Smartkarma Daily Briefs, Author at Smartkarma

Aug 04

Daily Brief United States: BP PLC and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

[Earnings Review] BP Surges Past Profit Estimates on Soaring Oil Prices and Robust Retail Earnings

[Earnings Review] BP Surges Past Profit Estimates on Soaring Oil Prices and Robust Retail Earnings

By Suhas Reddy

BP’s operating revenue declined by 2.55% YoY, falling short of estimates by 9.78%, while underlying net profit increased by 6.45% YoY, exceeding EPS estimates by 8.75%.
Strong performance from the Oil Production & Operations and Customers & Products segments drove underlying net profit growth.
BP announced a 10% increase in its interim dividend to 8 cents/share and completed USD 1.75 billion in share buybacks in Q2.

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Aug 04

Daily Brief Japan: Fancl Corp, Otsuka Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl
Otsuka Holdings (4578 JP): H1 Revenue Rises 17% on Rexulti; Picks Up Jnana Therapeutics for $800M

(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quite week – no new deals were discussed this week on Smartkarma ….
Key updates took place on Ansarada Group (AND AU), Southern Cross Gold (SXG AU), A8 New Media (800 HK), CPMC Holdings (906 HK), Mandala Multifinance (MFIN IJ), and Fancl (4921 JP).

Otsuka Holdings (4578 JP): H1 Revenue Rises 17% on Rexulti; Picks Up Jnana Therapeutics for $800M

By Tina Banerjee

During 1H24 Otsuka Holdings (4578 JP) reported 18% YoY growth in revenue from pharmaceuticals segment to ¥767B, mainly driven by a 27% YoY growth in Rexulti revenue to ¥122B.
The company has revised upward 2024 revenue and business profit, while reduced 2024 operating and net profit guidance due to the recording of an impairment loss.
Otsuka is acquiring Jnana Therapeutics for $800M. The transaction includes JNT-517, a potential first-in-class oral treatment for Phenylketonuria, a rare inherited metabolic disorder. The acquisition will close in 3Q24.

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Aug 04

Most Read: Exedy Corp, Nippon Express Holdings, PCCW Ltd, KB Financial, BrainBees Solutions, KT Corp, Fancl Corp, China Longyuan Power, Asia Cement China and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

[JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run
Japan – Passive Selling in a Few Weeks & Shorts Build Up
StubWorld: PCCW’s Premium To NAV Is Unsustainable
HK RE Series (3): Global Macro Starts to Turn More Supportive, Stock Valuation Is Compelling
Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System
Brainbees Solutions (FirstCry) IPO – Not Very Attractive but It Is Relatively Cheap
Asian Dividend Gems: KT Corp
(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl
A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider
Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk

[JAPAN ACTIVISM] – Murakami Group Bigger and Bolder on Exedy – STILL Room to Run

By Travis Lundy

In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP). The market dropped. But that was an opportunity.
There was an announcement, a ToSTNeT-3 buyback, the offering, and more buyback to come. On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.”
Exedy is up 21% since. On 17 June, activist Murakami-san’s group went over 5%. Then they bought more. Now they have 15%. Or more. Still cheap. Still vulnerable.

Japan – Passive Selling in a Few Weeks & Shorts Build Up

By Brian Freitas

Up to 12 stocks could be deleted from global passive portfolios in August. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.

StubWorld: PCCW’s Premium To NAV Is Unsustainable

By David Blennerhassett

Continued stub losses are one thing. Ballooning PCCW Ltd (8 HK) parent debt is another.
Preceding my comments on PCCW and HKT Ltd (6823 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%.

HK RE Series (3): Global Macro Starts to Turn More Supportive, Stock Valuation Is Compelling

By Jacob Cheng

We look at the global macro themes that are impacting the equity market including the US election, the Fed and China’s latest rate cut
We also look at the latest condition in Hong Kong, including the rates, the economy and the physical RE market
HK RE stocks continue to trade at compelling valuation, but fund flows are needed if we want a re-rating

Alpha Generating Opportunities from the Corporate Value Up Disclosures on the KIND System

By Douglas Kim

One of the key takeaways of the Corporate Value Up disclosures on the KIND system is that it could potentially lead to alpha generating investing opportunities.
Since the last week of May, there have been 7 companies that provided specific Corporate Value up programs; (4 major financials) have outperformed KOSPI.
Companies such as KB Financial and Shinhan Financial that provide more meaningful Corporate Value Up action plans are likely to have greater impact on their share prices.

Brainbees Solutions (FirstCry) IPO – Not Very Attractive but It Is Relatively Cheap

By Sumeet Singh

BrainBees Solutions is looking to raise up to US$500m in its upcoming India IPO.
FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.

Asian Dividend Gems: KT Corp

By Douglas Kim

We have a Positive view of KT Corp (030200 KS) due to three main reasons.
First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp’s shares are up 27.9% in the past one year.

