Smartkarma Daily Briefs

CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
Our expected ADDs and DELs baskets have changed slightly since our last insight.

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Aug 18

Daily Brief Consumer: Kweichow Moutai, TSE Tokyo Price Index TOPIX, Sony Corp, The Walt Disney Co, Wynn Resorts and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold
Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role
Sony Corporation: Enhanced Streaming and Subscription Revenue Growth in Entertainment Driving Our Optimism! – Major Drivers
The Walt Disney Company: Enhanced Streaming Services Strategy
Wynn Resorts: Enhanced Market Recovery in Macau & Expansion In New Markets! – Major Drivers

Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold

By Travis Lundy

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 5.0bn of A-shares. NORTHBOUND volumes were very, very low overall.
HK large caps again outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.

Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role

By Aki Matsumoto

The percentage of shares held by individuals and trust banks fell from 17.6% to 16.9% and from 22.6% to 22.1%, respectively. Increasing individual investors’ investment in Japanese equities isn’t easy.
The presence of overseas investors will increase, as the percentage of shares held by foreigners, which has reached a record high, is expected to remain high in the future.
The percentage of shares held by corporations decreased slightly, and cross-shareholdings are gradually being unwound. The gradual decline is likely to continue in the future.

Sony Corporation: Enhanced Streaming and Subscription Revenue Growth in Entertainment Driving Our Optimism! – Major Drivers

The Sony Group Corporation’s latest consolidated earnings report for the first quarter of fiscal 2024 demonstrated notable financial growth and strategic advancements across its diversified portfolio, which spans from electronic products and financial services to entertainment and gaming.
Despite a complicated global economic climate, marked by exchange rate volatility and potential threats of an economic downturn, particularly in the United States, Sony has reported robust results and optimistic projections for the fiscal year.
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.

The Walt Disney Company: Enhanced Streaming Services Strategy

The Walt Disney Company reported its third-quarter financial results for 2024, reflecting a mixed performance across its diverse business segments.
The company reported a revenue growth of 2% during the quarter, indicating resilience in its theme parks segment despite slight moderation in demand.
Attendance at the domestic parks remained flat, with a slight increase in per capita spending, contributing to a steady revenue outlook for the fourth quarter.

Wynn Resorts: Enhanced Market Recovery in Macau & Expansion In New Markets! – Major Drivers

Wynn Resorts provided a detailed overview of its second quarter 2024 earnings, illustrating mixed financial and operational performance across its various geographies.
The company’s earnings call highlighted record earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR), capital expenditures, and strategic developments, particularly with Wynn Las Vegas, Boston, Macau, and ongoing projects in the UAE.
Starting with the positives, Wynn Resorts reported a record quarterly EBITDAR of $572 million, marking the company’s strongest second quarter in its history.

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Aug 18

Daily Brief China: China Traditional Chinese Medicine, Tencent, J&T Global Express , Kweichow Moutai, CMOC Group , CK Infrastructure Holdings, Shanghai Rural Commercial Bank, CPMC Holdings and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

(Mostly) Asia-Pac M&A: TCM, BusinessOn Comm, Orora, Ramsay Health Care, Namoi Cotton, APM, CPMC
HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On “Tiny” Overall Volume, ETFs Big
HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold
Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting
Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche
[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come
Quiddity Leaderboard CSI 300/500 Dec 24: US$4.3bn One-Way Flows; Exp.ADDs Vs DELs Rebound Possible
HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect

(Mostly) Asia-Pac M&A: TCM, BusinessOn Comm, Orora, Ramsay Health Care, Namoi Cotton, APM, CPMC

By David Blennerhassett

I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Two new deals were discussed this week: JTower (4485 JP) and BusinessOn Communication (138580 KS)‘s Tender Offers. Orora (ORA AU) approached by Lone Star. Ramsay Health Care (RHC AU) Offer also rumoured.
Key updates took place on China Traditional Chinese Medicine (570 HK), Namoi Cotton Co Operative (NAM AU), APM Human Services (APM AU), and CPMC Holdings (906 HK).

HK Connect SOUTHBOUND Flows (To 16 Aug 2024); Big Net Buying On “Tiny” Overall Volume, ETFs Big

By Travis Lundy

SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes.
Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.
Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)

HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises

J&T Global Express (1519 HK) and New Oriental Education (9901 HK) will replace JD Logistics (2618 HK) and SenseTime (20 HK) in the HSCEI at the close on 6 September.
The inclusion of J&T Global Express (1519 HK) is a big surprise and the stock could move higher over the next couple of weeks.
The non-inclusion of PICC Property & Casualty H (2328 HK) is another surprise since we had the stock highly ranked in the universe.

Mainland Connect NORTHBOUND Flows (To 16 Aug 2024): Banks Bought, Industry & Materials Sold

By Travis Lundy

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 5.0bn of A-shares. NORTHBOUND volumes were very, very low overall.
HK large caps again outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.

Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting

SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
Some of our index change expectations have changed since our last insight.

