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Smartkarma Daily Briefs

Nov 16
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Building on Strong Rally; Tsuruha for Sale and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Building on Strong Rally; Tsuruha for Sale
  • Semiconductor Cycles: Industrial and EVs
  • Top 10 Tech Trends in 2024 – What’s Likely to Drive Tech Next Year

Ohayo Japan | Building on Strong Rally; Tsuruha for Sale

By Mark Chadwick

  • Overseas: SPX +0.2%, Nasdaq 0%; Interest rates remain key driver; Target stock +18% on bte Q3 results
  • Today: NKY Futs -0.4% v cash. JPY 151.4; Bullish plans from Denso; Japan tourism fully recovered
  • JapanX: Expected further consolidation in the drug store sector looking more likely. The vultures are circling

Semiconductor Cycles: Industrial and EVs

By Douglas O’Laughlin

  • This earnings season, Industrial semiconductor demand has been the biggest incremental softening in end market demand. That’s not surprising. 
  • I have been talking about the FIFO (First-In, First-Out) cycle, and the only two remaining segments that have not had a meaningful correction are Industrial and Automotive.
  • We are now seeing the beginning of Industrial weakening.

Top 10 Tech Trends in 2024 – What’s Likely to Drive Tech Next Year

By Water Tower Research

  • Artificial intelligence (AI). AI is already having a major impact on the tech sector, and this is only going to accelerate in 2024.
  • With an estimated market size of $137 billion in 2022, AI is projected to grow significantly to $1.8 trillion by 2030, a CAGR of 38%.
  • We can expect to see more sophisticated AI applications and algorithms that can perform complex tasks and make decisions with human-like accuracy. 

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Nov 16
0

Daily Brief ECM: Tata Technologies IPO: The Investment Case and more

By | Daily Briefs, ECM

In today’s briefing:

  • Tata Technologies IPO: The Investment Case
  • WuXi XDC Cayman IPO Trading – Strong Subscription Rates Heading into Listing
  • ZEEKR IPO Preview: A Geely-Backed Fast-Growing Decacorn in China’s EV Revolution
  • Ecopro Materials IPO Trading – One of the Weakest Subscription Rates of the Year
  • Pre-IPO Genecast Group – NGS Still Has Long Way to Go; Valuation Performance Is Worrying

Tata Technologies IPO: The Investment Case

By Arun George

  • Tata Technologies (TATATECH IN), the largest India-based ER&D service provider, seeks to raise US$350-375 million, which is lower than its previous target of US$600 million.
  • Tata Technologies is seeking a valuation of US$2.5 billion, which is 27.5% higher than the valuation TPG Inc (TPG US) acquired a 9.0% stake on 25 October.
  • The investment case rests on top-tier growth rates, strong core business, lower reliance on Vinfast (VFS US), high repeat rates, top-tier profitability, solid FCF profile and no debt. 

WuXi XDC Cayman IPO Trading – Strong Subscription Rates Heading into Listing

By Clarence Chu

  • WuXi XDC Cayman (1877628D HK) raised US$470m in its Hong Kong IPO.
  • WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

ZEEKR IPO Preview: A Geely-Backed Fast-Growing Decacorn in China’s EV Revolution

By Andrei Zakharov

  • ZEEKR, a fast-growing premium BEV maker, filed its F-1 last week. The company is going public through an IPO and offering ADSs of a Cayman Islands holding company.
  • In 2022, Geely agreed to spin off ZEEKR and list its EV maker in Asia/the U.S. The company has raised ~$1.6B and was backed by Geely and top-tier investors.
  • Geely Auto will hold 50%+ of the voting power upon completing an IPO. ZEEKR’s last round was a $750M Series A in February 2023 at a $13B post-money valuation. 

Ecopro Materials IPO Trading – One of the Weakest Subscription Rates of the Year

By Ethan Aw

  • EcoPro Materials (ECO123 KS) raised around US$320m, after downsizing the deal and pricing its IPO at the low end of the range at KRW36,200/share.
  • Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
  • In this note, we will talk about the demand for the deal and other trading dynamics.

Pre-IPO Genecast Group – NGS Still Has Long Way to Go; Valuation Performance Is Worrying

By Xinyao (Criss) Wang

  • The clinical need for NGS hasn’t developed as rigid demand due to high cost, difficult operation, high requirements on hospitals/personnel, etc. It takes time for NGS to improve market penetration.
  • Genecast’s LDT business could face compliance issue.Its in-hospital business has lower gross margin.Increasing R&D expenditure is inevitable since products need to get approval by regulatory authorities, putting pressure on profitability. 
  • Burning Rock is in a leading position in NGS field, but its market value is quite low. We advise investors to be prepared for valuations to fall short of expectations.

