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Smartkarma Daily Briefs

Daily Brief Thematic (Sector/Industry): Ohayo Japan: Oil Bubbles Higher but Stocks Quiet Ahead of Fed Meeting and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan: Oil Bubbles Higher but Stocks Quiet Ahead of Fed Meeting
  • China Housing – Weekly Data Does Not (Yet) Show Impact Of Policy Easing
  • China TMT Update-U/ATAT/LI-Unity to Adjust Fees/Pre-Booking Travel on National Day/New Wenjie M7
  • Inaugural Industry Report Tracks Stocks, Fundamentals, and Economic Drivers
  • The Highlights – Cannabis News for the Week Ending September 15, 2023
  • Weekly Sustainable Investing Surveyor Week Ended September 15, 2023


Ohayo Japan: Oil Bubbles Higher but Stocks Quiet Ahead of Fed Meeting

By Mark Chadwick

  • OVERSEAS: US stocks marginally higher; oil rises to almost $95/bbl; market expects Fed to remain on hold this week, while economists expect a hike
  • JAPAN: Topix earnings expected to rise by 4-7% this year; shortage of qualified independent directors (especially women) becoming an issue; potential job cuts at 7&I
  • JAPAN X: Global offshore wind projects facing cost pressures but Japan’s latest bids are done. Results by year end; trading companies and heavies likely biggest beneficiaries

China Housing – Weekly Data Does Not (Yet) Show Impact Of Policy Easing

By Robert Ciemniak

  • The weekly data for new home sales for 18 cities with consistent data to the week ending September 10 does not show pickup signs, despite some media buzz after easing
  • But we expect the impact to start showing in the next weeks
  • In the meantime, using weekly metrics as predictors of the direction of the national monthly figures, suggests no real improvement YTD y/y so far for Sep

China TMT Update-U/ATAT/LI-Unity to Adjust Fees/Pre-Booking Travel on National Day/New Wenjie M7

By Shawn Yang

  • U:Unity to Adjust Previously Established Runtime Fees Due to Developer Pressure (/)
  • ATAT: Pre-booking travel volume on National Day continue to ramp up(+)
  • LI: New Wenjie M7 order volume exceeded expectations, continuing to threaten LI (-)

Inaugural Industry Report Tracks Stocks, Fundamentals, and Economic Drivers

By Water Tower Research

  • Herein we inaugurate the WTR Furniture/Furnishings Weekly. Under “Statistics”, we recap stock price performance for select issues in three sectors: Commercial/Contract Furniture, Residential Manufacturers & Suppliers, and Home Goods Retailers.

  • Inside, we present data on company operating performance and valuation. Pertinent economic data/charts to furniture/furnishings issues follow.

  • This front-page column, and additional text, if needed, will be devoted to news tidbits.


The Highlights – Cannabis News for the Week Ending September 15, 2023

By Water Tower Research

  • Global equities were fairly flat this week, with the MSCI World Index +0.40% and the S&P -0.48%.

  • The NASDAQ was down 0.39%, while the small-cap Russell 2000 dropped 0.17%.

  • Rising oil prices boosted value stocks, while Apple’s uninspiring new product introductions weighed on the tech sector.


Weekly Sustainable Investing Surveyor Week Ended September 15, 2023

By Water Tower Research

  • The WTR Sustainable Index outperformed the broader market, rising 0.8% W/W versus the S&P 500 Index (down 0.2%), the Russell 2000 Index (down 0.2%), and the Nasdaq Index (down 0.5%).
  • Energy Technology (15.0% of the index) contributed to the index’s outperformance, rising 1.2%, while Industrial Climate and Ag Technology (45.3% of the index) was down 2%, ClimateTech Mining was up 2.6%, and Advanced Transportation Solutions was up 3.7%.
  • Top 10 Performers: MULN, CMC, FFIE, NKLA, CRGE, WUC, NNOMF, XOS, AZRE, CPTN

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Daily Brief Credit: Morning Views Asia: JSW Infrastructure and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: JSW Infrastructure, Medco Energi


Morning Views Asia: JSW Infrastructure, Medco Energi

By Charles Macgregor

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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Daily Brief ECM: Tuhu Car IPO: Forecasts and Valuation and more

By | Daily Briefs, ECM

In today’s briefing:

