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Smartkarma Daily Briefs

Nov 13
0

Daily Brief Industrials: Hyundai Electric & Energy, Hang Seng Index, SCREEN Holdings, Deere & Co and more

By | Daily Briefs, Industrials

In today’s briefing:

  • KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact
  • EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?
  • Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down
  • Technical Analysis on DEERE & CO | October 27, 2023

KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact

By Sanghyun Park

  • Although not explicitly outlined, it appears practical to interpret that we should filter out stocks that have entered a trading suspension among those receiving a WARNING designation.
  • The dynamics of KOSPI 200 flow trading have become notably tumultuous due to the abrupt short selling ban and additional liquidity halts imposed on market makers in the futures market.
  • The manifestation of price impact due to passive flows may be significantly delayed. So, we should prepare for this week’s announcement day setup targeting the delayed impact of passive flows.

EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?

By Nico Rosti

  • The HSI INDEX last week closed down (CC=-1), down for 3 months (almost 4), quite OVERSOLD and not in sync with the general “rally” (read: rebound) in other markets.
  • LONG support for this week is between Q3 and Inner Fence levels: 16800-16300 area, but the current pattern behavior is not really encouraging LONG trades.
  • Wait-And-See approach recommended before investment in HSI stocks, but if the index dives for the next 2 weeks it may be the right time to buy for a Christmas rally…

Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down

By Scott Foster

  • The share price has risen by more than 20% in the past month as 1H results beat guidance, FY guidance was raised and the yen weakened.
  • The 2-for-1 stock split may also have attracted retail investors. But the new FY guidance implies lower 2H guidance. 
  • The outlook is for higher but volatile sales and profits. Valuations are reasonable but not compelling. Wait for a pullback.

Technical Analysis on DEERE & CO | October 27, 2023

By VRS (Valuation & Research Specialists)

  • Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services.
  • The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.
  • The Small Agriculture and Turf segment offers utility tractors, and related loaders and attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, and utility vehicles, as well as implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products; and hay and forage equipment. 

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Nov 13
0

Daily Brief Health Care: Eoflow , BeiGene , SK Biopharmaceuticals and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC
  • BeiGene (6160.HK/​BGNE.US) 23Q3 – Beautiful Story Is About to Happen
  • SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC

By Arun George

BeiGene (6160.HK/​BGNE.US) 23Q3 – Beautiful Story Is About to Happen

By Xinyao (Criss) Wang

  • BeiGene performed well in 23Q3. Product sales maintained strong growth momentum. Together with effective cost control measures, net loss significantly narrowed (close to breakeven), which exceeds expectation.
  • BeiGene plans to rely primarily on BRUKINSA/tislelizumab to achieve breakeven, which means BRUKINSA needs to contribute about US$2 billion revenue. Given prescriptions volume, however, Astrazeneca’s Calquence is the biggest holdup.
  • Whether BeiGene’s overall revenue can reach US$4 billion is the key point of marginal change in logic. How to further reduce SG&A/R&D expenses has become important topic at this stage.

SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

By Tina Banerjee

  • In 3Q23, SK Biopharmaceuticals (326030 KS) reported Xcopri U.S. revenue of KRW75.7 billion, up 60% YoY and 19% QoQ, driven by accelerating new patients being treated with the drug.
  • In 3Q23, operating loss narrowed sequentially to KRW10.7 billion. However, operating loss widened compared to year-ago period, mainly due to higher operating costs of the company’s U.S. subsidiary.
  • The company is on track to report a profitable Q4. With continued momentum, Xcopri is expected to hit blockbuster status by generating revenue of $1B in the U.S. in 2029.

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Nov 13
0

Daily Brief Financials: Japan Post Insurance, EURO/US DOLLAR and more

By | Daily Briefs, Financials

In today’s briefing:

  • Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase
  • Comment on Exchange Rate EUR/USD October 27, 2023

Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase

By Alec Tseung

  • Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.
  • The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.  
  • Against the backdrop of Japan’s “higher for longer” theme, its embedded value growth could be under more pressure due to ANW’s m-t-m adjustments and very weak new business value.

Comment on Exchange Rate EUR/USD October 27, 2023

By VRS (Valuation & Research Specialists)

  • During the period under consideration, i.e. September 27th – October 27th, 2023, the EUR/USD exchange rate fluctuated between 1.049 and 1.061 until October 22nd, 2023, but thereafter it followed an instantaneous daily uptrend on October 23 to finally secure the price of 1.0668.
  • However, at the finish of October, the Euro notched a slight drop, but it was still trading higher than the levels at the end of September.
  • According to Graph 1, during the first 18 trading days of the period under consideration, the pair showed a consolidation pattern mainly along the range of 1.05-1.0593 (except 2 sessions). 

