Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">AIA Group Ltd (1299 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> and <a href="https://www.smartkarma.com/entities/byd-electronic-international-co-ltd" target="_blank" data-smartkarma-citation="entities:1927:1" rel="noopener">BYD Electronics (285 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/country-garden-services-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:27343:1" rel="noopener">Country Garden Services Holdings (6098 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/postal-savings-bank-of-china" target="_blank" data-smartkarma-citation="entities:22848:1" rel="noopener">Postal Savings Bank of China (1658 HK)</a> and <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a>. Shorts increased in the Consumer Discretionary, Information Technology, Health Care and Communication Services sectors, and decreased in the Financials and Industrials sectors.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP)</a>, <a href="https://www.smartkarma.com/entities/rakus-co-ltd" target="_blank" data-smartkarma-citation="entities:29200:1" rel="noopener">Rakus Co Ltd (3923 JP)</a>, <a href="https://www.smartkarma.com/entities/daito-trust-construct-co-ltd" target="_blank" data-smartkarma-citation="entities:10503:1" rel="noopener">Daito Trust Construct (1878 JP)</a> and <a href="https://www.smartkarma.com/entities/aeon-financial-service-co-ltd" target="_blank" data-smartkarma-citation="entities:5887:1" rel="noopener">Aeon Financial (8570 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a>, <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a>, <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/isetan-mitsukoshi-holdings-ltd" target="_blank" data-smartkarma-citation="entities:18871:1" rel="noopener">Isetan Mitsukoshi Holdings Ltd (3099 JP)</a> and <a href="https://www.smartkarma.com/entities/mitsui-mining-smelting-co" target="_blank" data-smartkarma-citation="entities:15998:1" rel="noopener">Mitsui Mining &amp; Smelting Co (5706 JP)</a>. Shorts increased in the Industrials and Financials sectors, and decreased in the Consumer Discretionary sector.</p></div><div>
<p>Short selling finally resumed in Korea this week. Shorts increased on <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-display-co-ltd" target="_blank" data-smartkarma-citation="entities:7145:1" rel="noopener">LG Display (034220 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/netmarble-corporation" target="_blank" data-smartkarma-citation="entities:22839:1" rel="noopener">Netmarble Corporation (251270 KS)</a> and <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>. The largest percentage increase in shorts was seen on <a href="https://www.smartkarma.com/entities/hyundai-rotem-company" target="_blank" data-smartkarma-citation="entities:1554:1" rel="noopener">Hyundai Rotem Company (064350 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-chemicals-co-ltd-new" target="_blank" data-smartkarma-citation="entities:26190:1" rel="noopener">Sk Chemicals Co Ltd/New (285130 KS)</a>, <a href="https://www.smartkarma.com/entities/daewoo-shipbuilding-marine-engineering" target="_blank" data-smartkarma-citation="entities:12531:1" rel="noopener">Daewoo Shipbuilding &amp; Marine Engineering (042660 KS)</a> and <a href="https://www.smartkarma.com/entities/e-mart-inc" target="_blank" data-smartkarma-citation="entities:6993:1" rel="noopener">E Mart Inc (139480 KS)</a>.</p>
<p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a> and <a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a>, while shorts covered on <a href="https://www.smartkarma.com/entities/wisdom-marine-lines-co-ltd" target="_blank" data-smartkarma-citation="entities:10001:1" rel="noopener">Wisdom Marine Lines (2637 TT)</a>, <a href="https://www.smartkarma.com/entities/wiwynn-corp" target="_blank" data-smartkarma-citation="entities:27838:1" rel="noopener">Wiwynn Corp (6669 TT)</a>, <a href="https://www.smartkarma.com/entities/richwave-technology-corp" target="_blank" data-smartkarma-citation="entities:18629:1" rel="noopener">Richwave Technology (4968 TT)</a>, <a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry (2317 TT)</a> and <a href="https://www.smartkarma.com/entities/hannstar-display-corp" target="_blank" data-smartkarma-citation="entities:13922:1" rel="noopener">Hannstar Display (6116 TT)</a>. </p>
</div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Alibaba Group (9988 HK), BYD (1211 HK), AIA Group Ltd (1299 HK), Xiaomi Corp (1810 HK) and BYD Electronics (285 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Country Garden Services Holdings (6098 HK), Meituan (3690 HK), Postal Savings Bank of China (1658 HK) and Citic Securities (H) (6030 HK). Shorts increased in the Consumer Discretionary, Information Technology, Health Care and Communication Services sectors, and decreased in the Financials and Industrials sectors.In Japan, stocks that saw the most shorts were Toshiba Corp (6502 JP), Cosmos Pharmaceutical (3349 JP), Rakus Co Ltd (3923 JP), Daito Trust Construct (1878 JP) and Aeon Financial (8570 JP) while shorts decreased on Ryohin Keikaku (7453 JP), Aeon Co Ltd (8267 JP), Lasertec Corp (6920 JP), Isetan Mitsukoshi Holdings Ltd (3099 JP) and Mitsui Mining &amp; Smelting Co (5706 JP). Shorts increased in the Industrials and Financials sectors, and decreased in the Consumer Discretionary sector.
Short selling finally resumed in Korea this week. Shorts increased on Celltrion Inc (068270 KS), LG Display (034220 KS), SK Hynix (000660 KS), Netmarble Corporation (251270 KS) and Naver Corp (035420 KS). The largest percentage increase in shorts was seen on Hyundai Rotem Company (064350 KS), Sk Chemicals Co Ltd/New (285130 KS), Daewoo Shipbuilding &amp; Marine Engineering (042660 KS) and E Mart Inc (139480 KS).
In Taiwan, shorts increased on Novatek Microelectronics Corp (3034 TT), Yang Ming Marine Transport (2609 TT), Taiwan Cement (1101 TT), AU Optronics (2409 TT) and Mediatek Inc (2454 TT), while shorts covered on Wisdom Marine Lines (2637 TT), Wiwynn Corp (6669 TT), Richwave Technology (4968 TT), Hon Hai Precision Industry (2317 TT) and Hannstar Display (6116 TT). 