  • Tuhu Car IPO: Forecasts and Valuation
  • Integral Corporation IPO: Trading Debut
  • 4Paradigm IPO – PHIP Updates, Peer Comparison & Thoughts on Valuation
  • Seoul Guarantee Insurance IPO: The Bull Case
  • Sai Silks Kalamandir IPO – Not Particularly Exciting but Is Relatively Cheap
  • Seoul Guarantee Insurance Pre-IPO – The Positives – Broad Coverage Across Guarantee Insurance
  • Seibu Giken IPO – Quick Note – Not Particularly Enticing
  • Integral Corporation IPO Trading – Low Demand but Somewhat Cornered


Tuhu Car IPO: Forecasts and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Chinese automotive maintenance services platform Tuhu Car has announced the terms for its HKEx IPO. Tuhu plans to raise net proceeds of HK$1.0-1.1bn (US$132-161m) through the issuance of 40.62m shares.
  • Tuhu Car (2007986D HK) ‘s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
  • In this insight, we discuss our forecasts and valuation for the company, and our analysis suggests that Tuhu Car’s IPO is priced reasonably.

Integral Corporation IPO: Trading Debut

By Arun George


4Paradigm IPO – PHIP Updates, Peer Comparison & Thoughts on Valuation

By Ethan Aw

  • 4Paradigm (1764934D HK) is looking to raise up to US$144m in its Hong Kong IPO, after downsizing from an earlier reported float of US$600m.
  • 4P is a platform-centric AI enterprise solutions provider. It was the largest player by revenue in the platform-centric decision-making AI market in China in 2022, as per CIC.
  • In our previous notes, we covered the company’s performance and refiling updates. In this note, we will cover the firm’s PHIP updates, peer comparison and share our thoughts on valuation.

Seoul Guarantee Insurance IPO: The Bull Case

By Arun George

  • Seoul Guarantee Insurance (031210 KS), a leading guarantee provider in Korea, is pre-marketing an IPO to raise up to KRW362 billion (US$272 million).
  • The IPO price range is KRW39,500-51,800 per share. The bookbuilding will run from 13 to 19 October, with pricing on 25 October. The shares will be listed in November.
  • The bull case rests on a leading market share, solid premium growth, the highest industry margins, a high solvency ratio and a high dividend payout. 

Sai Silks Kalamandir IPO – Not Particularly Exciting but Is Relatively Cheap

By Sumeet Singh

  • Sai Silk Kalamandir (SSKL IN) is looking to raise about US$145m in its India IPO.
  • Sai Silk Kalamandir (SSK) is one of the largest retailers of ethnic apparel in South India, particularly in sarees, according to Technopak.
  • In this note, we look at the company’s past performance and provide our thoughts on valuations.

Seoul Guarantee Insurance Pre-IPO – The Positives – Broad Coverage Across Guarantee Insurance

By Clarence Chu

  • Seoul Guarantee Insurance (031210 KS) is looking to raise around US$270m in its Korean IPO.
  • Seoul Guarantee Insurance (SGI) is a guarantee insurance firm operating predominantly in Korea.
  • In this note, we will talk about the positive aspects of the deal.

Seibu Giken IPO – Quick Note – Not Particularly Enticing

By Sumeet Singh

  • Seibu Giken (6223 JP) (SG) is looking to raise around US$93m in its Japan IPO via selling a mix of primary and secondary shares.
  • SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
  • In our previous note, we looked at the company’s past performance. In this note, we talk about valuations.

Integral Corporation IPO Trading – Low Demand but Somewhat Cornered

By Sumeet Singh

  • Integral Corporation (5842 JP) raised around US$123m in its Japan IPO.
  • Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
  • In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.

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Daily Brief Equity Bottom-Up: Taiwan Dual Listings Monitor: TSMC Spread In Clear Downtrend; UMC & ASE Corporate Days Could Support and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Dual Listings Monitor: TSMC Spread In Clear Downtrend; UMC & ASE Corporate Days Could Support
  • Yodogawa Steel (5451) | Steeling for a Capital Allocation Battle
  • Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders
  • Longfor 960 HK: Continue to Be the Best Among POEs, yet Valuation Premium Might Narrow over Time
  • Booking Holdings Inc.: The Margin Expansion Story Continues! What’s Their Secret Sauce? – Major Drivers
  • Challenger (CGF AU) – Bank Sale 1H24 | ROC Highest in 23 Yrs | 85% Market Share Annuity FUM
  • Global Banks Led Stocks on the Week with Arm IPO & Growth Outlook
  • Dropbox Inc.: The Skyrocketing Potential of AI and New High-Value Products! – Major Drivers
  • Bank Negara Indonesia (BBNI IJ) – Increasingly Quality Focused Through a Digital Lens
  • Esker – Working to balance investment and profitability


Taiwan Dual Listings Monitor: TSMC Spread In Clear Downtrend; UMC & ASE Corporate Days Could Support

By Vincent Fernando, CFA

  • TSMC’s ADR premium/discount appears to have shown a clear decline in trading range recently, down from the 10% level.
  • UMC & ASE joined corporate days today in Taipei, which could be supportive of their premiums in the near-term.
  • We provide spread levels we view as compelling from a risk/reward perspective.

