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Smartkarma Daily Briefs

Daily Brief Equity Bottom-Up: Alibaba (BABA US): Still One of if Not the Best China Consumer Play and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Alibaba (BABA US): Still One of if Not the Best China Consumer Play
  • BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel
  • Asian Dividend Gems: Tingyi Holding
  • First Run of Global Semis’ Guidances to Tell Early Signs of Recovery
  • Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues
  • Vinda International (3331 HK):  Business Recovering As Expected
  • US Banks – Office Exposures, Interest Spread Trends to 3Q23
  • Misumi Group (9962 JP): Weak Sales in September, but Most Bad News Discounted
  • Japanese Banks – Stay the Bullish Course
  • Intel. Beat & Raise Sends Shares Soaring After Hours


Alibaba (BABA US): Still One of if Not the Best China Consumer Play

By Eric Chen

  • The increasing dominance of retailers (off/online) in the US consumer sector measured by market cap over last three decades tellingly illustrates the long term potential of Alibaba in China.
  • While we believe consensus underestimates bottom line for 2QFY24, investors will likely focus on the outlook for 2024, with growth of Taobao/Tmall group remaining key share price driver.
  • Investors pulling out of Alibaba due to geopolitical risks remind me of how ESG drove investments away from oil & gas years ago and eventually led to the latter’s outperformance.  

BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel

By Angus Mackintosh

  • BFI Finance‘s 3Q2023 results reflected the lingering impact of May’s Malware incident which interrupted collections but this situation has now been remedied and the company can resume rebuilding its book.
  • 4Q2023 will likely see further write-offs but an improvement in credit costs but the company will remain cautious on building its book with a full recovery expected in 2H2024. 
  • BFI Finance remains the best-quality multi-finance company in Indonesia, with a low cost of funds and a differentiated target market of used 4W and 2W non-dealer loans. Valuations are attractive. 

Asian Dividend Gems: Tingyi Holding

By Douglas Kim

  • Shares of Tingyi Holding are oversold. It has high dividend yield and attractive valuations. Its core instant noodles and beverage businesses are turning around this year. 
  • The consensus expects DPS of HKD 0.62 for Tingyi in 2023 which would suggest a dividend yield of 6.1%. Tingyi Holding’s dividend yield averaged 5% annually from 2018 to 2022.
  • Tingyi’s “Master Kong” instant noodle is one of the best known brands in China. The company is also one of the largest producers and distributors of beverages in China. 

First Run of Global Semis’ Guidances to Tell Early Signs of Recovery

By Andrew Lu

  • We see early signs of recovery in PC and smartphone markets, stable server market (strengths in AI server, stable in non-AI server market), but weaknesses in automotive and industrial.
  • We expect the PC semi market recovery of more than 10% y/y in 2024/2025, driven by inventory rebuild and silicon contents increase by adding AI into PC.
  • We expect the smartphone semi market recovery of 7-8% y/y in 2024/2025, driven by inventory rebuild and adopting 3nE foundry node. But, Huawei/HiSilicon will take some of the growth.

Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues

By Shifara Samsudeen, ACMA, CGMA

  • Takeda’s 2QFY03/2024 revenues increased 4.1% YoY beating consensus estimates by 6%. However, Takeda reported an operating loss of ¥49.3bn for the quarter due to impairment losses.
  • As we expected, recent setback in some of Takeda’s clinical trials have led to write-downs and triggered a downward revision to full-year profit guidance.
  • There has been excessive price reaction to these setbacks, however, Takeda continues to progress with its pipeline development with some newly launched drugs showing great potential.

Vinda International (3331 HK):  Business Recovering As Expected

By Steve Zhou, CFA

  • Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover. 
  • Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). 
  • More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.

