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Smartkarma Daily Briefs

Jan 22
0

Daily Brief Energy/Materials: JSR Corp, Ganfeng Lithium, State Gas Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Merger Arb Mondays (22 Jan) – JSR, Benefit One, T&K Toka, Guppy’s, Genetron, Weiqiao, Probiotec
  • A/H Premium Tracker (To 19 Jan 2024):  Hs Shellacked Vs As. Near Multi-Year High Average AH Premia
  • State Gas – Final Construction Stage with Commissioning Imminent

Merger Arb Mondays (22 Jan) – JSR, Benefit One, T&K Toka, Guppy’s, Genetron, Weiqiao, Probiotec

By Arun George

A/H Premium Tracker (To 19 Jan 2024):  Hs Shellacked Vs As. Near Multi-Year High Average AH Premia

By Travis Lundy

  • The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc. But that didn’t help. 
  • SOUTHBOUND flows were bigly positive and NORTHBOUND flows a large net sell. Nevertheless AH Premia had their best week in ages as HK large caps, mid-caps, small-caps got shellacked.
  • Now at new 52wk wides on A premia. Now within 3% of 5+ year highs.

State Gas – Final Construction Stage with Commissioning Imminent

By Research as a Service (RaaS)

  • State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland.
  • The Rolleston West CNG Project in the Bowen Basin is now in the final stage with mechanical completion and tie-in of the Rougemont-2/3 well anticipated within the next week to be followed by pre-commissioning activities.
  • Importantly, first production and shipments are tantalisingly close and whilst the rate will initially be modest, up to 0.75TJd, the project has intrinsic growth potential (up to 1.7TJd) which could fund modest appraisal and evaluation works, particularly converting contingent gas to bankable reserves.

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Jan 22
0

Daily Brief TMT/Internet: Shinko Electric Industries, Korea Stock Exchange KOSPI 200, Micron Technology and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain
  • KRX Introduces Market Orders for Single Stock Futures: Potential Trading Impacts
  • Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron

Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain

By Travis Lundy

  • The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
  • There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
  • 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.

KRX Introduces Market Orders for Single Stock Futures: Potential Trading Impacts

By Sanghyun Park

  • KRX notified local brokerages last week about allowing market orders for single stock futures (SSF) from April. Currently, 192 SSFs are listed.
  • Anticipating short-term effects, heightened frequency and impact of erroneous orders may cause spot market confusion. KRX plans real-time bid disclosure for SSFs to prevent price distortions.
  • Nonetheless, we will likely observe SSF price volatility surges. Real-time bid exposure could exacerbate volatility due to premature information revelation. Preemptive position setups considering these factors are advised.

Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron

By Vincent Fernando, CFA

  • MSFT’s new AI features for Windows will need computers with at least 16GB of DRAM to run effectively. MSFT is asking manufacturers for this as a minimum for AI models.
  • MSFT announced Copilot Pro for individuals and small businesses last week. The desire to use generative AI and the minimum required DRAM will drive accelerated PC upgrades.
  • We note relative strength in 16GB DRAM prices; In Memory space, we continue to see relative value in SK Hynix, however, Nanya has the opportunity to Outperform in Taiwan.

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Jan 22
0

Daily Brief Industrials: Contemporary Amperex Technology (CATL), Jiangsu Zhongtian Technologies Co, Ltd., Medi Assist Healthcare Services, Lonking Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mainland Connect NORTHBOUND Flows (To 19 Jan 2024): BIG Net Sells, Again, Before National Team Buys
  • CSI300 Index Rebalance Preview: A Dozen Changes for June
  • Medi Assist Healthcare IPO Trading – Decent Subscription Rates Although Valuation Appears Fair
  • Lonking (3339 HK): A Yield Play?

Mainland Connect NORTHBOUND Flows (To 19 Jan 2024): BIG Net Sells, Again, Before National Team Buys

By Travis Lundy

  • The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
  • Last week saw NORTHBOUND net SELL RMB 23.5bn of A-shares on strong average activity. Big net selling on Weds. National Team stepped in Thurs. NORTHBOUND stepped in to sell Friday.
  • Renewables were a bit more mixed this week but still a net sell by NORTHBOUND. It is not clear what stops persistent net selling. 

CSI300 Index Rebalance Preview: A Dozen Changes for June

By Brian Freitas

  • With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
  • There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.

Medi Assist Healthcare IPO Trading – Decent Subscription Rates Although Valuation Appears Fair

By Clarence Chu

  • Medi Assist Healthcare Services (0886371D IN) raised around US$140m in its India IPO.
  • Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
  • We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

Lonking (3339 HK): A Yield Play?