Yodogawa Steel (5451) | Steeling for a Capital Allocation Battle

By Mark Chadwick

  • Activist investor, Strategic Capital, has taken a significant 5% stake in the underperforming steel company
  • Yodogawa stacks up in line with the sector on operating metrics but its under leveraged balance sheet has crimped Returns on Equity and valuations
  • We expect that the activist will seek to improve the company’s ROE through an improvement in capital allocation. That is bullish

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

By Oshadhi Kumarasiri

  • Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
  • Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
  • Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.

Longfor 960 HK: Continue to Be the Best Among POEs, yet Valuation Premium Might Narrow over Time

By Jacob Cheng

  • In this insight, we conducted fundamental analysis on Longfor, which has always been perceived as the best Chinese developer among all private players
  • However, since Chairlady resigns due to personal reasons, and given the policy clamp down, we think Longfor may not be able to sustain its competitive advantages over time
  • Longfor was trading at a premium to CRL and COLI, we believe the valuation premium should narrow over time.  On a relative basis we are not positive on Longfor

Booking Holdings Inc.: The Margin Expansion Story Continues! What’s Their Secret Sauce? – Major Drivers

By Baptista Research

  • Booking Holdings Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
  • The 268 million hotel nights booked in the second quarter increased by 9% year over year, and the $39.7 billion in gross bookings, the largest quarterly total ever, surged by 15% year over year.
  • The positive demand environment caused hotel nights and revenue bookings to surpass the company’s previous projections.

Challenger (CGF AU) – Bank Sale 1H24 | ROC Highest in 23 Yrs | 85% Market Share Annuity FUM

By Daniel Tabbush

  • During 1H24 CGF expects to sell its bank for ~AUD36m which could include a AUD11m gain and allow to free-up bank capital of around AUD40-50m.
  • Return on capital is now at the highest it has been since FY10 at 6.2% with a substantial 160bps increase in normalized ROE in 2H23 YoY to 13.1%
  • 85% market share of annuity FUM from 50% about 10 years ago, operating in system with strong forced savings in superannution funds now at AUD3.5tr up 91% over 10 yrs.

Global Banks Led Stocks on the Week with Arm IPO & Growth Outlook

By Geoff Howie

  • Last week, the trio of DBS, UOB and OCBC averaged 3.4% gains, bringing their average 3Q23-to-date total return to 8.7%.
  • The 3Q23-to-date has seen the trio of DBS, UOB & OCBC report combined 2Q23 Net Interest Income (NII) of S$8.26 billion, marking the third-consecutive quarter that combined quarterly NII has been above the S$8.0 billion mark.
  • DBS Group Holdings (DBS), United Overseas Bank (UOB) and Oversea-Chinese Banking Corporation (OCBC) also moved in tandem averaging a 4% gain on the week.

Dropbox Inc.: The Skyrocketing Potential of AI and New High-Value Products! – Major Drivers

By Baptista Research

  • Dropbox, Inc. delivered a positive result and managed an all-around beat in the last quarter, driven by FormSwift’s revenue growth and some improvement in the company’s SKUs, as the development it observed in late Q1 carried over into Q2.
  • In the quarter, the company launched Dropbox AI.
  • Furthermore, Dropbox introduced a new activation homepage to simplify admins setting up their teams and becoming familiar with the product.

Bank Negara Indonesia (BBNI IJ) – Increasingly Quality Focused Through a Digital Lens

By Angus Mackintosh

  • Bank Negara Indonesia (BBNI IJ)continues to focus on growing the quality end of its corporate loan book, and de-risking its smaller sized commercial loans, whilst growing consumer exposure.
  • The bank’s digital initiatives remain core, with strong growth in mobile transactions by value as well as the number of users, whilst BNI Direct is driving digitisation of business customers.
  • Hibank has launched, growing FMCG related loans fast, with the help of Mayora Indah. BNI valuations remain attractive, with the bank trading on 1.2x FY2023E PBV with 15% ROE.