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Nov 16
0

Daily Brief Credit: Morning Views Asia: Tata Motors ADR and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Tata Motors ADR
  • Morning Views Asia: SJM Holdings

Morning Views Asia: Tata Motors ADR

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.

Morning Views Asia: SJM Holdings

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 16
0

Daily Brief Event-Driven: EOFLOW/Medtronic Tender: Trading Suspension Lifted and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part
  • FRTIB Switches Benchmarks: +EM/-DM; US$56bn Trade as Asia EM Benefits & HK Loses Out
  • StubWorld: Pasona’s Expanding Cash Pile
  • Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact
  • Eoflow: Outlook After Trading Resumes on 16 November
  • Atlantic Lithium (A11 AU) Knocks Back Major Shareholder’s Offer. Again
  • Haitong International (665 HK): Pre-Condition Satisfied
  • US Fed. Rtir’mt Thrift Board Changes Intl Benchmark, Excludes HK, US$1.6bn HK to Sell, $20bn 1-Way
  • Danaher/Abcam: Balanced Risk/Return
  • Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part

By Arun George

  • The KRX has completed its review and excluded Eoflow (294090 KS) from the substantive review for listing eligibility. Therefore, trading will resume tomorrow, 16 November.
  • The shares should rise on trading resumption as Medtronic’s tender remains in play, KRX’s review supported Eoflow’s business continuity and the short-selling ban-driven market rally.
  • Deal break risks remain significant. Medtronic Plc (MDT US)’s long-dated closing date and lack of Eoflow integration job postings suggest it remains concerned about near-term unfavourable court rulings. 

FRTIB Switches Benchmarks: +EM/-DM; US$56bn Trade as Asia EM Benefits & HK Loses Out

By Brian Freitas

  • The FRTIB has decided to switch its benchmark for the International Stock Index Investment Fund from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index.
  • With around US$68bn invested in the I Fund, this will set off churn among the constituent stocks in 2024. One-way trade is around US$28bn with DM outflows and EM inflows.
  • The benchmark shift could be done over a 4 month period with higher trading during periods where liquidity opportunities arise.

StubWorld: Pasona’s Expanding Cash Pile

By David Blennerhassett

  • A double dose of StubWorld this week as Pasona Group (2168 JP) finally takes the hint to sell (if not exit altogether) its holding in Benefit One Inc (2412 JP).
  • Preceding my comments on Pasona/Benefit One 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%.

Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact

By Travis Lundy

  • DCM Holdings (3050 JP) and Keiyo Co Ltd (8168 JP) and Aeon Co Ltd (8267 JP) signed capital and business tie-up agreements 30+yrs ago. Recently, DCM bought Keiyo.
  • Aeon got some money from this and has decided to put that money back into DCM shares.
  • That changes both the current dynamics and future shareholder structure. And that leads to interesting questions about the outcome.

Eoflow: Outlook After Trading Resumes on 16 November

By Douglas Kim

  • On 15 November, the Korea Exchange announced that Eoflow (294090 KS) will start trading again on 16 November.
  • The fact that KRX has allowed Eoflow to trade again will be viewed positively by many investors. Plus, the recent temporary ban on short selling should also positively impact Eoflow.
  • We believe a higher probability event is for Medtronic to complete a tender offer of Eoflow sometime in 2Q 2024 at about 26,000 won. 

Atlantic Lithium (A11 AU) Knocks Back Major Shareholder’s Offer. Again

By David Blennerhassett

  • Livent (LTHM US)‘s CEO recently said, regarding its merger with Allkem Ltd (AKE AU), that while falling lithium prices put pressure on marginal producers, the sector’s fundamental outlook remains strong. 
  • And so, another week goes by, and another lithium Offer Down Under unfolds. 
  • African-Focused lithium play Atlantic Lithium (A11 AU) announced this morning it has twice rejected Offers from South African-based Assore International, its major shareholder.  Shares spiked 43% on the news.

