Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.</li>
<li>Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.</li>
<li>Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.</li>
</ul>


The 200 largest weighted companies in the GEM index reported average EPS growth of +14.2%y/y for 4Q22-to-date, slightly down from the +15.7% reported for 3Q22.
Only 54% of companies delivered positive sales surprises, and only 49% delivered positive EPS surprises, significantly down from the trend seen over the past 2 years.
Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.


Global Emerging Markets: Reporting Season Summary, 4Q2022

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

<ul>
<li>We analyzed the changes in short interest of TWSE Stocks as of Aug 26th, which has an aggregated short interest worth USD 12.9bn. </li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in EVA Airways, Alchip, and Faraday. </li>
</ul>


We analyzed the changes in short interest of TWSE Stocks as of Aug 26th, which has an aggregated short interest worth USD 12.9bn. 
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in EVA Airways, Alchip, and Faraday. 


TWSE Short Interest Weekly (Aug 26th): EVA Airways, Alchip, Faraday

Silver Point

Thomas J. Monaco

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

Yuanta Financial Holding Co / Equity Bottom-Up

<p><strong><em>*Very Solid 1Q21: </em></strong>Yuanta Financial Holding (2885.TT) [Yuanta] reported 1Q21 results of NTD 9.4 bn, increasing NTD 4.9 bn (107.5%) linked quarter. Much of Yuanta’s linked quarter growth can be attributed to strong net interest income growth from both a margin loan and bank loan balance increases; a significant reduction in loss provisioning; and net fee improvement on the back of an ADTV increase on the TAIEX; and</p><p><strong><em>*Hidden Yuanta Earnings At Bank:</em></strong> At 21% of Yuanta’s bottom-line, Yunata Bank posted strong core operating results as well – NTD 2.0 bn, increasing NTD 731 mn or 59.2% linked quarter. Reserve cover of NPLs is extraordinary and the best we’ve seen in Asia thus far at 12.1x. By our calculation, Yuanta Bank has over reserved and can release upward of NTD 10.5 bn – representing over one quarter of Yuanta’s quarterly bottom-line.</p>

*Very Solid 1Q21: Yuanta Financial Holding (2885.TT) [Yuanta] reported 1Q21 results of NTD 9.4 bn, increasing NTD 4.9 bn (107.5%) linked quarter. Much of Yuanta’s linked quarter growth can be attributed to strong net interest income growth from both a margin loan and bank loan balance increases; a significant reduction in loss provisioning; and net fee improvement on the back of an ADTV increase on the TAIEX; and*Hidden Yuanta Earnings At Bank: At 21% of Yuanta’s bottom-line, Yunata Bank posted strong core operating results as well – NTD 2.0 bn, increasing NTD 731 mn or 59.2% linked quarter. Reserve cover of NPLs is extraordinary and the best we’ve seen in Asia thus far at 12.1x. By our calculation, Yuanta Bank has over reserved and can release upward of NTD 10.5 bn – representing over one quarter of Yuanta’s quarterly bottom-line.

Yuanta Financial Holding – Firing On All Cylinders

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<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/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/beijing-kuaishou-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:29725:1" rel="noopener">Kuaishou Technology (1024 HK)</a>, <a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili Inc (9626 HK)</a> and <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 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/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a>, <a href="https://www.smartkarma.com/entities/hsbc-holdings-plc" target="_blank" data-smartkarma-citation="entities:516:1" rel="noopener">HSBC Holdings (5 HK)</a> and <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a>. Shorts increased in the Communication Services, Consumer Discretionary, Information Technology, Consumer Staples and Materials sectors, and decreased in the Financials sector.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a>, <a href="https://www.smartkarma.com/entities/keihan-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:6120:1" rel="noopener">Keihan Holdings Co., Ltd. (9045 JP)</a> and <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE Holdings (5411 JP)</a> while shorts decreased on <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/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a>, <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/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/ai-inside-inc" target="_blank" data-smartkarma-citation="entities:33241:1" rel="noopener">AI Inside (4488 JP)</a>. Shorts increased in the Consumer Staples and Consumer Discretionary sectors, and decreased in the Information Technology sector.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <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> and <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>. The largest percentage increase in shorts was seen on <a href="https://www.smartkarma.com/entities/kcc-corp" target="_blank" data-smartkarma-citation="entities:11109:1" rel="noopener">Kcc Corp (002380 KS)</a>, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a>, <a href="https://www.smartkarma.com/entities/daelim-industrial-co-ltd" target="_blank" data-smartkarma-citation="entities:18095:1" rel="noopener">DL Co Ltd (000210 KS)</a> and <a href="https://www.smartkarma.com/entities/dongkuk-steel-mill-co-ltd" target="_blank" data-smartkarma-citation="entities:7293:1" rel="noopener">Dongkuk Steel Mill (001230 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a>, <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/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 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/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/cathay-financial-holding-co" target="_blank" data-smartkarma-citation="entities:17677:1" rel="noopener">Cathay Financial Holding Co (2882 TT)</a>, <a href="https://www.smartkarma.com/entities/mega-financial-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:3463:1" rel="noopener">Mega Financial Holding Co., Ltd (2886 TT)</a>, <a href="https://www.smartkarma.com/entities/china-airlines-ltd" target="_blank" data-smartkarma-citation="entities:4591:1" rel="noopener">China Airlines (2610 TT)</a>, <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a> and <a href="https://www.smartkarma.com/entities/silergy-corp" target="_blank" data-smartkarma-citation="entities:13998:1" rel="noopener">Silergy Corp (6415 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 Sunny Optical (2382 HK), China Merchants Bank H (3968 HK), Kuaishou Technology (1024 HK), Bilibili Inc (9626 HK) and China Mengniu Dairy Co (2319 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Citic Securities (H) (6030 HK), Wuxi Biologics (2269 HK), HSBC Holdings (5 HK) and Haier Smart Home Co Ltd (6690 HK). Shorts increased in the Communication Services, Consumer Discretionary, Information Technology, Consumer Staples and Materials sectors, and decreased in the Financials sector.In Japan, stocks that saw the most shorts were Seven &amp; I Holdings (3382 JP), Sharp Corp (6753 JP), CyberAgent Inc (4751 JP), Keihan Holdings Co., Ltd. (9045 JP) and JFE Holdings (5411 JP) while shorts decreased on Lasertec Corp (6920 JP), BASE Inc (4477 JP), Toshiba Corp (6502 JP), Daito Trust Construct (1878 JP) and AI Inside (4488 JP). Shorts increased in the Consumer Staples and Consumer Discretionary sectors, and decreased in the Information Technology sector.In Korea, shorts increased on Samsung Electronics (005930 KS), Celltrion Inc (068270 KS), LG Display (034220 KS) and Shinpoong Pharmaceutical (019170 KS). The largest percentage increase in shorts was seen on Kcc Corp (002380 KS), Shinpoong Pharmaceutical (019170 KS), DL Co Ltd (000210 KS) and Dongkuk Steel Mill (001230 KS).In Taiwan, shorts increased on China Steel (2002 TT), Novatek Microelectronics Corp (3034 TT), TSMC (2330 TT), AU Optronics (2409 TT) and United Microelectronics Corp (2303 TT) while shorts covered on Cathay Financial Holding Co (2882 TT), Mega Financial Holding Co., Ltd (2886 TT), China Airlines (2610 TT), Pegatron Corp (4938 TT) and Silergy Corp (6415 TT).

