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Smartkarma Daily Briefs

Jan 06
0

Daily Brief United States: Crude Oil, A10 Networks and more

By | Daily Briefs, United States

In today’s briefing:

  • Part Six: Commodities: Priced for a Downturn
  • ATEN: No Fear of a Warning

Part Six: Commodities: Priced for a Downturn

By Untying The Gordian Knot

  • The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
  • Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
  • Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.

ATEN: No Fear of a Warning

By Hamed Khorsand

  • A10 Networks (ATEN) not warning about missing consensus estimates is a positive, but not enough for a victory lap after a volatile 2023
  • The fourth quarter was of particular importance since the Company had reported third quarter revenue materially below estimates
  • Service providers represented 50 percent of ATEN’s third quarter revenue compared to 67 percent in prior years. Throughout 2023 this customer base was not consistent with their purchasing

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Jan 06
0

Daily Brief India: SJM Holdings and more

By | Daily Briefs, India

In today’s briefing:

  • Weekly Wrap – 05 Jan 2024

Weekly Wrap – 05 Jan 2024

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. Agile Property Holdings
  2. China Vanke
  3. Indika Energy
  4. SK Hynix
  5. Vedanta Resources

and more…

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Jan 06
0

Daily Brief Japan: Aoki Super, Japan Airlines, LaKeel and more

By | Daily Briefs, Japan

In today’s briefing:

  • Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
  • Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
  • Japan Airlines: Upside to Expectations Despite A350 Loss
  • LaKeel (4074) – Remaining Steadfast in Building Its Ecosystem

Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

By Travis Lundy

  • The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO. 
  • This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO. 
  • This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

By Arun George

  • Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January). 
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio. 
  • Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high. 

Japan Airlines: Upside to Expectations Despite A350 Loss

By Neil Glynn

  • Our updated analysis suggests that JAL’s FY24 to March 2024 EBIT guidance of  ¥ 130bn remains conservative. We see  ¥ 177bn as achievable unless forward bookings weaken.
  • Our analysis of JAL’s management of inflation highlights it is outperforming many APAC and global peers, keeping unit cost increases to a minimum. 
  • Reduced overheads have proved the key driver of inflation avoidance, while stable unit personnel costs contrast starkly with US carriers in particular; JAL’s largest international market.

LaKeel (4074) – Remaining Steadfast in Building Its Ecosystem

By Astris Advisory Japan

  • On track to scale – over the last 12 months we believe LaKeel has made progress in developing its ecosystem, driving new customer acquisitions, and increasing MMR for its key DX-related in-house LaKeel Products.
  • While Q1-3 FY12/2023 results highlighted risks over license sale slippages, LaKeel’s strategy remains focused on providing innovative business and technology solutions with high ROI, and reducing IT ownership costs with reusable microservices and sustainable software development.
  • Despite the slower-than-expected business development, we believe LaKeel’s products and services are differentiated to make headway in a market with a significant need for digital transformation, and its ecosystem will expand and become more commercialized.

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Jan 06
0

Daily Brief Macro: Regional Economics:  Episodic Stresses and more

By | Daily Briefs, Macro

In today’s briefing:

  • Regional Economics:  Episodic Stresses, Not Prolonged Crises for Asia in 2024
  • China Will Increase Government Spending to Bolster Economy
  • EA: Inflation Springs as Energy Fades
  • Part Six: Commodities: Priced for a Downturn
  • CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales

Regional Economics:  Episodic Stresses, Not Prolonged Crises for Asia in 2024

By Manu Bhaskaran

  • While there will be economic and geopolitical shocks, we believe that these will cause episodic stresses, not lasting damage to the region’s growth or stability. 
  • Monetary policy, China’s economic performance, and geopolitical conflict will shape the economic outlook for the region, while government policy responses may provide economic upsides. 
  • Thus, we think that the Asia-Pacific region will exhibit commendable economic resilience and modestly improved growth compared to 2023.

