Smartkarma Daily Briefs, Author at Smartkarma

Nov 11

Daily Brief Consumer: Shidax Corp, Eclat Textile Company, MGM China Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Shidax (4837) – Nikkei Scoops MBO (Anncmt Post-Close), Family Wants to Buy at ¥800 Which Is Too Low
Eclat Textile (1476 TT): Start Of Upcycle
Weekly Wrap – 10 Nov 2023

Shidax (4837) – Nikkei Scoops MBO (Anncmt Post-Close), Family Wants to Buy at ¥800 Which Is Too Low

By Travis Lundy

13mos ago I wrote about Shidax Corp (4837 JP) which an interesting restructuring past and a refreshing governance outlook going forward in Shidax Outlook May Change – Better Governance Matters.
The stock was up 25% in that period to yesterday. Today, a Nikkei article mid-day suggests the Shida family will launch an MBO. Stock popped. Earnings out after the close.
The article suggests a take-private MBO with Oisix ra daichi (3182 JP) again supporting the deal. 30 minutes ago Shidax responded saying an offer was put forth at ¥800/share.

Eclat Textile (1476 TT): Start Of Upcycle

By Steve Zhou, CFA

Eclat Textile Company (1476 TT) is a vertically integrated textile company, with around 20% net profit margin, similar to Shenzhou Intl Group Holdings (2313 HK).
The company just reported 3Q23 results, with sales down 26% yoy and net profit down 28% yoy. Starting the next quarter 4Q23, the company is expected to return to growth.
The company now trades at 23x 2024E earnings. I believe the valuation is reasonable as growth returns, and there are potential upside catalysts.

Weekly Wrap – 10 Nov 2023

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

and more…

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Nov 11

Daily Brief Quantitative Analysis: Hong Kong Buybacks Weekly (Nov 10th): Aia and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

Hong Kong Buybacks Weekly (Nov 10th): Aia, China Petroleum & Chemical, Esr
ASX Short Interest Weekly (Nov 3rd): Wisetech Global, BHP, Rio Tinto, Wesfarmers, Whitehaven Coal

Hong Kong Buybacks Weekly (Nov 10th): Aia, China Petroleum & Chemical, Esr

By Ke Yan, CFA, FRM

We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Nov 10th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were AIA (1299 HK), China Petroleum & Chemical (386 HK), Esr (1821 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were AIA (1299 HK), Tencent (700 HK), HSBC (5 HK).

ASX Short Interest Weekly (Nov 3rd): Wisetech Global, BHP, Rio Tinto, Wesfarmers, Whitehaven Coal

By Ke Yan, CFA, FRM

We analyzed the changes in short interest of ASX Stocks as of Nov 3rd (reported today) which has an aggregated short interest worth USD18.5bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
We highlight short interest changes in Wisetech Global, BHP, Rio Tinto, Wesfarmers, Whitehaven Coal, Northern Star Re, Invocare.

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Nov 11

Daily Brief ECM: WT Microelectronics Placement – Wouldn’t Be Difficult to Digest and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

WT Microelectronics Placement – Wouldn’t Be Difficult to Digest

WT Microelectronics Placement – Wouldn’t Be Difficult to Digest

By Ethan Aw

WT Microelectronics (3036 TT) major shareholder, WPG Holdings (3702 TT), seeks to raise up to approximately NT5.15bn (US$159m) through a secondary block deal, selling approximately 40m shares (4.5% of TSO).
The deal is a small one to digest at 3.6 days of three month ADV and 4.1% of current mcap.
In this note, we will talk about the placement and run the deal through our ECM framework.

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Nov 11

Daily Brief Thematic (Sector/Industry): Japan Weekly | Trend Micro and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Japan Weekly | Trend Micro, Screen, Mazda, Itochu-Techno
[Blue Lotus Daily]: BABA/JD/PDD/BILI/Tencent/700.HK/Kuaishou/1024.HK/DOYU/HUYA/ACMR
Takeaways Post Our Global Foundry Model Updated and Initial View on 2024
Shroom Shmooz – Psychedelics and the Hype Cycle – Where Does It Go in 2024 and Beyond?