(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quite week – no new deals were discussed this week on Smartkarma ….
Key updates took place on Ansarada Group (AND AU), Southern Cross Gold (SXG AU), A8 New Media (800 HK), CPMC Holdings (906 HK), Mandala Multifinance (MFIN IJ), and Fancl (4921 JP).

A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider

By Travis Lundy

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND inflow strong. SOEs, Tencent, and Xiaomi leading. NORTHBOUND down four of five days this week, but net inflows on the week. Consumer discretionary bad.
Hs underperformed As again. 20d AH Premia performance is at the top of its multi-year range. I’d expect AH Premia to decline the next couple of weeks.

Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk

By Arun George

Asia Cement China (743 HK)’s IFA opines that Asia Cement (1102 TT)’s HK$3.22 privatisation offer is fair and reasonable. The scheme vote is on 26 August.
The IFA valiantly justifies that an offer materially below net cash is fair and reasonable. The crux of the justification lies in the fortuitous disclosure of material capex requirements.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates, retail opposition and unconvincing IFA report suggest a high chance of a deal break.

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Aug 04

Daily Brief Utilities: China Longyuan Power, China National Nuclear Power C and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider
Mainland Connect NORTHBOUND Flows (To 2 Aug 2024): Small Net Positive Week But…

A/H Premium Tracker (To 2 Aug 2024): Policy Commentary Supports Consumers, AH Premia Drifting Wider

By Travis Lundy

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND inflow strong. SOEs, Tencent, and Xiaomi leading. NORTHBOUND down four of five days this week, but net inflows on the week. Consumer discretionary bad.
Hs underperformed As again. 20d AH Premia performance is at the top of its multi-year range. I’d expect AH Premia to decline the next couple of weeks.

Mainland Connect NORTHBOUND Flows (To 2 Aug 2024): Small Net Positive Week But…

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 BUY RMB 3.2bn of A-shares. Wednesday was a BIG buy day. Every other day was a net sell.
HK and Mainland large caps generally performed equally, down but much better than the rest of the world, but Hs in H/A pairs underperformed.

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Aug 04

Daily Brief TMT/Internet: Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 2 Aug 2024); ETFs Get Sold; Tencent, SOEs, Utilities Bought

HK Connect SOUTHBOUND Flows (To 2 Aug 2024); ETFs Get Sold; Tencent, SOEs, Utilities Bought

By Travis Lundy

SOUTHBOUND was again a net buyer, for HK$9.2bn this week (now 26wks in a row of net buying), on smallish two-way volumes.
I’ve thought national team was buying banks for months. They were gone for a couple of weeks. Feels like they are back.
There were three ETFs in the top five SOUTHBOUND sells this past week, reversing last week. Energy, Utilities, Telecoms bought.

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Aug 04

Daily Brief Energy/Materials: Asia Cement China, Rio Tinto Ltd, BP PLC and more

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

In today’s briefing:

Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk
Asia Cement (743 HK): 26th August Vote. Shareholders Should Reject Terms
Last Week in Event SPACE: Rio Tinto, Ryohin Keikaku/Fast Retailing, WH Group, ThaiBev/F&N, PCCW
[Earnings Review] BP Surges Past Profit Estimates on Soaring Oil Prices and Robust Retail Earnings

Asia Cement China (743 HK): Scheme Vote on 26 August Has a High Deal Break Risk

By Arun George

Asia Cement China (743 HK)’s IFA opines that Asia Cement (1102 TT)’s HK$3.22 privatisation offer is fair and reasonable. The scheme vote is on 26 August.
The IFA valiantly justifies that an offer materially below net cash is fair and reasonable. The crux of the justification lies in the fortuitous disclosure of material capex requirements.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates, retail opposition and unconvincing IFA report suggest a high chance of a deal break.

Asia Cement (743 HK): 26th August Vote. Shareholders Should Reject Terms

By David Blennerhassett

Back on the 5th June, Chinese cement play Asia Cement China (743 HK) announced a rubbish HK$3.22/share Offer from its parent Asia Cement (1102 TT).
This best & final cash Offer was a ~ 45% premium to undisturbed, and a 37% discount to FY23’s net cash. It’s a 39% discount to 1H24’s net cash.
The Scheme Doc is now out, with a 26th August independent shareholder vote. And payment (if it were to occur) on 20th September. The IFA (unsurprisingly) says fair and reasonable.

Last Week in Event SPACE: Rio Tinto, Ryohin Keikaku/Fast Retailing, WH Group, ThaiBev/F&N, PCCW

By David Blennerhassett

At a time when the LSE has dumbed down the checks and balances for listed companies, now may be the right time to consider collapsing Rio Tinto (RIO AU)‘s DLC.
Re: Sep24 Nikkei 225 Rebal, long Ryohin Keikaku (7453 JP) vs. Fast Retailing (9983 JP), but this may not last. It has worked very well.
Unless we see a significant (and sustainable) reversal in WH Group (288 HK)‘s US/Mexican ops in the interim results, now hardly appears the opportune time for a Smithfield IPO.