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Nov 13
0

Daily Brief Consumer: IJTT Co., Ltd., ASICS Corp, Li Auto , BYD , Great Wall Motor, Ninebot , Benesse Holdings, Sheng Siong, Wolters Kluwer Nv and more

By | Consumer, Daily Briefs

In today’s briefing:

  • IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812
  • Asics (7936) | Running the Numbers
  • IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book
  • China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
  • Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)
  • A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”
  • STAR50 Index Rebalance Preview: Big Impact Expected on the Changes
  • Merger Arb Mondays (13 Nov) – Benesse, JSR, IJTT, Shidax, Cybernet, CMIC, IRC, Hollysys, Healius
  • Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE
  • Wolters Kluwer: Management Confident About 2024

IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812

By Arun George

  • IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s offer of JPY812 per share, an 18.5% and 16.0% premium to the undisturbed (9 November) and last close price, respectively. 
  • 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 23.48% ownership ratio.
  • Despite the modest premium, the offer represents a high five-year share price. The minimum acceptance condition requires a 41.3% minority acceptance rate. 

Asics (7936) | Running the Numbers

By Mark Chadwick

  • ASICS reports solid Q3 results, featuring a 14.5% rise in net sales, 31% rise in operating profit, improved gross margin, and digital growth.
  • ASICS revises FY23 outlook with increased sales and operating profit. New OP guidance of Y52b is inline with consensus
  • Market to focus on new Mid-Term Plan (end-Nov). Valuation at 16x forecast EBIT still a discount to average 18x multiple.

IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book

By Travis Lundy

  • A Fund named Mirai Creation Fund, investing in five “fields” “vital to the future” (“intelligent technologies”, robotics, hydrogen-economy, electrification, and “new materials”) will buy out casting/forging mainstay IJTT. 
  • The look and feel of this fund screams “lead me to the future”, so of course, the buy-out is being done with 26% equity, 74% debt. Levered is good.
  • That’s to buy at 0.46x PBR. Equity check is 12% of net assets. The Board says “yes” because it will lead to “improvement of corporate value”. Unfortunately, not for shareholders. 

China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE

By Ming Lu

  • Li Auto’s revenue increased by 271% YoY and vehicle deliveries increased by 296% YoY in 3Q23.
  • NIO will dismiss 10% of its employees and even 20% in some departments.
  • We do not believe Alibaba will take over the whole Best Inc.

Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)

By Travis Lundy

  • This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
  • The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are still smaller.
  • Last week, NORTHBOUND returned to net OUTflow after the previous week saw the first net buy in 3mos. This week saw RMB 7.95bn of net NORTHBOUND selling.

A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”

By Travis Lundy

  • The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • HUGE underperformance of Hs vs As across the board. A horrible week and it is not clear why. I doubt it was the short-selling warning or increase in haircuts.
  • SOUTHBOUND was a net buy and NORTHBOUND a net sell and the largest net SB flows on H/A pairs were the high-div SOEs.

STAR50 Index Rebalance Preview: Big Impact Expected on the Changes

By Brian Freitas

  • With the review period complete, we expect one change for the STAR50 INDEX in December if the index committee continues to use a 6-month minimum listing history.
  • With net inflows to mainland China ETFs over the last few months, passive trackers will need to trade between 9-25 days of ADV on the potential add and delete.
  • SMIC (688981 CH) will be capped and there will be reverse funding flows on the index constituents. One-way turnover is estimated at 1.8% resulting in a one-way trade of CNY2,580m.

Merger Arb Mondays (13 Nov) – Benesse, JSR, IJTT, Shidax, Cybernet, CMIC, IRC, Hollysys, Healius

By Arun George

Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE

By Sameer Taneja

  • Sheng Siong (SSG SP) continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment. 
  • Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY). 
  • Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.

Wolters Kluwer: Management Confident About 2024

By Alexis Dwek

  • Wolters Kluwer is executing on the second year of its strategic plan, with bold steps taken during the past few months
  • The business model is solid, with recurring revenues totaling 80% of the group’s total revenues. 
  • Management is positive about the pipeline, the retention rates, and the promising net promoter scores seen in H2; the key element for determining revenue growth in 2024

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Nov 13
0

Daily Brief India: Studio City International Holdings Limited and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: Studio City International Holdings Limited, Tata Motors ADR, UPL Ltd

Morning Views Asia: Studio City International Holdings Limited, Tata Motors ADR, UPL Ltd

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 13
0

Daily Brief South Korea: Hyundai Electric & Energy, Eoflow , NCSOFT Corp, SK Biopharmaceuticals and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact
  • Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC
  • NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game
  • SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact

By Sanghyun Park

  • Although not explicitly outlined, it appears practical to interpret that we should filter out stocks that have entered a trading suspension among those receiving a WARNING designation.
  • The dynamics of KOSPI 200 flow trading have become notably tumultuous due to the abrupt short selling ban and additional liquidity halts imposed on market makers in the futures market.
  • The manifestation of price impact due to passive flows may be significantly delayed. So, we should prepare for this week’s announcement day setup targeting the delayed impact of passive flows.

Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC

By Arun George

NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game

By Douglas Kim

  • NCsoft plans to launch the highly anticipated new MMORPG game called Throne and Liberty in Korea on 7 December 2023.
  • NCsoft reported operating profit of 16.5 billion won (down 89% YoY) and  revenue of 423.1 billion won (down 30% YoY) in 3Q 2023. 
  • Throne and Liberty has a solid chance to become successful globally through Amazon Game platform, which is likely to drive a strong turnaround of NCsoft’s sales and profits.

SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed

By Tina Banerjee

  • In 3Q23, SK Biopharmaceuticals (326030 KS) reported Xcopri U.S. revenue of KRW75.7 billion, up 60% YoY and 19% QoQ, driven by accelerating new patients being treated with the drug.
  • In 3Q23, operating loss narrowed sequentially to KRW10.7 billion. However, operating loss widened compared to year-ago period, mainly due to higher operating costs of the company’s U.S. subsidiary.
  • The company is on track to report a profitable Q4. With continued momentum, Xcopri is expected to hit blockbuster status by generating revenue of $1B in the U.S. in 2029.

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Nov 13
0

Daily Brief Singapore: Sheng Siong and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE

Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE

By Sameer Taneja

  • Sheng Siong (SSG SP) continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment. 
  • Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY). 
  • Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.

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Nov 13
0

Daily Brief United States: Deere & Co, EURO/US DOLLAR and more

By | Daily Briefs, United States

In today’s briefing:

  • Technical Analysis on DEERE & CO | October 27, 2023
  • Comment on Exchange Rate EUR/USD October 27, 2023

Technical Analysis on DEERE & CO | October 27, 2023

By VRS (Valuation & Research Specialists)

  • Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services.
  • The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.
  • The Small Agriculture and Turf segment offers utility tractors, and related loaders and attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, and utility vehicles, as well as implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products; and hay and forage equipment. 

Comment on Exchange Rate EUR/USD October 27, 2023

By VRS (Valuation & Research Specialists)

  • During the period under consideration, i.e. September 27th – October 27th, 2023, the EUR/USD exchange rate fluctuated between 1.049 and 1.061 until October 22nd, 2023, but thereafter it followed an instantaneous daily uptrend on October 23 to finally secure the price of 1.0668.
  • However, at the finish of October, the Euro notched a slight drop, but it was still trading higher than the levels at the end of September.
  • According to Graph 1, during the first 18 trading days of the period under consideration, the pair showed a consolidation pattern mainly along the range of 1.05-1.0593 (except 2 sessions). 

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Nov 13
0

Daily Brief Japan: GMO Payment Gateway, IJTT Co., Ltd., ASICS Corp, Ohizumi Mfg, Benesse Holdings, Japan Post Insurance, SCREEN Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • Japan – Increase in Shorts on Some Interesting*** Stocks
  • IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812
  • Asics (7936) | Running the Numbers
  • IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book
  • Oizumi Mfg (6618) Gets Takeout from Parent Ferrotec (6890) – Probably Cheap, Disappointing Process
  • Merger Arb Mondays (13 Nov) – Benesse, JSR, IJTT, Shidax, Cybernet, CMIC, IRC, Hollysys, Healius
  • Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase
  • Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down

Japan – Increase in Shorts on Some Interesting*** Stocks

By Brian Freitas

IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812

By Arun George

  • IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s offer of JPY812 per share, an 18.5% and 16.0% premium to the undisturbed (9 November) and last close price, respectively. 
  • 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 23.48% ownership ratio.
  • Despite the modest premium, the offer represents a high five-year share price. The minimum acceptance condition requires a 41.3% minority acceptance rate. 

Asics (7936) | Running the Numbers

By Mark Chadwick

  • ASICS reports solid Q3 results, featuring a 14.5% rise in net sales, 31% rise in operating profit, improved gross margin, and digital growth.
  • ASICS revises FY23 outlook with increased sales and operating profit. New OP guidance of Y52b is inline with consensus
  • Market to focus on new Mid-Term Plan (end-Nov). Valuation at 16x forecast EBIT still a discount to average 18x multiple.

IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book

By Travis Lundy

  • A Fund named Mirai Creation Fund, investing in five “fields” “vital to the future” (“intelligent technologies”, robotics, hydrogen-economy, electrification, and “new materials”) will buy out casting/forging mainstay IJTT. 
  • The look and feel of this fund screams “lead me to the future”, so of course, the buy-out is being done with 26% equity, 74% debt. Levered is good.
  • That’s to buy at 0.46x PBR. Equity check is 12% of net assets. The Board says “yes” because it will lead to “improvement of corporate value”. Unfortunately, not for shareholders. 