Asia Shorts: BYD, Ping An, Toshiba, Rakus, Aeon, Celltrion, LG Display, SK Chem, Novatek, Yang Ming

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p><strong><em>* Poor Operating Result:</em></strong><em>Aeon Financial Service (8570.JP) [AFS] reported a FY 1Q20 operating loss of JPY 0.8 bn, and a net loss of JPY 1.1 bn. The poor result was driven by JPY 30.7 bn in net loss provisions, as credit quality across AFS deteriorated well beyond expectations resultant of the global slowdown attributed to COVID-19;</em></p><p><strong><em>* ASEAN Risk:</em></strong> Aeon Thana Sinsap (ATS.TB) [ATS], AFS’ 54.3% owned subsidiary) reported a 46% YOY decline results to THB 530 mn, as ATS temporarily closed 70 branches for about six weeks through mid-May due to COVID-19, and offered credit assistance to customers in line with the Bank of Thailand’s relief measures. Aeon Credit Service Berhad (ACSM.HK) reported results of MYR 26.3 mn  - declining 69% YOY in 1Q to MYR 26.3 mn. The Malaysian government’s Movement Control Order (MCO) to prevent the spread of COVID-19 had a negative impact on local business activities,</p><p><strong><em>*Dividend Cut:</em></strong> FY 2/21 DPS guidance of JPY 23 is a sharp reduction in DPS – but in line with the projected profit decline and works out to a dividend payout ratio of 50%-100%. This was a negative surprise as AFS had made a convincing argument for dividend stability at the FY 2/20 earnings briefing. If a 2<sup>nd</sup> wave of COVID-19 occurs, we’d expect the dividend to decline to zero.  </p>

* Poor Operating Result:Aeon Financial Service (8570.JP) [AFS] reported a FY 1Q20 operating loss of JPY 0.8 bn, and a net loss of JPY 1.1 bn. The poor result was driven by JPY 30.7 bn in net loss provisions, as credit quality across AFS deteriorated well beyond expectations resultant of the global slowdown attributed to COVID-19;* ASEAN Risk: Aeon Thana Sinsap (ATS.TB) [ATS], AFS’ 54.3% owned subsidiary) reported a 46% YOY decline results to THB 530 mn, as ATS temporarily closed 70 branches for about six weeks through mid-May due to COVID-19, and offered credit assistance to customers in line with the Bank of Thailand’s relief measures. Aeon Credit Service Berhad (ACSM.HK) reported results of MYR 26.3 mn  - declining 69% YOY in 1Q to MYR 26.3 mn. The Malaysian government’s Movement Control Order (MCO) to prevent the spread of COVID-19 had a negative impact on local business activities,*Dividend Cut: FY 2/21 DPS guidance of JPY 23 is a sharp reduction in DPS – but in line with the projected profit decline and works out to a dividend payout ratio of 50%-100%. This was a negative surprise as AFS had made a convincing argument for dividend stability at the FY 2/20 earnings briefing. If a 2nd wave of COVID-19 occurs, we’d expect the dividend to decline to zero.  

