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Smartkarma Daily Briefs

United States: S&P 500, Moderna Inc, Bitcoin, TerraUSD, Peloton Interactive, Clearfield Inc, US Treasury (10 Yr Generic), Power & Digital Infrastructure Acquisition Corp, Asia High Yield Bond Index, Texas Pacific Land Trust and more

By | Daily Briefs, United States

In today’s briefing:

  • US Equities: A Small Squeeze?
  • Is It Time For Moderna To Boost Share Buyback And Start Paying Dividends?
  • 2022: The Supercycle Year
  • Stablecoin Part 2 – History of Stablecoins and the Best Stablecoin Yield Opportunities
  • Peloton and the Kiss(es) of Death
  • CLFD: Not so Clear Field, Initiating with Sell
  • What to Expect of EM Rates When Expecting US Rates to Stay Volatile?
  • The Nightcap from SPAC Track
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • TPL: Rising Production, Raising Estimates

US Equities: A Small Squeeze?

By Shyam Devani

  • Both the S&P 500 and the Nasdaq 100 have hit decent supports
  • This has come after the rise in yields has started to slow down
  • At this stage it appears at least a short term bounce may be seen. It is too soon to determine anything more than that

Is It Time For Moderna To Boost Share Buyback And Start Paying Dividends?

By Andrei Zakharov

  • Shares of Moderna Inc (MRNA US) underperformed and fell ~32% YTD. Investors continued to cut exposure to stocks of COVID vaccine makers, including BioNTech, Novavax, CureVac, among others.
  • In August 2021, Moderna announced the first share buyback plan. The company’s Board of Directors has authorized share repurchase for up to $1 billion with an expiry date in 2023. 
  • We estimate Moderna may end 2021 with a total of ~$18.5 billion in cash, cash eq., investments and expect the company may boost share buyback in the future.

2022: The Supercycle Year

By Coinstack

  • We share our thoughts on why 2022 may be a great year for digital assets.
  • During a bullish 2021 we saw Bitcoin increase in price 58% and Ether increase in price 400%.

  • I expect this may actually turn out to be a positive year for the assets with the most growth, utility, and cashflows

Stablecoin Part 2 – History of Stablecoins and the Best Stablecoin Yield Opportunities

By Josh Du

  • We explore the notion that stablecoins existed even before crypto was invented and shows the difficulties of creating a monetary medium with zero volatility 
  • We show that the supply of stablecoins has grown 27x over the past 2 years and breakdown the history of stablecoins and their modern-day use cases 
  • We demonstrate a strategy to generate 20% returns on stablecoins using TerraUSD (UST CURNCY)  and Anchor Protocol

Peloton and the Kiss(es) of Death

By Investment Talk

  • As I perused the headlines yesterday, I came across a CNBC article that suggested Peloton would be hiring McKinsey to “review its cost structure and potentially eliminate some jobs”. 
  • Whilst Foley is not likely to be sleeping with fishes anytime soon, the CNBC report suggests that 12% of Peloton’s physical store count might be on the chopping board
  • Whilst I still continue to believe Peloton will have success in their market over the longer term, this does not equate to attractive shareholder returns

CLFD: Not so Clear Field, Initiating with Sell

By Hamed Khorsand

  • CLFD has been the beneficiary of communication service providers investing in their broadband networks to meet an increase in data traffic.
  • The events of the last two years, namely the COVID-19 pandemic causing work/learn from home and Huawei and ZTE equipment replacement, were the reason for the boom CLFD has experienced.
  • CLFD’s community broadband customer was incentivized to replace Huawei and ZTE equipment with reimbursement checks from the FCC.

What to Expect of EM Rates When Expecting US Rates to Stay Volatile?