Esker – Working to balance investment and profitability

By Edison Investment Research

In H123 Esker reported strong growth in revenue (+16% y-o-y in constant currency (cc)) and bookings (+18% y-o-y cc) but this was outweighed by increases in costs, resulting in an operating margin decline. The company is taking measures to counter this, both in its contract pricing and by slowing the pace of hiring. While FY23 revenue outlook is unchanged, management reduced the mid-point of operating margin guidance by 1% to 12%. We have conservatively reduced our operating profit forecasts, which for FY23 were at the upper end of the new guidance range.


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Daily Brief Event-Driven: Poly Culture (3636 HK): H Share Class Meeting on 3 November and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Poly Culture (3636 HK): H Share Class Meeting on 3 November
  • Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
  • Lansen Pharma (503 HK): The Chairman Makes An Offer
  • Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
  • HSCI Index Rebalance Preview: Low Probability Add in December
  • Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December
  • Lotte Non-Life Insurance: Who Will Buy?
  • Quiddity Leaderboard BSE/​​​​SENSEX Dec 23: AllCap Sep 23 Rebal Done; Some Changes to Expectations
  • EQD | Nikkei 225 (NKY) Enters WEEKLY OVERBOUGHT Resistance Area


Poly Culture (3636 HK): H Share Class Meeting on 3 November

By Arun George

  • The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
  • The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
  • The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.

Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved

By David Blennerhassett

  • Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
  • This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
  • The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved. 

Lansen Pharma (503 HK): The Chairman Makes An Offer

By David Blennerhassett

  • Specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK) has been a perennial takeover target. And now we have an Offer.
  • Wu Zhen Tao, NED and Chairman of Lansen, has made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.   
  • This looks done. Get involved if small-cap illiquid arbs are your thing. 

Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements

By Sanghyun Park

  • As of last Friday, SKT has utilized 86.2 billion won out of the allotted 300 billion won for share buybacks, resulting in the acquisition of 1,810,242 shares.
  • If there are indications of the foreign room potentially falling to a risky level, SKT will likely proceed with an aggressive buyback, targeting 20-30% of the daily trading volume.
  • Another particularly intriguing observation is the absence of local retail flow directed towards SKT. This indicates there is still potential momentum for an upward price movement at this juncture.

HSCI Index Rebalance Preview: Low Probability Add in December

By Brian Freitas

  • There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
  • Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma

By Arun George

  • Costa Group Holdings (CGC AU)  has disclosed a revised non-binding indicative proposal from Paine Schwartz Partners at A$3.20 per share, 9.6% lower than the previous offer on a like-for-like basis. 
  • The weak CY23 outlook impacted the debt that could be taken on to meet the IRR hurdles of the previous offer. The revised offer is the best and final offer.
  • The Board faces a dilemma as the offer is light, but some shareholders will want the Board to accept as trading volatility making Costa more suited to the private market.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December

By Brian Freitas

  • Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
  • Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
  • The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.

Lotte Non-Life Insurance: Who Will Buy?

By Douglas Kim

  • It was reported in numerous local media that the sale process of Lotte Non Life Insurance Co (000400 KS) could start in October 2023.
  • There are four companies including Shinhan Financial (055550 KS), Hana Financial (086790 KS), Woori Financial Group (316140 KS), and Kyobo Life Insurance that may be interested in acquiring Lotte Non-Life Insurance. 
  • Minority shareholders are not likely to benefit from this potential huge management M&A premium of Lotte Non-Life Insurance. 

Quiddity Leaderboard BSE/​​​​SENSEX Dec 23: AllCap Sep 23 Rebal Done; Some Changes to Expectations

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
  • The BSE AllCap index Rebalance was completed in September 2023. There were 77 ADDs and 73 DELs. 
  • Since the BSE AllCap index is the main universe for the BSE 200, 100, and SENSEX indices, there have been some changes to our December 2023 index change expectations.

EQD | Nikkei 225 (NKY) Enters WEEKLY OVERBOUGHT Resistance Area

By Nico Rosti

  • The Nikkei 225 INDEX is getting WEEKLY OVERBOUGHT after just +1 week up. Rallying further during the next 2-3 weeks may be hard, it could stall or fall.
  • If the index rallies further this week, it could fall the following week. Alternatively it could stall this week and rally the following week/s, but OVERBOUGHT status won’t go away.
  • 34256 is the Q3 resistance target on CC=+3, this should be a hard barrier to breach. An earlier barrier is Q3 resistance on the Gen.Pattern Boxplot = 33835.

