In today’s briefing:
- A Thorough Guide to KOSPI 200 & KOSDAQ 150 Rebalancing Calculations
- China Dairy Sector: Long Inner Mongolia Yili and Short China Mengniu Dairy
- SML Group Pre-IPO Tearsheet
- Walmart (WMT US) | Why Walmart Is Likely to Win in India’s ONDC World Compared to Amazon
- Faraday Future (FFIE) Struggles to Finance Amid Internal “Civil War”
A Thorough Guide to KOSPI 200 & KOSDAQ 150 Rebalancing Calculations
- This post explains how the rebalancing of the KOSPI 200 and KOSDAQ 150 is calculated. So, please note that this post does not have any investment recommendations.
- Both indices have the same calculation method. However, the thresholds are different. They screen stocks using the three metrics: Market Cap, ADTV, and Market Cap Ranking (buffer).
- The concept itself of these three metrics is not difficult. However, ranking it cumulatively often confuses us.
China Dairy Sector: Long Inner Mongolia Yili and Short China Mengniu Dairy
- In this insight, we discuss a pair trade involving going long on Inner Mongolia Yili Industrial Group (A) (600887 CH)(“Yili”) and going short on China Mengniu Dairy Co (2319 HK).
- Yili has more impressive financial metrics than China Mengniu Dairy in terms of ROE, operating margins, and sales growth. However, Yili is trading at lower EV/EBITDA than China Mengniu Dairy.
- Yili should be trading at premium valuation than China Mengniu Dairy. Therefore, we believe Yili is well poised to outperform China Mengniu Dairy’s share price in the next 12 months.
SML Group Pre-IPO Tearsheet
- SML Group (SMLGZ HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by BNP Paribas.
- SML Group (SMLG) is a vertically integrated digital identification solutions provider. It primarily engages in developing, manufacturing and selling label and tag products with RFID, a leading item-level identification technology.
- SMLG operates globally across 24 countries and as of the latest practicable date (17 Jun 22), had 23 production facilities in 18 countries.
Walmart (WMT US) | Why Walmart Is Likely to Win in India’s ONDC World Compared to Amazon
- India’s Open Network for Digital Commerce (ONDC) is expected to break duopolies across the digital commerce ecosystem including e-marketplaces like Flipkart Online Services (1398508D IN) & Amazon.com Inc (AMZN US).
- We think it is the other way around. We expect them to thrive and become even more dominant in case the market expands as envisioned under ONDC.
- While it could be too early & premature, Walmart (WMT US) thanks to its investments in Flipkart and the path chosen by PhonePe is better placed compared to Amazon in India.
Faraday Future (FFIE) Struggles to Finance Amid Internal “Civil War”
- Faraday has been actively looking for financing as cash on hand in April was only $222m and its cash-burn in Q1 ran at $173m.
- On top of SEC & DoJ investigations, Faraday’s financing efforts are further hampered by a recent proxy battle against the Board of Directors launched by Faraday’s founder.
- Faraday “believes” it has enough cash to see the launch its first EV in Q3, but Q2 results may show it has little cash left for a successful ramp-up.
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