US Banks – Office Exposures, Interest Spread Trends to 3Q23

By Victor Galliano

  • US Banks’ office credit exposures represent a big part of the sector’s credit quality concerns, given the decline in office space occupancy and rising interest rates
  • Industry data shows that bank funding costs are rising fast, and 3Q23 bank spread trends are mixed; banks with greater mortgage exposure are potentially at greater risk of narrowing spreads
  • We stick with Capital One for its high lending spreads, negligible mortgage exposure and limited office credit exposure with high coverage; Capital One also has healthy overall NPL coverage

Misumi Group (9962 JP): Weak Sales in September, but Most Bad News Discounted

By Scott Foster

  • Total sales remained weak in September, dropping 3.5% YoY. In 1H of FY Mar-24, sales were down 4.3%. Month-to-month, though, they have been trending sideways.
  • Die Components have been holding up best, followed by Factory Automation. The VONA e-commerce business has been more volatile, but still shows a lack of traction.
  • Operating profit dropped 31% in 1H, but management is guiding for a 23% increase in 2H. This looks optimistic, but most of the bad news should be in the price.

Japanese Banks – Stay the Bullish Course

By Victor Galliano

  • So far in 4Q23, Japanese banks’ share prices have registered a mixed performance, in part due to the unsettled global market conditions; yet the Japanese bond yield curve keeps steepening
  • We assess the top twelve Japanese commercial banks by market capitalisation, and we believe that Japanese banks remain good value with, a rare thing, improving fundamentals
  • Ahead of the September results, we stick with our buys on Resona, Mizuho and SMFG; Resona has lagged deserving to re-rate further, and we add Hachijuni to our buy list

Intel. Beat & Raise Sends Shares Soaring After Hours

By William Keating

  • Q323 revenues of $14.2 billion, some $800 million above the guided midpoint, down 8% YoY but up 10% sequentially.
  • Current quarter revenue guided up QoQ to $15.1 billion at the midpoint, shares up 10% 
  • Intel is betting big on a return to a 300 million unit PC TAM. Is this realistic?

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Daily Brief Health Care: Takeda Pharmaceutical, Cargo Therapeutics and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues
  • CARGO Therapeutics IPO Preview: A Promising Pipeline of Next-Gen CAR T-Cell Therapies


Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues

By Shifara Samsudeen, ACMA, CGMA

  • Takeda’s 2QFY03/2024 revenues increased 4.1% YoY beating consensus estimates by 6%. However, Takeda reported an operating loss of ¥49.3bn for the quarter due to impairment losses.
  • As we expected, recent setback in some of Takeda’s clinical trials have led to write-downs and triggered a downward revision to full-year profit guidance.
  • There has been excessive price reaction to these setbacks, however, Takeda continues to progress with its pipeline development with some newly launched drugs showing great potential.

CARGO Therapeutics IPO Preview: A Promising Pipeline of Next-Gen CAR T-Cell Therapies

By Andrei Zakharov

  • CARGO Therapeutics, a clinical-stage biotech company developing treatments for various lymphomas, filed for an IPO to fund its Phase 2 clinical trials of CRG-022, a lead program in the pipeline. 
  • The biotech firm was backed by founding investor Samsara BioCapital and top-tier healthcare VC firms, including Third Rock Ventures, Perceptive Advisors, and Nextech Invest.
  • The company’s lead program, CRG-022, is focused on patients with large B-cell lymphoma whose disease relapsed and targets CD-22 that has been expressed in 81% to 100% of DLBCL patients. 

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Daily Brief Event-Driven: Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
  • Passive Flow Trading Opportunities Emerge from L&F’s Transition to KOSPI Listing
  • Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap
  • Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar


Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us

By Travis Lundy

  • Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn. 
  • Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
  • The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.

Passive Flow Trading Opportunities Emerge from L&F’s Transition to KOSPI Listing

By Sanghyun Park

  • L&F will likely be listed on the KOSPI in mid-December. The top reserved issue within the KOSDAQ 150 IT Sector will be added to the index via an ad-hoc change.
  • Selvas AI stands as the foremost candidate for the screened top reserved issue, with a mere two trading days remaining in the six-month screening period.
  • Given the relatively limited proactive position buildup due to more uncertainty regarding timing, the price impact leading up to the effective date might become even more significant.

Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap

By David Blennerhassett

  • Stellantis, a merger between France’s PSA with Fiat Chrysler Automobiles NV (FCAM BQ), is buying a 17% stake (14.53% fully diluted) in Zhejiang Leapmotor Technologie (9863 HK)
  • Leapmotor will issue 194mn H shares at HK$43.8/share, a 19% premium to last close, in a HK$8.51bn transaction. Stellantis will also hold a 51% stake in newly formed JV. 
  • Stellantis is paying a chunky 3.64x market cap-trailing-revenue; but ~2.25x forward revs, which compares to the average for key peers of 1.9x.

Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Golden Solar New Energy Technology Holdings (1121 HK).

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Daily Brief Financials: Japan Post Bank, BFI Finance Indonesia, Sun Hung Kai Properties, Zions Bancorporation, Resona Holdings, Freedom Holding Corp, TSE Tokyo Price Index TOPIX, XRP and more

By | Daily Briefs, Financials

In today’s briefing:

  • Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
  • BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel
  • Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar
  • US Banks – Office Exposures, Interest Spread Trends to 3Q23
  • Japanese Banks – Stay the Bullish Course
  • Freedom Holding: A Kazakh Scam Being Uncovered?
  • Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities
  • More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto


Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us

By Travis Lundy

  • Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn. 
  • Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
  • The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.

BFI Finance Indonesia (BFIN IJ) – Back on an Even Keel

By Angus Mackintosh

  • BFI Finance‘s 3Q2023 results reflected the lingering impact of May’s Malware incident which interrupted collections but this situation has now been remedied and the company can resume rebuilding its book.
  • 4Q2023 will likely see further write-offs but an improvement in credit costs but the company will remain cautious on building its book with a full recovery expected in 2H2024. 
  • BFI Finance remains the best-quality multi-finance company in Indonesia, with a low cost of funds and a differentiated target market of used 4W and 2W non-dealer loans. Valuations are attractive. 

Hong Kong CEO & Director Dealings (27 Oct): Kwoks Still Buying SHK; Chairman Selling Golden Solar

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Golden Solar New Energy Technology Holdings (1121 HK).

US Banks – Office Exposures, Interest Spread Trends to 3Q23

By Victor Galliano

  • US Banks’ office credit exposures represent a big part of the sector’s credit quality concerns, given the decline in office space occupancy and rising interest rates
  • Industry data shows that bank funding costs are rising fast, and 3Q23 bank spread trends are mixed; banks with greater mortgage exposure are potentially at greater risk of narrowing spreads
  • We stick with Capital One for its high lending spreads, negligible mortgage exposure and limited office credit exposure with high coverage; Capital One also has healthy overall NPL coverage

Japanese Banks – Stay the Bullish Course

By Victor Galliano

  • So far in 4Q23, Japanese banks’ share prices have registered a mixed performance, in part due to the unsettled global market conditions; yet the Japanese bond yield curve keeps steepening
  • We assess the top twelve Japanese commercial banks by market capitalisation, and we believe that Japanese banks remain good value with, a rare thing, improving fundamentals
  • Ahead of the September results, we stick with our buys on Resona, Mizuho and SMFG; Resona has lagged deserving to re-rate further, and we add Hachijuni to our buy list

Freedom Holding: A Kazakh Scam Being Uncovered?

By Alec Tseung

  • Hindenburg Research published a short-selling report accusing the company and its Chairman & CEO of evading sanctions, fabricating revenue, market manipulations, etc.
  • One area that could warrant more attention is the acquisitions Freedom carried out over the past 18 months, where numerous target companies were personally invested by its Chairman & CEO.
  • In Kazakhstan, it’s difficult to have full visibility into these target companies’ shareholders and for whom exactly Freedom was providing liquidity.

Remain Overweight and Add Exposure to Japan; Buys in Insurance, Services, Tech, Staples, Utilities

By Joe Jasper

  • The MSCI ACWI index (ACWI-US) continues to test major support at $90.50-$91.50, though no decisive break yet; as long as this support area holds, we remain constructive on global equities.
  • MSCI EM (EEM-US) continues to test $37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) are testing supports at $45 and $65-$66, respectively
  • Remain overweight and add exposure to Japan; the TOPIX remains in a 1.5-year RS uptrend (vs. MSCI ACWI), and continues to hold above 5-month support at 2200-2215

More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto

By Delphi Digital

  • Traditional equities confer specific rights to their holders, such as voting power and dividends. Tokens offer distinct advantages, including implementation versatility, composability—especially within DeFi—and other functionalities unattainable with securities.
  • The innovative designs of tokens play a pivotal role; they not only channel value back to the token holders but also exert a direct impact on the token’s market value.
  • In this report, we explore four value accrual mechanisms implemented by tokens. These include: (i) Buyback and Burn; (ii) Real Yield; (iii) Tax-Tokens; and (iv) Book Value Tokens