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Daily Brief Macro: Steno Signals #65 – The 4 things that worries me the most in global macro right now and more

By | Daily Briefs, Macro

In today’s briefing:

  • Steno Signals #65 – The 4 things that worries me the most in global macro right now
  • A Unique High-Frequency Indicator of Recessions
  • ECB Cranks Up for The Record Tenth Time; Yet the Euro Looks Weak and Wobbly
  • From Digital Highways to Energy Pathways: The New Era of Infrastructure Investments
  • Singapore Economics: Structural Growth Model Needs a Revamp
  • The Week That Was in ASEAN@Smartkarma – Bank Negara Indonesia, XL Axiata Leading Data, and VNG.
  • Central Bank Watch: 5 charts on the Central Bank bonanza week!
  • Asian Geopolitics: The Next Phase in the Asian Geopolitical Contest


Steno Signals #65 – The 4 things that worries me the most in global macro right now

By Andreas Steno

  • I have four major worries around the current macro setup. The long consensus in bond positioning is worrisome paired with rising energy prices
  • The lack of reliability of recession forecasts and the relationship to Manufacturing
  • Germany being a nation-wide Nokia case despite falling input prices

A Unique High-Frequency Indicator of Recessions

By Thomas Lam

  • The current US recession debate, while seemingly dormant, is arguably unsettled and undeniably intricate
  • And US recessions tend to be accompanied by periods of subpar growth in many other economies around the world
  • Hence, it is crucial to track and assess the risks attending the US economy by harnessing the proprietary weekly Recession Odds (weRO) indicator

ECB Cranks Up for The Record Tenth Time; Yet the Euro Looks Weak and Wobbly

By Srinidhi Raghavendra

  • Currencies desire nothing more than higher rates. The Euro should have popped but instead it flopped after ECB’s rate hiking decision last Thursday.
  • For nine straight weeks, Euro has lost ground to the USD despite ten rate hikes collectively amounting to 450 basis points over the last 12 months.
  • Rates at record levels combined with macro weakness, ECB will be cornered at the Dec meeting and be forced to pause or cut rates.

From Digital Highways to Energy Pathways: The New Era of Infrastructure Investments

By Albert Maass

  • In a world shaped by geopolitical risks, infrastructure investments are pivoting to address energy supply vulnerabilities illuminated by global tensions.
  • As the pandemic accelerated digital transformation, the pressing demand for enhanced digital infrastructure, from data centers to renewable energy integrations, becomes evident.
  • Concurrently, the sector confronts financing challenges, emphasizing the need for sustainable projects that align with a low-carbon future.

Singapore Economics: Structural Growth Model Needs a Revamp

By Manu Bhaskaran

  • Singapore’s model as a dynamic, external-oriented economy has served it well through internal and external challenges, but there are signs that this has run its natural course. 
  • Global economic bifurcation, external volatility, and a more competitive market mean that the city-state faces new challenges that warrant shifts in economic strategy.
  • There is thus a need to revisit the old economic playbook. The upcoming Forward Singapore strategy will provide hints as to whether the needed shifts are forthcoming.

The Week That Was in ASEAN@Smartkarma – Bank Negara Indonesia, XL Axiata Leading Data, and VNG.

By Angus Mackintosh


Central Bank Watch: 5 charts on the Central Bank bonanza week!

By Andreas Steno

  • It is a big central bank week with the FOMC meeting concluding on Wednesday, while four of the bigger European central banks report/decide on Thursday.
  • US: Can the Fed pause with accelerating inflation?
  • Nothing is priced for this meeting but we expect the updated projections to include another hike in the modal outcome from the FOMC members.

Asian Geopolitics: The Next Phase in the Asian Geopolitical Contest

By Manu Bhaskaran

  • Major movements by Vietnam in closer security ties with Washington and hawkishness in Indian foreign policy mean that China is further disadvantaged in its regional theatre. 
  • Turnover in Beijing’s top tier of foreign policy officials and the weak economic recovery imply the need for policymakers to avoid risky gambits and keep their own house in order. 
  • China will recalibrate its foreign policy strategy, including alliance-building activities and economic carrots. India and ASEAN will also adjust their responses based on their needs.

