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Smartkarma Daily Briefs

Mar 07
0

Daily Brief Macro: Macro Regime Indicator: MORE liquidity is coming and more

By | Daily Briefs, Macro

In today’s briefing:

  • Macro Regime Indicator: MORE liquidity is coming
  • Silver: Is a Breakout Imminent?
  • 5 Things We Watch – Natural Gas, ECB, Crypto, Liquidity & Positioning
  • EM Stimulus Showdown: From Beijing with Boost to EM?
  • UK Flogging A Dead Horse
  • Lower prices and uncertain demand: navigating choppy waves of wheat markets in 2024
  • Canada Policy Interest Rate 5.0% (consensus 5.0%) in Mar-24

Macro Regime Indicator: MORE liquidity is coming

By Elias Lisberg Glistrup

  • Greetings and welcome to this month’s Macro Regime Indicator.
  • Financial markets have behaved pretty much just as we laid out in last month’s predictions.
  • Sentiment remains strong and the US consumer continues to spend.

Silver: Is a Breakout Imminent?

By Untying The Gordian Knot

  • Gold and Silver have remained unresponsive to lower rates, escalating geopolitical risks and higher China and India seasonal demand.
  • Notably, early February saw the emergence of two contrarian signals that merited closer attention.
  • While these signals are not foolproof market timing tools, they warrant attention when they align with technical support levels within an established consolidation pattern.

5 Things We Watch – Natural Gas, ECB, Crypto, Liquidity & Positioning

By Andreas Steno

  • Hello everyone, and welcome to our ‘5 Things We Watch’, where we as always provide you with 5 things that we find particularly interesting in the world of global macro currently.
  • This week we are watching out for the following 5 topics within global macro: Natural Gas, ECB, Crypto, Liquidity, Positioning.
  • Natural Gas has really not been the place to be for a long time, as hotter weather and prudent storage dynamics has left supply WAY greater than demand.

EM Stimulus Showdown: From Beijing with Boost to EM?

By Andreas Steno

  • Welcome to this week’s edition of our EM-angled editorial, which comes hot on the heels of the PBOC Key Ministry Briefing.
  • So, where better to turn first than China?
  • Findings in brief: More stimulus for the Chinese economy and markets; Spill-overs to manufacturing/China sensitive geographies and currencies; Both EM (particularly Asian) equity and FX appear cheap.

UK Flogging A Dead Horse

By Phil Rush

  • The UK Budget should be the last fiscal statement before the general election. It merely sold more of the same fiscal approach, measures, and political focus to weary voters.
  • A fiscal windfall was spent on a national insurance tax cut in an ongoing effective reconfiguration from income tax. Non-dom reform steals a bad Labour policy.
  • Challenges for the next Labour government are increasingly severe but not scaring markets. Loose fiscal policy is sustaining the need for relatively high interest rates.

Lower prices and uncertain demand: navigating choppy waves of wheat markets in 2024

By Commodities Focus

  • Global wheat prices have been defying expectations and have continued on a downward trend since the start of 2024
  • Russia is expected to have a high wheat production of over 90 million tons in 2024 due to favorable growing conditions
  • Ukrainian wheat exports are expected to improve with better logistics and an estimated production of nearly 20.5 million tons in the 2024-25 season

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Canada Policy Interest Rate 5.0% (consensus 5.0%) in Mar-24

By Heteronomics AI

  • The Bank of Canada’s decision to hold the policy rate at 5% aligns with economic consensus. It was influenced by a global economic slowdown, easing inflationary pressures, and modest domestic growth below potential.
  • Despite CPI inflation moderating to 2.9%, concerns over persistent core inflation and elevated shelter costs underscore the need for continued vigilance. The Bank anticipates inflation to stay close to 3% in the near term before gradually easing, with a full return to the 2% target expected by 2025.
  • The Bank remains open to adjusting the policy rate if inflationary surprises occur. Its current focus is on monitoring wage growth, demand-supply balance, inflation expectations, and corporate pricing behavior. The decision process incorporates domestic conditions and global economic dynamics, ensuring readiness to act to maintain price stability.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Mar 07
0

