In today’s briefing:
- HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home
- HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls
- Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally
- Light at the End of the Dark Tunnel for Korean Cosmetics?
- SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)
- Home Depot Inc: Managing Labor Shortages & Other Developments
- Target Corporation: Partnership With Apple & Other Drivers
- Lowe’s Companies: Divestment Of Canadian Retail Operations & Other Drivers
- Raising % of Female Board Directors Requires Solving a Variety of Challenges in Reality
HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home
- The inclusion of Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK) and Haier Smart Home Co Ltd (6690 HK) gets us to 76 index constituents.
- Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 2.01% and will result in a one-way trade of HK$3,845m.
- Shorts on Haier Smart Home Co Ltd (6690 HK) and Tingyi Holding (322 HK) are around 5% of float and covering could take the stocks higher.
HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls
- There are 4 adds and 4 deletes for the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance. The only surprises are some non-adds and non-deletes.
- Using prices from the close on 18 November, estimated one-way turnover is 4.64% and will result in a one-way trade of HK$2,612m at the close on 2 December.
- Short interest is larger on the deletes than the adds. However, at 17 days of ADV to cover and 11.7% of float, short interest on Zhongsheng Group is huge.
Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally
- Oriental Watch (398 HK) paid a 31-cent dividend in its H1FY23 result on the 16th, equating to an annualized dividend yield of 15% on the current share price.
- The outlook for the rest of the year is much brighter, given the recovery in China and the inability of the Chinese to travel. October numbers were strong.
- The stock trades at a 6.7x PE, with more than 50% of the market capitalization in cash. In slightly better market conditions, this could be a 6 HKD stock.
Light at the End of the Dark Tunnel for Korean Cosmetics?
- We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&H and Amorepacific Corp.
- These two stocks have underperformed the market in the past year but have started to outperform the market in the past three weeks.
- There are credible signs that indoor mask wearing in Korea will be eliminated in Korea on/near March 2023 and that the inbound visitors to Korea will continue to increase significantly.
SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)
- As forecast, Tata Motors Ltd (TTMT IN) will be added to the S&P BSE SENSEX Index (SENSEX INDEX) in December to replace Dr. Reddy’s Laboratories (DRRD IN).
- We estimate passive trackers will need to buy 2.3x ADV (7.2x delivery volume) on Tata Motors Ltd (TTMT) while selling 5x ADV (10.5x delivery volume) on Dr. Reddy’s Laboratories (DRRD).
- The HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger should see Adani Enterprises (ADE IN) added to the S&P BSE SENSEX Index (SENSEX INDEX) prior to the June rebalance.
Home Depot Inc: Managing Labor Shortages & Other Developments
- Home Depot delivered another good result and surpassed Wall Street expectations in terms of revenues as well as earnings.
- The company continued to observe high demand for home renovation projects throughout the third quarter.
- Sales growth for both Pro and DIY was good, with Pro surpassing DIY.
Target Corporation: Partnership With Apple & Other Drivers
- Target’s third quarter results were a mixed bag as the company’s revenues surpassed Wall Street expectations but it missed out on meeting earnings expectations.
- Their top-line continues to profit from increases in guest visitation and unit share gains across all of their main categories.
- While their performance in the third quarter compared favorably with the previous one, the period’s tendencies were very different.
Lowe’s Companies: Divestment Of Canadian Retail Operations & Other Drivers
- Lowe’s delivered an impressive set of results this quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
- The company’s Pro business maintained its momentum, resulting from the success of its Pro efforts and the tenacity of the demand for home renovation.
- Their ongoing focus on productivity and solid sales growth contributed to improved operating performance which ensured the earnings beat.
Raising % of Female Board Directors Requires Solving a Variety of Challenges in Reality
- 72.9% of companies in prime market complied with the principles of Corporate Governance Code, which defines the concept of ensuring diversity, but no specific targets were set in their disclosures.
- If % female directors were raised to 30%, they should be recruited from within the company to executive directors, but very few companies have % female managers exceeding 30%.
- Gender discrimination in hiring, gender disparity in access to higher education, issues of leaving/returning to work due to childbirth and child rearing, and gender discrimination in workplace must be resolved.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
