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Smartkarma Daily Briefs

Jan 06
0

Daily Brief Energy/Materials: Anhui Conch Cement, Petroleo Brasileiro , Crude Oil, Saudi Aramco and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Anhui Conch Cement (914 HK):  Where Are We In The Cycle?
  • Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities
  • Part Six: Commodities: Priced for a Downturn
  • Saudi Aramco and China’s Rongsheng Plan Closer Tie-up

Anhui Conch Cement (914 HK):  Where Are We In The Cycle?

By Steve Zhou, CFA

  • Anhui Conch Cement (914 HK) is trading at a historical low forward P/B of 0.5x, compared to an average of 1.2x for the last decade. 
  • In the long term, China cement will likely see much lower volume and lower cement prices in the short term, but eventually rising cement prices due to better supply picture. 
  • As the lowest cost producer, Anhui Conch stands a very good chance to win out in the long term and potentially more than double its current market share. 

Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities

By Joe Jasper

  • Global growth stocks that have significantly outperformed since the October 2023 lows are starting to pull back, and we believe a continued pause/pullback is likely in these growth areas.
  • Meanwhile, we are seeing a clear shift into value and defensives, and we recommend adding exposure to these areas. This type of Sector rotation is common during bull markets.
  • Major supports continue to hold, including $98-99 on MSCI ACWI (ACWI-US), 4600 on the S&P 500, 4400 on the EURO STOXX 50, and 2300 on the TOPIX

Part Six: Commodities: Priced for a Downturn

By Untying The Gordian Knot

  • The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
  • Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
  • Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.

Saudi Aramco and China’s Rongsheng Plan Closer Tie-up

By Caixin Global

  • Saudi Aramco and its Chinese partner Rongsheng Petrochemical Co. Ltd. have agreed to deepen their tie-up further by taking a stake in each other’s subsidiaries.
  • China’s privately controlled refiner Rongsheng said it signed a memorandum of understanding with Aramco to buy a 50% stake in the Saudi company’s refining unit Saudi Aramco Jubail Refinery Company (SASREF).
  • At the same time, Rongsheng plans to sell up to 50% stake in its unit Ningbo Zhongjin Petrochemical Co to Aramco, the world’s biggest oil producer, according to Rongsheng’s filing with the Shenzhen stock exchange on Tuesday.

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Jan 06
0

Daily Brief Health Care: Hanmi Science, Newron Pharmaceuticals and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows
  • Newron Pharmaceuticals – TRS data green-lights evenamide Phase III plans

StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

By David Blennerhassett

  • A double dose of stubs this week as Hanmi Science (008930 KS) comes up “cheap” on my monitor.
  • Preceding my comments on Hanmi are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Newron Pharmaceuticals – TRS data green-lights evenamide Phase III plans

By Edison Investment Research

Newron has announced positive 12-month data from its Phase II extension trial (study 015) assessing evenamide in 161 patients with treatment-resistant schizophrenia (TRS). The results demonstrate desirable safety and tolerability, as well as durable efficacy of evenamide, showing statistically significant improvements (p-value <0.001) in all key efficacy measures (PANSS, CGI-S and LOF) versus baseline. We believe the results are favourable for Newron’s TRS programme and bolster the company’s plans to launch a potentially pivotal Phase III trial, which management expects to commence in Q224. We note that the company is also gearing up to share results from the Phase III trial (study 008A) for patients with poorly managed schizophrenia in March 2024, which could represent another significant catalyst for investor attention.

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Jan 06
0

Daily Brief Consumer: Aoki Super, SJM Holdings, PT Metrodata Electronics and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
  • Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
  • Weekly Wrap – 05 Jan 2024
  • PT Metrodata Electronics (MTDL IJ) – Digitising Private and Public Indonesia

Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

By Travis Lundy

  • The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO. 
  • This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO. 
  • This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

By Arun George

  • Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January). 
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio. 
  • Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high. 

