Smartkarma Daily Briefs

For the month of December 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$10bn.
The average premium for the new deals announced (or first discussed) in December was 44.7%. The average YTD is 39% (117 deals).
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Burlington Stores Inc.: Reinventing the Off-Price Retail Model! – Major Drivers

Burlington Stores and its management reported a 6% increase in comparable store sales, aligning with the midpoint of their projected range of 5% to 7%.
Despite a slight outperformance through September, unseasonably warm weather in October impacted the growth trajectory, particularly affecting outerwear sales, an area of strength for Burlington.
Despite anticipating some variability, the company aims for mid-single-digit annual comparable store sales growth over the next five years, building on strategies implemented since 2019 to enhance its off-price model.

Domino’s Pizza Inc.: Can The New AI-Driven Innovation Be A Game Changer? – Major Drivers

The company had a 5.1% global retail sales increase, excluding foreign currency impact, propelled by positive international sales comps and net store expansion.
The US experienced a 0.9% growth in retail sales, while international retail sales, excluding foreign currency impact, saw an impressive 9.4% surge.
Positive retail sales growth, excluding foreign currency impact, contributed to improved operating income across both US and international domains.

The Estee Lauder Companies Inc.: The AI Makeup Revolution! Is This the Future of Beauty? – Major Drivers

Estee Lauder Companies Inc. delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
Despite an 11% decline in organic sales, adjusted diluted EPS exceeded expectations at $0.11, attributed to a better-than-expected adjusted operating margin.
Estee Lauder remains optimistic about sequential improvements, anticipating double-digit organic sales growth.

Dollar Tree Inc.: Can They Survive Amidst The Economic Turmoil? – Major Drivers

By Small Cap Consumer Research

Dollar Tree, Inc. delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as earnings expectations of Wall Street.
In a demanding retail landscape, Dollar Tree has demonstrated resilience amid challenges faced by lower-income consumers, including inflation and reduced government benefits.
The company’s strategic initiatives include a multi-price journey at Dollar Tree, with a growing assortment, and planogram resets at Family Dollar, enhancing product offerings.

EXPR: Getting Clean as Near Peak Xmas; Reiterate Buy Rating, $20 PT

We are reiterating our Buy rating, price target and projections for Express after visiting stores in Connecticut and Long Island.
As such, we believe Express is on track to achieve our 4Q projections.
We reiterate our Buy rating and price target.

The Gap Inc.: How They’re Reclaiming Their Throne in the Fashion Industry! – Major Drivers

The Gap, Inc. has been seeing an amazing upward momentum after it managed to surpass the revenue and earnings expectations of Wall Street.
Despite a 7% dip in revenue and a 2% decrease in comp sales, the third quarter showcased improved margins, expenses, and cash flow.
Old Navy saw a positive 1% comp, driven by women’s and back-to-school strength, while Gap brand found success in women’s and baby segments.

Etsy Inc: Reinventing E-Commerce with AI-Powered Curation! – Major Drivers

Etsy Inc managed to surpass Wall Street’s revenue and earnings expectations, marked by moderate top-line growth and sustained robust profitability.
The management’s dedication to enhancing buyer confidence was evident in the strides made to improve reliability and convenience metrics, such as estimated delivery dates, package tracking, on-time delivery, and transparent return policies.
These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

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Jan 01

Daily Brief Financials: Lifenet Insurance Company, American International Group, Metlife Inc, S&P Global and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo
American Airlines Group: Additions of New Routes & Other Major Drivers
American International Group (AIG): Acquisition of UK Protection Business & Other Major Drivers
MetLife Inc.: AI Partnerships As A Major Growth Driver! – Financial Forecasts
S&P Global: New Products and Strategies Fueling Market Domination! – Major Drivers

Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo

By Alec Tseung

Oasis Management has become a major shareholder in Lifenet in November. Together with another activist investor, Effissimo Capital (the largest shareholder), they now control >30% of the company.
Company announced some new partnerships/initiatives to drive growth but they don’t seem to be materially different from what it has been doing to turn around its declining VoNB.
Unless we can see a sustained trend of improving VoNB, it’s difficult to justify the premium valuation vs. the other more established peer.

American Airlines Group: Additions of New Routes & Other Major Drivers

American Airlines Group delivered mixed results for the previous quarter, with revenues below the analyst consensus.
The financial results for the third quarter showcased high revenues of approximately $13.5 billion, driven by a resilient demand environment and significant travel rewards program revenue.
American Airlines experienced steady domestic demand, with international demand fueling revenue growth, particularly in the Atlantic, Caribbean, and Central America regions.

American International Group (AIG): Acquisition of UK Protection Business & Other Major Drivers

AIG delivered mixed results for the previous quarter, with revenues well below analyst expectations, but managed an earnings beat.
In the third quarter, AIG continued to achieve remarkable results, demonstrating significant progress in strategic, operational, and financial objectives across the organization.
They had adjusted after-tax income of $1.2 billion, a 92% YoY increase, and consolidated net investment income reaching $3.3 billion, a 29% YoY increase.