Oizumi Mfg (6618) Gets Takeout from Parent Ferrotec (6890) – Probably Cheap, Disappointing Process

By Travis Lundy

  • Ferrotec Corp (6890 JP) on Friday announced a takeover for subsidiary Ohizumi Mfg (6618 JP) on Friday. There will be synergies and growth and corporate value increase. 
  • The takeover price is not overly high, and includes no measure of synergies – not even the DCF value of delisting the company (no listing/filing/IR/legal fees/costs). 
  • I think this gets done. It is too closely held, there are few foreigners in it, and it’s not large enough for an activist to care.

Merger Arb Mondays (13 Nov) – Benesse, JSR, IJTT, Shidax, Cybernet, CMIC, IRC, Hollysys, Healius

By Arun George

Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase

By Alec Tseung

  • Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.
  • The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.  
  • Against the backdrop of Japan’s “higher for longer” theme, its embedded value growth could be under more pressure due to ANW’s m-t-m adjustments and very weak new business value.

Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down

By Scott Foster

  • The share price has risen by more than 20% in the past month as 1H results beat guidance, FY guidance was raised and the yen weakened.
  • The 2-for-1 stock split may also have attracted retail investors. But the new FY guidance implies lower 2H guidance. 
  • The outlook is for higher but volatile sales and profits. Valuations are reasonable but not compelling. Wait for a pullback.

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Nov 13
0

Daily Brief China: Li Auto , BYD , Tencent, Great Wall Motor, BeiGene , Ninebot , Hang Seng Index and more

By | China, Daily Briefs

In today’s briefing:

  • China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
  • Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)
  • HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys
  • A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”
  • BeiGene (6160.HK/​BGNE.US) 23Q3 – Beautiful Story Is About to Happen
  • STAR50 Index Rebalance Preview: Big Impact Expected on the Changes
  • EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?

China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE

By Ming Lu

  • Li Auto’s revenue increased by 271% YoY and vehicle deliveries increased by 296% YoY in 3Q23.
  • NIO will dismiss 10% of its employees and even 20% in some departments.
  • We do not believe Alibaba will take over the whole Best Inc.

Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)

By Travis Lundy

  • This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
  • The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are still smaller.
  • Last week, NORTHBOUND returned to net OUTflow after the previous week saw the first net buy in 3mos. This week saw RMB 7.95bn of net NORTHBOUND selling.

HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys

By Travis Lundy

  • This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
  • SOUTHBOUND flows the last four weeks clearly indicate a momentum move. The top net sells are all down. The top buys are all up.
  • Tencent and three ETFs see the top net buys as SOUTHBOUND bought HK$18.4bn this past week. Energy and Telco net sales persist. And persist. And persist.

A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”

By Travis Lundy

  • The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • HUGE underperformance of Hs vs As across the board. A horrible week and it is not clear why. I doubt it was the short-selling warning or increase in haircuts.
  • SOUTHBOUND was a net buy and NORTHBOUND a net sell and the largest net SB flows on H/A pairs were the high-div SOEs.

BeiGene (6160.HK/​BGNE.US) 23Q3 – Beautiful Story Is About to Happen

By Xinyao (Criss) Wang

  • BeiGene performed well in 23Q3. Product sales maintained strong growth momentum. Together with effective cost control measures, net loss significantly narrowed (close to breakeven), which exceeds expectation.
  • BeiGene plans to rely primarily on BRUKINSA/tislelizumab to achieve breakeven, which means BRUKINSA needs to contribute about US$2 billion revenue. Given prescriptions volume, however, Astrazeneca’s Calquence is the biggest holdup.
  • Whether BeiGene’s overall revenue can reach US$4 billion is the key point of marginal change in logic. How to further reduce SG&A/R&D expenses has become important topic at this stage.

STAR50 Index Rebalance Preview: Big Impact Expected on the Changes

By Brian Freitas

  • With the review period complete, we expect one change for the STAR50 INDEX in December if the index committee continues to use a 6-month minimum listing history.
  • With net inflows to mainland China ETFs over the last few months, passive trackers will need to trade between 9-25 days of ADV on the potential add and delete.
  • SMIC (688981 CH) will be capped and there will be reverse funding flows on the index constituents. One-way turnover is estimated at 1.8% resulting in a one-way trade of CNY2,580m.

EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?

By Nico Rosti

  • The HSI INDEX last week closed down (CC=-1), down for 3 months (almost 4), quite OVERSOLD and not in sync with the general “rally” (read: rebound) in other markets.
  • LONG support for this week is between Q3 and Inner Fence levels: 16800-16300 area, but the current pattern behavior is not really encouraging LONG trades.
  • Wait-And-See approach recommended before investment in HSI stocks, but if the index dives for the next 2 weeks it may be the right time to buy for a Christmas rally…

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