Most Read: BYD, Emperador Inc, Tianqi Lithium, Life Insurance Corp of India (LIC), LG Energy Solution, NTT (Nippon Telegraph & Telephone), Fast Retailing and more

• Just days after BYD (1211 HK) surpassed Tesla Motors (TSLA US) as the world’s largest electric vehicle producer by sales, is Warren Buffet cashing in his chips?
• 225mn shares of BYD  – 7.73% of the H shares – moved into CCASS yesterday. These are Berkshire Hathaway’s shares. 
• For a shareholder who has kept his holding in share certificates for 13 years, this development suggests the possibility of a partial or full exit. 

• Emperador Inc (EMP PM) is pre-marketing a secondary listing on the SGX IPO by raising US$300-500 million, according to press reports. 
• Emperador has established a track record of decent revenue growth, profitability and cash generation over the years. 
• While the fundamentals are solid the valuation looks full in comparison to peers and historical trading ranges. 

For our next Webinar, we are excited to welcome Analysts Said Desaque and Osbert Tang, CFA , who will go over China’s latest potential $220 billion stimulus through a massive sale of special bonds. The Analysts will each present their views on the situation and a Q&A will follow.

The webinar will be hosted on Wednesday, 13 July 2022, 17:00 SGT/HKT.

Said DeSaque is a professional economist with over 33 years of experience covering the global economy, with significant expertise in the US, China, Japan, and emerging markets. He worked with US investment banks for 25 years covering institutional investors in Europe, Middle East, Far East and Australia. He covers financial markets on a multi-asset basis, and has been an independent economist covering the global economy and financial markets for the past 8 years since founding DeSaque Macro Research in London.

Osbert Tang is an equity analyst with over 20 years of experience, focusing on China transport, infrastructure, industrials, and utilities. He has been based in Shanghai since 2003, where he accumulated more than 15 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities.

• Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
• TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
• In this note, we talk about the updates since our last note, along with the trading dynamics.

• Life Insurance Corp of India (LIC) (LICI IN) and Tata Power (TPWR IN) will be added to the Nifty 100 Index (NSE100 INDEX) and Nifty Next 50 Index (NIFTYJR INDEX). 
• Nmdc Ltd (NMDC IN) will be deleted from the CPSE ETF (CPSEBE IN) and there will be no replacement in the index.
• The NMDC deletion along with capping changes means that there is decent volume (and ADV) to buy on quite a few names in the CPSE ETF (CPSEBE IN).

• The price diversion between LG Chem and LG Energy has deepened considerably over the past two days. The sigma is currently -2.35. It is virtually the most extreme level year-to-date.
• LG Energy’s immediate-term overhang risk will likely offset the upcoming passive inflow event. In addition, the intensity of their price cointegration has not been weakened in recent months.
• Therefore, we should consider setting up reversion trading from this point on, aimed at the lockup release on July 27.

• Tianqi Lithium (002466 CH) priced its H Share at HK$82.00 per share to raise net proceeds of HK$13,062 million (US$1.7 billion). The H Share will start trading tomorrow.
• The H Share listing (HK$82.00) and grey market price (HK$76.50) imply an AH discount of 45% and 49%, respectively. This compares to Ganfeng Lithium (1772 HK)’s current 35.3% AH discount.
• The relative valuation is attractive. At the H Share listing price, Tianqi Lithium (9696 HK)’s H Share trades at a -6% discount to the median peers’ CY2022 P/B multiple.

• The increase of 225.2 million CCASS shares deposited with Citibank matches Berkshire Hathaway Inc Cl B (BRK/B US)’s stake. BYD (1211 HK) closed -12% down on speculation of a selldown.   
• The H Share recently touched all-time highs and trades at a significant premium to historical multiples. BYD has a recent history of a selldown by a substantial shareholder (Himalaya Capital).
• Berkshire has made a 33x gain on its BYD investment, excluding dividends. Taking money off the table would align with Berkshire’s value investing mandate.

• 2022 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each. 
• Even if you do not “play” index changes, understanding impact is important. Japan Exchange Group (8697 JP) entered Nikkei 225 in July 2020 after rising 30%. That was the top.
• Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks. 

• We turn bullish on Fast Retail as the current quarter marks the bottom for China sales
• The company continues to surprise in its mastery of gross margins and operating costs
• China is key, but the US is emerging as a new (and profitable) growth driver