By Gautam Jain, PhD, CFA

  • The risk of US yields continuing to rise is high especially with inflation not having peaked yet, the Fed potentially reducing its balance sheet, and real rates still negative.
  • The high volatility in US rates does not bode well for EM rates due to their high correlation even though EM local debt is overall cheap based on most metrics.
  • Until the volatility in US rates subsides, it is best to focus on cross-country and curve trades in EM, with my preference for curve steepening trades in several countries.

The Nightcap from SPAC Track

By SPAC Track

  • Power & Digital Infrastructure Acquisition Corp. (XPDI) shareholders approved its merger with Core Scientific
  • Vistas Media Acquisition Company Inc. (VMAC) shareholders approved its merger with Anghami
  • ACE Convergence Acquisition Corp. (ACEV) announces a $200M convertible note consisting of $175M in new financing from Oaktree and $25M from an ACE investment partner

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets dropped again after with the S&P and Nasdaq down 1% and 1.2%. The latter is down 10% from its November 2021 high. Most sectors were in the red with Consumer Discretionary, Financials and IT down 1.4-1.8%. US 10Y Treasury yields eased 3bp to 1.85%. European markets closed higher with the DAX, CAC and FTSE up 0.2%, 0.6% and 0.4% respectively. Brazil’s Bovespa closed 1.3% higher. In the Middle East, UAE’s ADX and Saudi TASI were up 1.6% and 0.5%. Asian markets have opened broadly higher – HSI, STI and Nikkei were up 1.9%, 0.1% and 0.5% while Shanghai was down 0.2%. US IG CDS spreads were 0.6bp wider and HY CDS spreads were 3.5bp wider, EU Main CDS spreads were 0.1bp tighter and Crossover CDS spreads were 1.7bp tighter. Asia ex-Japan CDS spreads were 4.7bp tighter.

TPL: Rising Production, Raising Estimates

By Hamed Khorsand

  • TPL remains unhedged to the price of crude oil with Permian Basin output rising. Total output in the Permian Basin is projected to surpass 5 million barrels per day 
  • The increase in output would have an immediate benefit to TPL in the form of royalties and could generate incremental water and surface land easement revenue
  • TPL’s stock has been selling off with the broader market in what we speculate could have to do with no action from TPL’s Board after the annual shareholder meeting

Before it’s here, it’s on Smartkarma

Indonesia: Bank Mandiri Persero, Adira Dinamika Multi Finance, Asia High Yield Bond Index, Perusahaan Gas Negara Perser and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Bank Mandiri Persero (BMRI IJ) – Livin’ in Digital World
  • Adira Dinamika Multi Finance (ADMF IJ) – Short-term downfall creates an attractive investment op…
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
  • Perusahaan Gas Negara (PGAS IJ) – Operational improvement ahead

Bank Mandiri Persero (BMRI IJ) – Livin’ in Digital World

By Angus Mackintosh

  • Bank Mandiri stands out amongst the top 4 banks in that it has chosen to push its digital services through Livin’ rather than a stand-alone digital bank.
  • The bank has already made significant progress with Livin’ with 6m active users out of 30m customers and it is also developing wholesale digital banking through Kopra.
  • Bank Mandiri remains a core proxy for the recovery in Indonesian economic recovery with an increasing digital edge and valuations are attractive versus historical levels.

Adira Dinamika Multi Finance (ADMF IJ) – Short-term downfall creates an attractive investment op…

By Mirae Asset Securities

Short-term downfall creates an attractive investment opportunity

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets dropped again after with the S&P and Nasdaq down 1% and 1.2%. The latter is down 10% from its November 2021 high. Most sectors were in the red with Consumer Discretionary, Financials and IT down 1.4-1.8%. US 10Y Treasury yields eased 3bp to 1.85%. European markets closed higher with the DAX, CAC and FTSE up 0.2%, 0.6% and 0.4% respectively. Brazil’s Bovespa closed 1.3% higher. In the Middle East, UAE’s ADX and Saudi TASI were up 1.6% and 0.5%. Asian markets have opened broadly higher – HSI, STI and Nikkei were up 1.9%, 0.1% and 0.5% while Shanghai was down 0.2%. US IG CDS spreads were 0.6bp wider and HY CDS spreads were 3.5bp wider, EU Main CDS spreads were 0.1bp tighter and Crossover CDS spreads were 1.7bp tighter. Asia ex-Japan CDS spreads were 4.7bp tighter.