Haitong International (665 HK): Pre-Condition Satisfied

By Arun George

  • The pre-condition relating to Haitong International Securities Group (665 HK)’s privatisation offer from Haitong Securities Co Ltd (A) (600837 CH) is satisfied. The offer is at HK$1.52 per share. 
  • The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and the headcount test. The high takeover premium facilitates approval. 
  • This is a done deal. At the last close and for an estimated early February 2024 payment, the gross and annualised spread is 5.6% and 26.4%, respectively.

US Fed. Rtir’mt Thrift Board Changes Intl Benchmark, Excludes HK, US$1.6bn HK to Sell, $20bn 1-Way

By Travis Lundy

  • The Federal Retirement Thrift Investment Board which manages the four major funds in the Thrift Savings Plan for US federal government employees will change benchmark for its International Fund
  • This was announced on 14 November. The transition will take place “in 2024.” It entails moving from MSCI EAFE to MSCI All Country World ex-USA ex-China ex-HongKong Investable Market Index.
  • The explanation: double the countries, lots more stocks, BUT CHINA! This means selling ~US$1.6bn of HK stocks but US$20bn of one-way flow in total (lots of Japan/UK/Europe to sell)

Danaher/Abcam: Balanced Risk/Return

By Jesus Rodriguez Aguilar

  • Shareholders of Cambridge (UK)-based  Abcam (ABCM US) followed Glass Lewis and ISS recommendations and approved (>84%) the scheme resolutions at both the Court Meeting and the GM.
  • The $24/share cash offer represents 10x EV/Fwd Revenue, 25x EV/Fwd NTM EBITDA. Danaher Corp (DHR US) and Abcam have guided that the transaction is expected to close by mid-2024.
  • Spread is 3.21%/6.21% (gross/annualised, assuming settlement by 30 May). From the current levels, I see a balanced risk/reward.

Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

By Mohshin Aziz

  • General Electric intends to offload its entire shareholding via a secondary offer, a positive development as it removes the share overhang
  • Opportune time to own Aercap as aircraft is in high demand and supply chain disruptions mean limited supply over the medium-term, ensuring high lease rates and strong profits 
  • BUY with target price of $81.45 (+21% UPSIDE) pegged to FY24 P/BV of 0.94x, Aercap is the best in the pack with superior net lease margin, finance cost, and ROE     

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Nov 16
0

Daily Brief Equity Bottom-Up: Our High Conviction Asia Based Gaming Stocks Signal Buy on the Dip Entry Points and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Our High Conviction Asia Based Gaming Stocks Signal Buy on the Dip Entry Points
  • Silicon Wafers. SUMCO Sounds The Alarm As Inventory Continues To Climb
  • Tencent: Domestic Gaming Returns to Growth
  • SK Telecom: Three Key Catalysts
  • Tencent (700 HK): Raise Margin Estimates After 3Q23 Results, 30% Upside, Buy
  • Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings
  • Silergy (6415.TT): Silergy Expect to Grow Slightly in 4Q23F.
  • Taste Gourmet Q2 2023, Far Better Than Expectations 5.3x PE, 27% Mkt Cap In Cash, 9% Yield
  • Terumo Corp (4543 JP): Record High Revenue and OP in H1FY24; Better Profitability Expected in H2FY24
  • XPER: Scaled for Growth

Our High Conviction Asia Based Gaming Stocks Signal Buy on the Dip Entry Points

By Howard J Klein

  • Our review of the  three stocks here reveals considerable run room ahead as revenue  recovery in Asia gaming is  outpacing  forecasts.
  • These companies  have proven   resilient after taking big hits during covid crisis.
  • Balance sheets are stronger, revenue  rising, margins  improved–much of  this not as yet  reflected in valuations.

Silicon Wafers. SUMCO Sounds The Alarm As Inventory Continues To Climb

By William Keating

  • Global silicon wafer area shipments declined 10% QoQ in Q323 but customer inventory remains at historical highs and is showing no signs of declining
  • SUMCO’s Operating Profit forecasted to fall by ¥8.6 billion QoQ in Q423 
  • The company vowed to make “substantial” production cuts in a bid to bring their inventory situation under control. 

Tencent: Domestic Gaming Returns to Growth

By Shifara Samsudeen, ACMA, CGMA

  • Tencent (700 HK) ’s 3Q2023 revenues fell marginally below consensus, however, OP beat consensus estimates. Domestic games returned to growth after a flat quarter in 2Q2023.
  • Both Online Advertising and Fintech businesses have seen strong increase in top line with GPM approaching new highs for the two businesses.
  • Though Tencent’s earnings show a recovery, we would remain cautious given the slowdown in Chinese economy and Tencent failing to make into new game approval list since July 2023.