Last Week in Event SPACE: Aussie Tax Loss Basket, CK Infra, JTower, Porsche

By David Blennerhassett

The Aussie Tax-Loss Selling Baskets worked very well on the sell side from 30 April through end-June 2024. What now? Unwind.
CK Infrastructure Holdings (1038 HK) has now submitted an application for a secondary listing, not a dual-primary listing, on the London stock exchange. Admission expected on the 19th August.
The right trade is to buy JTower (4485 JP) below terms. The really right trade is to already be an owner. IF you’re an arbitrageur, you know what to do.

[Tencent (700 HK, BUY, TP HK$485) TP Change]: Revenue Acceleration and Margin Leverages to Come

By Ying Pan

Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;
Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;
We raise TP to HK$485 and keep Tencent as our TOP PICK.

Quiddity Leaderboard CSI 300/500 Dec 24: US$4.3bn One-Way Flows; Exp.ADDs Vs DELs Rebound Possible

CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
Our expected ADDs and DELs baskets have changed slightly since our last insight.

HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect

There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.
Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 18

Daily Brief Energy/Materials: CMOC Group , CPMC Holdings, Crude Oil and more

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

In today’s briefing:

Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting
HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect
[ETP 2024/33] Oil Lost Gains to Demand Concerns and Unexpected Build in US Inventories

Quiddity Leaderboard SSE50/180 Dec 24: SSE 50 Expected ADDs Vs DELs Trade Looks Interesting

SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
Some of our index change expectations have changed since our last insight.

HSCI Index Rebalance: 38 Adds, 29 Deletes & Changes to Southbound Stock Connect

There are 38 adds and 29 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents up to 518.
We expect 33 of the 38 HSCI inclusions to be added to Stock Connect while we expect 27 of the 29 HSCI deletions to be removed from Southbound Stock Connect.
Since the start of the calendar year, shares held though Southbound Connect have increased in 22 of the 27 HSCI deletions that will also be removed from Stock Connect.

[ETP 2024/33] Oil Lost Gains to Demand Concerns and Unexpected Build in US Inventories

By Suhas Reddy

For the week ending 09/Aug, US crude inventories increased by 1.4 mb for the first time in seven weeks, contrary to analyst expectations of a 1.9 mb drawdown.
US natural gas inventories fell by 6 Bcf, its first decline since 04/Apr. However, storage levels are up 6.8% YoY and 13% above the 5-year seasonal average.
Wells Fargo, UBS, and BMO Capital reduced their target prices on Occidental. BMO Capital lowered its targets on Chevron and Halliburton but raised its target on Exxon Mobil.

💡 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 18

Daily Brief Japan: JTower, TSE Tokyo Price Index TOPIX, Sony Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Weekly Deals Digest (18 Aug) – JTower, Piolax, Fancl, China TCM, CPMC, PropertyGuru, Orora, WeRide
Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role
Sony Corporation: Enhanced Streaming and Subscription Revenue Growth in Entertainment Driving Our Optimism! – Major Drivers

Weekly Deals Digest (18 Aug) – JTower, Piolax, Fancl, China TCM, CPMC, PropertyGuru, Orora, WeRide

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: WeRide (WRD US) aims to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
Event-Driven developments:China Traditional Chinese Medicine (570 HK), CPMC Holdings (906 HK), JTower (4485 JP), Piolax Inc (5988 JP), Fancl Corp (4921 JP), PropertyGuru (PGRU US).

Foreign Ownership, Which Has Reached a Record High of 31.8%, Will Continue to Play a Major Role

By Aki Matsumoto

The percentage of shares held by individuals and trust banks fell from 17.6% to 16.9% and from 22.6% to 22.1%, respectively. Increasing individual investors’ investment in Japanese equities isn’t easy.
The presence of overseas investors will increase, as the percentage of shares held by foreigners, which has reached a record high, is expected to remain high in the future.
The percentage of shares held by corporations decreased slightly, and cross-shareholdings are gradually being unwound. The gradual decline is likely to continue in the future.

Sony Corporation: Enhanced Streaming and Subscription Revenue Growth in Entertainment Driving Our Optimism! – Major Drivers

The Sony Group Corporation’s latest consolidated earnings report for the first quarter of fiscal 2024 demonstrated notable financial growth and strategic advancements across its diversified portfolio, which spans from electronic products and financial services to entertainment and gaming.
Despite a complicated global economic climate, marked by exchange rate volatility and potential threats of an economic downturn, particularly in the United States, Sony has reported robust results and optimistic projections for the fiscal year.
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.

💡 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 18

Daily Brief Industrials: J&T Global Express , Doosan Bobcat Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
Thoughts on Capturing the 7% Doosan Swap Spread

HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises

J&T Global Express (1519 HK) and New Oriental Education (9901 HK) will replace JD Logistics (2618 HK) and SenseTime (20 HK) in the HSCEI at the close on 6 September.
The inclusion of J&T Global Express (1519 HK) is a big surprise and the stock could move higher over the next couple of weeks.
The non-inclusion of PICC Property & Casualty H (2328 HK) is another surprise since we had the stock highly ranked in the universe.

