Smartkarma Daily Briefs

There are 22 adds and 27 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents down to 518.
We expect all 22 inclusions to the HSCI will be added to Stock Connect, while 24 of the 27 HSCI deletions will be removed from Southbound Stock Connect.
Since the end of June, shares held though Southbound Connect have increased on 20 of the 27 HSCI deletions and there could be some unwinding in the next two weeks.

Share Buybacks In Japan – A 2023 Primer

The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.

Joyful Honda (3191) – Repeats Its ASR In Double the Size

Last year, I wrote about Joyful Honda (3191 JP)‘s implementation of a ¥2.5bn ToSTNeT-3 into Accelerated Share Repurchase. It was the first such transaction I knew of in Japan.
This year, they have just announced another for nearly twice the size. It is worth looking at the details and comparing the stock vs Peers.
It is also worth understanding exactly what the incentives are for whom and how that impacts the path. And who might respond to it.

Last Week in Event SPACE: Aussie Tax-Loss Selling, Japan Post Bank/Holdings, AviChina, Hang Lung

Concerning Australian tax-loss selling baskets, the sell across the four baskets made 4.2% vs ASX200 in May, then is up.
Be long Japan Post Bank (7182 JP). Or longJapan Post Holdings (6178 JP) for a long JPB position. Don’t be short JPB or short JPB vs JPH.
As a PRC aviation/defense play, AviChina Industry & Technology H (2357 HK)‘s fundamentals are undemanding.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Celltrion, Sanei Architecture, T&K Toka, MPI, Chindata

I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals this week: the Celltrion Inc (068270 KS)/Celltrion Healthcare (091990 KS) merger; and the Tender Offers for Sanei Architecture Planning (3228 JP) and T&K Toka (4636 JP).
Key updates took place for Tesserent Ltd (TNT AU), DDH1 (DDH AU), L’Occitane (973 HK), Metro Pacific Investments Co (MPI PM), and Chindata Group (CD US).

HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)

As expected, Trip.com Group (9961 HK) replaces Country Garden Services (6098 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 1 September.
BeiGene (6160 HK) fails the Velocity Test and misses inclusion, while an increase in Zhongsheng Group (881 HK)‘s float keeps it in the index.
Using prices from the close on 18 August, estimated one-way turnover is 2.78% leading to a one-way trade of HK$1.73bn (US$221m).

Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI

Friday was the review cutoff for the September rebalance of the ASX family of indices. The September changes for the Hang Seng family of indices were also announced.
The September changes for the SSE STAR50 (STAR50 INDEX) will be announced after the close of trading on 25 August.
For a second week running, there were big inflows to mainland China ETFs and were spread across multiple index trackers. There were outflows from iShares Emerging Markets (EEM US).

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief Equity Bottom-Up: China Healthcare Weekly (Aug.18) – TCM Formula Granules VBP and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

China Healthcare Weekly (Aug.18) – TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu
Mayne Pharma (MYX AU): Sale of Retail Generic Portfolio Shifts Focus on US Women’s Health and Derma
[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

China Healthcare Weekly (Aug.18) – TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu

By Xinyao (Criss) Wang

For a considerable period of time, the industry has been speculating about when the large-scale VBP of TCM formula granules will officially begin. Now, here it comes.
Primary market and other financing except IPO in European and US biopharma industry shows a significant signal of recovery. However, IPOs remain stagnant.
We analyzed key points about China Resources Sanjiu. Sanjiu is expected to have better performance in 2023 than 2022, but we advise investors to allow a sufficient margin of safety.

Mayne Pharma (MYX AU): Sale of Retail Generic Portfolio Shifts Focus on US Women’s Health and Derma

By Tina Banerjee

Mayne Pharma (MYX AU) divested its retail generic portfolio. The divestment is part of the transformation strategy which refocused the company on the U.S. women’s healthcare and dermatology markets.
Mayne Pharma will announce FY23 result on August 25. With business restructuring and cost management, the company is expected to cut net loss significantly and turn EBITDA positive from FY24.
Mayne Pharma announced a share buyback for up to 10% of issued capital, which will be funded through cash reserves. As of April 30, Mayne Pharma held A$239M in cash.

[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

By Shawn Yang

BILI reported 2Q23 top-line in-line and non-GAAP net profit 7% better than consensus. However, gaming revenue was weak, causing BILI to revise down its full-year revenue guidance.
We believe e-commerce ads could become a new near-term driving force, but the rapid growth of game-related ads might fade post-Q3.
Also, the significant consolidation of ACG games could affect BILI’s future game performance. We maintain our US$ 12.3 TP and SELL rating.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief Australia: Mayne Pharma and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Mayne Pharma (MYX AU): Sale of Retail Generic Portfolio Shifts Focus on US Women’s Health and Derma

Mayne Pharma (MYX AU): Sale of Retail Generic Portfolio Shifts Focus on US Women’s Health and Derma

By Tina Banerjee

Mayne Pharma (MYX AU) divested its retail generic portfolio. The divestment is part of the transformation strategy which refocused the company on the U.S. women’s healthcare and dermatology markets.
Mayne Pharma will announce FY23 result on August 25. With business restructuring and cost management, the company is expected to cut net loss significantly and turn EBITDA positive from FY24.
Mayne Pharma announced a share buyback for up to 10% of issued capital, which will be funded through cash reserves. As of April 30, Mayne Pharma held A$239M in cash.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief South Korea: Celltrion Inc and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Celltrion, Sanei Architecture, T&K Toka, MPI, Chindata

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Celltrion, Sanei Architecture, T&K Toka, MPI, Chindata

I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals this week: the Celltrion Inc (068270 KS)/Celltrion Healthcare (091990 KS) merger; and the Tender Offers for Sanei Architecture Planning (3228 JP) and T&K Toka (4636 JP).
Key updates took place for Tesserent Ltd (TNT AU), DDH1 (DDH AU), L’Occitane (973 HK), Metro Pacific Investments Co (MPI PM), and Chindata Group (CD US).