China Will Increase Government Spending to Bolster Economy

By Caixin Global

  • China will expand government spending in 2024 through a combination of policy tools, Lan Foan, the country’s newly appointed finance minister, said as Beijing steps up efforts to stimulate domestic demand and shore up the economy.
  • The government will strengthen the overall coordination of fiscal resources, utilizing a combination of special bonds, national bonds, and other policy tools such as tax incentives and fiscal subsidies to moderately expand the scale of fiscal spending, Lan said in an interview published Thursday by official newspaper People’s Daily.
  • In 2024, the government will maintain a proactive fiscal policy with an appropriate level of fiscal spending increase to send positive signals, said Lan.

EA: Inflation Springs as Energy Fades

By Phil Rush

  • EA inflation undershot expectations for the fourth consecutive month but smashed the downtrend with a 0.5pp rise to 2.9% for Dec-23.
  • The run of downward surprises means Dec-23 inflation is 0.8pp lower than expected in Oct-23. However, it is close to expectations a year earlier.
  • Fading energy price disinflation drove the upside move in a timely reminder that all the EA’s other special aggregates remain well above 2%, discouraging ECB rate cuts.

Part Six: Commodities: Priced for a Downturn

By Untying The Gordian Knot

  • The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
  • Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
  • Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.

CX Daily: China’s Cash-Strapped Local Governments Struggle to Revive Land Sales

By Caixin Global

  • Land / In Depth: China’s cash-strapped local governments struggle to revive land sales

  • PMI /: China services activity picks up, Caixin PMI shows

  • Funds /: New China Life sets up $1.4 billion fund for property investments

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Jan 06
0

Daily Brief China: Kerry Logistics Network, Anhui Conch Cement, SJM Holdings, New China Life Insurance and more

By | China, Daily Briefs

In today’s briefing:

  • Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO
  • Anhui Conch Cement (914 HK):  Where Are We In The Cycle?
  • Weekly Wrap – 05 Jan 2024
  • New China Life Sets up $1.4 Billion Fund for Property Investments

Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO

By David Blennerhassett

Anhui Conch Cement (914 HK):  Where Are We In The Cycle?

By Steve Zhou, CFA

  • Anhui Conch Cement (914 HK) is trading at a historical low forward P/B of 0.5x, compared to an average of 1.2x for the last decade. 
  • In the long term, China cement will likely see much lower volume and lower cement prices in the short term, but eventually rising cement prices due to better supply picture. 
  • As the lowest cost producer, Anhui Conch stands a very good chance to win out in the long term and potentially more than double its current market share. 

Weekly Wrap – 05 Jan 2024

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. Agile Property Holdings
  2. China Vanke
  3. Indika Energy
  4. SK Hynix
  5. Vedanta Resources

and more…

New China Life Sets up $1.4 Billion Fund for Property Investments

By Caixin Global

  • New China Life Insurance Co. Ltd. will partner with a unit of China International Capital Corp. (CICC) to set up a $1.4 billion fund to invest in companies with real estate assets, as the state-owned insurer taps the property sector for long-term returns despite a market downturn.
  • New China Life said it has reached an agreement with China Capital Investment Group (CCIG) to forge the private fund, in which the insurance company will provide 9.999 billion yuan ($1.4 billion) as the limited partner. CICG will be the general partner with 1-million-yuan investment and will manage the fund.
  • The fund, with a term of eight years, will focus on direct and indirect investment in companies holding property projects in their long-term portfolios, according to New China Life.

