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Smartkarma Daily Briefs

Daily Brief Macro: 5 Things We Watch – The Equity Rally and more

By | Daily Briefs, Macro

In today’s briefing:

  • 5 Things We Watch – The Equity Rally, the Chinese Consumption Problem, Consumers Vs Corporates
  • Credit Watch – Why European Housing is likely going further south
  • CX Daily: China Mulls Scrapping Fixed Household Gas Rates as Winter Shortages Loom


5 Things We Watch – The Equity Rally, the Chinese Consumption Problem, Consumers Vs Corporates

By Andreas Steno

  • Happy Wednesday, and welcome back to our weekly ‘5 Things We Watch’ where we take you through some of the topics and events that we are looking out for currently. 
  • The equity rally continues, Xi is in the middle of structural issues, house lending is falling off a cliff in EZ and inflation is waning fast.
  • Read more about the 5 things that we watch currently in this week’s edition of ‘5 Things We Watch’.

Credit Watch – Why European Housing is likely going further south

By Andreas Steno

  • With the recent drop in house lending in the Eurozone, we take a closer look at how exposed European consumers and corporations actually are to further interest rate hikes. A teaser: It doesn’t look particularly great.
  • Everyone is starting to notice the EZ weakness that we have been pointing out recently, and it is probably the last place you would want to place excess capital currently.
  • But where does this weakness come from?

CX Daily: China Mulls Scrapping Fixed Household Gas Rates as Winter Shortages Loom

By Caixin Global

  • Natural gas /In Depth: China mulls scrapping fixed household gas rates as winter shortages loom
  • China-U.S. /: China, U.S. should prioritize setting up guiding principles for peaceful bilateral relationship, former Chinese ambassador says
  • Yellen /: Analysis: What does the market expect from Yellen’s China visit?

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

By | Daily Briefs, ESG

In today’s briefing:

  • Natura – ESG Report – Lucror Analytics
  • Telecom Italia – ESG Report – Lucror Analytics
  • The Key Is to Be Able to Use Cash on Hand Effectively in the Future


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


Telecom Italia – 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 Telecom Italia’s ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. While the company has a “Strong” Environmental score, this pillar has the lowest weightage in our assessment of companies in the telecom sector. Controversies are “Immaterial” and Disclosure is “Strong”.


The Key Is to Be Able to Use Cash on Hand Effectively in the Future

By Aki Matsumoto

  • Although more companies have recently started to use their cash for shareholder returns, this is still not enough in terms of the dividend payout ratio.
  • Both sales and profits of companies haven’t increased by that amount for past 10 years. The question for the future is whether the cash on hand can be used effectively.
  • It is hoped that the quality of listed companies on prime market will improve as a result of M&As involving industry restructuring, the dissolution of parent-subsidiary listings and going private.

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Daily Brief Quantitative Analysis: Factor Olympics 2023 1H and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Factor Olympics 2023 1H


Factor Olympics 2023 1H

By Nicolas Rabener

  • All popular factors generated negative excess returns in 1H 2023
  • The best-performing stocks were small caps, while the lowest-risk stocks fared the worst.
  • Against all expectations, long short multi-factor products generated favorable returns.

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Daily Brief China: Robosense Technology, Zhejiang Yongtai Tech A, Lalatech Holdings Co Ltd and more

By | China, Daily Briefs

In today’s briefing:

  • Robosense Technology Pre-IPO Tearsheet
  • Zhejiang Yongtai Technology GDR Listing –  Discount Wider than Recent Deals & Inline with Average
  • Lalatech Holdings Limited Pre-IPO – Thoughts on Valuation – Needs a Very Big Cut from Pre-IPO Rounds


Robosense Technology Pre-IPO Tearsheet

By Sumeet Singh

  • Robosense Technology (ROBO HK) (RT) is looking to raise around US$300m (estimated) in its upcoming Hong Kong IPO. The deal will be run by JPM and China Renaissance.
  • As of Mar 23, it had earned design wins for mass production of LiDAR for 52 vehicles with 21OEMs and Tier 1 suppliers, ranking No. 1 globally, according to CIC.
  • As of Mar 23, it had served the largest number of automotive OEMs and Tier 1 suppliers, according to CIC.