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Most Read: Descente Ltd, Wharf Holdings, China Mobile, SK Telecom, Poly Culture Group Corp H, Lansen Pharmaceutical Holdings Co, Ltd., Costa Group Holdings, Keep Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?
  • Wharf Holdings (4 HK): Improved Liquidity & Passive Buying
  • Quiddity A/H Premium Weekly (15-Sep):  Utilities, Insurance, China Mobile, BYD
  • SK Telecom (017670 KS): Foreign Room & Passive Inflows
  • Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
  • Poly Culture (3636 HK): H Share Class Meeting on 3 November
  • Lansen Pharma (503 HK): The Chairman Makes An Offer
  • Costa Mulls Paine Schwartz’s Lower Bid
  • Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
  • HSCI Index Rebalance Preview: Low Probability Add in December


Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?

By Travis Lundy

  • Four years after Itochu got to 40.0% of votes in Descente (8114) in a hostile Tender Offer, Descente partner ANTA, which supported Itochu at the time started selling its stake.
  • A few months later, Itochu started buying shares of Descente in the market. As of 7 Sep, Itochu had bought Descente shares 81 days straight (9.7% of ADV).
  • This begs the question: Is Itochu ensuring they maintain voting control as ANTA sells? Or are they buying to lift their stake prior to another bid?

Wharf Holdings (4 HK): Improved Liquidity & Passive Buying

By Brian Freitas

  • Improved liquidity and a higher stock price could see passive trackers buying Wharf Holdings (4 HK) within the next couple of months.
  • Wharf Holdings (4 HK) trades cheaper than the average and median of its peers on EV/Sales, EV/EBITDA and price to book value.
  • Wharf Holdings (4 HK) has already started to move higher and there could be a bigger move in the stock over the next month.

Quiddity A/H Premium Weekly (15-Sep):  Utilities, Insurance, China Mobile, BYD

By Travis Lundy

  • The Brand-Spanking New (6 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
  • We used to do it and decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 41 Trade Recommendations.
  • The last five weeks (since the instantiation of the new Monitor and Portfolio 6 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%.

SK Telecom (017670 KS): Foreign Room & Passive Inflows

By Brian Freitas

  • Foreign room in SK Telecom (017670 KS) increased above 15% in July and is currently just above 16%. Foreign investors have resumed buying again and foreign room is moving lower.
  • Foreign room staying above 15% for another month could result in passive buying at the end of November. SK Telecom (017670 KS) has outperformed peers over the last few weeks.
  • Foreign buying over the next month could lead to foreign room dropping below 15% in which case there will be no passive inflows. But the stock could be higher.

Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved

By David Blennerhassett

  • Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
  • This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
  • The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved. 

Poly Culture (3636 HK): H Share Class Meeting on 3 November

By Arun George

  • The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
  • The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
  • The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.

Lansen Pharma (503 HK): The Chairman Makes An Offer

By David Blennerhassett

  • Specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK) has been a perennial takeover target. And now we have an Offer.
  • Wu Zhen Tao, NED and Chairman of Lansen, has made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.   
  • This looks done. Get involved if small-cap illiquid arbs are your thing. 

Costa Mulls Paine Schwartz’s Lower Bid

By David Blennerhassett

  • Back on the 4 July, Paine Schwartz Partners (PSP) made an A$3.50/share NBIO for Costa Group (CGC AU) by way of a Scheme.  PSP held 14.84% at the time.
  • The due diligence period came and went, or so it appeared, but Costa said it remained ongoing.  Rumours circulated that PSP had gone cold. 1H23 results were also delayed. 
  • Costa has now announced this morning that PSP has returned with a $3.20/share Offer – best and final – reduced for any permitted dividend of up to A$0.04, if declared. 

Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements

By Sanghyun Park

  • As of last Friday, SKT has utilized 86.2 billion won out of the allotted 300 billion won for share buybacks, resulting in the acquisition of 1,810,242 shares.
  • If there are indications of the foreign room potentially falling to a risky level, SKT will likely proceed with an aggressive buyback, targeting 20-30% of the daily trading volume.
  • Another particularly intriguing observation is the absence of local retail flow directed towards SKT. This indicates there is still potential momentum for an upward price movement at this juncture.

