) will continue to be resilient and prefer exposure to copper in those names.

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Oct 21

Daily Brief China: China Traditional Chinese Medicine, Cambricon Technologies Lt, JD.com Inc (ADR), China Resources Beverage, Alibaba Group Holding , Singamas Container Holdings and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance
Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified
China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com
Singamas (716 HK): Positive Readthrough from CIMC

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech

By Xinyao (Criss) Wang

The “industry clearing” of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

JD.com (JD US): Boycotted by Male Users, Denies Run on JD Finance

On October 18, JD denies there is a run on JD Finance.
Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
We believe the event will negatively impact JD and benefit Alibaba.

Pre-IPO China Resources Beverage – Due to the Pain Points, High Valuation Is Not Justified

By Xinyao (Criss) Wang

The whole industry has entered a medium to low-speed growth stage, and the industry’s future growth rate will remain single-digit growth. So, CR Beverage’s future performance decline is inevitable.
Due to serious homogenization/competition of packaged drinking water market, there’s not much room for innovation/iteration. CR Beverage’s sales-driven model is hard to bring “new story” to break through the dilemma.
CR Beverage is clearly inferior to Nongfu Spring. Its valuation should be lower than Nongfu Spring. We think reasonable valuation of CR Beverage is about US$4 billion (or lower).

China Consumption Weekly (21 Oct 2024): Sun Art, Alibaba, Tesla, JD.com

Alibaba is selling Sun Art, a listed supermarket subsidiary, as Sun Art’s revenue is shrinking.
Alibaba gained 6 million new retailers on its Taobao Tmall platform year to date.
In September Tesla’s sales volume increased by 66% YoY and all major Chinese NEV grew strongly.

Singamas (716 HK): Positive Readthrough from CIMC

By Osbert Tang, CFA

With its share price returning to HK$0.68 level, the investment value of Singamas Container Holdings (716 HK) has re-emerged.
Its competitor, CIMC, has just issued a positive profit alert, indicating an impressive 888.7% and 317.3% growth in reported and recurring earnings, which is positive for Singamas.
An 11% growth in the global containership fleet in FY24 is also beneficial to the company. Its net cash of HK$1.65bn equals 1.02x its market capitalisation.

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Oct 21

Daily Brief Japan: Fuji Soft Inc, Fujikura Ltd, Seven & I Holdings, Exedy Corp, Tokyo Metro, Nikkei 225, Sanwa Holdings, Mazda Motor and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
Fujikura (5803 JP): Positioning & Potential Passive Buying
Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac
[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run
ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst
Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
Unloved Japan Roundup: Bracing for Q3

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors.
Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible.
KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside.

Fujikura (5803 JP): Positioning & Potential Passive Buying

Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

Merger Arb Mondays (21 Oct) – Seven & I, Fuji Soft, Henlius, Canvest, GA Pack, Dyna-Mac

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Seven & I Holdings (3382 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP),Canvest Environmental Protection Group (1381 HK), Arcadium Lithium (LTM AU).
Lowest spreads: Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Silverlake Axis (SILV SP), T Gaia Corp (3738 JP), Descente Ltd (8114 JP), Pasco Corp (9232 JP).

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

By Travis Lundy

This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price? ¥2,928/share.
The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still.

ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree

By Sumeet Singh

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the live IPOs front, the coming week will see a whole lot of listings across the region.
On the placements front, there were mainly deals in Australia this week.

EQD | Nikkei 225 Option Implied Volatility Analysis – Focus on Bank of Japan Rate Decision Catalyst

By Gaudenz Schneider

Nikkei 225 (NKY INDEX) option implied volatility is stabilizing at an elevated level. This Insight analyses term structure, skew, open interest, and more.
We identify a tactical option opportunity that profits from the current volatility structure.
Are Consumer Price Index and Bank of Japan interest rate decision announcements systematically followed by unusually large market moves? We run the numbers.

Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel

By Mark Chadwick

Sanwa Holdings revised its first-half (1H) forecasts, increasing sales estimates from ¥293 billion to ¥313 billion, and operating profit (OP) from ¥25.6 billion to ¥32 billion
Essilor’s growing investment in Nikon, with the optical giant increasing its stake from 5.1% to 7.38% in just a few weeks, underscores our bullish view on the name.
Nihon Kohden recently revised its first-half (1H24) guidance, raising sales expectations by ¥700 million to ¥102.7 billion and operating profit by ¥2 billion to ¥5 billion.

Unloved Japan Roundup: Bracing for Q3

By Michael Allen

Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.