Perusahaan Gas Negara (PGAS IJ) – Operational improvement ahead

By Mirae Asset Securities

Operational improvement ahead

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Before it’s here, it’s on Smartkarma

Singapore: Rex International Holding, Roxy Pacific Holdings and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Preview Rex International FY21 Results: Prime Beneficiary Of Rising Oil Price
  • Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable

Preview Rex International FY21 Results: Prime Beneficiary Of Rising Oil Price

By Nicolas Van Broekhoven

  • Rex International Holding (REXI SP) will report results around 25/2/2022; we expect a major 2H21 performance inflection as the Norwegian Brage field cash flow is included from 01/01/2021.
  • According to a press release on 13/1/22 the company is actively applying to uplist from Catalist to the mainboard. We see no reason why SGX should not grant this application.
  • Rex’s Oman production has disappointed in 4Q21 but cash flow-wise shortfall should be made up by higher oil prices and Brage. Maiden dividend announcement should be forthcoming.

Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable

By David Blennerhassett

  • An Offeror consortium, led by Teo Hong Lim, founder of Roxy Pacific (ROXY SP), is offering S$0.485/share, a 19.8% premium to last close. The Offer Price will NOT be increased. 
  • The Circular was dispatched yesterday (the Offer Doc was issued on the 5 January), in which the IFA considered the terms not fair but reasonable). 
  • Trading to terms. The first close is the 3 February. 

Before it’s here, it’s on Smartkarma

Event-Driven: Hitachi Transport System, KakaoBank, Roxy Pacific Holdings, LG Energy Solution, Virtus Health, Swire Pacific (A) and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS
  • Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable
  • MSCI Korea: Potential Inclusions & Exclusions in February 2022 Highlighted by Locals
  • Virtus Health (VRT AU): CapVest’s Bid Edges BGH Capital
  • StubWorld: Cathay Pacific – Still Grounded
  • Virtus Receives a Competing Offer from CapVest

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

By Sanghyun Park

  • For Kakao Bank, the 6M IPO lockup (2.79%) will hit the market. Also, the possibility that the 4.48% stake held by Anchor/TPG will hit the market should be left open.
  • In Krafton’s case, Tencent is the most notable player, owning 13.56%. It recently suggested a reduction in overseas holdings. So, some of this 13.56% stake should appear in the market.
  • The 4.84% stake held by Premier Superior is available after February 14. Samsung Electronics and Samsung SDS shares by the Samsung family are also likely to take place in February.

Roxy-Pacific (ROXY SP): Circular Out. IFA Says Not Fair But Reasonable

By David Blennerhassett

  • An Offeror consortium, led by Teo Hong Lim, founder of Roxy Pacific (ROXY SP), is offering S$0.485/share, a 19.8% premium to last close. The Offer Price will NOT be increased. 
  • The Circular was dispatched yesterday (the Offer Doc was issued on the 5 January), in which the IFA considered the terms not fair but reasonable). 
  • Trading to terms. The first close is the 3 February. 

MSCI Korea: Potential Inclusions & Exclusions in February 2022 Highlighted by Locals

By Douglas Kim

  • We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (10 February) that are being highlighted by the locals. 
  • The potential candidates for inclusion in the MSCI Korea Index emphasized by locals in February 2022 include Meritz Financial Group, Meritz Fire & Marine Insurance, HHI, and LG Energy Solution. 
  • In our view, if MSCI decides to include LG Energy Solution in the MSCI Korea index in February, this will likely be an extra boost to this stock in February. 