Asia Shorts: Sunny Optic, CMB, Ping An, 7&I, Keihan, Celltrion, Shinpoong, KCC, China Steel, Novatek

Mega Financial Holding Co., Ltd / Equity Bottom-Up

Mega Financial Holding Co., Ltd (2886 TT)

<p> <strong><em>*Blowout Quarter Not Sustainable: </em></strong>Mega Financial Holding (2886.TT) [Mega] reported 2Q20 profit of NTD 9.4 bn, increasing NTD 7.4 bn (384%) on a linked quarter basis.  The increase in profitability was led primarily by the NTD 9.1 bn (41.6x) increase in trading and other category, which appears to be led by MTM gains attributed to the decline in both US and Taiwanese interest rates. We view much of the gain as one-time in nature; and</p><p> <strong><em>*Continued EPS Pressures:</em></strong> Earnings pressures abound, however, as the following acted as an offset to Mega’s improved bottom-line, as net interest income declined with the NIM drop far greater than peer; the across the board decline in fees; and an operating expense increases. We worry that the only earnings lever left for Mega to pull on is a continued reduction in loss provisions and that the dividend may be cut. </p>

 *Blowout Quarter Not Sustainable: Mega Financial Holding (2886.TT) [Mega] reported 2Q20 profit of NTD 9.4 bn, increasing NTD 7.4 bn (384%) on a linked quarter basis.  The increase in profitability was led primarily by the NTD 9.1 bn (41.6x) increase in trading and other category, which appears to be led by MTM gains attributed to the decline in both US and Taiwanese interest rates. We view much of the gain as one-time in nature; and *Continued EPS Pressures: Earnings pressures abound, however, as the following acted as an offset to Mega’s improved bottom-line, as net interest income declined with the NIM drop far greater than peer; the across the board decline in fees; and an operating expense increases. We worry that the only earnings lever left for Mega to pull on is a continued reduction in loss provisions and that the dividend may be cut. 

Mega Financial – NIM Under Severe Pressure

Taiwan

Mega Financial Holding Co., Ltd. is a holding company.  Through its subsidiaries, the Company accepts deposits, issues financial debentures, provides medium and long term loans to enterprises, as well as provides brokerage, dealer and insurance services.

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Mega Financial Holding Co., Ltd (2886 TT)

Global Emerging Markets: Reporting Season Summary, 4Q2022

In this quarterly insight, we analyse recent GEM reporting trends with reference to Sales and EPS growth, size and percentage of positive...

Wium Malan, CFA

TWSE Short Interest Weekly (Aug 26th): EVA Airways, Alchip, Faraday

We analyzed TWSE short interest data last week and highlight weekly short interest changes in EVA Airways, Alchip, and Faraday.

Ke Yan, CFA, FRM

Yuanta Financial Holding – Firing On All Cylinders

YUANTA FINANCIAL: Yuanta reported a QOQ 1Q21 results increase of 107.5%, attributed to strong net interest income growth and a provision reduction....

Thomas J. Monaco

Asia Shorts: Sunny Optic, CMB, Ping An, 7&I, Keihan, Celltrion, Shinpoong, KCC, China Steel, Novatek

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

Mega Financial – NIM Under Severe Pressure

*Blowout Quarter Not Sustainable: Mega Financial Holding (2886.TT) [Mega] reported 2Q20 profit of NTD 9.4 bn, increasing NTD 7.4 bn (384%) on a...

Thomas J. Monaco

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