MetLife Inc.: AI Partnerships As A Major Growth Driver! – Financial Forecasts

MetLife managed to exceed Wall Street’s revenue and earnings expectations, underscoring the company’s sustained business momentum.
Adjusted earnings per share, excluding these items, stood at $1.95, reflecting a significant 43% increase from the previous year.
In the US Group Benefits sector, MetLife achieved an all-time high in adjusted earnings, totaling $483 million, a 16% year-over-year increase.

S&P Global: New Products and Strategies Fueling Market Domination! – Major Drivers

S&P Global delivered strong financial performance in the third quarter, with an 11% increase in revenue and a 10% rise in adjusted EPS.
S&P Global’s strategic growth areas are accelerating, particularly in sustainability and energy transition, and private markets.
S&P Global’s Ratings division saw a robust quarter with 21% growth year-over-year, driven by a favorable environment for issuers.

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Dec 31

Most Read: Posco DX, Tongcheng Travel Holdings , Pasona Group, Jusung Engineering, China Mobile, Hollysys Automation Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price
Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer

The KRX has preliminarily approved Posco DX (022100 KS)‘s listing transfer from the KOSDAQ Market to the KOSPI Market.
Posco DX (022100 KS) has announced that its stock will start trading on the KOSPI Market from the open on 2 January.
We expect Temc (425040 KS) to replace Posco DX (022100 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 28 December.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).

Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO

It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.

KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX

Posco DX (022100 KS) will move from the KOSDAQ Market to the KOSPI Market on 2 January. That means KOSDAQ150 Index (KOSDQ150 INDEX) deletion at the close on 28 December.
In line with our forecast, Temc (425040 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) as a replacement.
Short interest increased in Posco DX (022100 KS) following its inclusion in a global index and there should continue to be unwinding over the next week.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price

Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.

Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea

By Sanghyun Park

The spot prices of the newly listed SSFs generally exhibited a notable upward trend. This trend was consistently more pronounced in KOSDAQ-listed stocks compared to KOSPI-listed ones.
Various factors, including actions by ETF operators, may contribute. Their SSF purchases could deepen contango, leading to temporary spot price increases through arb spread seekers anticipating this development.
We should focus on a potentially consistent price pattern persisting before a sufficient learning effect accumulates. The tight schedule after July increases the likelihood of similar opportunities next March.

Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid

On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
“The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

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Dec 31

Daily Brief Australia: AUD and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Part Three: Australian Dollar and AGB Yields

Part Three: Australian Dollar and AGB Yields

By Untying The Gordian Knot

The Aussie Dollar is acting as a delta one to the Chinese Economic data, as the People’s Bank of China (PBOC) remains committed to maintaining the stability of the CNY.
The AUDJPY has formed an intermediate double-top pattern.
While it is likely to rebound, it could also be influenced by the difference in export growth between ROW with China and Japan.

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Dec 31

Daily Brief United States: Hollysys Automation Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

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Dec 31

Daily Brief China: China Mobile, Swire Pacific (A), LONGi Green Energy Technology, Ganfeng Lithium and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT
Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week
A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.
Swire Pacific (A) (19 HK) may still see more outperformance from its latest buyback. But it’s up ~29% since the company announced it was buying both the As and Bs.
Li Ning (2331 HK)‘s shares continue to edge up after its founder recently increased its stake.

Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week

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 BUY RMB 18.7bn of A-shares on stronger average activity. BIG net buying flows on Weds and Thursday.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

The New and Better (5mos old) 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.
SOUTHBOUND flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.

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Dec 31

Daily Brief Thematic (Sector/Industry): 4 New Deep Value Double Net Net Additions To The Cheap Japanese Basket and more

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

In today’s briefing:

4 New Deep Value Double Net Net Additions To The Cheap Japanese Basket
2023 Winners & Losers: Laggards and Rotation Plays for Global Travel/Mobility Stocks

4 New Deep Value Double Net Net Additions To The Cheap Japanese Basket

By Altay Capital

I’ve added several deep value names to my Japanese portfolio over the last few months.
While there are many net-nets in Japan, the names below are either double net nets or close, meaning if these stocks doubled, they would still be net nets.
There are cheaper names in Japan, but I’m filtering a bit for profitability.

2023 Winners & Losers: Laggards and Rotation Plays for Global Travel/Mobility Stocks

By Mohshin Aziz

We compiled the share price movements of 183 global travel/mobility stocks to uncover general trends and identify rotation and laggard plays
Tourist countries like Greece, Spain and Turkey did very well. The U.S. also performed well, almost all names closed the year higher except for those with unique problems
China and anything that is China-focused performed the worst, even companies that delivered great results are not spared and currently trading at cheap valuations

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Dec 31

Daily Brief Event-Driven: HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys
Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT
Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week
A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.
Swire Pacific (A) (19 HK) may still see more outperformance from its latest buyback. But it’s up ~29% since the company announced it was buying both the As and Bs.
Li Ning (2331 HK)‘s shares continue to edge up after its founder recently increased its stake.

Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week

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 BUY RMB 18.7bn of A-shares on stronger average activity. BIG net buying flows on Weds and Thursday.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable