Smartkarma Daily Briefs

There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.

HSTECH Index Rebalance: ASMPT (522 HK) Replaces Ping An Healthcare (1833 HK)

As expected, ASM Pacific Technology (522 HK) will replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 6 September.
Estimated one-way turnover at the rebalance is 3.2% resulting in a round-trip trade of HK$6.5bn. Passives need to buy over 7x ADV in ASM Pacific Technology (522 HK).
Positioning appears light in both stocks. Expect ASM Pacific Technology (522 HK) to move up and Ping An Healthcare and Technol (1833 HK) to move lower near-term.

Hang Seng Index Sep24 Rebal – No Name Changes, Some Capping, 1% One-Way Flow – Total 0️⃣🍔

The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
This time? We get nothing. No name changes. Some capping flows. 6 FAF changes.
Minimal flows on the HSI rebalance to be effective on 9 September.

HSCEI Sep24 Rebal – Two ADDs, Two DELETEs, Two Surprises, Middling Flows

The HSCEI is famous but has less AUM tracking it passively than you’d think. Nevertheless it is well-known and well-watched.
J&T Global Express (1519 HK) and New Oriental Education & Techn (9901 HK) were ADDs. JD Logistics (2618 HK) and SenseTime Group (20 HK) are DELETEs.
PICC Property & Casualty H (2328 HK) was NOT included. This was a surprise. We may see some disappointment this week from pre-positioning getting sold.

Hang Seng Index (HSI) Rebalance: Meh (Or Will We Ever Get to 100 Stocks?)

In a surprise (maybe should not have been!), there are no constituent changes for the Hang Seng Index (HSI INDEX) in September. However, there are float and capping changes.
Estimated one-way turnover is 1% and estimated round-trip trade is HK$3.73bn (US$478m). There are no stocks with over +/-0.5x ADV to trade but flows could add to/offset other index flows.
We remain at 82 index constituents and the road to 100 constituents appears to be a long drawn out torturous one. At this glacial pace, could be an eternity away.

[Alibaba (BABA US, BUY, TP US$100) TP Change]: On Track for the Great Turnaround…Reiterate BUY

By Ying Pan

BABA reported C1Q24 top line, adjusted EBITA and non-GAAP net profit (2.7%), 5.5% and in-line vs. consensus.
E-Commerce GMV recovery is the most positive of all. TTG ad-revenues (CMR) trailed GMV growth but we see the two closing the gap in C2H24
Besides stabilizing e-commerce, BABA is on track of transforming itself from China’s eBay to China’s Microsoft. AI-related cloud revenue grew 100% YoY.

Sep24 HSTECH Index Rebal – ASMPT (522 HK) ADDed as Expected, After Post-Earnings Fall

HSTECH sees one ADD, one DELETE and several capping and re-capping actions. One of the re-caps is already an un-recap (i.e. a new capping), to be updated.
The ADD is ASM Pacific Technology (522 HK), as expected, with significant ADV impact to buy. The DELETE is Ping An Healthcare and Technol (1833 HK), also a big sell.
Across the three major indices, Alibaba Group Holding (9988 HK) is the big dollar sell and HSTECH changes are the biggies in terms of ADV impact.

Time To Buy China/Gold

By Douglas Busch

Gold breaks above MONTHLY bull flag suggesting possible move to 3000.
Is China ready to duplicate prior move we witnessed in Nikkei?
BABA looks technically attractive and could reach par by year-end.

Wasion (3393): Profit Alert and OBOR Beneficiary

By Henry Soediarko

1H 24 net profit is expected to grow by 54%, a similar amount to FY 23 with a consistent message that revenue growth helps and cost control is in place.
Wasion Group Holdings (3393 HK) benefits from the One Belt One Road policy as many of the EM countries do not have smart power meters yet.
Wasion’s holding on Willfar Information Technology (688100 CH) is worth around USD 970 million, double the current market capitalization of Wasion.

Merger Arb Mondays (19 Aug) – China TCM, Henlius, Canvest, CPMC, JTower, Fuji Soft PropertyGuru

By Arun George

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), JTower (4485 JP), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), Capitol Health (CAJ AU).
Lowest spreads: Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP), Second Chance Properties (SCE SP), C.I. TAKIRON Corporation (4215 JP), Fancl Corp (4921 JP), Alps Logistics (9055 JP).