Japan Weekly | Trend Micro, Screen, Mazda, Itochu-Techno

By Mark Chadwick

Market Watch: Topix Index gained 0.6% WoW, influenced by Treasury yields and interest rate discussions, while individual stock movements were largely impacted by earnings reports
Major Movers: Trend Micro surged 19.6% on strong Q3 results and a ¥140 billion total shareholder return plan. Screen and Mazda rose 15% and 13.5%, driven by positive profit outlooks
Activist Watch: Oasis Management surprises with a 6.42% stake in Itochu Techno Solutions despite Itochu’s TOB completion & Share consolidation announcement. Oasis likely to contest valuation in Court.

[Blue Lotus Daily]: BABA/JD/PDD/BILI/Tencent/700.HK/Kuaishou/1024.HK/DOYU/HUYA/ACMR

By Eric Wen

BABA/JD/PDD: Post Bureau publishes Parcel Volume Data for Double 11 Festival (-/+)
BILI/700.HK/1024.HK/DOYU/HUYA: Douyu CEO Chen Shaojie missing for 3 Weeks (+/+/+/-/+)
4689JP/PDD: LY C3Q23 result beat consensus on LINE advertising (/)

Takeaways Post Our Global Foundry Model Updated and Initial View on 2024

By Andrew Lu

Takeaways post model updated: 1. most foundries miss 4Q23 but y/y decline to decelerate; 2. y/y sales passed the trough but utilization later; 3. wafer shipment down 18-20% in 2023;
More takeaways: 4. different mix with different price; 5. some are defensive this year, some might have larger upside for 2024; 6. gross margin still falling and capex cut needed.
Automotive/Industrial lags only not beginning of the fall: Smartphone, pc, consumer/IOT foundry orders might recover earlier than automotive/industrial for 2-3 quarters, resulting fablesses in these area to outperform.

Shroom Shmooz – Psychedelics and the Hype Cycle – Where Does It Go in 2024 and Beyond?

By Water Tower Research

Psychedelic stocks continue their bad trip despite the psychedelic renaissance.
The headlines flowing out of the psychedelics sector over the past year indicate that the psychedelic renaissance appears to be gaining momentum.
Clinical trials at various stages involving psychedelic substances, led by MDMA, psilocybin, ketamine, and DMT, have produced results showing clinical promise in a number of treatment- resistant mental health disorders.

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Nov 11

Daily Brief Credit: Weekly Wrap – 10 Nov 2023 and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Weekly Wrap – 10 Nov 2023
Country Garden : Jungle Rather than Garden

Weekly Wrap – 10 Nov 2023

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

and more…

Country Garden : Jungle Rather than Garden

By Warut Promboon

Reuters reported on 8-November that China’s State Council has asked the Guangdong local government to arrange the rescue of Country Garden Holding.
Ping An’s spokesperson said the company had not been approached by the government.
There is also no guarantee on when bondholders will get paid back and how much the recovery value will be.

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Nov 11

Daily Brief Event-Driven: Allkem/Livent Merger: 19th December Shareholder Vote and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Allkem/Livent Merger: 19th December Shareholder Vote
Shidax (4837) – Nikkei Scoops MBO (Anncmt Post-Close), Family Wants to Buy at ¥800 Which Is Too Low
Olympus (7733) – OP Hit but Additional Buyback; Positive Dynamics but Flow Risks Persist
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Santa Rally?