Daily Brief Australia: Azure Minerals, Redbubble Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Azure Minerals (AZS AU): Scheme Vote on 8 April
  • Dear COVID Darling

Azure Minerals (AZS AU): Scheme Vote on 8 April

By Arun George

  • The Azure Minerals (AZS AU) IE considers Sociedad Quimica y Minera de Chile (SQM US)/Hancock’s scheme and takeover offer fair and reasonable as it is above its A$2.03-2.93 valuation range. 
  • The scheme is conditional on FIRB approval, which should be forthcoming as Azure’s key asset (Andover) will be majority-owned by Australian entities.
  • The scheme vote will get up due to irrevocables and retail support. At the last close and for the 18 April payment, the gross/annualised spread was 3.1%/29.2%.

Dear COVID Darling

By The Mikro Kap

  • Redbubble was a bubble. On the wings of pandemic mania, the stock price increased 13 times from March 2020 to January 2021.
  • Reaching a 1.9B market cap. Today, the situation looks quite different.
  • The stock is down 93% from its highs of 7 AUD and currently sits at 0.

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Mar 07
0

Daily Brief China: New World Development, Hua Hong Semiconductor, Shenzhen New Industries Biomedical Engineering-A, China Power International, Auntea Jenny (Shanghai) Industrial, UMP Healthcare, Nameson Holdings, Greentown China and more

By | China, Daily Briefs

In today’s briefing:

  • StubWorld: Troubling Signs For NWD (17 HK)
  • Hua Hong Semiconductor: AI, EV and New Energy Opportunities at a Leading Chinese Foundry
  • CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
  • China Power International (2380 HK): We See More Upside
  • Pre-IPO Auntea Jenny (Shanghai) Industrial – An IPO Is a Must, but Success Is Not Guaranteed
  • UMP Medical (722 HK): Slow H124, Deep Value, Execution Remains Key
  • Some Updates #2
  • Morning Views Asia: Adani Green Energy, Greentown China

StubWorld: Troubling Signs For NWD (17 HK)

By David Blennerhassett

  • Despite the lifting of the “spicy” property cooling measures last week, New World Development (17 HK) has plumbed fresh P/B lows after a (very) brief respite. 
  • Preceding my comments on NWD 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%.

Hua Hong Semiconductor: AI, EV and New Energy Opportunities at a Leading Chinese Foundry

By Smartkarma Research

For our next Corporate Webinar, we are glad to welcome Hua Hong Seminconductor’s Chief Financial Officer, Daniel Yu-Cheng Wang. 

In the upcoming webinar, Daniel will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Eric Wen. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 12 March 2024, 16:00 SGT.

About Hua Hong Semiconductor

Hua Hong Semiconductor Limited, an investment holding company, manufactures and sells semiconductor products. The company provides embedded non-volatile memory, standard logic and mixed-signal, radio frequency, power management integrated circuits, power discrete, and automotive solutions. It also offers foundry services; and design services comprising standard and customized IP development, full-custom layout design, and customer-specific integrated solutions, as well as design support and tape out services. In addition, the company provides multi-project wafer services; mask making services; and backend services, such as in-house testing, backside processing and dicing, and backend turnkey services, as well as assembly and testing services. 

Further, it engages in real estate development. Its products are used in consumer electronics, communications, computing, industrial, and automotive markets in the People’s Republic of China, North America, Europe, Japan, and other Asian countries. The company was founded in 1997 and is headquartered in Shanghai, the People’s Republic of China. Hua Hong Semiconductor Limited is a subsidiary of Shanghai Alliance Investment Ltd.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

By Brian Freitas

  • With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
  • The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

China Power International (2380 HK): We See More Upside

By Osbert Tang, CFA

  • China Power International (2380 HK)‘s Jan power sales showed a sharp 41.2% YoY growth. More importantly, this marks sustaining a solid MoM trend in the last few months. 
  • Recovery of the hydropower generation is encouraging as this was a drag last year. Meanwhile, higher coal-fired generation will capture the better profitability of this segment.
  • CPI’s strongest earnings CAGR in the sector has made its earnings multiples increasingly cheap over the next two years. After +15.7% YTD in its share price, there is further upside.

