In today’s briefing:
- Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Bank of Kyoto (8369) – Not a Normal Regional Bank
- Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good
- Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Quiddity Primer for HSCEI Rebalance Events
- Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows
- Taiwan Dual-Listings: TSMC Premium In Upper Range, UMC Briefing This Afternoon
- TSMC Analyst Call Take-Aways: Signs of Industry Stabilization & 2H23E Recovery
- HK Short Interest Weekly: Tencent, Baba, CMB, Bidu, Meituan, HSBC, Differ, Li Auto
- Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos
Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Japanese Banks have had a good run recently. From the day before the BOJ changed the 10yr yield target in December in its YCC programme to today, +30% vs TOPIX.
- The question is how that is spread out. There are lots of banks. Some are cheaper than others. Some are better than others. Can we draw conclusions to trade better?
- If you are looking at Japanese Banks to play a change in BOJ policy when Governor Kuroda’s term ends shortly, there are definitely conclusions one can draw. I offer comments.
Bank of Kyoto (8369) – Not a Normal Regional Bank
- Bank of Kyoto (8369 JP) is a classic “deep value” trade. It has a low PBR, and… “Dude, it’s equity portfolio alone is worth more than the whole bank.”
- It has a larger market cap than most super-low PBR Japanese regional banks, is more liquid, and the narrative is quite easy to tell.
- Japanese Banks are the hottest new thing but unless you think This Particular Leopard is going to change its spots, it is still best thought of as a range trade.
Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good
- Wuxi Biologics Holdings is looking to raise up to US$513m by selling about 1.3% of Wuxi Biologics (2269 HK).
- This is the company’s 16th placement since it listed in June 2017.
- In this note, we will discuss deal dynamics, past deal performance, and share the scores on our ECM framework.
Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
- They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
- This is one of those times when I can reiterate, Japan Needs More Cowbell.
Quiddity Primer for HSCEI Rebalance Events
- The Hang Seng China Enterprises Index (HSCEI INDEX) is one of the most widely discussed indices in the Hang Seng Indices family.
- The HSCEI serves as a benchmark to reflect the overall performance of “Mainland” Securities listed in Hong Kong.
- In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.
Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows
- Alibaba (ADR) (BABA US), along with several other Chinese tech names have rallied more than 100% over the past 2.5 months with the Chinese government indicating regulatory crackdowns are over.
- However, we think this could just be a temporary respite for tech names as there’s a lot more to be done in terms of a data security and privacy standpoint.
- Nevertheless, Alibaba Group (9988 HK) is still quite expensive, given that government interventions have pretty much curtailed Alibaba’s avenues for growth in the domestic market.
Taiwan Dual-Listings: TSMC Premium In Upper Range, UMC Briefing This Afternoon
- TSMC ADRs are trading at the high end of the recent premium/discount range.
- UMC ADRs are near the middle of their premium/discount range, however the company will host its analyst results call this afternoon.
- ASE’s ADR premium is at the upper end of its range.
TSMC Analyst Call Take-Aways: Signs of Industry Stabilization & 2H23E Recovery
- TSMC’s comments during its 4Q22 analyst call indicate the company expects an industry recovery in 2H23E, adding further confirmation to this view expressed by other firms.
- TSMC grew faster than the industry in 2022 and expects to grow faster than the industry in 2023E again.
- Based on our cycle-adjusted PE valuation metric, TSMC my not be super cheap vs. history, but it is also inexpensive.
HK Short Interest Weekly: Tencent, Baba, CMB, Bidu, Meituan, HSBC, Differ, Li Auto
- We analyzed the latest HK SFC report for aggregate short position as of Jan 6th.
- Top short increases and decreases were tabulated for one week and four week period.
- We highlight short changes in Tencent, Baba, Cm Bank, Bidu, Meituan, HSBC, Differ Gp Auto, Li Auto-W.
Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos
- OVERSEAS: US MLK Holidays – World markets directionless; US Equity Futs flat; European Markets bid on Inflation peak; BOJ decision to lead markets this week.
- JAPAN: NKY Futures +0.2% vs Cash ; USDJPY flat at 128.52 ; BOJ speculation dominates local headlines; Kuroda heads to Davos = no fireworks? ; Dec Machine Tools orders +1%YoY
- DAILY NUGGET: Fast Retailing and Sustainability: Set to introduce a new repair service in its domestic stores.
💡 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