SK Telecom: Three Key Catalysts

By Douglas Kim

  • In this insight, we discuss three key catalysts that are likely to positively impact SK Telecom in the next several months.
  • The current gap between SK Telecom’s 2023 expected dividend yield (6.6%) and US 10 year treasury note (4.47%) is 2.13%.
  • The gap between SK Telecom’s dividend yield and US 10 year treasury note yield could widen to 3-4%+ in 2024, making SK Telecom’s dividend yield more attractive. 

Tencent (700 HK): Raise Margin Estimates After 3Q23 Results, 30% Upside, Buy

By Ming Lu

  • Advertising, international game, and Fintech grew by two digits, but domestic entertainments were stagnant.
  • The gross margins of all business lines improved and admin expense as percentage of total revenue decreased.
  • We believe the stock has an upside of 30% for the year end of 2024.

Freee 1Q: Earnings Beat; Qualified Invoice System to Further Drive Earnings

By Shifara Samsudeen, ACMA, CGMA

  • Freee KK (4478 JP) ’s 1QFY06/2024 results beat consensus estimates. Introduction of qualified invoicing system in October has resulted in strong corporate user growth for the company.
  • Upfront investment in selling and marketing has helped freee onboard a large no. of corporate clients prior to the introduction of the new invoice system.
  • Freee expects selling and advertising spending to decline going forward which should help the company reach break-even in FY06/2025E.

Silergy (6415.TT): Silergy Expect to Grow Slightly in 4Q23F.

By Patrick Liao

  • The inventory adjustment of consumer electronics products is nearing completion and industrial products will end later.
  • Silergy Corp (6415 TT)‘s short-term growth momentum comes from the demand of new smartphone, while its long-term growth momentum comes from the automotive, new energy and high-performance computing area.
  • In 1H24, the pro forma gross profit margin can be maintained at around 50%.

Taste Gourmet Q2 2023, Far Better Than Expectations 5.3x PE, 27% Mkt Cap In Cash, 9% Yield

By Sameer Taneja

  • Taste Gourmet (8371 HK) reported Q2 profits 25% over our expectations at 30 mn HKD (81% YoY), led by net margin expansion to 11.2% (vs. our expectation of 8.8%)
  • The net cash of 133 mn HKD represents around 27% of market capitalization, which is used to increase the restaurant count in HK from 42 to 48 QoQ.
  • The company declared a 5.5 cent interim dividend (Vs. 4.8 cents last year). We believe they can declare a 12.5/13 cent dividend for FY24 (March-End)

Terumo Corp (4543 JP): Record High Revenue and OP in H1FY24; Better Profitability Expected in H2FY24

By Tina Banerjee

  • In H1FY24, Terumo Corp (4543 JP)‘s revenue increased 10% YoY to ¥443.9B, mainly driven by a 13% YoY growth in C&V business, due to strong global demand of catheter products.  
  • Revenue from TIS (catheter) segment reported 12% YoY growth to¥176.5B, driven by a 12% YoY growth in overseas business, with EU and China being the main drivers.
  • Terumo has reiterated FY24 guidance, which implies significant improvement in operating profit in H2FY24 due to the realization of the full effect of global price revision and cost cutting initiatives.

XPER: Scaled for Growth

By Hamed Khorsand

  • XPER reported third quarter results in line with our forecast and reaching an inflection point in revenue where the operating leverage of the business becomes visible.
  • Ahead of the results, there had been worries over XPER’s exposure to consumer electronics and pay TV industries that could cripple revenue growth.
  • XPER reported third quarter revenue of $130.4 million compared to our forecast of $130.9 million. Adjusted EBITDA reached $9.3 million compared to our forecast of $9.2 million

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Nov 16
0

Daily Brief Macro: Navigating the Crude Oil Crack Spread and more

By | Daily Briefs, Macro

In today’s briefing:

  • Navigating the Crude Oil Crack Spread
  • Positioning Watch – The Cocktail of Heavy Logs in Both Equities and Bonds
  • Charting Beyond the US CPI Headlines
  • CX Daily: Chinese Consumers Deluged With Cheap Loans
  • Electricity Watch: Why Ze Germans Are OK for Now
  • UK: Disinflation Driven in Oct-23
  • 5 Things We Watch: Trump, Electricity, CPI, Crude Oil, Fixed Income
  • EUR Watch: Damned if You Do Until You Are Damned if You Don’t

Navigating the Crude Oil Crack Spread

By Pranay Yadav

  • Crack spread refers to the gross processing margin of refining (“cracking”) crude oil into its by-products.
  • Crack spreads are affected by seasonality, supply, and inventory levels of crude and refined products, as well as demand for each refined product.
  • A low-demand outlook for refined products of crude is prevalent due to expectations of an economic slowdown.