Weekly Wrap – 05 Jan 2024

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:

  1. Agile Property Holdings
  2. China Vanke
  3. Indika Energy
  4. SK Hynix
  5. Vedanta Resources

and more…

PT Metrodata Electronics (MTDL IJ) – Digitising Private and Public Indonesia

By Angus Mackintosh

  • PT Metrodata Electronics is Indonesia’s leading ICT distributor and one of the largest IT solutions & consulting companies, making it a play on growing digitalisation in the country.
  • The company has seen strong demand from several sectors for its solutions & consulting business, most notably from banks for digital transformations, oil & gas, and telecoms 
  • PT Metrodata Electronics is also seeing a strong rebound in its ICT distribution business, with its higher-margin solutions outperforming boosted by public sector growth. Valuations compelling on 8.7x FY2024E PER.

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Jan 06
0

Daily Brief Financials: New China Life Insurance and more

By | Daily Briefs, Financials

In today’s briefing:

  • New China Life Sets up $1.4 Billion Fund for Property Investments

New China Life Sets up $1.4 Billion Fund for Property Investments

By Caixin Global

  • New China Life Insurance Co. Ltd. will partner with a unit of China International Capital Corp. (CICC) to set up a $1.4 billion fund to invest in companies with real estate assets, as the state-owned insurer taps the property sector for long-term returns despite a market downturn.
  • New China Life said it has reached an agreement with China Capital Investment Group (CCIG) to forge the private fund, in which the insurance company will provide 9.999 billion yuan ($1.4 billion) as the limited partner. CICG will be the general partner with 1-million-yuan investment and will manage the fund.
  • The fund, with a term of eight years, will focus on direct and indirect investment in companies holding property projects in their long-term portfolios, according to New China Life.

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Jan 06
0

Most Read: Korea Stock Exchange Kospi Index, TSE Tokyo Price Index TOPIX, Jio Financial Services, Samsung Electronics Pref Shares, Fast Retailing, BYD Electronics, Aoki Super, Hyundai Hyms , Kerry Logistics Network and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
  • New Year New NISA Accounts – It’s BIG, But Not so Big
  • NIFTY NEXT50 Index Rebalance Preview: Potential Adds Skyrocketing
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2024
  • Fast Retailing: Earnings Preview
  • Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?
  • Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
  • Hyundai Hyms IPO Valuation Analysis
  • Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO
  • Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

By Sanghyun Park

  • Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
  • Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
  • Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

New Year New NISA Accounts – It’s BIG, But Not so Big

By Travis Lundy

  • The Kishida administration put out a Doubling Asset-Based Income Plan in 2022. The goal? To get cash savings (corporate/individual) into growth assets and increase asset-based return contribution to income.
  • The goal included doubling the number of NISA accounts, and the amount invested in the next five years. On 1 January 2024, NEW NISA account contribution totals were trebled.
  • If accounts double, and contribution totals treble, and exemptions are now permanent, investment doubling is a quasi-certainty. The question is how it turns into income-producing assets. That’s MUCH tougher.

NIFTY NEXT50 Index Rebalance Preview: Potential Adds Skyrocketing

By Brian Freitas

  • Nearing the end of the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
  • Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 26.9bn. There will be more than 1.5x ADV to sell on nearly all deletes.
  • The potential adds have outperformed the potential deletes by 35% over the last two months and some stocks are looking extremely frothy.

Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2024

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 1Q 2024. 
  • The excessive gaps in the preferred and common shares of Kumho Petro Chemical, Amorepacific Corp, and Samsung Electronics could reverse in the next several months.
  • We see some attractive longer-term opportunities for Amorepacific, Doosan Fuel Cell, LG Electronics, and CJ Cheiljedang which have especially high discounts for the preferred shares versus their counterpart common shares.

Fast Retailing: Earnings Preview

By Oshadhi Kumarasiri

  • While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by gross margin growth and a gradual reduction in SG&A costs.
  • Meanwhile, we expect Uniqlo’s International business OP to surpass ¥75bn, driven by a rebound in China demand  and strong momentum in South Korea, SE Asia & Ocenia.
  • Thus, we see the upcoming earnings as a compelling opportunity for trading Fast Retailing (9983 JP).

Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.
  • The index changes for the March 2024 index rebal will be announced on 16th February 2024.
  • While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.

Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

By Travis Lundy

  • The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO. 
  • This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO. 
  • This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

Hyundai Hyms IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Hyundai Hyms is implied target price of 8,025 won per share, which is 27% higher than the high end of the IPO price range. 
  • We believe Hyundai Hyms’ valuation premium to the comps is appropriate due to much stronger operating profit growth and its strong relationships with HD Hyundai Heavy Industries.
  • Hyundai Hyms’s main business includes shipbuilding equipment and related services. The company manufactures a wide variety of items necessary for ship construction, such as ship unit blocks and piping manufacturing.

Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO

By David Blennerhassett

Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

By Arun George

  • Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January). 
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio. 
  • Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high. 

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Jan 06
0

Daily Brief Quantitative Analysis: Hong Kong Buybacks Weekly (Jan 5th): Tencent and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Hong Kong Buybacks Weekly (Jan 5th): Tencent, AIA, Xiaomi

Hong Kong Buybacks Weekly (Jan 5th): Tencent, AIA, Xiaomi

By Ke Yan, CFA, FRM

  • We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jan 5th based on HKEx daily reports.
  • In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Xiaomi (1810 HK).
  • In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Wuxi Biologics (2269 HK).

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Jan 06
0

Daily Brief ESG: Almaviva – ESG Report – Lucror Analytics and more

By | Daily Briefs, ESG

In today’s briefing:

  • Almaviva – ESG Report – Lucror Analytics

Almaviva – ESG Report – Lucror Analytics

By Charles Macgregor

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).

We assess Almaviva’s ESG as “Adequate”, in line with its Environmental and Governance scores. The company has a “Strong” score for the Social pillar. Controversies are “Immaterial” and Disclosure is “Adequate”.

Almaviva is an Italian company with a focus on IT services and business process outsourcing (BPO) in customer relationship management (CRM).

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Jan 06
0

Daily Brief Technical Analysis: Buys Within Global Energy and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities

Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities

By Joe Jasper

  • Global growth stocks that have significantly outperformed since the October 2023 lows are starting to pull back, and we believe a continued pause/pullback is likely in these growth areas.
  • Meanwhile, we are seeing a clear shift into value and defensives, and we recommend adding exposure to these areas. This type of Sector rotation is common during bull markets.
  • Major supports continue to hold, including $98-99 on MSCI ACWI (ACWI-US), 4600 on the S&P 500, 4400 on the EURO STOXX 50, and 2300 on the TOPIX

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Jan 06
0

Daily Brief South Korea: Hyundai Hyms , Hanmi Science and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Hyundai Hyms IPO Valuation Analysis
  • StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

Hyundai Hyms IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Hyundai Hyms is implied target price of 8,025 won per share, which is 27% higher than the high end of the IPO price range. 
  • We believe Hyundai Hyms’ valuation premium to the comps is appropriate due to much stronger operating profit growth and its strong relationships with HD Hyundai Heavy Industries.
  • Hyundai Hyms’s main business includes shipbuilding equipment and related services. The company manufactures a wide variety of items necessary for ship construction, such as ship unit blocks and piping manufacturing.

StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

By David Blennerhassett

  • A double dose of stubs this week as Hanmi Science (008930 KS) comes up “cheap” on my monitor.
  • Preceding my comments on Hanmi are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

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Jan 06
0

Daily Brief ECM: Hyundai Hyms IPO Valuation Analysis and more

By | Daily Briefs, ECM

In today’s briefing:

  • Hyundai Hyms IPO Valuation Analysis

Hyundai Hyms IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Hyundai Hyms is implied target price of 8,025 won per share, which is 27% higher than the high end of the IPO price range. 
  • We believe Hyundai Hyms’ valuation premium to the comps is appropriate due to much stronger operating profit growth and its strong relationships with HD Hyundai Heavy Industries.
  • Hyundai Hyms’s main business includes shipbuilding equipment and related services. The company manufactures a wide variety of items necessary for ship construction, such as ship unit blocks and piping manufacturing.

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