By Osbert Tang, CFA

  • While the 2H23 result of Lonking Holdings (3339 HK) may disappoint due to a plunge in sales volume, it is a yield play given the high historical payout ratio.
  • Assuming a DPS of HK$0.10 for FY23-25 as in FY22, yielding 8.3%, the total dividend will amount to Rmb1.2bn. This only equals 22% of its net cash (including short-term investments).
  • Its controlling shareholders bought 7.3m shares since 27 Dec, raising the stake by 0.13pp to 56.2%, demonstrating their positive view on the share’s value and long-term outlook. 

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Jan 22
0

Daily Brief Financials: Ping An Insurance (H), HDFC Bank, Quadro Acquisition One , S&P/ASX 200 and more

By | Daily Briefs, Financials

In today’s briefing:

  • Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal
  • HDFC Bank: An Update
  • The Big Blend
  • EQD | S&P/ASX200 WEEKLY LONG Supports Reset, Ready for Bounce?

Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

By Brian Freitas

HDFC Bank: An Update

By Value Punks

  • HDFC Bank reported earnings last week. The next day the stock fell 8% followed by another 4% the day after.
  • HDFC Bank is one of India’s bluest blue chip stocks with a reputation for being a high quality compounder.
  • What happened and where do we go from here? First, some lessons from another life.

The Big Blend

By subSPAC

  • The previous week was packed with deals, IPOs, and other SPAC-related events.
  • Four new deals were announced, including SPACs taking a conglomerate, an eVTOL company, and Korean and Chinese Biotech firms public.
  • Also, a new SPAC priced its IPO, and SPAC rules could come under the microscope in the week ahead when the SEC meets. 

EQD | S&P/ASX200 WEEKLY LONG Supports Reset, Ready for Bounce?

By Nico Rosti

  • The S&P/ASX 200 INDEX closed last week down at 7421.20 (CC=-1). The index was rallying in the previous weeks, but then pulled back before reaching the previous all time highs.
  • The next strong support for a LONG trade is 7288 (Q3 support), but there is a risk of a slide to lower levels, so hedge your LONG trades.
  • This looks like a temporary correction (buy-the-dip opportunity to add LONG positions, or to re-enter LONG at better prices).

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Jan 22
0

Daily Brief Health Care: Gushengtang and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Gushengtang (2273.HK) – Some New Business Updates and Positive Performance Forecasts

Gushengtang (2273.HK) – Some New Business Updates and Positive Performance Forecasts

By Xinyao (Criss) Wang

  • 23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.
  • In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&A.
  • Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.

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Jan 22
0

Daily Brief Consumer: Denso Corp, Hisense Home Appliances Group Co., Ltd. H, Dickson Concepts Intl, TSE Tokyo Price Index TOPIX and more

By | Consumer, Daily Briefs

In today’s briefing:

  • The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies
  • HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts
  • Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield
  • ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings

The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies

By Mohshin Aziz

  • Tokyo Stock Exchange (TSE) has published the list of companies that are conscious of stock capital and share price; this will be a recurring monthly feat 
  • The initial compliance rate is encouraging and should continue to grow as peer pressure is relentless and doing nothing is not an option. The shake-up is happening  
  • We narrow down a list of companies that are the most compelling laggard opportunities based on their low price to book ratio (PBR) and strong balance sheet  

HK Connect SOUTHBOUND Flows (To 19 Jan 2024); High Div SOEs Again BIG Buys as CBBC Hedging Hurts

By Travis Lundy

  • An ugly week for HK stocks but SOUTHBOUND flows showed decent net buying at HK$14.7bn on the week. High-Div SOEs continue to be in favour.
  • What appears to have been strong net selling on the mainland combined with CBBC unwinds in Hong Kong related to mainland-linked stocks caused HK to have a baaaaad week.
  • The separately published AH Monitor highlights a Really Tough Week. Hs got KILLED vs their A-share counterparts as CBBCs sold the HK names and National Team bought A-shares.

Dickson Concept (113 HK) Update: Trading at 40% Discount to NCAV, 8% Dividend Yield

By Sameer Taneja

  • Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY. 
  • Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share. 
  • The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).

ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings

By Aki Matsumoto

  • It’s no surprise that some companies consider the dissolution of parent-subsidiary listings as a swift and effective measure to raise ROE. However, not every listed subsidiary will be TOB.
  • TOB of a high-profitability subsidiary can have significant impact on both the denominator and numerator of the parent company’s ROE because it uses more cash and will improve profit margins.
  • Even if the “significance of parent-subsidiary listings” is disclosed, few investors believe that the listed subsidiary’s independence is fully ensured, and the dissolution of parent-subsidiary listings will eventually follow.

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Jan 22
0

Daily Brief Quantitative Analysis: Hong Kong Connect Flows (Jan 19th): CCB and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Hong Kong Connect Flows (Jan 19th): CCB
  • A-H Premium Weekly (Jan 19th): Haier Smart, ICBC, China Vanke, ZTE, CR Group, CCCC
  • Northbound Flows (Jan 19th): BYD, Chongqing Changan Automobile, Wuliangye
  • HK Short Interest Weekly: Citic Sec

Hong Kong Connect Flows (Jan 19th): CCB

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of January 19th.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight the weekly Hong Kong connect flows for CCB.