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Jan 05
0

Daily Brief TMT/Internet: TSE Tokyo Price Index TOPIX, BYD Electronics and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • New Year New NISA Accounts – It’s BIG, But Not so Big
  • Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

New Year New NISA Accounts – It’s BIG, But Not so Big

By Travis Lundy

  • The Kishida administration put out a Doubling Asset-Based Income Plan in 2022. The goal? To get cash savings (corporate/individual) into growth assets and increase asset-based return contribution to income.
  • The goal included doubling the number of NISA accounts, and the amount invested in the next five years. On 1 January 2024, NEW NISA account contribution totals were trebled.
  • If accounts double, and contribution totals treble, and exemptions are now permanent, investment doubling is a quasi-certainty. The question is how it turns into income-producing assets. That’s MUCH tougher.

Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.
  • The index changes for the March 2024 index rebal will be announced on 16th February 2024.
  • While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.

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Jan 05
0

Daily Brief Industrials: GS Engineering & Construction and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

By Douglas Kim

  • We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.
  • We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months. 
  • On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.

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Jan 05
0

Daily Brief Industrials: GS Engineering & Construction and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

Top 20 Korean Construction Companies: Off-Balance Sheet Contingent Liabilities To Drive Lower Prices

By Douglas Kim

  • We argue that the top 20 listed construction companies in Korea are likely to underperform KOSPI in 2024 mainly due to the excessive risks in the housing/commercial real estate sectors.
  • We expect the share prices of these 20 domestic construction companies to fall by at least 15%-20%+ on average in the next 6-12 months. 
  • On 2 January 2024, Financial Supervisory Service (FSS) announced that there will be new reporting requirements for PF loans of Korean construction companies starting 2023 annual reports.

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Jan 05
0

Daily Brief Financials: Korea Stock Exchange Kospi Index, People’s Insurance (PICC), Bajaj Finance Ltd and more

By | Daily Briefs, Financials

In today’s briefing:

  • Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
  • PICC’s (1339 HK)’s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite
  • Bajaj Finance: Q3FY24 Preview

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

By Sanghyun Park

  • Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
  • Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
  • Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

PICC’s (1339 HK)’s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite

By David Blennerhassett

Bajaj Finance: Q3FY24 Preview

By Ankit Agrawal, CFA

  • Bajaj Finance Ltd (“BAF”) reported key performance metrics for Q3FY24. It reported strong growth, particularly in AUM which grew 7%+ QoQ and 35% YoY to reach INR 311,000cr.
  • Customer franchise grew 5%+ QoQ to reach 80.41mm, surpassing the 80mm mark. New loans booked grew to 9.86mm, a growth of 26% YoY and 15%+ QoQ.
  • The liability book also did well with deposits growing at around 6% QoQ and 35% YoY to reach INR 58,000cr.

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Jan 05
0

Daily Brief Health Care: Cloudbreak Pharma, Alteogen Inc and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Cloudbreak Pharma (拨康视云) Pre-IPO: Old Drug, New Formulation
  • Alteogen (196170 KS): First Proprietary Product Approval in Korea To Improve Revenue Visibility

Cloudbreak Pharma (拨康视云) Pre-IPO: Old Drug, New Formulation

By Ke Yan, CFA, FRM

  • Cloudbreak Pharma, a China-based clinical-stage biotechnology company, plans to raise up to US$200m via a Hong Kong listing.
  • In this note, we examine the company’s core products, namely CBT-001 and CBT-009, for pterygium and juvenile myopia respectively.
  • We are seeing a lack of convincing sustainable innovation from the company. Pre-IPO investors and management are mediocre.

Alteogen (196170 KS): First Proprietary Product Approval in Korea To Improve Revenue Visibility

By Tina Banerjee

  • Alteogen Inc (196170 KS)‘s first proprietary recombinant human hyaluronidase liquid product, Tergase (ALT-BB4) is currently under approval process in Korea and is expected to receive approval in early 2024.  
  • Tergase is a stand-alone hyaluronidase product that can be used for the treatment of various medical conditions, such as pain relief, edema treatment, and hyaluronic acid filler removal.
  • Compared to commercially available animal-derived hyaluronidase products in the market, Tergase is a highly purified product of high-quality with very few impurities and an excellent side effect profile.

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