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Smartkarma Daily Briefs

Nov 27
0

Daily Brief Macro: Investment Opportunities From A Global Leadership Review and more

By | Daily Briefs, Macro

In today’s briefing:

  • Investment Opportunities From A Global Leadership Review
  • Steno Signals #75 – The 2007/2008 Playbook Is Useful Again
  • 7 Reasons to Embrace the Melt-Up Into Year-End

Investment Opportunities From A Global Leadership Review

By Cam Hui

  • Global equities are surging, led by growth stocks. Stay with the current leadership until year-end as hedge funds are likely to engage in a beta chase for performance.
  • U.S. stocks are still the leaders, especially the megacap growth stocks.
  • Set-Ups for a new leadership are emerging in Europe and EM ex-China. Wait until early 2024 to re-evaluate the evolution of leadership before making any decisions on rotation.

Steno Signals #75 – The 2007/2008 Playbook Is Useful Again

By Andreas Steno

  • Happy Sunday and welcome to our weekly flagship editorial.
  • The soft landing narrative has seen material tailwinds over the past 6-8 weeks, while the recession narrative is fading fast.
  • This is the first prerequisite for an actual recession as a recession never arrives when everyone plans for one.

7 Reasons to Embrace the Melt-Up Into Year-End

By Cam Hui

  • We wouldn’t go as far as to call the current circumstance a generational buying opportunity, but a rare “fat pitch” that comes along only once or twice per decade.
  • The current episode of strong breadth thrust off the market bottom in late October is a rare and clear, and extraordinary, trading signal of a major market bottom.
  • We believe investors should, at a minimum, embrace the likely melt-up into year-end and re-evaluate market conditions in January.

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Nov 27
0

Daily Brief TMT/Internet: Xiaomi Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

By Ming Lu

  • Trip.com’s domestic hotel bookings increased by 70% over pre-COVID 3Q19.
  • Xiaomi’s revenue began to grow in 3Q23 after decreasing for five quarters.
  • China home appliance export surged in October, for example, fridge export amount growing by 42% YoY.

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Nov 27
0

Daily Brief Health Care: WuXi AppTec , China Resources Sanju Mdcl & Phrm, Xiamen Yan Palace Bioengineering and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks
  • China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu
  • Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) – Some Points Worth the Attention

CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks

By Brian Freitas

  • There are 4 changes for the CSI Medical Service Index that will be implemented at the close on 8 December.
  • The constituent changes plus capping result in one-way turnover of 5.9% and in a one-way trade of CNY 1.86bn (US$261m).
  • Some stocks will have passive flows from global trackers at the end of November while there will be flows from other local passive trackers at the close on 8 December.

China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

By Xinyao (Criss) Wang

  • It is the upfront payment rather than the total or subsequent milestone payments that indicates the gold content of license-out collaborations. We analyzed our criteria.
  • Investors actually don’t need to worry too much about the NRDL negotiation results, because the NRDL price of domestic innovative drugs has become relatively stable. There are basically three levels.
  • We analyzed key points about China Resources Sanju. Considering the impact of anti-corruption in 23Q3 and the weak performance of TCM formula granules business, 23H2 performance could be under pressure. 

Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.
  • OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.
  • The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than Dong E E Jiao.

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Nov 27
0

Daily Brief Equity Bottom-Up: 2024 High Conviction: VinFast (VFS US) – Heading for Trouble and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • 2024 High Conviction: VinFast (VFS US) – Heading for Trouble
  • 2024 High Conviction: Long BYD and Short Tesla
  • China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu
  • Tongcheng Travel (780 HK): Rides on the Tourism Upswing
  • China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

2024 High Conviction: VinFast (VFS US) – Heading for Trouble

By Arun George

  • Vinfast (VFS US), a Vietnamese EV manufacturer and a majority-owned affiliate of Vingroup Jsc (VIC VN), completed its merger with Black Spade on 14 August. 
  • Due to the low float, the shares have been on a wild ride, with the last close of US$6.56 materially below the high of US$82.35 per share.
  • VinFast remains an avoid due to related party-driven EV sales, declining customer traction, operating losses, cash burn, equity raise overhang and frothy valuation.  

2024 High Conviction: Long BYD and Short Tesla

By Henry Soediarko

  • Tesla Motors (TSLA US) market share in China has decreased and its 3Q23 operational data suggested it offered discounts to defend its market share. 
  • Albeit losing some market share, BYD (1211 HK) operational data is much more solid, even expanded its profit margin during a difficult environment in China. 
  • Tesla share price has outpaced BYD’s this year by 70%, it should reverse in the next year.