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Daily Brief Consumer: Zhejiang Leapmotor Technologie, Tingyi Holding, Vinda International and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap
  • Asian Dividend Gems: Tingyi Holding
  • Vinda International (3331 HK):  Business Recovering As Expected


Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap

By David Blennerhassett

  • Stellantis, a merger between France’s PSA with Fiat Chrysler Automobiles NV (FCAM BQ), is buying a 17% stake (14.53% fully diluted) in Zhejiang Leapmotor Technologie (9863 HK)
  • Leapmotor will issue 194mn H shares at HK$43.8/share, a 19% premium to last close, in a HK$8.51bn transaction. Stellantis will also hold a 51% stake in newly formed JV. 
  • Stellantis is paying a chunky 3.64x market cap-trailing-revenue; but ~2.25x forward revs, which compares to the average for key peers of 1.9x.

Asian Dividend Gems: Tingyi Holding

By Douglas Kim

  • Shares of Tingyi Holding are oversold. It has high dividend yield and attractive valuations. Its core instant noodles and beverage businesses are turning around this year. 
  • The consensus expects DPS of HKD 0.62 for Tingyi in 2023 which would suggest a dividend yield of 6.1%. Tingyi Holding’s dividend yield averaged 5% annually from 2018 to 2022.
  • Tingyi’s “Master Kong” instant noodle is one of the best known brands in China. The company is also one of the largest producers and distributors of beverages in China. 

Vinda International (3331 HK):  Business Recovering As Expected

By Steve Zhou, CFA

  • Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover. 
  • Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). 
  • More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.

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Daily Brief Crypto: More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto and more

By | Crypto, Daily Briefs

In today’s briefing:

  • More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto


More Than Just Governance: Unpacking Value Accrual Mechanisms in Crypto

By Delphi Digital

  • Traditional equities confer specific rights to their holders, such as voting power and dividends. Tokens offer distinct advantages, including implementation versatility, composability—especially within DeFi—and other functionalities unattainable with securities.
  • The innovative designs of tokens play a pivotal role; they not only channel value back to the token holders but also exert a direct impact on the token’s market value.
  • In this report, we explore four value accrual mechanisms implemented by tokens. These include: (i) Buyback and Burn; (ii) Real Yield; (iii) Tax-Tokens; and (iv) Book Value Tokens

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  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Macro: CX Daily: Marriage Loses Its Luster in China and more

By | Daily Briefs, Macro

In today’s briefing:

  • CX Daily: Marriage Loses Its Luster in China
  • Ifo Watch: Signs of Disinflation Bottoming Out in Germany?
  • Portfolio Watch: Equities Running Out of Gas?
  • The Weekly Market Monitor – Reality Check!


CX Daily: Marriage Loses Its Luster in China

By Caixin Global

  • Marriage / Charts of the Day: Marriage loses its luster in China 
  • China-U.S. /: Xi calls for stable ties in meeting with California Governor Newsom

  • Zhongzhi /: Shareholder in Zhongzhi-linked trust firm delists amid deepening liquidity crisis


Ifo Watch: Signs of Disinflation Bottoming Out in Germany?

By Ulrik Simmelholt

  • Takeaways: Some very gloomy signs in the IFO survey details with Capital Goods production expectations nose-diving in a recessionary fashionOn the other hand, the highly cyclical Chemicals industry, a large consumer of Natural Gas, is rebounding for the third month running.
  • Price pressures remain low in the forward looking survey, but there are signs of a stabilization/rebound.
  • EUR-flation is likely to bottom below 2%, but price pressures could re-emerge already during the spring according to the Ifo Survey.

Portfolio Watch: Equities Running Out of Gas?

By Andreas Steno

  • Welcome to our weekly Portfolio Watch! Every week, we assess the risk/reward across asset classes and explain our decisions in our own portfolio.
  • We once again note the great diversification effects from Energy over the past week.
  • Front month Nat Gas has been on the move in the US despite relatively weak flow data, which is a strong harbinger of an improving underlying demand dynamic in the industrial sector due to the tick-up in orders books in cyclical- and energy intensive sectors such as Chemicals.

The Weekly Market Monitor – Reality Check!