Virtus Health (VRT AU): CapVest’s Bid Edges BGH Capital

By David Blennerhassett

  • UK-Based CapVest Partners is offering A$7.60/share, in cash, for Virtus Health (VRT AU), compared to BGH Capital’s bid last month of A$7.10/share. Virtus has granted exclusive due diligence. 
  • CapVest’s Offer is non-binding. No doubt due to BGH holding 20% of shares out, CapVest will concurrently run an alternate off-market bid with a 50.1% acceptance condition at A$7.50/share. 
  • At a ~5% spread to the indicative Scheme terms, I would look to get involved. 

StubWorld: Cathay Pacific – Still Grounded

By David Blennerhassett

  • Cathay Pacific Airways (293 HK) dangles bonuses for pilots and first officers amid Hong Kong’s stringent crew quarantine requirements. 
  • Preceding my comments on Cathay – and Swire Pacific (A) (19 HK)– are the current setup/unwind tables for Asia-Pacific Holdcos. 
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Virtus Receives a Competing Offer from CapVest

By Arun George

  • Virtus Health (VRT AU) announced an offer from CapVest comprising of A$7.60 per share via a scheme (a 7.0% premium to BGH’s A$7.10 offer) or A$7.50 via an off-market takeover. 
  • CapVest’s offer is contingent on exclusivity and cost recovery protections. The Board will recommend a binding offer of at least A$7.60 via a scheme or A$7.50 via an off-market takeover.
  • Due to the healthy premium to historical multiples and share prices implied by the CapVest offer, it is likely that BGH will be hesitant to start a bidding war.    

Before it’s here, it’s on Smartkarma

Consumer: Don Agro International Ltd, Zomato, Peloton Interactive, Skylark Co Ltd, Index Livingmall PCL and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Smartkarma Corporate Webinar | Don Agro: From Russia With Food
  • Zomato’s Investments Game: Stain on Governance
  • Peloton and the Kiss(es) of Death
  • Skylark Holdings (3197): Earnings Forecast Update in Light of Omicron Outbreak
  • ILM: Expect 4Q21 Earnings Improve QoQ

Smartkarma Corporate Webinar | Don Agro: From Russia With Food

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome the management team of Don Agro International (DAG SP):

  • CEO, Marat Devlet-Kildeyev

  • CFO, Artur Nazaryan

In their upcoming webinar, Don Agro management will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 25 January 2022, 17:00 SGT.

Don Agro (SGX: GRQ) is one of the largest agricultural companies in the Rostov region in Russia, the most fertile region of the country. The Group is engaged in the cultivation of agricultural crops and production of raw milk. Don Agro has a total controlled land bank of 67,340 hectares. The Group’s operations are situated close to the Azov and Black Seas and the Don River which house major international ports. In addition, Don Agro is the largest milk producer in the Rostov region and owns more than 4,000 heads of dairy cattle.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.


Zomato’s Investments Game: Stain on Governance

By Nitin Mangal

  • Zomato (ZOMATO IN) had made total investments of $275 million in the year 2021 across 4 different companies.
  • The investments made by the company have and may further lead to controversies as it showed poor patterns of governance practices.
  • We highlight these issues pertaining to two of these investments viz. Grofers and Shiprocket.

Peloton and the Kiss(es) of Death

By Investment Talk

  • As I perused the headlines yesterday, I came across a CNBC article that suggested Peloton would be hiring McKinsey to “review its cost structure and potentially eliminate some jobs”. 
  • Whilst Foley is not likely to be sleeping with fishes anytime soon, the CNBC report suggests that 12% of Peloton’s physical store count might be on the chopping board
  • Whilst I still continue to believe Peloton will have success in their market over the longer term, this does not equate to attractive shareholder returns

Skylark Holdings (3197): Earnings Forecast Update in Light of Omicron Outbreak

By Mita Securities

  • We are updating our earnings forecasts for Skylark Holdings (3197, the company) in light of its 3Q FY12/21 results
  • Earnings forecast for FY12/22 and beyond: Moderate recovery
  • Our target price is equivalent to 34.2x our FY12/24 EPS forecast of 46.85 yen.