China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

By Xinyao (Criss) Wang

  • It is the upfront payment rather than the total or subsequent milestone payments that indicates the gold content of license-out collaborations. We analyzed our criteria.
  • Investors actually don’t need to worry too much about the NRDL negotiation results, because the NRDL price of domestic innovative drugs has become relatively stable. There are basically three levels.
  • We analyzed key points about China Resources Sanju. Considering the impact of anti-corruption in 23Q3 and the weak performance of TCM formula granules business, 23H2 performance could be under pressure. 

Tongcheng Travel (780 HK): Rides on the Tourism Upswing

By Osbert Tang, CFA

  • Tongcheng Travel Holdings (780 HK) is best positioned to capture post-COVID travel, especially in lower-tier cities. This is reflected in a 146.5% growth in 3Q23 adjusted net profit.
  • The cooperation with Tencent (700 HK) continues to bear fruits and will drive accelerated momentum as it leverages on QQ Browser, Weixin mini-program, and Tencent Docs.
  • 3Q23 net cash increased 1.5x from the end-FY22 level and now represents 10.9% of market capitalisation. Its earnings valuations are attractive relative to both growth and peers.

China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

By Ming Lu

  • Trip.com’s domestic hotel bookings increased by 70% over pre-COVID 3Q19.
  • Xiaomi’s revenue began to grow in 3Q23 after decreasing for five quarters.
  • China home appliance export surged in October, for example, fridge export amount growing by 42% YoY.

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Nov 27
0

Daily Brief Australia: Origin Energy and more

By | Australia, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (27 Nov) – Origin, OreCorp, Healius, Taisho, JSR, Eoflow, Hollysys, Haitong Intl

Merger Arb Mondays (27 Nov) – Origin, OreCorp, Healius, Taisho, JSR, Eoflow, Hollysys, Haitong Intl

By Arun George

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Nov 27
0

Daily Brief India: Studio City International Holdings Limited and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: China South City, China Vanke , Hopson Development

Morning Views Asia: China South City, China Vanke , Hopson Development

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Nov 27
0

Daily Brief China: Zhongjin Gold Corp A, Fenbi Ltd, Hainan Island Construction, Shanxi Meijin Energy Co, Ltd., WuXi AppTec , BYD, Tongcheng Travel Holdings , China Resources Sanju Mdcl & Phrm, Xiamen Yan Palace Bioengineering, Xiaomi Corp and more

By | China, Daily Briefs

In today’s briefing:

  • CSI300 Index Rebalance: 14 Changes & A Few Surprises
  • KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added
  • Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!
  • CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
  • CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks
  • 2024 High Conviction: Long BYD and Short Tesla
  • Tongcheng Travel (780 HK): Rides on the Tourism Upswing
  • China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu
  • Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) – Some Points Worth the Attention
  • China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

CSI300 Index Rebalance: 14 Changes & A Few Surprises

By Brian Freitas

  • There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
  • While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
  • The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.

KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added

By Brian Freitas

Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!

By Janaghan Jeyakumar, CFA

  • After market close on Friday 24th November 2023, the December 2023 index review results for CSI 300/500 and SSE 50/180 were announced.
  • CSI 300 and CSI will have 14 and 50 changes while SSE 50 and SSE 180 will have 5 and 18 changes respectively. There are many overlapping flows.
  • In this insight, I have presented the details of the index changes and aggregated the expected flows attributable to the four indices mentioned above.

CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes

By Brian Freitas

  • There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 8 December.
  • There are 15 stocks that overlap between the CSI 300 Index and the CSI Smallcap 500 Index and there will be opposing flows from passive trackers.
  • One way turnover at the rebalance is estimated at 9.56% leading to a one-way trade of CNY 6.04bn. Industrials and Information Technology gain index spots while Materials and Financial lose.

CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks

By Brian Freitas

  • There are 4 changes for the CSI Medical Service Index that will be implemented at the close on 8 December.
  • The constituent changes plus capping result in one-way turnover of 5.9% and in a one-way trade of CNY 1.86bn (US$261m).
  • Some stocks will have passive flows from global trackers at the end of November while there will be flows from other local passive trackers at the close on 8 December.

2024 High Conviction: Long BYD and Short Tesla

By Henry Soediarko

  • Tesla Motors (TSLA US) market share in China has decreased and its 3Q23 operational data suggested it offered discounts to defend its market share. 
  • Albeit losing some market share, BYD (1211 HK) operational data is much more solid, even expanded its profit margin during a difficult environment in China. 
  • Tesla share price has outpaced BYD’s this year by 70%, it should reverse in the next year.