Allkem/Livent Merger: 19th December Shareholder Vote

By David Blennerhassett

On the 10th May, Aussie lithium miner Allkem Ltd (AKE AU) inked a $US10bn+ “merger of equals” with Livent (LTHM US), ostensibly forming the world’s fifth largest lithium producer.
Allkem’s Scheme Meeting is the 19 December, with implementation expected on the 4 January. The IE is supportive and Allkem’s board unanimously recommends the transaction.
This looks done. Buy Livent. And get borrow on Livent to be able to short it into the inclusion or in the days following.

Shidax (4837) – Nikkei Scoops MBO (Anncmt Post-Close), Family Wants to Buy at ¥800 Which Is Too Low

By Travis Lundy

13mos ago I wrote about Shidax Corp (4837 JP) which an interesting restructuring past and a refreshing governance outlook going forward in Shidax Outlook May Change – Better Governance Matters.
The stock was up 25% in that period to yesterday. Today, a Nikkei article mid-day suggests the Shida family will launch an MBO. Stock popped. Earnings out after the close.
The article suggests a take-private MBO with Oisix ra daichi (3182 JP) again supporting the deal. 30 minutes ago Shidax responded saying an offer was put forth at ¥800/share.

Olympus (7733) – OP Hit but Additional Buyback; Positive Dynamics but Flow Risks Persist

By Travis Lundy

Yesterday, Olympus Corp (7733 JP) announced Q2 earnings which were trifle light, and announced a sharp downward revision to full-year OP despite higher revs on weaker yen.
OP takes a hit because of expenses related to the shutdown of Veran Medical device sales (announced 6 Sep, “causing” a 2.4% share price fall the next day).
They also announced an ¥80bn buyback. That should be worth 3.0-3.5% of shares out, but overhang exists. The label is the label. The details are inside. They matter.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Santa Rally?

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

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Nov 11

Daily Brief Equity Bottom-Up: Renesas Clean-Up Block Trade – Overhang Out of The Way And Time To Own Again and more

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

In today’s briefing:

Renesas Clean-Up Block Trade – Overhang Out of The Way And Time To Own Again
Unpacking First Mover OpenAI. Can It Avoid the Fate of Netscape and MySpace?
[Tencent(700 HK,BUY,TP HK$425)Target Price Change]: International Game and Advertising Drove Results
Key Takeaways from OpenAI DevDay
Eclat Textile (1476 TT): Start Of Upcycle
SMIC (981.HK): Probably A Double U-Shape Correction for Around 2 Years Until the End of 2024F.
HHGrace. Yikes! Things Just Got Really Ugly
Softbank (9984 JP): WeWork Hangover and Other Challenges
How Foxconn Triumphed on the Chinese Mainland
[KE Holdings (BEKE US,BUY,TP US$24.5)TP Change]:Steady Recovery with Catalysts for Market Share Gain

Renesas Clean-Up Block Trade – Overhang Out of The Way And Time To Own Again

By Travis Lundy

INCJ made a lot of money on Renesas Electronics (6723 JP) over the years and arguably did a great job helping the firm change direction. Now they are out.
Last night they launched a block sale through JPM and Bof A for 130.2317mm shares. They priced the heavily-oversubscribed deal at a discount of 8% or ¥2143/share.
That’s a big discount (so bad broking) for such oversubscription on a clearly-flagged deal but now they are out.

Unpacking First Mover OpenAI. Can It Avoid the Fate of Netscape and MySpace?

By Pranay Yadav

First mover advantage is half-truth. For every academic study proving that first-mover advantages exist, there is a study proving they do not.
Engineers at OpenAI, scaled up a special machine learning method using large data sets to create GPT or “Generative Pre-trained Transformer.”
Launch of ChatGPT has put OpenAI revenues on steroids with reports suggesting USD 1.3B this year (versus USD 28 million before ChatGPT was rolled out).

[Tencent(700 HK,BUY,TP HK$425)Target Price Change]: International Game and Advertising Drove Results

By Eric Wen

We expect that Tencent’s C3Q23’s revenue/non-IFRS operating profit/IFRS net income to be 2.3%/3.3%/4.2% above consensus.
We raised estimates of Tencent’s international game growth to 12% YoY to reflect the success. We also expect Tencent’s advertising business to benefit from e-commerce advertisers’ competition.
We raised the Target Price to HK$425, which implies 22.4X PE in 2024.