ILM: Expect 4Q21 Earnings Improve QoQ

By Research Group at Country Group Securities

  • We maintain BUY rating with a target price of Bt21.0, derived from 18xPE’22E, +1SD from three years average trading range or 50% discount from Home improvement subsector.
  • We expect ILM to report 4Q21 net profit at Bt135m (-6%YoY, +142%QoQ). QoQ recovery will be supported by an increase in revenue, thanks to stores sales recovery (SSSG at +13%YoY)
  • We expect 2022E earnings to recover 46%YoY supported by revenue growth at +5.6%YoY to Bt8.5bn from; 1) a new products launch to attract new targeted  customers (low-ended and luxury segments)

Before it’s here, it’s on Smartkarma

Industrials: Hitachi Transport System, Mitsui O.S.K. Lines, Hitachi Construction Machinery, Asia High Yield Bond Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • Mitsui OSK Lines Bear Impulse
  • Japan’s Governance: Hitachi Construction Machinery: Additional Notes and Ownership Factor
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

Mitsui OSK Lines Bear Impulse

By Thomas Schroeder

  • Mitsui OSK Lines impulsive decline as sell volumes rise is a big negative and sets up a short on a bounce, which may be limited.
  • 8,500 is near resistance. 7,000 is tactical support (trendline) where a reaction rise is due. Watch RSI near/below 30 for a short term low.
  • Major support at 6,500 targeted representing key dual lows, 200 dma and congestion support.

Japan’s Governance: Hitachi Construction Machinery: Additional Notes and Ownership Factor

By Aki Matsumoto

  • More important than the continuity of the Hitachi brand is how HCM can increase the competitive advantage of its products and how quickly it can respond to changes in market.
  • Changes in major shareholders and the presence of major shareholders have been shown to have statistically significant correlations in ROA, Tobin’s q (and changes in market capitalization).
  • The existence of the Ownership factor doesn’t necessarily predict the future of HCM, but in construction equipment market with strong competition, having a reliable partner is encouraging in business decisions.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets dropped again after with the S&P and Nasdaq down 1% and 1.2%. The latter is down 10% from its November 2021 high. Most sectors were in the red with Consumer Discretionary, Financials and IT down 1.4-1.8%. US 10Y Treasury yields eased 3bp to 1.85%. European markets closed higher with the DAX, CAC and FTSE up 0.2%, 0.6% and 0.4% respectively. Brazil’s Bovespa closed 1.3% higher. In the Middle East, UAE’s ADX and Saudi TASI were up 1.6% and 0.5%. Asian markets have opened broadly higher – HSI, STI and Nikkei were up 1.9%, 0.1% and 0.5% while Shanghai was down 0.2%. US IG CDS spreads were 0.6bp wider and HY CDS spreads were 3.5bp wider, EU Main CDS spreads were 0.1bp tighter and Crossover CDS spreads were 1.7bp tighter. Asia ex-Japan CDS spreads were 4.7bp tighter.

Before it’s here, it’s on Smartkarma

TMT: S&P 500, TerraUSD, Kuaishou Technology, Clearfield Inc, Newgen Software Technologies and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • US Equities: A Small Squeeze?
  • Stablecoin Part 2 – History of Stablecoins and the Best Stablecoin Yield Opportunities
  • Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise
  • CLFD: Not so Clear Field, Initiating with Sell
  • Newgen Software Technologies Ltd. | Q3FY22 Result Updare

US Equities: A Small Squeeze?