Tongcheng Travel (780 HK): Rides on the Tourism Upswing

By Osbert Tang, CFA

  • Tongcheng Travel Holdings (780 HK) is best positioned to capture post-COVID travel, especially in lower-tier cities. This is reflected in a 146.5% growth in 3Q23 adjusted net profit.
  • The cooperation with Tencent (700 HK) continues to bear fruits and will drive accelerated momentum as it leverages on QQ Browser, Weixin mini-program, and Tencent Docs.
  • 3Q23 net cash increased 1.5x from the end-FY22 level and now represents 10.9% of market capitalisation. Its earnings valuations are attractive relative to both growth and peers.

China Healthcare Weekly (Nov.24) – Gold Content Of License-Out Deals, NRDL Pricing Levels, CR Sanjiu

By Xinyao (Criss) Wang

  • It is the upfront payment rather than the total or subsequent milestone payments that indicates the gold content of license-out collaborations. We analyzed our criteria.
  • Investors actually don’t need to worry too much about the NRDL negotiation results, because the NRDL price of domestic innovative drugs has become relatively stable. There are basically three levels.
  • We analyzed key points about China Resources Sanju. Considering the impact of anti-corruption in 23Q3 and the weak performance of TCM formula granules business, 23H2 performance could be under pressure. 

Pre-IPO Xiamen Yan Palace Bioengineering (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • From 2020 to 2022, Yan Palace has spent RMB831 million on advertising and promotion, while total net profit of the Company during the same period was only about RMB500 million.
  • OneNest is the main product with the highest gross margin, which is driven by price increase strategy.However, raising price may not work. Revenue growth in 2023H2/2024 could further slow down.
  • The question is are investors really satisfied with such low-margin business for a company with strong consumption attributes? Valuation of Yan Palace should be lower than Dong E E Jiao.

China Consumption Weekly (27 Nov 2023): Trip.com, Xiaomi, IQiyi, Full Truck, Home Appliance Export

By Ming Lu

  • Trip.com’s domestic hotel bookings increased by 70% over pre-COVID 3Q19.
  • Xiaomi’s revenue began to grow in 3Q23 after decreasing for five quarters.
  • China home appliance export surged in October, for example, fridge export amount growing by 42% YoY.

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Nov 27
0

Daily Brief Japan: Asahi Group Holdings, Zensho Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer
  • Zensho Placement – Good Price to Raise At, at Least for the Company

Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer

By Clarence Chu

Zensho Placement – Good Price to Raise At, at Least for the Company

By Sumeet Singh

  • Zensho Holdings (7550 JP) aims to raise around US$300m via a public offering.
  • As per the company it will use the proceeds from the deal for potential M&A transactions.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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Nov 26
0

Daily Brief Quantitative Analysis: TWSE Short Interest Weekly (Nov 24th): Lite-On Tech and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • TWSE Short Interest Weekly (Nov 24th): Lite-On Tech, Compeq Mfg, Inventec, Gigabyte Tech

TWSE Short Interest Weekly (Nov 24th): Lite-On Tech, Compeq Mfg, Inventec, Gigabyte Tech

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Nov 24th which has an aggregated short interest worth USD15.0bn.
  • 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 Lite-On Tech, Compeq Mfg, Inventec, Gigabyte Tech.

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Nov 26
0

Daily Brief ESG: Investors Will Again Demand Concrete Measures to Raise ROE and Boost Shareholder Returns in FY3/2025 and more

By | Daily Briefs, ESG

In today’s briefing:

  • Investors Will Again Demand Concrete Measures to Raise ROE and Boost Shareholder Returns in FY3/2025
  • Techem – ESG Report – Lucror Analytics

Investors Will Again Demand Concrete Measures to Raise ROE and Boost Shareholder Returns in FY3/2025

By Aki Matsumoto

  • The carryback of pension obligations and expenses resulting from higher bond yields is a factor in the increase in operating profit.
  • While this’ll lead to higher EPS, which should lead to higher dividends and more room for stock price appreciation, there’s concern that inflating the B/S will lead to stagnant ROE.
  • In addition, since FY3/2024 profits will be boosted by pension financing factors unrelated to the core business, lower profit growth rate in FY3/2025 will put pressure on the stock price.

Techem – 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 Techem’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

International energy services provider Techem offers consumption-based billing services in the sub-metering industry.

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