By Jeroen Blokland

  • This week, the approval of a spot Bitcoin ETF took another leap forward. And a poll among investors reveals that this will be a game-changer. 
  • Equities tumbled again, and earnings are to blame. Google is down hard as the ‘Magnificent 7’ delivered mixed earnings, nowhere near good enough, given they are priced for perfection! 
  • And that’s not all. The spike in real yields suggests a whopping decline of 25%(!) of the P/E ratio of the S&P 500 Index.

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Most Read: Newmont Mining, Hanwha Ocean, Keisei Electric Railway Co, Japan Post Bank, Adaro Energy, KakaoBank , J&T Global Express, Selvas AI Inc, Alibaba (ADR), Zhejiang Leapmotor Technologie and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Newcrest/Newmont – More Selling on the NCM Means More Buying on NEM, And Settlement Logistics Matter
  • Trading Angles Using Severely Backwardated Hanwha Ocean’s SSFs Ahead of the Rights Trading
  • Keisei Electric: Activists Arrive As Expected
  • Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
  • IDX30/​​LQ45/IDX80 Index Rebalance: Float & Capping Changes on Tuesday
  • Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank
  • J&T Global Express IPO: Trading Debut
  • Passive Flow Trading Opportunities Emerge from L&F’s Transition to KOSPI Listing
  • Alibaba (BABA US): Still One of if Not the Best China Consumer Play
  • Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap


Newcrest/Newmont – More Selling on the NCM Means More Buying on NEM, And Settlement Logistics Matter

By Travis Lundy

  • Today saw 65mm shares of Newcrest Mining (NCM AU) print at the close and 85+mm shares crossed in blocks post-close. There was another 15mm shares traded in additional excess volume.
  • That suggests a certain lack of “risk taking” by passive managers, increasing today’s trade in NY. 
  • Furthermore, the settlement logistics appear to indicate an interesting trade to do 7 November (worth checking with your custodian/broker). 

Trading Angles Using Severely Backwardated Hanwha Ocean’s SSFs Ahead of the Rights Trading

By Sanghyun Park

  • First, we can take on some risk and build up a short position using SSFs from now, aiming for an aggressively low price (likely Day 1) during the rights trading. 
  • If this approach seems somewhat risky, the second is to wait until the rights trading and, although accepting some sacrifice in the spread, build positions relatively risk-free. 
  • We can also actively build up a long position in the significantly backwardated SSFs from now and, instead, set up an aggressive short on the underlying shares.

Keisei Electric: Activists Arrive As Expected

By Oshadhi Kumarasiri

  • Just as we suspected earlier in the year, there is now talk of an impending investor activism campaign targeting Keisei Electric Railway Co (9009 JP).
  • The activist is Palliser Capital, a multi-strategy fund based in London and run by former employees of Elliott Management, a company well-known for its activist campaigns in Japan.
  • Their proposal is simple and straightforward, requesting for a 35% reduction in Keisei Electric’s Oriental Land holding.

Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us

By Travis Lundy

  • Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn. 
  • Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
  • The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.

IDX30/​​LQ45/IDX80 Index Rebalance: Float & Capping Changes on Tuesday

By Brian Freitas


Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank

By Douglas Kim

  • In this insight, we discuss the increasing probability of Kakao Corp (035720 KS) losing its controlling shareholding of KakaoBank (323410 KS).
  • The FSS Chairman Lee Bok-Hyun emphasized that the FSS may punish Kakao Corp for a potential stock manipulation of S.M.Entertainment amid the M&A tender offer process earlier this year.
  • At this point, the higher probability event appears to be a combination of fine and Kakao Corp selling at least 10% of its stake in Kakao Bank to another company.

J&T Global Express IPO: Trading Debut

By Arun George


Passive Flow Trading Opportunities Emerge from L&F’s Transition to KOSPI Listing

By Sanghyun Park

  • L&F will likely be listed on the KOSPI in mid-December. The top reserved issue within the KOSDAQ 150 IT Sector will be added to the index via an ad-hoc change.
  • Selvas AI stands as the foremost candidate for the screened top reserved issue, with a mere two trading days remaining in the six-month screening period.
  • Given the relatively limited proactive position buildup due to more uncertainty regarding timing, the price impact leading up to the effective date might become even more significant.