Pre-IPO Auntea Jenny (Shanghai) Industrial – An IPO Is a Must, but Success Is Not Guaranteed

By Xinyao (Criss) Wang

  • Auntea Jenny is positioned in the same league as Guming. Both have similar business model/strategy. However, in terms of the number of stores/revenue scale/profitability, Auntea Jenny lags behind its peers.
  • China’s freshly-made beverage industry has developed to the stage of capitalization. Auntea Jenny has to obtain more funds to strengthen barriers, improve supply chain, accelerate expansion.The real competition just begins.
  • Pre-IPO valuation of Auntea Jenny was already RMB5.1 billion, but the market seems not optimistic about the franchising model. Valuation of Auntea Jenny should be lower than that of Guming/MIXUE.  

UMP Medical (722 HK): Slow H124, Deep Value, Execution Remains Key

By Sameer Taneja

  • UMP Healthcare (722 HK) delivered a slow start to FY24, with revenues up 2.3% YoY and profits down 63% YoY, due to sluggish demand in Hong Kong. 
  • The company cut dividend for H1 FY24 by 25% to 1.3 HKD cents/share. Net cash on the balance sheet remained healthy at 265 mn HKD representing 64% of market capitalization.
  • The company is implementing stringent cost control and we believe that a slow turnaround and a 9-10% dividend yield is very probable at these levels. 

Some Updates #2

By Turtles all the way down

  • First a new holding, Nameson Holdings (HKG:1982). A vertically integrated knitwear and fabrics manufacturer with most of its production base in Vietnam and some of it still in China.
  • They expanded to Myanmar, which did not work out so well, so they had to take significant write-downs and restructuring costs recently of 243 million HK$.
  • This somewhat obscures their true earnings power.

Morning Views Asia: Adani Green Energy, Greentown China

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Mar 07
0

Daily Brief South Korea: Kumho Petro Chemical, Shinhan Financial, Angel Robotics and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Interpreting Kumho Petro Chemical’s Unexpected Move to Cancel Treasury Shares
  • Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well
  • Kumho Petrochemical – A Significant Shares Cancellation Announcement
  • Block Deal Sale of About 400 Billion Won of Shinhan Financial by EQT Partners
  • Angel Robotics: IPO Preview

Interpreting Kumho Petro Chemical’s Unexpected Move to Cancel Treasury Shares

By Sanghyun Park

  • Kumho Petro Chemical (011780 KS) intends to retire 50% of its common shares, totaling 2,624,417 shares, starting from the 2024 fiscal year until the 2026 fiscal year.
  • With the annual general meeting nearing, NPS hasn’t revealed its support, causing unease for Park Chan-gu. Considering NPS’s obligation to the Value-Up policy, cancellation seems inevitable for Park Chan-gu.
  • Whether the battle persists hinges on NPS’s stance. If NPS backs Park Chan-gu, their stake surpassing 25% could deter the opposition’s financial strength. Conversely, NPS’s neutrality could escalate the battle.

Shinhan Financial Group Placement – Recent Selldowns Have Held up Since, Momentum Is Strong as Well

By Clarence Chu

  • EQT (EQT SS) , via Supreme, is looking to raise US$311m from selling its stake in Shinhan Financial (055550 KS).
  • Momentum on the stock has been strong over the past few months, and the recent selldowns in the stock have held up by the end of the week.
  • The share sale here will be a cleanup one, and a small one to digest at just 5.3 days of ADV. 

Kumho Petrochemical – A Significant Shares Cancellation Announcement

By Douglas Kim

  • After the market close on 6 May, Kumho Petrochem announced a significant shares cancellation program which is likely to have a positive impact on its share price. 
  • The company announced that it will cancel 430 billion won worth of its common shares in the next three years, representing nearly 10.5% of its market cap.
  • Park Chul Wan, nephew of Kumho Petrochem Chairman Park Chan Koo, has been very vocal about the need for Kumho Petrochem to improve its corporate governance in past several years.