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief China: ZJLD Group , China Resources Sanju Mdcl & Phrm, Tencent, Trip.com Group , Bilibili , Brilliance China Automotive and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
China Healthcare Weekly (Aug.18) – TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu
ECM Weekly (20th August 2023) – Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank
HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)
[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues
Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI

HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect

There are 22 adds and 27 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents down to 518.
We expect all 22 inclusions to the HSCI will be added to Stock Connect, while 24 of the 27 HSCI deletions will be removed from Southbound Stock Connect.
Since the end of June, shares held though Southbound Connect have increased on 20 of the 27 HSCI deletions and there could be some unwinding in the next two weeks.

China Healthcare Weekly (Aug.18) – TCM Formula Granules VBP, Global Financing Rebound, CR Sanjiu

By Xinyao (Criss) Wang

For a considerable period of time, the industry has been speculating about when the large-scale VBP of TCM formula granules will officially begin. Now, here it comes.
Primary market and other financing except IPO in European and US biopharma industry shows a significant signal of recovery. However, IPOs remain stagnant.
We analyzed key points about China Resources Sanjiu. Sanjiu is expected to have better performance in 2023 than 2022, but we advise investors to allow a sufficient margin of safety.

ECM Weekly (20th August 2023) – Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
The IPO space saw a few pops this week, some were somewhat justifiable in SBFC Finance Limited and Concord Biotech while one was reminisent of the 2020-21 frenzy, Vinfast.
In the placement space, the selldown for InterGlobe Aviation Ltd (INDIGO IN) materialised as expected but despite that the deal didn’t do much.

HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)

As expected, Trip.com Group (9961 HK) replaces Country Garden Services (6098 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 1 September.
BeiGene (6160 HK) fails the Velocity Test and misses inclusion, while an increase in Zhongsheng Group (881 HK)‘s float keeps it in the index.
Using prices from the close on 18 August, estimated one-way turnover is 2.78% leading to a one-way trade of HK$1.73bn (US$221m).

[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

By Shawn Yang

BILI reported 2Q23 top-line in-line and non-GAAP net profit 7% better than consensus. However, gaming revenue was weak, causing BILI to revise down its full-year revenue guidance.
We believe e-commerce ads could become a new near-term driving force, but the rapid growth of game-related ads might fade post-Q3.
Also, the significant consolidation of ACG games could affect BILI’s future game performance. We maintain our US$ 12.3 TP and SELL rating.

Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI

Friday was the review cutoff for the September rebalance of the ASX family of indices. The September changes for the Hang Seng family of indices were also announced.
The September changes for the SSE STAR50 (STAR50 INDEX) will be announced after the close of trading on 25 August.
For a second week running, there were big inflows to mainland China ETFs and were spread across multiple index trackers. There were outflows from iShares Emerging Markets (EEM US).

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief Japan: Tokyo Stock Exchange Tokyo Price Index Topix, Joyful Honda, Japan Post Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Share Buybacks In Japan – A 2023 Primer
Joyful Honda (3191) – Repeats Its ASR In Double the Size
Last Week in Event SPACE: Aussie Tax-Loss Selling, Japan Post Bank/Holdings, AviChina, Hang Lung

Share Buybacks In Japan – A 2023 Primer

The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.

Joyful Honda (3191) – Repeats Its ASR In Double the Size

Last year, I wrote about Joyful Honda (3191 JP)‘s implementation of a ¥2.5bn ToSTNeT-3 into Accelerated Share Repurchase. It was the first such transaction I knew of in Japan.
This year, they have just announced another for nearly twice the size. It is worth looking at the details and comparing the stock vs Peers.
It is also worth understanding exactly what the incentives are for whom and how that impacts the path. And who might respond to it.

Last Week in Event SPACE: Aussie Tax-Loss Selling, Japan Post Bank/Holdings, AviChina, Hang Lung

Concerning Australian tax-loss selling baskets, the sell across the four baskets made 4.2% vs ASX200 in May, then is up.
Be long Japan Post Bank (7182 JP). Or longJapan Post Holdings (6178 JP) for a long JPB position. Don’t be short JPB or short JPB vs JPH.
As a PRC aviation/defense play, AviChina Industry & Technology H (2357 HK)‘s fundamentals are undemanding.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 20

Daily Brief TMT/Internet: Tokyo Stock Exchange Tokyo Price Index Topix, Tencent, Bilibili and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Share Buybacks In Japan – A 2023 Primer
ECM Weekly (20th August 2023) – Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank
[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

Share Buybacks In Japan – A 2023 Primer