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Aug 19

Daily Brief Energy/Materials: Copper, Iron Ore, Mosaic Co/The, Occidental Petroleum, Select Water Solutions, Summit Materials Inc Cl A and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Copper Tracker August 19th, 2024: Markets Volatile, Accumulate Good Copper Names On Weakness
Iron Ore Tracker (19-Aug-2024): Major Testing Point of 95 USD/Ton, Broken For Iron Ore
The Mosaic Company: Enhanced Potash & Phosphate Projections & Their Expected Impact On The Top-Line! – Major Drivers
Occidental Petroleum Corporation: Will The CrownRock Acquisition Be A Game Changer? – Major Drivers
Select Water Solutions, Inc. – Water Infrastructure Segment Crosses 50% Margin Threshold
Summit Materials: How Are They Dealing With Market Volatility in Cement and Aggregates & Other Challenges? – Major Drivers

Copper Tracker August 19th, 2024: Markets Volatile, Accumulate Good Copper Names On Weakness

By Sameer Taneja

With increasing market volatility, base metals continue their rocky weekly performance. Copper is up marginally, taking it past 9000 USD/ton.
Copper inventories continue to pile at the exchanges, with ~500k tons combined at Comex, LME, and Shanghai, up almost 7% in the last two weeks.
We believe accumulating names like Southern Copper (SCCO US) and Ivanhoe Mines (IVN CN) with good long-term fundamentals is a great strategy.

Iron Ore Tracker (19-Aug-2024): Major Testing Point of 95 USD/Ton, Broken For Iron Ore

By Sameer Taneja

Iron ore found no support at the 95-100 USD/ton range for the first time in a while and broke through it, gapping down 8.8% WoW to 92 USD/ton.
This break is a major short-term bearish signal for iron ore prices, as market participants would lose confidence in the theory of cost support at 95-100 USD/ton.
TSF data and mill margins ( -575 RMB/ton) from China also do not inspire much confidence in the near-term outlook for iron ore.

The Mosaic Company: Enhanced Potash & Phosphate Projections & Their Expected Impact On The Top-Line! – Major Drivers

The Mosaic Company’s second quarter 2024 earnings were a mixed set of results amidst striving for strategic and operational enhancements during a challenging operational backdrop.
The company reported an adjusted EBITDA of $584 million and revenues of $2.8 billion, which, when compared with the previous year’s $744 million EBITDA and $3.4 billion in revenues, marked a noticeable decrease.
This decline is reflective of the tougher conditions in the market yet shows resilience given the macroeconomic pressures and fluctuating demand patterns across different geographies.

Occidental Petroleum Corporation: Will The CrownRock Acquisition Be A Game Changer? – Major Drivers

Occidental Petroleum Corporation exhibited strong execution and financial health in its Second Quarter 2024 earnings, marking numerous operational and strategic accomplishments that further consolidate its market position.
The company reported its highest quarterly production in four years, both for the total company and U.S. onshore operations, significantly surpassing production guidance with a generation of $1.3 billion in free cash flow before working capital adjustments.
This performance was mainly driven by remarkable execution across business segments, particularly in the Permian region, including new well performances and production uptime, as well as a robust showing in the Gulf of Mexico.

Select Water Solutions, Inc. – Water Infrastructure Segment Crosses 50% Margin Threshold

By Water Tower Research

Gross profit margin before D&A in Select’s Water Infrastructure Segment crossed the 50% threshold in 2Q24.
Segment revenue totaled $68.6 million, a 24% increase from 2Q23 and gross profit before D&A totaled $35.0 million, a 68% Y/Y gain.
Gross profit margin before D&A was 51%, compared with 46.9% in 1Q24 and 37.8% in 2Q23.

Summit Materials: How Are They Dealing With Market Volatility in Cement and Aggregates & Other Challenges? – Major Drivers

Summit Materials has consistently demonstrated a focused approach toward operational excellence and strategic acquisitions, contributing to robust financial performance during the second quarter of 2024, despite challenging external conditions.
The integration of Argos USA and other strategic acquisitions has played a pivotal role, enhancing Summit Materials’ foothold in high-growth markets and fortifying its balance sheet, reinforcing its ability to navigate through economic cycles with increased resilience.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

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Aug 19

Daily Brief Industrials: J&T Global Express , Trex Company, Sunrun Inc, Emerson Electric Co, nVent Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCEI Sep24 Rebal – Two ADDs, Two DELETEs, Two Surprises, Middling Flows
Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers
Sunrun Inc.: Adopting A Strategic Approach to Market Expansion and Customer Acquisition! – Major Drivers
Emerson Electric Co.: A Story Of Deepening Market Penetration in Test & Measurement! – Major Drivers
nVent Electric plc: Expanded Electrification Capabilities With The Acquisition Of Trachte! – Major Drivers