Block Deal Sale of About 400 Billion Won of Shinhan Financial by EQT Partners

By Douglas Kim

  • EQT Partners announced that it is selling all of its remaining shares in Shinhan Financial for about 400 billion won in a block deal sale.
  • The block deal sale price range is expected to be 43,776 won to 44,688 won, representing 2% to 4% discount to the closing price on 6 March (45,600 won).
  • We would take the deal. The block deal discount is reasonable and Shinhan Financial continues to have attractive valuations and dividend yield despite recent share price appreciation. 

Angel Robotics: IPO Preview

By Douglas Kim

  • Angel Robotics is getting ready to complete its IPO in KOSDAQ in March. The IPO price range is from 11,000 won to 15,000 won. 
  • The IPO offering amount is from 17.6 billion won to 24 billion won. At the IPO price range, the company’s valuation ranges from 154 billion won to 210 billion won. 
  • Angel Robotics is likely to be compared to Doosan Robotics and Rainbow Robotics. 

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Mar 07
0

Daily Brief India: Bajaj Finance Ltd, Greentown China and more

By | Daily Briefs, India

In today’s briefing:

  • Trouble in Paradise | India Credit Landscape & Wrath of the Regulator
  • Morning Views Asia: Adani Green Energy, Greentown China

Trouble in Paradise | India Credit Landscape & Wrath of the Regulator

By Pranav Bhavsar

  • India’s Credit Landscape has changed and is facing structural and regulatory challenges.
  • The Indian regulator (RBI), particularly in its oversight of underwriting practices and the behavior of Non-Banking Financial Companies (NBFCs), is commendably proactive, positioning it ahead of the curve.
  • We expect more such steps in other parts of the credit funnel. The recent crack down along with the stock underperformance is here to stay and possibility intensify. 

Morning Views Asia: Adani Green Energy, Greentown China

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Mar 07
0

Daily Brief United States: ARM Holdings, Silver, Forward Air, Hewlett Packard Enterprise , International Public Partnerships, Vera Bradley, Wheat, CNX Resources , Eastern Bankshares and more

By | Daily Briefs, United States

In today’s briefing:

  • ARM Holdings (ARM US): Lock up Expiry on 12 March
  • Silver: Is a Breakout Imminent?
  • Forward Air (FWRD US | BUY | TP:USD59.5): A Toad, but There Is a Prince Inside
  • Hewlett Packard Enterprise (HPE) – Wednesday, Dec 6, 2023
  • International Public Partnerships – Capital markets day
  • VRA: 4Q Preview: Setting Up the Vision; Reiterate Buy Rating, $10 PT
  • Lower prices and uncertain demand: navigating choppy waves of wheat markets in 2024
  • CNX Resources: Hit the Gas – [Business Breakdowns, EP.152]
  • Eastern Bankshares Inc (EBC) – Wednesday, Dec 6, 2023

ARM Holdings (ARM US): Lock up Expiry on 12 March

By Arun George

  • Softbank Group (9984 JP)’s 180-day lock-up period on its 89.75% ARM Holdings (ARM US) shareholding expires on 12 March. SoftBank’s stake is worth US$124 billion.
  • SoftBank will likely monetise its ARM stake using the Alibaba (ADR) (BABA US) playbook. This playbook uses prepaid forward contracts to raise capital with eventual settlement through shares. 
  • ARM is currently trading 2.6x its IPO price on AI-driven hype. ARM trades at a premium multiple to NVIDIA Corp (NVDA US), despite forecasted lower growth and margin.  

Silver: Is a Breakout Imminent?

By Untying The Gordian Knot

  • Gold and Silver have remained unresponsive to lower rates, escalating geopolitical risks and higher China and India seasonal demand.
  • Notably, early February saw the emergence of two contrarian signals that merited closer attention.
  • While these signals are not foolproof market timing tools, they warrant attention when they align with technical support levels within an established consolidation pattern.