Key Takeaways from OpenAI DevDay

By Pranay Yadav

OpenAI held its first developer conference on November 6th. The event announced the launch of OpenAI’s latest model and feature upgrades.
The latest OpenAI model, GPT-4 Turbo offers drastically lower costs, updated knowledge cutoff, better vision and voice support, and improved API.
Event unveiled custom chatbots called GPTs for specific applications, showcasing expanded domain knowledge. They’ll be sold in a digital store, adding a new revenue stream for OpenAI.

Eclat Textile (1476 TT): Start Of Upcycle

By Steve Zhou, CFA

Eclat Textile Company (1476 TT) is a vertically integrated textile company, with around 20% net profit margin, similar to Shenzhou Intl Group Holdings (2313 HK).
The company just reported 3Q23 results, with sales down 26% yoy and net profit down 28% yoy. Starting the next quarter 4Q23, the company is expected to return to growth.
The company now trades at 23x 2024E earnings. I believe the valuation is reasonable as growth returns, and there are potential upside catalysts.

SMIC (981.HK): Probably A Double U-Shape Correction for Around 2 Years Until the End of 2024F.

By Patrick Liao

Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F.
SMIC took into consideration geopolitical instability and allowed equipment vendors to submit orders in advance.
Currently, only a few manufacturers are stockpiling smartphones in response to this wave. The overall industry remains relatively stable.

HHGrace. Yikes! Things Just Got Really Ugly

By William Keating

Revenues of US$568.5 million, down 10% sequentially and down 9.7% YoY, at the bottom of the previously guided range.
Net loss of $25.8 million compared to a profit of $7.8 million in the previous quarter and $65.5 million in the year ago period.
With current quarter gross margins in the 2-5% range, HHGrace has flipped from best in class in H123 to the worst in class now.

Softbank (9984 JP): WeWork Hangover and Other Challenges

By Victor Galliano

Softbank’s exposure to WeWork continues to haunt it beyond the close of 2QFY23, due to its credit support agreements
Aside from WeWork, we continue to see risks to valuations supporting the NAV; in particular, Arm Holdings and SVF2 which accounted for 45% of group equity value
Softbank shares trade at a 45% discount to the stated NAV yet there is downside risk to Arm’s valuation along with questions over private company valuations at SVF1 and SVF2

How Foxconn Triumphed on the Chinese Mainland

By Caixin Global

Foxconn is facing one of its biggest compliance challenges on the Chinese mainland, where the key iPhone assembler has been caught in the crosshairs of government investigators.
Multiple Foxconn-affiliated entities are being investigated by Chinese authorities as part of probes into the company’s mainland facilities, Caixin confirmed Monday with Foxconn Industrial Internet Co. Ltd., the Taiwanese contract manufacturer’s Shanghai-listed arm.
State-owned newspaper Global Times first reported Sunday that Foxconn, also known as Hon Hai Precision Industry Co. Ltd., was facing tax and land-use probes into its mainland facilities.

[KE Holdings (BEKE US,BUY,TP US$24.5)TP Change]:Steady Recovery with Catalysts for Market Share Gain

By Eric Wen

KE Holdings’ (Beike) C3Q23 revenue was 7.7%/11.6% higher than our est./cons., non-GAAP net income beat our est./cons. by 35%/119%. Existing home sales and non-transaction biz drove the bottom line beat.
We expect Beike C4Q23 to grow 20% YoY, 33% in existing home and 5% in new home, supported by gradual recovery of home transaction and Beike’s market share gain;
We reiterate BUY rating and raised TP by US$0.5 to US$24.5/ADS, also taking into account of progress in home renovation and rental management.