Alibaba (BABA US): Still One of if Not the Best China Consumer Play

By Eric Chen

  • The increasing dominance of retailers (off/online) in the US consumer sector measured by market cap over last three decades tellingly illustrates the long term potential of Alibaba in China.
  • While we believe consensus underestimates bottom line for 2QFY24, investors will likely focus on the outlook for 2024, with growth of Taobao/Tmall group remaining key share price driver.
  • Investors pulling out of Alibaba due to geopolitical risks remind me of how ESG drove investments away from oil & gas years ago and eventually led to the latter’s outperformance.  

Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap

By David Blennerhassett

  • Stellantis, a merger between France’s PSA with Fiat Chrysler Automobiles NV (FCAM BQ), is buying a 17% stake (14.53% fully diluted) in Zhejiang Leapmotor Technologie (9863 HK)
  • Leapmotor will issue 194mn H shares at HK$43.8/share, a 19% premium to last close, in a HK$8.51bn transaction. Stellantis will also hold a 51% stake in newly formed JV. 
  • Stellantis is paying a chunky 3.64x market cap-trailing-revenue; but ~2.25x forward revs, which compares to the average for key peers of 1.9x.

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Most Read: Newmont Mining, Eoflow , Elite Material, Keisei Electric Railway Co, Medtronic Plc, Azure Minerals, Mini Kospi 200 Futures, Ecopro BM , KakaoBank , Hollysys Automation Technologies and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Newcrest/Newmont – More Selling on the NCM Means More Buying on NEM, And Settlement Logistics Matter
  • Medtronic’s M&A of Eoflow Timeline Postponed
  • Yuanta/​P-Shares Taiwan Div Plus ETF Rebalance Preview: In-The-Money; Turnover & Trade Remain High
  • Keisei Electric: Activists Arrive As Expected
  • EOFlow/Medtronic: Signs of Life
  • Gina Can’t “Liontown” SQM’s Bid For Azure
  • Key Points to Consider at This Stage Regarding the Year-End Ex-Dividend Play
  • Ecopro Innovation Is Selling Ecopro BM Shares
  • Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank
  • What To Make Of Hollysys’ Latest Offer


Newcrest/Newmont – More Selling on the NCM Means More Buying on NEM, And Settlement Logistics Matter

By Travis Lundy

  • Today saw 65mm shares of Newcrest Mining (NCM AU) print at the close and 85+mm shares crossed in blocks post-close. There was another 15mm shares traded in additional excess volume.
  • That suggests a certain lack of “risk taking” by passive managers, increasing today’s trade in NY. 
  • Furthermore, the settlement logistics appear to indicate an interesting trade to do 7 November (worth checking with your custodian/broker). 

Medtronic’s M&A of Eoflow Timeline Postponed

By Douglas Kim

  • On 25 October, Eoflow announced that the M&A of Eoflow by Medtronic has been postponed. 
  • The closing date for Eoflow’s stock transfer agreement with Medtronic has now been changed to 3 January 2024. 
  • Although we believe Medtronic will continue to pursue Eoflow, the M&A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.

Yuanta/​P-Shares Taiwan Div Plus ETF Rebalance Preview: In-The-Money; Turnover & Trade Remain High

By Brian Freitas

  • Using data from the close on 25 October, there could be 6 adds and 5 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
  • There will also be capping and funding flows that will lead to a one-way turnover of 19.5% and a one-way trade of US$1.39bn.
  • A long adds/ short deletes trade is up double digits over the last three weeks and there are a few trade adjustments based on the new rankings.

Keisei Electric: Activists Arrive As Expected

By Oshadhi Kumarasiri

  • Just as we suspected earlier in the year, there is now talk of an impending investor activism campaign targeting Keisei Electric Railway Co (9009 JP).
  • The activist is Palliser Capital, a multi-strategy fund based in London and run by former employees of Elliott Management, a company well-known for its activist campaigns in Japan.
  • Their proposal is simple and straightforward, requesting for a 35% reduction in Keisei Electric’s Oriental Land holding.

EOFlow/Medtronic: Signs of Life

By David Blennerhassett

  • When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move. 
  • I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
  • The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024. 