By Shyam Devani

  • Both the S&P 500 and the Nasdaq 100 have hit decent supports
  • This has come after the rise in yields has started to slow down
  • At this stage it appears at least a short term bounce may be seen. It is too soon to determine anything more than that

Stablecoin Part 2 – History of Stablecoins and the Best Stablecoin Yield Opportunities

By Josh Du

  • We explore the notion that stablecoins existed even before crypto was invented and shows the difficulties of creating a monetary medium with zero volatility 
  • We show that the supply of stablecoins has grown 27x over the past 2 years and breakdown the history of stablecoins and their modern-day use cases 
  • We demonstrate a strategy to generate 20% returns on stablecoins using TerraUSD (UST CURNCY)  and Anchor Protocol

Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise

By Ming Lu

  • The stock price has risen 13% since our last note, but we still believe there is an upside of 21%.
  • The company is cutting employee benefits, from housing allowance to afternoon tea.
  • We believe the operating loss will shrink significantly in the following two years.

CLFD: Not so Clear Field, Initiating with Sell

By Hamed Khorsand

  • CLFD has been the beneficiary of communication service providers investing in their broadband networks to meet an increase in data traffic.
  • The events of the last two years, namely the COVID-19 pandemic causing work/learn from home and Huawei and ZTE equipment replacement, were the reason for the boom CLFD has experienced.
  • CLFD’s community broadband customer was incentivized to replace Huawei and ZTE equipment with reimbursement checks from the FCC.

Newgen Software Technologies Ltd. | Q3FY22 Result Updare

By Edelweiss

Robust deal wins to drive growth

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Before it’s here, it’s on Smartkarma

China: Swire Pacific (A), FTSE China A50 Index, ClouDr Group, Kuaishou Technology, China South City, Asia High Yield Bond Index and more

By | China, Daily Briefs

In today’s briefing:

  • StubWorld: Cathay Pacific – Still Grounded
  • China/HK Breakout Points Need Follow Through
  • ClouDr (智云健康) Pre-IPO – Strong Growth but Has Issues that Need to Be Clarified
  • Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise
  • Morning Views Asia: China South City, Sunac China Holdings
  • Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

StubWorld: Cathay Pacific – Still Grounded

By David Blennerhassett

  • Cathay Pacific Airways (293 HK) dangles bonuses for pilots and first officers amid Hong Kong’s stringent crew quarantine requirements. 
  • Preceding my comments on Cathay – and Swire Pacific (A) (19 HK)– are the current setup/unwind tables for Asia-Pacific Holdcos. 
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

China/HK Breakout Points Need Follow Through

By Thomas Schroeder

  • A share bull wedge stands out after meeting the 15k downside target. H shares bullish near lower wedge support.
  • The cut in key lending rates is spurring a push in HK/China, one needs to make sure this is not just another flash in the pan given a weak SPX.
  • HSI impulse out of bull flag cleared wedge resistance and needs resolution. On watch to close higher level shorts.

ClouDr (智云健康) Pre-IPO – Strong Growth but Has Issues that Need to Be Clarified

By Clarence Chu

  • ClouDr Group (16897333D CH) (CDG) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
  • The firm is a digital chronic condition management solution provider and is market leader in China in terms of the number of SaaS installations in hospitals and pharmacies in 2020.
  • In this note, we share our thoughts on the company’s business, financials, and operating metrics.

Kuaishou (1024 HK): Right Decision to Cut Costs, Still 20% Upside After 13% Rise

By Ming Lu

  • The stock price has risen 13% since our last note, but we still believe there is an upside of 21%.
  • The company is cutting employee benefits, from housing allowance to afternoon tea.
  • We believe the operating loss will shrink significantly in the following two years.