Positioning Watch – The Cocktail of Heavy Logs in Both Equities and Bonds

By Andreas Steno

  • Hello everyone, and welcome back to our weekly positioning watch, which due to delays in the CFTC data has been postponed to today (data was available yesterday evening).
  • Almost as usual, markets find themselves in an odd position, as they await the next big event to move price action after Powell’s latest shocker a couple of weeks ago coupled with a severe sell-off in bonds in recent weeks.
  • Today’s CPI report will likely not change a whole lot, but equity markets may continue their run upward if we are right in our prediction from yesterday (more on that here).

Charting Beyond the US CPI Headlines

By Thomas Lam

  • Both “supercore” and the Most Persistent category of CPI inflation improved directionally in October
  • But the implications on inflation expectations and trend inflation as a result of the above-average 3-month and 12-month run-rates remain moot 
  • My measure of long-term inflation expectations (CPI-based) tentatively shows a somewhat less well anchored backdrop than before  

CX Daily: Chinese Consumers Deluged With Cheap Loans

By Caixin Global

  • Loans / In Depth: Chinese consumers deluged with cheap loans

  • APEC /Analysis: Xi-Biden APEC meeting may help stabilize ties, won’t change fundamentals

  • Credit /: Government borrowings boosted China’s credit growth in October

Electricity Watch: Why Ze Germans Are OK for Now

By Andreas Steno

  • We have so far seen a very contained market reaction to the electricity aid package from Germany last week, but there are loads of reasons why markets can absorb the demand-fuelling news in energy markets short-term.
  • Maybe there is a window of opportunity for the German industry before price pressures return?
  • The IFO index covering the Germany industry is likely going to improve in the coming months.

UK: Disinflation Driven in Oct-23

By Phil Rush

  • UK inflation undershot expectations of 4.8% in October by plummeting to 4.6%. Most of that drop was an energy price base effect with downside news in car and hotel prices.
  • Services inflation aligned with our relatively low forecast but disappointed the BoE. Other measures of underlying inflation, like the median, remained surprisingly strong.
  • This outcome lessens the risk of another BoE rate hike. However, second-round effects still constrain this disinflation trend, with persistent excesses discouraging cuts.

5 Things We Watch: Trump, Electricity, CPI, Crude Oil, Fixed Income

By Ulrik Simmelholt

  • This week we start out by looking at Trump’s chances of getting reelected then move on to European electricity markets after that we’ll discuss yesterday’s CPI print before moving on to crude oil and then ending with fixed income positioning.
  • President Biden’s approval ratings continue to sour as the country heads into potential Oil price headwinds and numerous unsolved foreign policy challenges.
  • The Biden camp has launched a number of PR offensives during 2023 – most notably the coining of “Bidenomics”, but none have managed to close the gap, which has even accelerated since summertime.

EUR Watch: Damned if You Do Until You Are Damned if You Don’t

By Andreas Steno

  • EUR assets will suffer if the activity levels rebound too quickly due to a lack of elasticity in the commodity/energy supply in Europe.
  • The EUR (and EUR assets) have suffered from a damned if you do, damned if you don’t a scenario in recent years as the scarcity of energy has taken center stage in the pricing of everything from the EUR, to EUR discount rates and EUR risk assets.
  • Low volatility in energy prices allows energy-sensitive industrials to brighten up the outlook, which is initially good for the EUR, but the problem is just that there is a potential negative embedded feedback loop in that journey.

