In today’s briefing:
- One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
- ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- Nidec (6594 JP): Buy into Current Weakness
- AKR Corporindo (AKRA IJ) – A Winning Formula
- Air China (753 HK): Demonstrating Obvious Strengths
- ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors
- Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers
One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
- Due to the matched order fraud incident in recent days, there has been a significant change in the KOSDAQ top 50 rankings, presenting a great opportunity for Yunsung F&C.
- The estimated size of the passive inflow that it is likely to receive is approximately 0.5-0.8x ADTV for ETFs alone, and 1.2-1.5x when expanded to all passive funds.
- We should note that the level of market exposure to inclusion possibility has been significantly low. Therefore, we can expect a significant price impact at the time of the announcement.
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
- With 1 trading day left in the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
- Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
- The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We’d be inclined to trim positions.
Nidec (6594 JP): Buy into Current Weakness
- FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.
- The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.
- Projected valuations are attractive even if sales do not reach management’s ambitious target.
AKR Corporindo (AKRA IJ) – A Winning Formula
- AKR Corporindo1Q2023 results demonstrated its resilience with its petroleum and chemicals division continuing to grow in 1Q2023 with the added kicker of a large land sale at JIIPE.
- The company’s JIIPE Industrial Estate will become an increasingly important earnings contributor but chemical distribution will be driven by smelters and fuel by the BP retail JV at the margin,
- AKR Corporindo is an increasingly interesting proxy for the next stage of Indonesia’s economic growth through its exposure to smelters through its chemicals business and the overall economy through fuel.
Air China (753 HK): Demonstrating Obvious Strengths
- Air China Ltd (H) (753 HK)‘s 1Q23 result demonstrated a significant YoY and QoQ reduction in losses. At Rmb2.9bn, this is the smallest losses in last six quarters.
- We witnessed a solid spike in overall yield and sharp margin recovery in the quarter. There is also encouraging performance in operating cash flow which turned around YoY to positive.
- Its associate Cathay Pacific Airways (293 HK) has seen Mar capacity returned to 50% of pre-pandemic level with over 90% load. More resumption of international flights will drive 2H23.
ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors
Selex Motors produces electric two-wheelers and swappable battery packs that are purpose-built for last-mile cargo delivery
- The company aims to utilise the funds to expand its two-wheeler production lines and set up battery-swapping systems in key cities in Vietnam, aiming to become the nation’s largest battery-swapping network provider
- Established in 2018, Selex produces electric two-wheelers and swappable battery packs that are purpose-built for large applications, including last-mile cargo delivery
Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers
- Millennium Services Group Ltd (ASX:MIL) has announced an update on Q3 FY23 revenue and cash flow from operating activities.
- MIL achieved the first positive quarterly revenue growth since Q1 FY22 at +3.5%, while contract revenue growth was ~+12.6% on the pcp (excludes ad-hoc revenue).
- The COVID-related ad-hoc revenue has now all but cycled out of the quarterly numbers while new contract wins cycle in.
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