Morning Views Asia: China South City, Sunac China Holdings

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

By BondEvalue

US equity markets dropped again after with the S&P and Nasdaq down 1% and 1.2%. The latter is down 10% from its November 2021 high. Most sectors were in the red with Consumer Discretionary, Financials and IT down 1.4-1.8%. US 10Y Treasury yields eased 3bp to 1.85%. European markets closed higher with the DAX, CAC and FTSE up 0.2%, 0.6% and 0.4% respectively. Brazil’s Bovespa closed 1.3% higher. In the Middle East, UAE’s ADX and Saudi TASI were up 1.6% and 0.5%. Asian markets have opened broadly higher – HSI, STI and Nikkei were up 1.9%, 0.1% and 0.5% while Shanghai was down 0.2%. US IG CDS spreads were 0.6bp wider and HY CDS spreads were 3.5bp wider, EU Main CDS spreads were 0.1bp tighter and Crossover CDS spreads were 1.7bp tighter. Asia ex-Japan CDS spreads were 4.7bp tighter.

Before it’s here, it’s on Smartkarma

Japan: Hitachi Transport System, Mitsui O.S.K. Lines, Hitachi Construction Machinery, Skylark Co Ltd and more

By | Daily Briefs, Japan

In today’s briefing:

  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • Mitsui OSK Lines Bear Impulse
  • Japan’s Governance: Hitachi Construction Machinery: Additional Notes and Ownership Factor
  • Skylark Holdings (3197): Earnings Forecast Update in Light of Omicron Outbreak

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

Mitsui OSK Lines Bear Impulse

By Thomas Schroeder

  • Mitsui OSK Lines impulsive decline as sell volumes rise is a big negative and sets up a short on a bounce, which may be limited.
  • 8,500 is near resistance. 7,000 is tactical support (trendline) where a reaction rise is due. Watch RSI near/below 30 for a short term low.
  • Major support at 6,500 targeted representing key dual lows, 200 dma and congestion support.

Japan’s Governance: Hitachi Construction Machinery: Additional Notes and Ownership Factor

By Aki Matsumoto

  • More important than the continuity of the Hitachi brand is how HCM can increase the competitive advantage of its products and how quickly it can respond to changes in market.
  • Changes in major shareholders and the presence of major shareholders have been shown to have statistically significant correlations in ROA, Tobin’s q (and changes in market capitalization).
  • The existence of the Ownership factor doesn’t necessarily predict the future of HCM, but in construction equipment market with strong competition, having a reliable partner is encouraging in business decisions.

Skylark Holdings (3197): Earnings Forecast Update in Light of Omicron Outbreak

By Mita Securities

  • We are updating our earnings forecasts for Skylark Holdings (3197, the company) in light of its 3Q FY12/21 results
  • Earnings forecast for FY12/22 and beyond: Moderate recovery
  • Our target price is equivalent to 34.2x our FY12/24 EPS forecast of 46.85 yen.

Before it’s here, it’s on Smartkarma

Macro: What to Expect of EM Rates When Expecting US Rates to Stay Volatile? and more

By | Daily Briefs, Macro

In today’s briefing:

  • What to Expect of EM Rates When Expecting US Rates to Stay Volatile?
  • EA: Core Trend Ripped Above 2%

What to Expect of EM Rates When Expecting US Rates to Stay Volatile?

By Gautam Jain, PhD, CFA

  • The risk of US yields continuing to rise is high especially with inflation not having peaked yet, the Fed potentially reducing its balance sheet, and real rates still negative.
  • The high volatility in US rates does not bode well for EM rates due to their high correlation even though EM local debt is overall cheap based on most metrics.
  • Until the volatility in US rates subsides, it is best to focus on cross-country and curve trades in EM, with my preference for curve steepening trades in several countries.

EA: Core Trend Ripped Above 2%

By Phil Rush

  • EA HICP inflation was confirmed at 5.0% y-o-y for Dec-21, while the ex-tobacco index printed at 109.97 (HTRO: 109.98).
  • A leg down in Jan-22 should start a headline trend.  The step-up in the core inflation impulse is more critical for us.
  • It implies upside and, for the first time since the sovereign debt crisis, it shows inflation settling near 2%.

Before it’s here, it’s on Smartkarma