A-H Premium Weekly (Jan 19th): Haier Smart, ICBC, China Vanke, ZTE, CR Group, CCCC

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 129.2% as of Jan 19th.
  • The average A-H premium changed by 7.1ppt week-on-week, led by financials, materials, health care and offset by information technology.
  • We highlight weekly changes in A-H premium for Haier Smart H, ICBC, China Vanke, ZTE, China Rail Gr, China Com Cons, SMIC, China Longyuan.

Northbound Flows (Jan 19th): BYD, Chongqing Changan Automobile, Wuliangye

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of January 19th.
  • We estimate the weekly outflows to be US$3,217.1 million, led by materials, industrials, and offset by information technology, financials.
  • We highlight flows for BYD, Chongqing Changan Automobile, and Wuliangye.

HK Short Interest Weekly: Citic Sec

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Jan 12th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight Hong Kong short weekly changes in Citic Sec.

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Jan 22
0

Daily Brief ESG: ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings and more

By | Daily Briefs, ESG

In today’s briefing:

  • ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings

ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings

By Aki Matsumoto

  • It’s no surprise that some companies consider the dissolution of parent-subsidiary listings as a swift and effective measure to raise ROE. However, not every listed subsidiary will be TOB.
  • TOB of a high-profitability subsidiary can have significant impact on both the denominator and numerator of the parent company’s ROE because it uses more cash and will improve profit margins.
  • Even if the “significance of parent-subsidiary listings” is disclosed, few investors believe that the listed subsidiary’s independence is fully ensured, and the dissolution of parent-subsidiary listings will eventually follow.

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Jan 22
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Surge; Japan’s Seven-Year Streak of Prosperity and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Stocks Surge; Japan’s Seven-Year Streak of Prosperity
  • 2023 PC Unit Shipments Disappoint While Smartphone Fared Better Than Expected
  • Maverick Charts & Markets – January 2024 Edition #14
  • Private Brands in Japan: Getting Bigger – Literally

Ohayo Japan | Stocks Surge; Japan’s Seven-Year Streak of Prosperity

By Mark Chadwick

  • Last week, stocks surged, propelling the S&P 500 and Dow Jones to record highs. Positive economic data and consumer sentiment overshadowed a decline in existing home sales.
  • This week, CB meetings in the eurozone, Canada, and BoJ (Tues) will shape market expectations. US earnings will further contribute to a dynamic week.
  • Japan’s equity market remains popular, but divergence from the PMI output index raises concerns of overheating. A flash PMI (Wed) report will provide insight into Japan’s growth conditions.

2023 PC Unit Shipments Disappoint While Smartphone Fared Better Than Expected

By William Keating

  • For 2023, Smartphone unit shipments amounted to 1.17 billion units,  a 3.2% YoY decline, far better than we expected at the beginning of last year.
  • For 2023, PC unit shipments amounted to 241.8 million units, a 14.8% YoY decline, worse than expected. Last time annual shipments fell below 250 million units was in 2006.
  • The weaker than anticipated PC TAM is a headwind for Intel heading into earnings and Q124 guidance on January 25

Maverick Charts & Markets – January 2024 Edition #14

By Maverick Equity Research

  • One would meet here people from all walks of life, interests, subject of study, leisure reading, university studying, work etc.
  • One can meet a 20-year youngster that dropped from university and works 10-12h/a day on his app which already works very very well, to a 45-year chap that has been devoting his last 5 years to give Shakespeare a new novel interpretation … which makes me tell myself and my friends many times that our single focused interests, opinions, biases and views about the world might be quite narrow and 100,000 miles apart from somebodies else’s.
  • It’s not about being ‘right’ or ‘wrong’, but about the fundamental aspect to remain open minded … .

Private Brands in Japan: Getting Bigger – Literally

By Michael Causton

  • Private brands developed and managed by retailers themselves offer plenty of price and marketing flexibility during these inflationary times.
  • But it is not only their popularity as cheaper alternatives that is growing, so too are pack sizes, as consumers increase shopping volume and reduce shopping trip frequency.
  • The trend is another sign of why investors should look out for retailers with good private brands, given the impact on both sales and margin growth.

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Jan 22
0

Daily Brief ECM: Medi Assist Healthcare IPO Trading – Decent Subscription Rates Although Valuation Appears Fair and more

By | Daily Briefs, ECM

In today’s briefing:

  • Medi Assist Healthcare IPO Trading – Decent Subscription Rates Although Valuation Appears Fair

Medi Assist Healthcare IPO Trading – Decent Subscription Rates Although Valuation Appears Fair

By Clarence Chu

  • Medi Assist Healthcare Services (0886371D IN) raised around US$140m in its India IPO.
  • Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
  • We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

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