AEON Financial Services – ASEAN Weakness Results In Dividend Cut

Mitsubishi UFJ Financial (MUFG) / Equity Bottom-Up

<p><strong><em>*Weak May 2020 Data:</em></strong> ACOM (8572.JP) released poor May 2020 monthly performance data on June 10<sup>th</sup> which exhibited negative consumer lending growth for the first time since 2014  - declining 0.6% YOY during the month. ACOM is chronically understates kaburai risk;</p><p><strong><em>* No Guidance Still: </em></strong>Senior management did not issue FY3/21 guidance, we remain in the dark regarding treatment of credit costs and its overseas operations; and  </p><p><strong><em>* MUFG Should Struggle Globally Too:</em></strong> The lack of provisioning is far from the only problem MUFG must manage. <em>P</em>ost-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; continued impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.</p>

*Weak May 2020 Data: ACOM (8572.JP) released poor May 2020 monthly performance data on June 10th which exhibited negative consumer lending growth for the first time since 2014  - declining 0.6% YOY during the month. ACOM is chronically understates kaburai risk;* No Guidance Still: Senior management did not issue FY3/21 guidance, we remain in the dark regarding treatment of credit costs and its overseas operations; and  * MUFG Should Struggle Globally Too: The lack of provisioning is far from the only problem MUFG must manage. Post-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; continued impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.

<p><strong><em>* ACOM’s Chronic Kaburai Underestimation: </em></strong>After the market close on April 24<sup>th</sup>, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG] subsidiary ACOM (8572.JP) announced a revisions to its FY (March) 2020 earnings forecasts, lowering its operating profit by JPY 12 bn (13.7%) reflecting a JPY 19.7 bn in <em>kaburai </em>interest repayment provisions; and</p><p><strong><em>* Pig Piling At MUFG: </em></strong>ACOM <em>is far from the only headache at MUFG: p</em>ost-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.</p>

* ACOM’s Chronic Kaburai Underestimation: After the market close on April 24th, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG] subsidiary ACOM (8572.JP) announced a revisions to its FY (March) 2020 earnings forecasts, lowering its operating profit by JPY 12 bn (13.7%) reflecting a JPY 19.7 bn in kaburai interest repayment provisions; and* Pig Piling At MUFG: ACOM is far from the only headache at MUFG: post-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

SBI Cards & Payment Services / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/sbi-cards-payment" target="_blank" data-smartkarma-citation="entities:28662:1" rel="noopener">SBI Cards (SBICARDS IN)</a> is the second-largest credit card issuer in India, with an 18.0% market share of the Indian credit card market as measured by the number of credit cards outstanding as of 30 September 2019. SBI Cards will commence trading on Monday, 16 March. SBI Cards set its IPO price at Rs755 per share, which is the upper limit of the IPO price band.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/sbi-cards-and-payment-ipo-price-range-s-polarized-appeal" target="_blank" rel="noopener">our valuation note</a>, we stated that the signs point to a good post-IPO performance, and we are inclined to put on our "growth" hat and participate in the IPO. However, since then, the markets globally are in turmoil due to the covid-19 outbreak. While trying to predict market moves in the current environment is challenging, we think that SBI Cards will have a tepid debut (likely flat). On a longer-term basis, we think the valuation remains appealing to growth-oriented investors willing to look past the market turmoil.</p></div></div></div>

SBI Cards (SBICARDS IN) is the second-largest credit card issuer in India, with an 18.0% market share of the Indian credit card market as measured by the number of credit cards outstanding as of 30 September 2019. SBI Cards will commence trading on Monday, 16 March. SBI Cards set its IPO price at Rs755 per share, which is the upper limit of the IPO price band.In our valuation note, we stated that the signs point to a good post-IPO performance, and we are inclined to put on our "growth" hat and participate in the IPO. However, since then, the markets globally are in turmoil due to the covid-19 outbreak. While trying to predict market moves in the current environment is challenging, we think that SBI Cards will have a tepid debut (likely flat). On a longer-term basis, we think the valuation remains appealing to growth-oriented investors willing to look past the market turmoil.

SBI Cards and Payment IPO: Trading Debut In Unprecedented Times

Japan

AEON Financial Service Co Ltd is a credit card company.  The Company's financial services include loans, credit cards, and customer installment credits.

Aeon Financial (8570 JP)

Asia Shorts: BYD, Ping An, Toshiba, Rakus, Aeon, Celltrion, LG Display, SK Chem, Novatek, Yang Ming

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

AEON Financial Services – ASEAN Weakness Results In Dividend Cut

* Poor Operating Result:Aeon Financial Service (8570.JP) [AFS] reported a FY 1Q20 operating loss of JPY 0.8 bn, and a net loss of JPY 1.1 bn. The...

Thomas J. Monaco

MUFG – ACOM Monthly Data Disappoints

*Weak May 2020 Data: ACOM (8572.JP) released poor May 2020 monthly performance data on June 10th which exhibited negative consumer lending growth...

Thomas J. Monaco

MUFG – When It Rains, It Pours

* ACOM’s Chronic Kaburai Underestimation: After the market close on April 24th, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG]...

Thomas J. Monaco

SBI Cards and Payment IPO: Trading Debut In Unprecedented Times

SBI Cards (SBICARDS IN) is the second-largest credit card issuer in India, with an 18.0% market share of the Indian credit card market as measured...

Arun George