Forward Air (FWRD US | BUY | TP:USD59.5): A Toad, but There Is a Prince Inside

By Mohshin Aziz

  • A highly unpopular acquisition driving investors and sell-side analysts up the wall. Forward Air is OVERSOLD on almost all technical indicators and valuations are the lowest in its history  
  • Our analysis suggests it is not all that bad, the business will still be profitable and generate positive free cash flow 
  • Our fair value of USD59.50 (+97% UPSIDE) is derived by 2x current Book Value. A potential double-bagger, will be rewarding for the patient investors     

Hewlett Packard Enterprise (HPE) – Wednesday, Dec 6, 2023

By Value Investors Club

Key points

  • HPE is a $21.5 billion provider of networking, servers, and storage products, with a focus on higher quality businesses and services
  • The company generates cash from operations and divestitures, presenting an attractive investment opportunity with potential for upside to $29/share or a 35% IRR through 10/2025
  • HPE’s recent Security Analysts Meeting emphasized its business segments, particularly highlighting opportunities in the Compute segment for AI inferencing needs and Proliant Gen 11 servers

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

International Public Partnerships – Capital markets day

By Edison Investment Research

INPP recently held a strategy day. This provided a detailed overview of its business and the outlook for a continuation of the strong, predictable, inflation-linked returns that have been generated since the company listed in 2006. INPP’s operational and financial performance is at odds with its discount to NAV and the company has a clear strategy to address this. No new financial details were provided ahead of INPP’s 2023 results, due to be published on 28 March.

VRA: 4Q Preview: Setting Up the Vision; Reiterate Buy Rating, $10 PT

By Small Cap Consumer Research

  • We are reiterating our Buy rating, $10 price target and projections for Vera Bradley with the company reporting 4QFY24 (January) results before the open next Wednesday.
  • We look to the 4Q call for management to provide even more detail on the material changes to the company, as CEO Jackie Ardrey and her team begin to take full control of the shopping and product experience.
  • We believe Vera Bradley has become increasingly more relevant and appealing to a wider customer base, and the company is positioned, with a cash rich and materially leaner balance sheet, to fund potential higher-margin growth drivers going forward.

Lower prices and uncertain demand: navigating choppy waves of wheat markets in 2024

By Commodities Focus

  • Global wheat prices have been defying expectations and have continued on a downward trend since the start of 2024
  • Russia is expected to have a high wheat production of over 90 million tons in 2024 due to favorable growing conditions
  • Ukrainian wheat exports are expected to improve with better logistics and an estimated production of nearly 20.5 million tons in the 2024-25 season

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

CNX Resources: Hit the Gas – [Business Breakdowns, EP.152]

By Business Breakdowns

  • CNX is an ENP exploration and production business focusing on natural gas with a long history in the energy sector
  • CNX evolved from a coal company to a natural gas producer under new management led by CEO Nick
  • The current business model focuses on monetizing assets, separating coal business, and leveraging the productive Marcellus shale for low-cost advantage.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Eastern Bankshares Inc (EBC) – Wednesday, Dec 6, 2023

By Value Investors Club

  • Merger with Cambridge Bancorp seen as strategic move to bolster asset management business
  • Market initially reacted negatively to merger announcement
  • Both EBC and CATC stocks have started to bounce back, reflecting overall recovery of bank stocks; Eastern Bankshares remains significant player in industry with strong asset base

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Mar 07
0

Daily Brief Japan: Fast Retailing, Sakura internet, Japan Airlines, Daiichi Kigenso Kagaku Kogyo and more

By | Daily Briefs, Japan

In today’s briefing:

  • Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
  • Sakura Internet (3778) | Blossoming in the Cloud?
  • Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL
  • Daiichi Kigenso Kagaku-Kogyo (4082) – Awaiting Solid Execution

Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN

By Travis Lundy

  • Now that the March 2024 Nikkei 225 Rebalance is decided, we have a model for the Sep 2024 Review. As previously discussed on Smartkarma, actual name changes get tough now. 
  • As of now, there should be two ADDs and two DELETEs. They might not occur. But there are two other situations which create interesting dynamics around big names. 
  • The dynamics of Fast Retailing and Tokyo Electron promise more fun than the actual name changes in September 2024. It impacts how you trade Nikkei vs TOPIX and tech internals.

Sakura Internet (3778) | Blossoming in the Cloud?

By Mark Chadwick

  • Sakura Internet, a Japanese cloud provider, has seen a significant surge in stock price and market capitalization due to entry into AI cloud services.
  • The company plans to invest in NVIDIA H100 GPUs for AI servers, expecting substantial demand but with uncertain revenue and profitability projections.
  • Risks include concentrated ownership, lack of analyst coverage, potential shareholder pressure, and competition from larger cloud providers like AWS with advanced AI computing capabilities.

Japanese Airlines – ANA’s Margin Outperformance Poses Big Questions for JAL

By Neil Glynn

  • We refresh estimates for ANA and JAL, and highlight we think the strength of FY24 makes it difficult for ANA to avoid an earnings decline in FY25.
  • However, ANA’s superior recovery to JAL poses bigger questions for JAL as it revisits its medium term plan on 21 March
  • Our deep dive on margin management at each carrier suggests a revenue problem rather than a cost problem at JAL; but without revenue improvements, it will have to cut costs

Daiichi Kigenso Kagaku-Kogyo (4082) – Awaiting Solid Execution

By Astris Advisory Japan

  • Q1-3 FY3/24 results were in line with company guidance, reflecting the strategic importance for DKK to scale its new growth initiatives.
  • Ongoing positive developments related to semiconductor, secondary battery, and biomaterial applications were offset by weakness in electronics and the mature profile of the core automotive catalyst business.
  • Operating a business model that is externally driven (such as FX movements and raw materials market pricing), the company has disclosed ROIC targets that coincide with its current 10-year plan for FY3/32. 

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Mar 06
0

Most Read: Socionext, ZOZO Inc, EcoPro Materials, Kakaopay , Titan Co Ltd, Vinda International, CELSYS, Alumina Ltd, Abacus Storage King, Celltrion Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks
  • Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
  • May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
  • Block Deal Sale of 2.2% of Kakao Pay by Alipay
  • NIFTY100 Low Volatility 30 Index Rebalance Preview: Titan Could Replace IOCL
  • Vinda (3331 HK): That’s A Wrap As Pre-Cons Done
  • TOPIX Inclusions: Who Is Ready (Mar 2024)
  • Alumina (AWC AU): Further Thoughts on Alcoa’s Proposal
  • MVIS Australia A-REITs Index Rebalance Preview: One Deletion & Capping Changes
  • Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

Mar24 Nikkei 225 Rebal – Socionext, Disco, Zozo IN; US$4bn One-Way; More Impactful Than It Looks

By Travis Lundy

  • The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected. 
  • Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise. 
  • Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

By Brian Freitas

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

By Sanghyun Park

  • May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
  • Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
  • We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.

Block Deal Sale of 2.2% of Kakao Pay by Alipay

By Douglas Kim

  • After the market close on 5 March, it was reported that Alipay will sell a 2.2% stake (2.95 million shares) in Kakaopay (377300 KS) in a block deal sale.
  • A key component of this block deal sale is that there will be a lock up period of 90 days post the sale date.
  • We would avoid this block deal sale. There is a high probability of Kakao Pay’s share price falling below the block deal price of 38,380 won after 90 days. 

NIFTY100 Low Volatility 30 Index Rebalance Preview: Titan Could Replace IOCL

By Brian Freitas

  • With the review period complete, Titan Co Ltd (TTAN IN) should replace Indian Oil Corp (IOCL IN) in the Nifty100 Low Volatility 30 Index at the close on 27 March.
  • Constituent changes, volatility changes and capping changes will result in one-way turnover of 13.2% resulting in a one-way trade of INR 4.2bn.
  • The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