Gina Can’t “Liontown” SQM’s Bid For Azure

By David Blennerhassett

  • When lithium mining play Azure Minerals (AZS AU) was halted this week “regarding a potential change of control transaction“, Sociedad Quimica y Minera (SQM/B CI) was the obvious suitor.
  • This was confirmed this morning with a A$3.52/share Offer, a 44.3% premium to undisturbed, by way of a Scheme. A concurrent conditional off-market takeover at A$3.50/share is also present. 
  • $3.50 is locked in, no matter what. Gina may take her stake up to 19.9%, but it won’t affect the A$3.50 floor. But it may kickstart a competitive bidding situation. 

Key Points to Consider at This Stage Regarding the Year-End Ex-Dividend Play

By Sanghyun Park

  • The pivotal question now is the number of these companies that will effectively defer their year-end ex-dividend date to April next year.
  • The most reliable way to accurately confirm this would be to check how many of them will publicly announce the dividend reference date two weeks before the December year-end deadline.
  • This will serve as the most critical indicator in determining whether this year’s year-end flow trading event, the most significant in Korea, will recur.

Ecopro Innovation Is Selling Ecopro BM Shares

By Douglas Kim

  • On 26 October, it was announced that Ecopro Innovation is selling 160k shares of Ecopro BM shares (0.2% of outstanding shares), representing about 32 billion won.
  • Although the percentage of shares is small relative to its outstanding shares, this additional selling is likely to further negatively impact Ecopro BM’s shares in the near term.
  • Ecopro BM’s shares have seen a significant drop in price over the past few months, but its current P/E (87.3x in 2023) and EV/EBITDA (46.9x in 2023) multiples remain unattractive.

Increasing Probability of Kakao Corp Losing Its Controlling Shareholding of Kakao Bank

By Douglas Kim

  • In this insight, we discuss the increasing probability of Kakao Corp (035720 KS) losing its controlling shareholding of KakaoBank (323410 KS).
  • The FSS Chairman Lee Bok-Hyun emphasized that the FSS may punish Kakao Corp for a potential stock manipulation of S.M.Entertainment amid the M&A tender offer process earlier this year.
  • At this point, the higher probability event appears to be a combination of fine and Kakao Corp selling at least 10% of its stake in Kakao Bank to another company.

What To Make Of Hollysys’ Latest Offer

By David Blennerhassett

  • Hollysys (HOLI US), a leading automation control system solutions provider in China, has been subject to at least six indicative Offers since December 2020, ranging from US$15.47/share to $US$25/share. 
  • Yue Xu and Lei Fang, the co-chief operating officers of Hollysys, who previously tabled a NBIO of US$23.00/share in August 2021, have now pitched a US$25/share proposal.
  • What is different this time? >32% of the share registry has banded together to demand changes. That’s dramatically different vs previous Offers.

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Daily Brief Thematic (Sector/Industry): Ohayo Japan | Tech Tumbles; MHI Develops Co2 Liquefaction and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Tech Tumbles; MHI Develops Co2 Liquefaction
  • SK Hynix Call Bad News for WDC
  • China Property Developers In Distress – Weekly News & Announcements Tracker | 20-26 October 2023


Ohayo Japan | Tech Tumbles; MHI Develops Co2 Liquefaction

By Mark Chadwick

  • Overseas: SPX -1.2%, Nasdaq -1.9%; Nasdaq now officially in correction mode; Meta warned of advertising softness
  • Today: NKY Futs -0.1% v cash. JPY150.4; Denso to spend $3b on semicons by 2030; KHI revises down on P&W engine losses
  • JapanX: Mitsubishi Heavy Industries and its subsidiaries are pioneering CO2 liquefaction from gas engine generators, advancing carbon neutrality goals and carbon capture technologies

SK Hynix Call Bad News for WDC

By Jim Handy

  • SK hynix reported increased DRAM and NAND flash revenues in the third quarter, with DRAM’s price increasing about 10%
  • NAND inventory is higher than DRAM’s so NAND production capacity will not be increased
  • This bodes well for DRAM makers and poorly for NAND makers like WDC and Kioxia

China Property Developers In Distress – Weekly News & Announcements Tracker | 20-26 October 2023

By Robert Ciemniak

  • A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
  • We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
  • We do not verify the underlying data or provide any opinion, we only select and summarize the information; See direct links to sources

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