Zhejiang Yongtai Technology GDR Listing –  Discount Wider than Recent Deals & Inline with Average

By Clarence Chu

  • Zhejiang Yongtai Tech A (002326 CH) is looking to raise US$107m in its London GDR listing. Huatai is the sole bookrunner on the deal.
  • The firm is offering 11.4m GDRs (1 GDR to 5 ordinary A-shares) for sale, at a fixed 12.7% discount to last close on its A-share leg.
  • The deal is a relatively small one for the firm to digest, representing just 3.9 days of three month ADV on its A-share leg.

Lalatech Holdings Limited Pre-IPO – Thoughts on Valuation – Needs a Very Big Cut from Pre-IPO Rounds

By Sumeet Singh

  • Lalatech Holdings Co Ltd (LALA HK) is looking to raise about US$1bn in its upcoming HK IPO.
  • Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
  • We have looked at the company’s past performance and peer comparison in our earlier notes. In this note we will talk about valuations.

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Daily Brief Australia: Paradigm Biopharmaceuticals and more

By | Australia, Daily Briefs

In today’s briefing:

  • Paradigm Biopharma – Pivotal Phase III progressing as planned


Paradigm Biopharma – Pivotal Phase III progressing as planned

By Edison Investment Research

Paradigm has announced the completion of patient recruitment for stage one (dose selection) of its pivotal Phase III trial, PARA_OA_002, a multi-centre (US/Australia/UK/EU/Canada), two-stage, adaptive, randomised, double-blind, placebo-controlled study to assess injectable pentosan polysulfate (iPPS) in patients with knee osteoarthritis (kOA) pain. Paradigm has efficiently recruited participants for the trial through various initiatives, such as through its partnership with NFL Alumni Health. Management expects stage one to be complete in Q3 CY23, and for stage two to commence with the most effective dose later in H2 CY23. The selected dose will also be used in the initiation of the separate confirmatory Phase III trial in H2 CY23. These events represent key milestones for Paradigm, in our view.


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Daily Brief South Korea: Mini Kospi 200 Futures, SKC Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Impact of Allowing Negotiated Block Trades for Eight Futures Spreads, Incl. SSF SP
  • SKC: Aggressive Plans to Expand Rechargeable Battery & Semiconductor Materials – But At What Price?


Impact of Allowing Negotiated Block Trades for Eight Futures Spreads, Incl. SSF SP

By Sanghyun Park

  • It is highly probable that SP trading will increase after July 31st, as this will provide a more conducive environment for the seamless rollover of large positions.
  • Considering the actual impact on the market, we may have to pay more attention to the potential surge in trading volume for single-stock futures SP.
  • We see a rise in aggressive position setups in event trading, including rights offerings. This may lead to a more substantial price impact by increasing the intensity of such trading.

SKC: Aggressive Plans to Expand Rechargeable Battery & Semiconductor Materials – But At What Price?

By Douglas Kim

  • SKC announced aggressive plans to expand its rechargeable battery, semiconductor, and ecofriendly materials and it plans to invest about 5 trillion to 6 trillion won in these businesses by 2027. 
  • We believe that the company will use a combination of asset sales, sale of its treasury shares, and additional debt and equity raising in the next 3-5 years. 
  • While the market welcomes sale of non-core businesses such as SK Pucore and sale of treasury shares, it is likely to have greater concerns about additional debt and equity raising. 