Vinda (3331 HK): That’s A Wrap As Pre-Cons Done

By David Blennerhassett

  • On the 15 December 2023, the Tanoto family emerged with a HK$23.50 pre-conditional Offer for Vinda (3331 HK). PRC regulatory approval to one side, this Offer was a done deal.
  • Those regulatory approvals have now been satisfied. The Composite Doc will be dispatched on or before the 11th March, at which time the Offer will be open for acceptances. 
  • With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto’s 7.69% direct stake), this should turn unconditional on or before the 20th March

TOPIX Inclusions: Who Is Ready (Mar 2024)

By Janaghan Jeyakumar, CFA

  • Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
  • There were no Section Transfers announced in January or February so currently there are no live TOPIX Inclusion events but there are some pre-event names to be monitored closely.
  • The upcoming TOPIX flows in end-April 2024 will be more complicated than the other quarterly rebalances as there will be more flows due to the annual liquidity factor review.

Alumina (AWC AU): Further Thoughts on Alcoa’s Proposal

By Arun George

  • I have received several questions from readers on Alcoa (AA US)’s non-binding proposal for Alumina Ltd (AWC AU) in the context of the current gross spread of 9.2%. 
  • The questions primarily concerned Citic Resources Holdings (1205 HK) voting intentions, the probability of a bump and the likelihood of Aloca shareholders supporting the transaction. 
  • CITIC Resources’ lack of public endorsement of the transaction is due to HKEx listing requirements and not an indication of a NO vote risk.  

MVIS Australia A-REITs Index Rebalance Preview: One Deletion & Capping Changes

By Brian Freitas

Locals Driving Corporate Reforms and 10 Korean Companies Recently Announcing Share Cancellations

By Douglas Kim

  • In a recent discussion with a client, one of the questions that was raised was regarding the impact the local investors are having on the corporate governance reforms in Korea.
  • The number of local investors in the Korean stock market has jumped in the past few years from 5.3 million in 2017 to 14.4 million in 2022.
  • All in all, I think Korea is about 3-5 years behind Japan in various corporate governance reforms. So it has a lot of catching up to do.

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Mar 06
0

Daily Brief Industrials: Tuhu Car , Gold and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Tuhu Car Lock-Up Expiry – Would Need Some Selling to Improve Liquidity when US$1.5bn Comes Unlocked
  • Gold Breaking Out Above 3.5-Year Resistance as the U.S. Dollar (DXY) And Treasury Yields Roll Over

Tuhu Car Lock-Up Expiry – Would Need Some Selling to Improve Liquidity when US$1.5bn Comes Unlocked

By Clarence Chu

  • Tuhu Car (9690 HK) was listed in Hong Kong on 26th Sept 2023 after raising US$151m. The IPO had been a 100% primary offering.
  • Tuhu is an integrated online and offline platform for automotive services in China.
  • Trading with a very small float of 1.8%, in its upcoming six-month lockup expiry, >90% of Tuhu’s pre-IPO investors, cornerstones and management combined stakes will come off six-month lockup expiry.

Gold Breaking Out Above 3.5-Year Resistance as the U.S. Dollar (DXY) And Treasury Yields Roll Over

By Joe Jasper

  • The number of risk-on signals continues to grow, while risk-off signals remain virtually non-existent. We will be sure to point it out when this dynamic starts to change
  • In the meantime, we want to continue riding this bull market higher, and our bullish outlook on the S&P 500, Russell 2000, and Nasdaq 100 (since early-November 2023) remains intact.
  • Gold is breaking out of a 3.5-year base to all-time closing highs — buy. Silver is breaking out above a 3-month base at $23.50. Fueled by toppy DXY and rates

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Mar 06
0

Daily Brief Utilities: Talen Energy and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • TLNE: Nuclear Shareholder Value

TLNE: Nuclear Shareholder Value

By Hamed Khorsand

  • TLNE announced the sale of Cumulus Data for a valuation higher than we were expecting and includes a long-term power purchasing agreement
  • TLNE’s management has also mentioned an ongoing sales process for TLNE’s assets in Texas, which could generate additional value.
  • TLNE sold Cumulus Data for $650 million to Amazon Web Services (“AWS”). TLNE sold the assets the Company had situated adjacent to Susquehanna nuclear power plant

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