HSCI Index Rebalance Preview: Low Probability Add in December

By Brian Freitas

  • There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
  • Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

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Daily Brief Australia: Costa Group Holdings, Boss Resources, Challenger Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December
  • Challenger (CGF AU) – Bank Sale 1H24 | ROC Highest in 23 Yrs | 85% Market Share Annuity FUM


Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma

By Arun George

  • Costa Group Holdings (CGC AU)  has disclosed a revised non-binding indicative proposal from Paine Schwartz Partners at A$3.20 per share, 9.6% lower than the previous offer on a like-for-like basis. 
  • The weak CY23 outlook impacted the debt that could be taken on to meet the IRR hurdles of the previous offer. The revised offer is the best and final offer.
  • The Board faces a dilemma as the offer is light, but some shareholders will want the Board to accept as trading volatility making Costa more suited to the private market.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December

By Brian Freitas

  • Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
  • Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
  • The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.

Challenger (CGF AU) – Bank Sale 1H24 | ROC Highest in 23 Yrs | 85% Market Share Annuity FUM

By Daniel Tabbush

  • During 1H24 CGF expects to sell its bank for ~AUD36m which could include a AUD11m gain and allow to free-up bank capital of around AUD40-50m.
  • Return on capital is now at the highest it has been since FY10 at 6.2% with a substantial 160bps increase in normalized ROE in 2H23 YoY to 13.1%
  • 85% market share of annuity FUM from 50% about 10 years ago, operating in system with strong forced savings in superannution funds now at AUD3.5tr up 91% over 10 yrs.

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Daily Brief South Korea: SK Telecom, Lotte Non Life Insurance Co, Seoul Guarantee Insurance, SD Biosensor and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
  • Lotte Non-Life Insurance: Who Will Buy?
  • Seoul Guarantee Insurance IPO: The Bull Case
  • Seoul Guarantee Insurance Pre-IPO – The Positives – Broad Coverage Across Guarantee Insurance
  • SD Biosensor (137310 KS): No Change of Fate Is Seen in Near-Term; Visibility to Improve in 2024 Only


Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements

By Sanghyun Park

  • As of last Friday, SKT has utilized 86.2 billion won out of the allotted 300 billion won for share buybacks, resulting in the acquisition of 1,810,242 shares.
  • If there are indications of the foreign room potentially falling to a risky level, SKT will likely proceed with an aggressive buyback, targeting 20-30% of the daily trading volume.
  • Another particularly intriguing observation is the absence of local retail flow directed towards SKT. This indicates there is still potential momentum for an upward price movement at this juncture.

Lotte Non-Life Insurance: Who Will Buy?

By Douglas Kim

  • It was reported in numerous local media that the sale process of Lotte Non Life Insurance Co (000400 KS) could start in October 2023.
  • There are four companies including Shinhan Financial (055550 KS), Hana Financial (086790 KS), Woori Financial Group (316140 KS), and Kyobo Life Insurance that may be interested in acquiring Lotte Non-Life Insurance. 
  • Minority shareholders are not likely to benefit from this potential huge management M&A premium of Lotte Non-Life Insurance. 

Seoul Guarantee Insurance IPO: The Bull Case

By Arun George

  • Seoul Guarantee Insurance (031210 KS), a leading guarantee provider in Korea, is pre-marketing an IPO to raise up to KRW362 billion (US$272 million).
  • The IPO price range is KRW39,500-51,800 per share. The bookbuilding will run from 13 to 19 October, with pricing on 25 October. The shares will be listed in November.
  • The bull case rests on a leading market share, solid premium growth, the highest industry margins, a high solvency ratio and a high dividend payout. 

Seoul Guarantee Insurance Pre-IPO – The Positives – Broad Coverage Across Guarantee Insurance

By Clarence Chu

  • Seoul Guarantee Insurance (031210 KS) is looking to raise around US$270m in its Korean IPO.
  • Seoul Guarantee Insurance (SGI) is a guarantee insurance firm operating predominantly in Korea.
  • In this note, we will talk about the positive aspects of the deal.

SD Biosensor (137310 KS): No Change of Fate Is Seen in Near-Term; Visibility to Improve in 2024 Only

By Tina Banerjee

  • SD Biosensor (137310 KS) is reporting significant decline in revenue due to the fading demand of COVID-19 tests. 2Q23 revenue declined 80% YoY and 11% QoQ to KRW162.6B.
  • SD Biosensor reported operating loss of KRW97.8B and KRW76.4B in 1Q23 and 2Q23, respectively, leading to 1H23 operating loss of KRW174.2B, compared with an operating profit of KRW348B in 1H22.
  • SD Biosensor is on track to launch next-generation ultra-small continuous blood glucose meter (CGMS) in Korea in 2024. Thus far, Korea has approved four CGMS, including one locally-developed.

