In today’s briefing:
- Zydus Lifesciences (ZYDUSLIF IN): Strong Start of FY24 Riding on US Formulation Business
- Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
- Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
- Pause Continues But Oversold Bounce Likely; Buys in Energy, Construction/Engineering, Enrgy Shippers
- Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It
- Inflation Watch: Why EUR inflation will print below 2% before New Years
- ARM Holdings Limited – The Positives – Pervasive Global Presence
- Integral Corporation IPO: The Bear Case
- KS (Kuaishou 1024 HK): 2Q23, First Net Profit Since IPO, Growth Accelerated, Buy
- FX Nugget: What Policy Normalization? The BoJ Is as Interventionist as Ever….
Zydus Lifesciences (ZYDUSLIF IN): Strong Start of FY24 Riding on US Formulation Business
- Zydus Lifesciences Ltd (ZYDUSLIF IN) recorded 30% YoY growth in revenue to INR51B in Q1FY24, driven by 57% YoY growth in US formulation business. India business revenue grew 6% YoY.
- US business growth was driven by new product launches and improvement in base business. The company has launched four new products in the US during the quarter.
- Zydus Lifesciences expects double-digit growth in India branded formulation business to continue and the U.S. business to grow on a formidable base of FY23 going forward.
Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
- The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
- There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
- A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.
Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
- There should be 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
- The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
- Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.
Pause Continues But Oversold Bounce Likely; Buys in Energy, Construction/Engineering, Enrgy Shippers
- Support levels discussed in our 8/8/23 Compass broke, leading to a change in character (from buy the dup to sell the rip) and a deeper pullback.
- Supports we were watching included the 50-day MA and 4460-4475 on the S&P 500, $371.50 on $QQQ, and $190-193 on the $IWM; these are now resistance moving forward
- Longer-Term support on the S&P 500 is at 4300-4325 (nearly hit on Friday) and 4200, and we will remain constructive as long as these supports hold.
Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It
- Multiple local news outlets reported Hanwha Ocean is undergoing a 2.5 trillion won equity increase. The official disclosure regarding this matter is expected to be released within this month.
- We have repeatedly observed a pattern of testing the waters through leaks to the local media. The case of Hanwha Ocean can also be seen in this light.
- It’s challenging to envision this magnitude being absorbed seamlessly by the market. There is a considerable likelihood that both issuers and bankers will aggressively attract inflows of arbitrage-seeking hot money.
Inflation Watch: Why EUR inflation will print below 2% before New Years
- It’s Jackson Hole week and even if Wyoming is typically only full of cowboys (also when CBs gather), they are joined by a cowgirl from France this week for the conference.
- The Fed and the ECB will enter the yearly conference with different macroeconomic backdrops as the US growth and inflation momentum seems stickier than Euro peers on our models.
- And using leads/lags from the European PPI basket and the US HICP index, we intend on showing you that sub 2% inflation in Europe is a clear possibility in just 3 months from now.
ARM Holdings Limited – The Positives – Pervasive Global Presence
- Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings ’ US IPO.
- ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
- In this note, we talk about the positive aspects of the deal.
Integral Corporation IPO: The Bear Case
- Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September.
- In Integral Corporation IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rest on the declining mix of fee-earning AUM, growth driven by volatile investment income and uninspiring 1HFY22 performance in fee-related revenue growth and margin.
KS (Kuaishou 1024 HK): 2Q23, First Net Profit Since IPO, Growth Accelerated, Buy
- The total revenue growth rate accelerated significantly to 28% YoY in 2Q23.
- The high-margin businesses grew more rapidly than the low margin business.
- Gross Merchandise Value and Active user base still increased strongly.
FX Nugget: What Policy Normalization? The BoJ Is as Interventionist as Ever….
- Markets are stuck in a discussion on the JPY this morning as BoJ governor Ueda and PM Kishida held a meeting allegedly discussing FX developments.
- Our models continue to signal weakness ahead for the JPY.
- Even a move to 1% in the YCC-curve control has NOT allowed the BoJ to become less interventionist.
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