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Oct 21

Daily Brief India: NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size

EQD / NSE Vol Update / Options Mkt. Structural Changes Incoming: 15x Position Limits + 3x Lot Size

By Sankalp Singh

SEBI-Mandated structural changes continue to percolate through for Options Markets. Position limits & lot sizes have been increased drastically, tilting regulations away from Retail & towards more Institutional participation.
IV levels are in the middle of their 12-month ranges. Vol-Regime Model currently in “High & Down” state – grind lower in IVs projected.
In spite of a stronger underlying index, upcoming Bank earnings results have supported BankNifty IVs.

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Oct 21

Most Read: China Traditional Chinese Medicine, Fuji Soft Inc, Horizon Robotics, Fujikura Ltd, Shinhan Financial, Cambricon Technologies Lt, Exedy Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price
TCM (570 HK): Likely Rush for The Exits As Deal Busts
Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter
Horizon Robotics (9660 HK) IPO: The Bear Case
Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside
China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech
Fujikura (5803 JP): Positioning & Potential Passive Buying
Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming
SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength
[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

China Traditional Chinese Medicine (570 HK): Disaster as Offer Lapses, Potential Deal Break Price

Shockingly, the Sinopharm-led consortium’s offer for China Traditional Chinese Medicine (570 HK) has lapsed as the precondition long stop date has not been extended.
This deal break caught many, including me, off guard. There are lessons to be learnt and questions to be asked.
Shareholders will have a bruising Monday. Our analysis suggests a deal break price of around HK$3.44, a 10% downside to the last close.

TCM (570 HK): Likely Rush for The Exits As Deal Busts

By David Blennerhassett

China Traditional Chinese Medicine (570 HK) (TCM) has been a frustrating deal, for a deal that shouldn’t be frustrating.
As feared from its 16th October monthly update, the inability to secure investor group consents appears to have torpedoed the transaction. Will we eventually find out why this got stonewalled?
This deal lapse changes the Hong Kong M&A landscape; if you can’t rely on SOE transactions to get up, what next? The immediate question now is downside support on Monday.

Fuji Soft (9749) Reiterates Support for KKR Tender#1, Recos Shareholders Wait, Ignores Nozawa Letter

By Travis Lundy

On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

Horizon Robotics (9660 HK) IPO: The Bear Case

Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
In Horizon Robotics (9660 HK) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on high related parties’ revenue, customer concentration risk, pricing pressure, uncertain path to profitability, high cash conversion cycle and FCF burn.

Fuji Soft (9749 JP): The Board’s Unchanged Recommendation Caps the Upside

The Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors.
Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible.
KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside.

China Healthcare Weekly (Oct.20)-A Big Lesson from China TCM’s Deal Break, “Must Option” of Biotech

By Xinyao (Criss) Wang

The “industry clearing” of innovative drug companies is far longer and more brutal than imagined. But Chinese innovative drug ecosystem will ultimately usher in a better innovation pattern in the future.
For every innovative pharmaceutical company with ambitious goals, globalization is a “must option”. With more and more Chinese biotech achieving success, the internationalization prospects will become better and better.
China TCM’s privatization failure made us realize large SOEs we always believe in would violate their commitments to market/investors.Now, we need to get back to the fundamentals to minimize losses.

Fujikura (5803 JP): Positioning & Potential Passive Buying

Fujikura Ltd (5803 JP) could be added to a global index at the end of November and there will be a lot of buying in the stock.
Following the rally in the stock, Fujikura Ltd (5803 JP) trades expensive to the average and median of its peers on most valuation metrics.
The increase in cumulative excess volume in Fujikura Ltd (5803 JP) over the last 3 months far outpaces the increase in its peers.

Korea Value-Up Index: Estimated Passive Flows as ETF Launches Coming

The KRX announced the 100 constituents of the much-awaited Korea Value-Up Index on 24 September. There were hits and misses but broad consensus was that the index is a miss.
Following market feedback, the KRX could conduct a special rebalance of the index in December. But this could be after the launch of ETFs tracking the index.
With a big overlap and similar characteristics as the KOSPI 200 Index, there could be limited assets benchmarked to the Korea Value-Up Index in the short-term.

SSE50 Index Rebalance Preview: Potential Inclusions Continue to Outperform; Trim into Strength

With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

[JAPAN ACTIVISM] Murakami Group Now 23.5% on Exedy (7278) – LOTS of Room Left To Run

By Travis Lundy

This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price? ¥2,928/share.
The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still.

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Oct 21

Daily Brief Industrials: Fujikura Ltd, Tokyo Metro, Sanwa Holdings, Singamas Container Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Fujikura (5803 JP): Positioning & Potential Passive Buying
ECM Weekly (21st Oct 2024) – Tokyo Metro, China Resources, Horizon Robotics, Hyundai India, Waaree
Japan Value | Sanwa, Nikon, Nihon Kohden, Maruichi Steel
Singamas (716 HK): Positive Readthrough from CIMC

Fujikura (5803 JP): Positioning & Potential Passive Buying