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Daily Brief India: Hero Motocorp, JSW Steel Ltd, Macrotech Developers and more

By | Daily Briefs, India

In today’s briefing:

  • Hero Motocorp (HMCL IN) | The “HOG” Wash
  • SENSEX Ad Hoc Rebalance: JSW Steel Replaces HDFC
  • Macrotech Developers- Yet to Show Grit


Hero Motocorp (HMCL IN) | The “HOG” Wash

By Pranav Bhavsar

  • Hero Motocorp (HMCL IN)  & Harley Davidson (HOG US) launched their collaborative creation, the Harley-Davidson X440, in India.
  • While this is a step in the right and anticipated direction, there are potentially grave mistakes that need to be corrected.
  • For HOG, there is more to lose than to gain from this development. Additionally, Eicher Motors (EIM IN) moat around the brand and a strong riding culture is likely underrated.

SENSEX Ad Hoc Rebalance: JSW Steel Replaces HDFC

By Brian Freitas


Macrotech Developers- Yet to Show Grit

By Nitin Mangal

  • Macrotech Developers (LODHA IN) had several issues on the balance sheet and governance front earlier. While, the debt levels have significantly come down since the time, governance however needs improvement. 
  • Flat sales and margin contraction, driven by some bizzarre expenses needs attention including some elongated debtors.
  • We suggest investors should remain cautious about future uncertainty, as impairment of loans and adverse outcome of contingent liabilities may have a dent on the balance sheet. 

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Daily Brief Indonesia: Sido Muncul and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Sido Muncul (SIDO): Past Is Not Indicative of Future


Sido Muncul (SIDO): Past Is Not Indicative of Future

By Henry Soediarko

  • Sido Muncul (SIDO IJ) performance during COVID was stellar and posted record high revenues and earnings without sacrificing margins. 
  • FY 22’s result was the first time in many years that both revenue and net income decelerated. 
  • Current valuations at 19x PER and 7x PBR are not cheap, historically or relative to their peers. 

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Daily Brief Japan: Socionext, Yachiyo Industry, Tryt Inc, Lawson Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Socionext (6526 JP) – Pre-IPO Lockup Expiry Offering Will Double Real World Float
  • Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains
  • And Now For Something Truly Offensive – Honda Pays <0.5x Book for Yachiyo
  • Socionext (6526 JP): US$1.9bn Secondary Placement
  • Tryt IPO – Valuation Seems Digestible at the Bottom End, but the Firm Still Needs to Get a Lot Right
  • TRYT IPO: Revised IPO Price Range Remains Unattractive
  • Lawson (2651) | Dividend Grower
  • The Key Is to Be Able to Use Cash on Hand Effectively in the Future


Socionext (6526 JP) – Pre-IPO Lockup Expiry Offering Will Double Real World Float

By Travis Lundy

  • Today after the close, SoC and market darling Socionext (6526 JP) announced that DBJ, Fujitsu, and Panasonic would offer the remaining shares they in a US$1.8bn secondary offering.
  • Pshaw…. that’s only 2.5 days of 20-day ADV… Not a lot. But in fact, that is a LOT of stock. 
  • I harp on understanding shareholder structure. I think it worthwhile. Here it matters too.

Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains

By Sumeet Singh

  • Three shareholders of Socionext (6526 JP) aim to raise around US$1.8bn via selling all of their shares in Socionext.
  • Socionext was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup expired in Apr 2023. Its shares are up 6x since listing.
  • In this note, we talk about the deal dynamics and run the deal through our ECM framework.

And Now For Something Truly Offensive – Honda Pays <0.5x Book for Yachiyo

By Travis Lundy

  • Every now and then, you get a tender offer proposal which is truly offensive. This is one. 
  • Yes, existing ICE-related autoparts makers are under the cosh as they face down obsolesence induced by competition from EVs. Fuel tank makers like Yachiyo are at risk. 
  • But this bid started at <0.3x book, and ended at <0.5x book, despite significant net financial assets and lots of unrecognised DTAs. 

Socionext (6526 JP): US$1.9bn Secondary Placement

By Arun George

  • Socionext (6526 JP) announced a pure secondary offering of 12.6 million or 37.50% of outstanding shares. At the last close, the placement is worth JPY277 billion (US$1.9 billion)
  • The selling shareholders’ primary motivation for exiting their shareholding is to capitalise on the extraordinary share price. Socionext shares are up 6x from the IPO price of JPY3,650 per share.
  • We think looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 11 to 13 July (likely 11 July).