HSCEI Sep24 Rebal – Two ADDs, Two DELETEs, Two Surprises, Middling Flows

The HSCEI is famous but has less AUM tracking it passively than you’d think. Nevertheless it is well-known and well-watched.
J&T Global Express (1519 HK) and New Oriental Education & Techn (9901 HK) were ADDs. JD Logistics (2618 HK) and SenseTime Group (20 HK) are DELETEs.
PICC Property & Casualty H (2328 HK) was NOT included. This was a surprise. We may see some disappointment this week from pre-positioning getting sold.

Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers

Trex Company Inc., a leading manufacturer of wood-alternative decking and railing, reported mixed results for its second quarter of 2024.
The financial performance showcased both strengths and challenges primarily influenced by changing consumer behavior and varying demand across product lines.
On the positive side, Trex experienced robust demand for its high-end products, with double-digit growth in the sell-through of premium offerings like Trex Transcend Lineage decking and Trex Signature lines.

Sunrun Inc.: Adopting A Strategic Approach to Market Expansion and Customer Acquisition! – Major Drivers

Sunrun Inc.’s second quarter 2024 earnings displayed a strategic dedication to a storage-first approach, reflective of broader transitions and consumer preferences within the solar power industry.
The company achieved significant progress toward their goal of becoming the trusted provider of renewable energy solutions across America.
This focus has led to record storage installation rates and a robust increase in customer growth, specifically in adding battery systems to existing setups.

Emerson Electric Co.: A Story Of Deepening Market Penetration in Test & Measurement! – Major Drivers

Emerson Electric Co. has presented its third quarter 2024 earnings, demonstrating a strong operational and financial performance amidst a challenging global economic environment.
The company reported solid results with underlying sales growth of 3%, driven by robust project activity in process and hybrid businesses.
Life sciences, energy, and power sectors particularly showed significant project wins, emphasizing Emerson’s traction in North America and Europe.

nVent Electric plc: Expanded Electrification Capabilities With The Acquisition Of Trachte! – Major Drivers

NVT’s Q2 2024 earnings reveal a company in the midst of significant operational and strategic transitions.
Their decision to divest the Thermal Management business and the recent acquisition of Trachte aligns with their goal of focusing on high-growth areas like electrical connection and protection, which plays into broader industry trends of electrification and digitalization.
This strategic repositioning appears geared towards capitalizing on sectoral shifts and enhancing long-term growth prospects.

💡 Before it’s here, it’s on Smartkarma

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

Aug 19

Daily Brief Industrials: J&T Global Express , Trex Company, Sunrun Inc, Emerson Electric Co, nVent Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCEI Sep24 Rebal – Two ADDs, Two DELETEs, Two Surprises, Middling Flows
Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers
Sunrun Inc.: Adopting A Strategic Approach to Market Expansion and Customer Acquisition! – Major Drivers
Emerson Electric Co.: A Story Of Deepening Market Penetration in Test & Measurement! – Major Drivers
nVent Electric plc: Expanded Electrification Capabilities With The Acquisition Of Trachte! – Major Drivers

HSCEI Sep24 Rebal – Two ADDs, Two DELETEs, Two Surprises, Middling Flows

The HSCEI is famous but has less AUM tracking it passively than you’d think. Nevertheless it is well-known and well-watched.
J&T Global Express (1519 HK) and New Oriental Education & Techn (9901 HK) were ADDs. JD Logistics (2618 HK) and SenseTime Group (20 HK) are DELETEs.
PICC Property & Casualty H (2328 HK) was NOT included. This was a surprise. We may see some disappointment this week from pre-positioning getting sold.

Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers

Trex Company Inc., a leading manufacturer of wood-alternative decking and railing, reported mixed results for its second quarter of 2024.
The financial performance showcased both strengths and challenges primarily influenced by changing consumer behavior and varying demand across product lines.
On the positive side, Trex experienced robust demand for its high-end products, with double-digit growth in the sell-through of premium offerings like Trex Transcend Lineage decking and Trex Signature lines.

Sunrun Inc.: Adopting A Strategic Approach to Market Expansion and Customer Acquisition! – Major Drivers

Sunrun Inc.’s second quarter 2024 earnings displayed a strategic dedication to a storage-first approach, reflective of broader transitions and consumer preferences within the solar power industry.
The company achieved significant progress toward their goal of becoming the trusted provider of renewable energy solutions across America.
This focus has led to record storage installation rates and a robust increase in customer growth, specifically in adding battery systems to existing setups.

Emerson Electric Co.: A Story Of Deepening Market Penetration in Test & Measurement! – Major Drivers

Emerson Electric Co. has presented its third quarter 2024 earnings, demonstrating a strong operational and financial performance amidst a challenging global economic environment.
The company reported solid results with underlying sales growth of 3%, driven by robust project activity in process and hybrid businesses.
Life sciences, energy, and power sectors particularly showed significant project wins, emphasizing Emerson’s traction in North America and Europe.

nVent Electric plc: Expanded Electrification Capabilities With The Acquisition Of Trachte! – Major Drivers

NVT’s Q2 2024 earnings reveal a company in the midst of significant operational and strategic transitions.
Their decision to divest the Thermal Management business and the recent acquisition of Trachte aligns with their goal of focusing on high-growth areas like electrical connection and protection, which plays into broader industry trends of electrification and digitalization.
This strategic repositioning appears geared towards capitalizing on sectoral shifts and enhancing long-term growth prospects.

💡 Before it’s here, it’s on Smartkarma

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

Aug 19

Daily Brief TMT/Internet: Weimob Inc., ASM Pacific Technology, Tencent, Hang Seng Index, Apple , Wasion Group Holdings, Taiwan Semiconductor (TSMC) – ADR, Lasertec Corp, Jiangsu Hoperun Software and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises
HSTECH Index Rebalance: ASMPT (522 HK) Replaces Ping An Healthcare (1833 HK)
Hang Seng Index Sep24 Rebal – No Name Changes, Some Capping, 1% One-Way Flow – Total 0️⃣🍔
Hang Seng Index (HSI) Rebalance: Meh (Or Will We Ever Get to 100 Stocks?)
Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation
Sep24 HSTECH Index Rebal – ASMPT (522 HK) ADDed as Expected, After Post-Earnings Fall
Wasion (3393): Profit Alert and OBOR Beneficiary
Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
Long 6920 Lasertec Corp | Short 6525 Kokusai Electric
Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: US$417mn One-Way; Some Changes to Expectations

Hang Seng Internet & IT Index Rebalance: Three Changes & A Few Surprises

There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.

HSTECH Index Rebalance: ASMPT (522 HK) Replaces Ping An Healthcare (1833 HK)

As expected, ASM Pacific Technology (522 HK) will replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 6 September.
Estimated one-way turnover at the rebalance is 3.2% resulting in a round-trip trade of HK$6.5bn. Passives need to buy over 7x ADV in ASM Pacific Technology (522 HK).
Positioning appears light in both stocks. Expect ASM Pacific Technology (522 HK) to move up and Ping An Healthcare and Technol (1833 HK) to move lower near-term.

Hang Seng Index Sep24 Rebal – No Name Changes, Some Capping, 1% One-Way Flow – Total 0️⃣🍔

The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
This time? We get nothing. No name changes. Some capping flows. 6 FAF changes.
Minimal flows on the HSI rebalance to be effective on 9 September.

Hang Seng Index (HSI) Rebalance: Meh (Or Will We Ever Get to 100 Stocks?)

In a surprise (maybe should not have been!), there are no constituent changes for the Hang Seng Index (HSI INDEX) in September. However, there are float and capping changes.
Estimated one-way turnover is 1% and estimated round-trip trade is HK$3.73bn (US$478m). There are no stocks with over +/-0.5x ADV to trade but flows could add to/offset other index flows.
We remain at 82 index constituents and the road to 100 constituents appears to be a long drawn out torturous one. At this glacial pace, could be an eternity away.

Apple Inc (AAPL US): $43bn Passive Buying Driven by Berkshire Selling & Market Consultation

Berkshire Hathaway Inc Cl B (BRK/B US) held over 5% of Apple (AAPL US). Nearly half of that was sold in the June quarter to take the holding to 2.63%.
Berkshire’s selling should result in an increase in Apple (AAPL US)‘s free float in the S&P 500 INDEX (SPX INDEX) and other related indices.
There will also be large buying in Apple (AAPL US) from the Technology Select Sector SPDR (XLK US) ETF if the proposals in the market consultation are implemented.

Sep24 HSTECH Index Rebal – ASMPT (522 HK) ADDed as Expected, After Post-Earnings Fall