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Nov 11

Daily Brief Macro: Do Not SNOOZE the SLOOS and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Do Not SNOOZE the SLOOS
Seasonality Watch: Why a Dec hike remains in play
Portfolio Watch: Staying Afloat in a Storm of Uncertainty

Do Not SNOOZE the SLOOS

By Jeroen Blokland

Based on the correlation with the ISM Manufacturing Index, dismissing the SLOOS as a useless macro indicator is a bit too easy.
Even though lending standards did not tighten as much as the previous quarter, current levels point to elevated odds of a US recession.
SLOOS also confirms the start of a new default cycle, revealing that high-yield bond spreads are way too low, especially when the spread widening of CMBS is taken into account.

Seasonality Watch: Why a Dec hike remains in play

By Andreas Steno

Remember the abysmal numbers seen in the US economy around the year-turn of 2022/2023 and the sharp rebound in numbers into February/March (December and January data respectively)?
Well, for those of you who have been clients of Steno Research since January, it is no surprise that these trends were driven by extreme adjustment activities in spreadsheets.
The seasonal factors in ISM Manufacturing reached record negative territory in January, but adjustments penciled in for Dec this year are clearly less extreme.

Portfolio Watch: Staying Afloat in a Storm of Uncertainty

By Emil Moller

Hello everyone, and welcome back to our weekly Portfolio Watch, where we dive into the latest market trends and candidly assess our portfolio. All the talk in town is the US Treasury market and it seems no matter where you place your chips you are effectively trading the momentum of US bonds, if not directly then by proxy.
As a token of the current uncertainty within the safest and most liquid fixed-income market in the world, yesterday’s howler of a 30-year treasury auction stands out as an example of just how on-edge nerves are in the financial markets these days.
If the 30y auction was a reality check on the duration appetite we can only imagine the actual consequences of a standard QRA issuance plan and not the heavy bill-tilted one that Secretary Yellen ended up presenting.

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Nov 10

Daily Brief Australia: Australis Oil & Gas and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Australis Oil & Gas Limited – Oil Prices and M&A on the Up

Australis Oil & Gas Limited – Oil Prices and M&A on the Up

By Research as a Service (RaaS)

Australis Oil & Gas (ASX:ATS) is an oil and gas producer/developer, with a strategic and controlling position in the emerging Tuscaloosa Marine Shale (TMS) oil play, onshore US.
The TMS is an Eagle Ford-equivalent but early-stage oil play with gross recoverable oil potential of around 7bn barrels – this is likely to be the next big thing.
Australis represents a highly- leveraged and attractive exposure to the transformational potential of the TMS oil play.

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Nov 10

Daily Brief South Korea: iShares MSCI South Korea ETF, Ecoeye and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Spotlight on Trading Prospects Arising from ETFs as Short Selling Workarounds in Korea
Ecoeye IPO Book Building Results Analysis

Spotlight on Trading Prospects Arising from ETFs as Short Selling Workarounds in Korea

By Sanghyun Park

During the previous period of short-selling restrictions, a pattern was observed in which ETFs were utilized as a workaround for short-selling.
We should anticipate more substantial price impacts this time. Of particular significance is the possibility of utilizing not only the MSCI Korea ETF but also sector ETFs for similar purposes.
This calls for our attention to the possibility that this short-selling workaround could generate a significantly wider range of trading opportunities in the spot market compared to three years ago.

Ecoeye IPO Book Building Results Analysis

By Douglas Kim

Ecoeye announced that the IPO price has been determined at 34,700 won, which is at the high end of the IPO price range. The demand ratio was 75 to 1.
An 81.1% of the IPO shares applied thought that the company’s value is more than 34,700 won per share. The IPO offering amount is 72 billion won.
Our base case valuation of Ecoeye IPO is 45,421 won per share (31% higher than the IPO price). Given the solid upside, we have a positive view of Ecoeye IPO.

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