[Earnings Review] BP Surges Past Profit Estimates on Soaring Oil Prices and Robust Retail Earnings

By Suhas Reddy

BP’s operating revenue declined by 2.55% YoY, falling short of estimates by 9.78%, while underlying net profit increased by 6.45% YoY, exceeding EPS estimates by 8.75%.
Strong performance from the Oil Production & Operations and Customers & Products segments drove underlying net profit growth.
BP announced a 10% increase in its interim dividend to 8 cents/share and completed USD 1.75 billion in share buybacks in Q2.

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Aug 04

Daily Brief Consumer: Fancl Corp, Ola Electric and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl
Weekly Deals Digest (04 Aug) – Ola, Brainbees, A8, Asia Cement, CPMC, Fancl, Sun Corp, Heiwa

(Mostly) Asia-Pac M&A:Ansarada, Southern Cross Gold, A8 New Media, CPMC, Mandala Multifinance, Fancl

By David Blennerhassett

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quite week – no new deals were discussed this week on Smartkarma ….
Key updates took place on Ansarada Group (AND AU), Southern Cross Gold (SXG AU), A8 New Media (800 HK), CPMC Holdings (906 HK), Mandala Multifinance (MFIN IJ), and Fancl (4921 JP).

Weekly Deals Digest (04 Aug) – Ola, Brainbees, A8, Asia Cement, CPMC, Fancl, Sun Corp, Heiwa

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: Ola Electric (1700674D IN) and BrainBees Solutions (0172540D IN) IPOs.
Event-Driven developments: A8 New Media (800 HK), Asia Cement China (743 HK), CPMC Holdings (906 HK), Fancl Corp (4921 JP), Sun Corp (6736 JP), Pacific Metals (5541 JP).

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Aug 04

Daily Brief Health Care: Otsuka Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Otsuka Holdings (4578 JP): H1 Revenue Rises 17% on Rexulti; Picks Up Jnana Therapeutics for $800M

Otsuka Holdings (4578 JP): H1 Revenue Rises 17% on Rexulti; Picks Up Jnana Therapeutics for $800M

By Tina Banerjee

During 1H24 Otsuka Holdings (4578 JP) reported 18% YoY growth in revenue from pharmaceuticals segment to ¥767B, mainly driven by a 27% YoY growth in Rexulti revenue to ¥122B.
The company has revised upward 2024 revenue and business profit, while reduced 2024 operating and net profit guidance due to the recording of an impairment loss.
Otsuka is acquiring Jnana Therapeutics for $800M. The transaction includes JNT-517, a potential first-in-class oral treatment for Phenylketonuria, a rare inherited metabolic disorder. The acquisition will close in 3Q24.

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Aug 03

Daily Brief Quantitative Analysis: Hong Kong Buybacks Weekly (Aug 2nd): Aia and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

Hong Kong Buybacks Weekly (Aug 2nd): Aia, Meituan, Hsbc
Hong Kong Connect Flows (July): 11 Months of Inflows
Northbound Flows (July): Two Months of Outflows

Hong Kong Buybacks Weekly (Aug 2nd): Aia, Meituan, Hsbc

By Ke Yan, CFA, FRM

We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Aug 2nd based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were AIA (1299 HK), Meituan (3690 HK), HSBC (5 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Meituan (3690 HK), Tencent (700 HK), AIA (1299 HK).

Hong Kong Connect Flows (July): 11 Months of Inflows

By Ke Yan, CFA, FRM

We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight inflows into ICBC, Tencent, CCB, Yankuang, Sinopec, and outflows from HSBC, Meituan, HKEx, China Hongqiao, CNOOC.

Northbound Flows (July): Two Months of Outflows

By Ke Yan, CFA, FRM

We analyze the monthly Shanghai/Shenzhen northbound Connect flows with our data engine.
Consumer Staples ($962 million worth of outflows), Consumer Discretionary ($561 million worth of outflows) led the outflows (first chart below).
We highlight monthly outflows for CATL, Zhongji, Moutai, Wuliangye, Mindray.

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Aug 03

Daily Brief ESG: Reducing Cross Shareholdings Is Necessary to Increase the Effectiveness of Engagement and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Reducing Cross Shareholdings Is Necessary to Increase the Effectiveness of Engagement
Agile Group – ESG Report – Lucror Analytics

Reducing Cross Shareholdings Is Necessary to Increase the Effectiveness of Engagement

By Aki Matsumoto

Signs of change in companies that have improved their capital profitability and valuations can be seen in their policy shareholdings/total assets.
Companies with fewer policy shareholdings, as measured by (policy shareholdings + equity holdings)/total assets, tend to have the best values for valuation, ROE, and ROA, and vice versa.
To measure the seriousness of reducing cross-shareholdings, as long as the company has the voting right of cross-shareholdings in retirement benefit trust, the deemed shares should be included in cross-shareholdings.

Agile Group – ESG Report – Lucror Analytics

By Leonard Law, CFA

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Agile Group’s ESG as “Adequate”, in line with its Environmental and Social scores. That said, Governance is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.

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