Tryt IPO – Valuation Seems Digestible at the Bottom End, but the Firm Still Needs to Get a Lot Right

By Clarence Chu

  • Tryt Inc (9164 JP) is looking to raise up to US$360m in its Japan IPO.
  • Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
  • In this note, we will revisit our earnings assumptions and share our thoughts on valuation at the final price range.

TRYT IPO: Revised IPO Price Range Remains Unattractive

By Arun George


Lawson (2651) | Dividend Grower

By Mark Chadwick

  • We are bullish on Lawson and see fair value at Y7,500 per share based on 3% FY2/25 DPS of Y225/share
  • The domestic convenience store business is recovering post pandemic leading to a possible earnings beat
  • The market remains sceptical of mid-term growth drivers like Seijo Ishii and China expansion plans

The Key Is to Be Able to Use Cash on Hand Effectively in the Future

By Aki Matsumoto

  • Although more companies have recently started to use their cash for shareholder returns, this is still not enough in terms of the dividend payout ratio.
  • Both sales and profits of companies haven’t increased by that amount for past 10 years. The question for the future is whether the cash on hand can be used effectively.
  • It is hoped that the quality of listed companies on prime market will improve as a result of M&As involving industry restructuring, the dissolution of parent-subsidiary listings and going private.

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Daily Brief United States: Tesla Motors, Bitcoin, United Rentals, SIGA Technologies and more

By | Daily Briefs, United States

In today’s briefing:

  • Tesla Q2: Solid Beat, At Any Cost
  • #70 Superpowered superchains
  • United Rentals: Be Mindful Of Short-Term Risks, But Don’t Lose The Long-Term Focus
  • SIGA Technologies – Diamond in the rough amid macro weakness


Tesla Q2: Solid Beat, At Any Cost

By Vicki Bryan

  • Q2 deliveries were solidly higher versus expectations, thanks to Tesla’s 11th hour fire sales on top of fire sales to move sluggish inventory. 
  • The trouble is, this likely slashed already shrinking profitability while excess inventory continued to grow.
  • Margins & profits probably can’t recover as more aggressive measures already are needed in Q3 just to sustain sales.

#70 Superpowered superchains

By Carbono Insights

  • The second week in a row of good vibes. The crypto market is basking in a period of optimism, fueled by the momentum generated from the influx of numerous ETF filings.
  • Bitcoin and Ethereum, the leading cryptocurrencies, have experienced sustained upward trends in their values.
  • As a result, the vision of an interconnected on-chain, off-chain financial system is rekindled, and the hopes of a seamless integration of traditional and digital economies emerge again, with record inflows of capital into crypto to feed this hypothesis.

United Rentals: Be Mindful Of Short-Term Risks, But Don’t Lose The Long-Term Focus

By Vladimir Dimitrov, CFA

  • United Rentals continues to perform well as the risk of a recession grows.
  • The share price is not expensive as profitability and utilization rates remain strong.
  • United Renters remains a sold long-term opportunity, but near-term risks should not be ignored, but United Rental remains a selling long- term opportunity.

SIGA Technologies – Diamond in the rough amid macro weakness

By Edison Investment Research

Ahead of its H123 results and an anticipated period of increased business activity in the second half of the year, we present a preview of SIGA Technologies, which continues to have strong fundamentals (despite the bearish macro environment) with several potential inflection points on the horizon. The nearest catalysts, in our opinion, are the upcoming TPOXX deliveries to the US strategic national stockpile (which we expect in Q3/Q423) and data readouts from the post-exposure prophylactic (PEP) label expansion trials, anticipated in Q323, positive results from which could materially expand SIGA’s addressable market. With a strong balance sheet and potential incremental income generation for shareholders (via dividends and buybacks), we believe that SIGA has a resilient business case in the biotech space.


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