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Nov 15
0

Daily Brief Australia: National Australia Bank and more

By | Australia, Daily Briefs

In today’s briefing:

  • NAB – Maturing Debt AUD40bn | At Top of Rate Cycle | With High Unseasoned Loans, CRE Loans

NAB – Maturing Debt AUD40bn | At Top of Rate Cycle | With High Unseasoned Loans, CRE Loans

By Daniel Tabbush

  • NAB holds significantly more maturing debt in the coming year than its largest 3 peer banks in Australia and also more than the 3 banks in Singapore, by comparison
  • The bank has grown its business loans aggressively, which can see lumpy bad loans in a poor economy, with high unseasoned loans, yet its HoH credit costs were flat
  • CRE loans are meaningful at NAB, adding another risk to maturing debt at the top of the rate cycle with what appears to optimistic credit costs in recent results

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Nov 15
0

Daily Brief South Korea: DGB Financial Group, Lunit and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea
  • KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

By Sanghyun Park

  • We can check this on KIND, KRX’s disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.
  • We can capture this information in English without the need for Korean. The disclosure title we must hunt is “Decision on Closure of Shareholder’s Registry (including Record Date) for Dividends.”
  • The critical aspect here is that we need to identify disclosures from companies that still use the year’s last trading day as the dividend base date.

KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

By Douglas Kim

  • This article discusses the potential inclusions and exclusions of KOSDAQ150 rebalance in December 2023 (especially those that are highlighted by the locals).
  • The potential inclusion candidates include Lunit, Shinsung Delta Tech, and JNTC. The eight potential inclusion candidates are up on average 122% YTD, sharply outperforming KOSDAQ in the same period. 
  • Stocks that are expected to be excluded in the KOSDAQ150 index include Aju IB Investment, HFR, Danal, and Sangsangin.

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Nov 15
0

Daily Brief Thailand: SCG Decor PCL and more

By | Daily Briefs, Thailand

In today’s briefing:

  • SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead

SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead

By Clarence Chu

  • SCG Decor PCL (SCGD TB) is looking to raise around US$180m in its Thailand IPO.
  • SCG Decor (SCGD) is Siam Cement Group’s flagship company in the decor surfaces and sanitaryware business.
  • In this note, we look at the firm’s past performance.

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Nov 15
0

Daily Brief China: iSoftStone Information Technology Group, ZEEKR, Livzon Pharmaceutical Group, Haier Smart Home , Keymed Biosciences and more

By | China, Daily Briefs

In today’s briefing:

  • CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap
  • Zeekr Pre-IPO – The Negatives – Remains Highly Dependent on Geely
  • Livzon Reloads Diagnostic Spin-Off
  • Haier Smart Home (6690 HK): Stays Smart
  • Keymed Biosciences (2162.HK) – Looking Forward to the Next Leap in Valuation

CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap

By Brian Freitas

  • With the review period for the December rebalance of the CSI500 Index complete, we forecast 50 changes (the maximum permitted) for the index at the close on 8 December.
  • Estimated one-way turnover is 9.66% at the December rebalance resulting in a one-way trade of CNY 6.36bn. There are 29 stocks with over 1 day of ADV to trade.
  • The potential deletes have outperformed the potential adds over the last 6 months though there has been a narrowing of the gap recently. Position for a further narrowing.

Zeekr Pre-IPO – The Negatives – Remains Highly Dependent on Geely

By Sumeet Singh

  • ZEEKR, a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • In this note, we talk about the not-so-positive aspects of the deal.

Livzon Reloads Diagnostic Spin-Off

By David Blennerhassett

  • Back in late 2020, Livzon Pharmaceutical Group (1513 HK) proposed spinning off 39.4%-held Livzon Diagnostics on Chinext. After numerous filings with the regulators … crickets.  
  • Livzon has now proposed listing Livzon Diagnostics on the National Equities Exchange and Quotations with an intention of transitioning listed shares to the Beijing Stock Exchange (BSE).
  • The CSRC recently introduced a raft of initiatives to spur investor interest in the BSE. After all-but-abandoning the prior listing, Livzon looks to be cashing in on this recent excitement. 

Haier Smart Home (6690 HK): Stays Smart

By Osbert Tang, CFA

  • Haier Smart Home (6690 HK) is less exposed to China’s real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.
  • We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. 
  • More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   

Keymed Biosciences (2162.HK) – Looking Forward to the Next Leap in Valuation

By Xinyao (Criss) Wang

  • Abrocitinib/Upadacitinib/Dupilumab will all exert great pressure on the future commercialization space of CM310 in China. If Keymed doesn’t run head-to-head trials with dupilumab, CM310’s internationalization outlook would be gloomy.
  • Compared with IL-4 that has been almost occupied by dupilumab, Keymed has more opportunity on TSLP. Even with Keymed-AstraZeneca deal, our valuation of CMG901 is cautious based on our analysis. 
  • The current valuation of Keymed is not cheap. The next big catalyst to share price is a new license-out deal with MNC on CM310/CM326, marking the beginning of qualitative changes. 

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