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Daily Brief Consumer: Poly Culture Group Corp H, Costa Group Holdings, Tuhu Car, Seven & I Holdings, Tokyo Stock Exchange Tokyo Price Index Topix, Booking Holdings, Sai Silk Kalamandir, Bajaj Auto Ltd, Philip Morris International and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Poly Culture (3636 HK): H Share Class Meeting on 3 November
  • Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
  • Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma
  • Tuhu Car IPO: Forecasts and Valuation
  • Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders
  • It Is Time to Identify True Value and Growth Stocks Rather than High and Low P/Bs
  • Booking Holdings Inc.: The Margin Expansion Story Continues! What’s Their Secret Sauce? – Major Drivers
  • Sai Silks Kalamandir IPO – Not Particularly Exciting but Is Relatively Cheap
  • [Week 3] Namaste India 🙏 | Bajaj Auto Ltd (BJAUT IN) | Exports Could Improve Further
  • Philip Morris International Inc.: The Smoke-Free Business Revolution You Didn’t See Coming! – Major Drivers


Poly Culture (3636 HK): H Share Class Meeting on 3 November

By Arun George

  • The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
  • The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
  • The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.

Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved

By David Blennerhassett

  • Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
  • This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
  • The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved. 

Costa Group (CGC AU): Paine Schwartz’s Final Proposal Poses a Dilemma

By Arun George

  • Costa Group Holdings (CGC AU)  has disclosed a revised non-binding indicative proposal from Paine Schwartz Partners at A$3.20 per share, 9.6% lower than the previous offer on a like-for-like basis. 
  • The weak CY23 outlook impacted the debt that could be taken on to meet the IRR hurdles of the previous offer. The revised offer is the best and final offer.
  • The Board faces a dilemma as the offer is light, but some shareholders will want the Board to accept as trading volatility making Costa more suited to the private market.

Tuhu Car IPO: Forecasts and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Chinese automotive maintenance services platform Tuhu Car has announced the terms for its HKEx IPO. Tuhu plans to raise net proceeds of HK$1.0-1.1bn (US$132-161m) through the issuance of 40.62m shares.
  • Tuhu Car (2007986D HK) ‘s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
  • In this insight, we discuss our forecasts and valuation for the company, and our analysis suggests that Tuhu Car’s IPO is priced reasonably.

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

By Oshadhi Kumarasiri

  • Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
  • Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
  • Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.

It Is Time to Identify True Value and Growth Stocks Rather than High and Low P/Bs

By Aki Matsumoto

  • If a company with P/B less than 1 conducts share buyback, its P/B will decrease; if a company with P/B greater than 1 conducts share buyback, its P/B will increase.
  • A company with P/B below 1x can be a great value stock if it can demonstrate to investors that it will generate ample cash flow, in addition to repurchasing shares.
  • Even if a company’s P/B is well above 1x, it is required to explain to investors whether there are any gaps in its cash flow growth scenario.

Booking Holdings Inc.: The Margin Expansion Story Continues! What’s Their Secret Sauce? – Major Drivers

By Baptista Research

  • Booking Holdings Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
  • The 268 million hotel nights booked in the second quarter increased by 9% year over year, and the $39.7 billion in gross bookings, the largest quarterly total ever, surged by 15% year over year.
  • The positive demand environment caused hotel nights and revenue bookings to surpass the company’s previous projections.

Sai Silks Kalamandir IPO – Not Particularly Exciting but Is Relatively Cheap

By Sumeet Singh

  • Sai Silk Kalamandir (SSKL IN) is looking to raise about US$145m in its India IPO.
  • Sai Silk Kalamandir (SSK) is one of the largest retailers of ethnic apparel in South India, particularly in sarees, according to Technopak.
  • In this note, we look at the company’s past performance and provide our thoughts on valuations.

[Week 3] Namaste India 🙏 | Bajaj Auto Ltd (BJAUT IN) | Exports Could Improve Further

By Pranav Bhavsar


Philip Morris International Inc.: The Smoke-Free Business Revolution You Didn’t See Coming! – Major Drivers

By Baptista Research

  • Philip Morris International managed to surpass the revenue and the earnings expectations of Wall Street.
  • This fantastic result supported high teens’ currency-neutral adjusted diluted EPS growth and double-digit organic top-line growth.
  • Given these strong results, their team remains confident in a solid full-year result with exceptional revenue growth.

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