Thoughts on Capturing the 7% Doosan Swap Spread

By Sanghyun Park

Consider a two-phase strategy: go long on Bobcat spot and short futures until November 1. If Robotics’ price drops significantly, close the setup.
If things go well, close the Bobcat futures short before November 1 and hold an unhedged Bobcat long until the listing date on November 25.
Hold an unhedged long position during this trading suspension period because cancellation risk will be gone and Robotics may get stable inflows from MSCI inclusion.

💡 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 18

Daily Brief Industrials: J&T Global Express , Doosan Bobcat Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises
Thoughts on Capturing the 7% Doosan Swap Spread

HSCEI Index Rebalance: Three In-Line Changes, Two Big Surprises

J&T Global Express (1519 HK) and New Oriental Education (9901 HK) will replace JD Logistics (2618 HK) and SenseTime (20 HK) in the HSCEI at the close on 6 September.
The inclusion of J&T Global Express (1519 HK) is a big surprise and the stock could move higher over the next couple of weeks.
The non-inclusion of PICC Property & Casualty H (2328 HK) is another surprise since we had the stock highly ranked in the universe.

Thoughts on Capturing the 7% Doosan Swap Spread

By Sanghyun Park

Consider a two-phase strategy: go long on Bobcat spot and short futures until November 1. If Robotics’ price drops significantly, close the setup.
If things go well, close the Bobcat futures short before November 1 and hold an unhedged Bobcat long until the listing date on November 25.
Hold an unhedged long position during this trading suspension period because cancellation risk will be gone and Robotics may get stable inflows from MSCI inclusion.

💡 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 18

Daily Brief South Korea: Doosan Bobcat Inc, Oscotec Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Thoughts on Capturing the 7% Doosan Swap Spread
Peptron: Rights Offering of 120 Billion Won

Thoughts on Capturing the 7% Doosan Swap Spread

By Sanghyun Park

Consider a two-phase strategy: go long on Bobcat spot and short futures until November 1. If Robotics’ price drops significantly, close the setup.
If things go well, close the Bobcat futures short before November 1 and hold an unhedged Bobcat long until the listing date on November 25.
Hold an unhedged long position during this trading suspension period because cancellation risk will be gone and Robotics may get stable inflows from MSCI inclusion.

Peptron: Rights Offering of 120 Billion Won

By Douglas Kim

On 16 August, Peptron (087010 KS) announced that it decided to increase capital through a rights offering worth about 120 billion won, involving 2.64 million shares (12.8% of outstanding shares).
The expected rights offering price is 45,450 won, which is 22% lower than current price.
We are negative on Peptron’s rights offering mainly due to much lower expected rights offering price, concerns about additional rights offering next 2-3 years, and continued lack of profitability.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
✓ Events & Webinars

Aug 18

Daily Brief United States: Crude Oil, Henry Schein, The Walt Disney Co, Wynn Resorts and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

[ETP 2024/33] Oil Lost Gains to Demand Concerns and Unexpected Build in US Inventories
Henry Schein Inc.: A Tale Of Expansion into Owned Brands and Portfolio Diversification! – Major Drivers
The Walt Disney Company: Enhanced Streaming Services Strategy
Wynn Resorts: Enhanced Market Recovery in Macau & Expansion In New Markets! – Major Drivers

[ETP 2024/33] Oil Lost Gains to Demand Concerns and Unexpected Build in US Inventories

By Suhas Reddy

For the week ending 09/Aug, US crude inventories increased by 1.4 mb for the first time in seven weeks, contrary to analyst expectations of a 1.9 mb drawdown.
US natural gas inventories fell by 6 Bcf, its first decline since 04/Apr. However, storage levels are up 6.8% YoY and 13% above the 5-year seasonal average.
Wells Fargo, UBS, and BMO Capital reduced their target prices on Occidental. BMO Capital lowered its targets on Chevron and Halliburton but raised its target on Exxon Mobil.

Henry Schein Inc.: A Tale Of Expansion into Owned Brands and Portfolio Diversification! – Major Drivers

In the second quarter of 2024, Henry Schein delivered a solid financial performance, underscoring its resilience amid challenging market conditions.
The company reported robust operating cash flow and an increase in gross margin, reflecting the benefit of strategic initiatives focusing on high-growth, high-margin products and services, as well as recent acquisitions.
However, the recovery from a cyber incident last year has been progressing slower than initially anticipated, impacting sales momentum.

The Walt Disney Company: Enhanced Streaming Services Strategy

The Walt Disney Company reported its third-quarter financial results for 2024, reflecting a mixed performance across its diverse business segments.
The company reported a revenue growth of 2% during the quarter, indicating resilience in its theme parks segment despite slight moderation in demand.
Attendance at the domestic parks remained flat, with a slight increase in per capita spending, contributing to a steady revenue outlook for the fourth quarter.

Wynn Resorts: Enhanced Market Recovery in Macau & Expansion In New Markets! – Major Drivers