Smartkarma Daily Briefs, Author at Smartkarma

Oct 12

Daily Brief Macro: The Corporate Interest Burden – It’s All About Earnings! and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

The Corporate Interest Burden – It’s All About Earnings!
5 Things We Watch: Recession, Gasoline, Temperatures, Geopolitics and Portfolio
CPI watch: 6 charts on a soft’ish inflation report

The Corporate Interest Burden – It’s All About Earnings!

By Jeroen Blokland

Although high interest rates may not immediately lead to debt servicing issues for companies, each month that elevated yields prevail will significantly impact the ratio between profits and debt servicing.
The good news is that the maturity wall, the ‘timetable’ for debt refinancing, is unlikely to cause much volatility.
However, companies must continue generating enough income to cover the (higher) interest payments. But our bellwether earnings indicator points to a significant drop in profits in the coming quarters.

5 Things We Watch: Recession, Gasoline, Temperatures, Geopolitics and Portfolio

By Ulrik Simmelholt

This week we are watching out for the following 5 topics within global macro: Recession, Gasoline, Temperatures, Geopolitics, Portfolio
As we start to see recessionary signs pop up in the US economy we’ll outline our recession playbook.
As we have talked about before we see manufacturing continuing its rebound into Q4 due to restocking.

CPI watch: 6 charts on a soft’ish inflation report

By Andreas Steno

The CPI report is like to surprise on the dovish side. Especially used cars and transportation services will surprise on the low side.
The Fed is very uncommitted to hiking rates here. The USD story could take a short-term beating on a weak CPI
The US inflation report in August turned out to be “hot” due to sharp increases in gasoline -and diesel retail prices, as we anticipated.

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Oct 12

Most Read: Liontown Resources, Kenedix Office Investment Co, Li Auto , JMDC , Eoflow , Rakuten Bank , Kokusai Electric , Posco DX and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Liontown Resources (LTR AU): Passive Selling on Lower Float
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)
EOFlow’s Suspension Is Not (All) Negative
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
EOFLOW/Medtronic Tender: On Life Support
Eoflow: Temporary Trading Suspension
Kokusai Electric IPO: Lower Price Range Is Reasonable
POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

Liontown Resources (LTR AU): Passive Selling on Lower Float

By Brian Freitas

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

By Brian Freitas

The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December

By Brian Freitas

With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.

JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)

By Travis Lundy

Results for the Omron Corp (6645 JP) Partial Tender Offer for JMDC (4483 JP) are out.
The Pro-Ration was 51.63%, at the lower end of my initial estimate of 50-58% range, and at the higher end of my revised range (42-56%).
The pro-ration, the nature of the shapes (technical term) tendered, and what that suggests for Noritsu Koki’s position suggests the back end could be more squeezy than not.

EOFlow’s Suspension Is Not (All) Negative

By David Blennerhassett

On the 6th of October, a US district court judge entered a preliminary injunction (PI) against EOFlow (294090 KS), pending a trial. This development should have been expected.
Less expected was the suspension of EOFlow shares today, and the cessation of sales globally.
The latter measure appears extreme, noting the PI addresses only sales in the US, which EOFlow is not permitted anyway, without FDA approval. There’s clearly more than meets the eye.

Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup

By Sumeet Singh

Rakuten Bank (5838 JP) (RB), the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
In this note, we will talk about the lock-up dynamics and updates since our last note.

EOFLOW/Medtronic Tender: On Life Support

By Arun George

In reaction to the preliminary injunction, Eoflow (294090 KS) shares were suspended as it is reviewing whether it is subject to a substantive review for KOSDAQ listing eligibility.
Medtronic Plc (MDT US) is in an unprecedented situation of potentially acquiring a company whose shares are suspended, has a preliminary injunction against it and exposure to possible liabilities.
Medtronic could have prevented this development by reaffirming its commitment to the deal. The transaction is on increasingly shaky grounds, which is reflected in the 38.2% gross spread.

Eoflow: Temporary Trading Suspension

By Douglas Kim

On 10 October, the Korea Exchange announced a temporary suspension of trading of Eoflow (294090 KS) shares starting 11 October.
Eoflow decided at its board of directors meeting the previous day (10th) to suspend production and sales of Eoflow patches until the outcome of the lawsuit is resolved.
In this insight, we provide various scenario analysis including the worst case, best case, and in-between cases of the Eoflow M&A tender offer process.

Kokusai Electric IPO: Lower Price Range Is Reasonable

By Arun George

Kokusai Electric (6525 JP) has trimmed its IPO price from JPY1,890 to JPY1,830-1,840 per share to raise up to US$727 million. The IPO price will be determined on 16 October.
We previously discussed the IPO in Kokusai Electric IPO: The Bull Case, Kokusai Electric IPO: The Bear Case and Kokusai Electric IPO: Valuation Insights.
Our base-case DCF valuation is JPY2,058 per share. Peers have modestly re-rated, and a lower IPO price range helps increase the IPO’s attractiveness.

POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

By Brian Freitas

Posco DX (022100 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
Based on history, the approval for the transfer and the listing change could take place in the next two months.
That means a deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) and inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). But the timeline is important.

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Oct 12

Daily Brief Australia: Estia Health, Bank Of Queensland and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Estia Health (EHE AU): Scheme Meeting on 15 November
BOQ – Illustrative of Australia Bank Risks Even for Nearly Pure Mortgage Lender and Mkt Expectations

Estia Health (EHE AU): Scheme Meeting on 15 November

By Arun George

The Estia Health (EHE AU) IE considers Bain’s A$3.20 (A$3.08 excluding paid dividends) offer fair and reasonable as it is above its valuation range of $2.83 to A$3.21 per share.
The offer is subject to FIRB and possibly aged care industry approvals. The MAC clause risk, particularly around material regulatory events, is diminishing.
This is a done deal. At the last close price and for the 30 November payment, the gross and annualised spread is 1.3% and 9.7%, respectively.

BOQ – Illustrative of Australia Bank Risks Even for Nearly Pure Mortgage Lender and Mkt Expectations

By Daniel Tabbush

The results for Bank Of Queensland (BOQ AU) are illustrative of risks for the mainstream banks in Australia and market expectations
Even with almost all residential mortgage loans, BOQ’s credit costs rose from AUD13m to AUD71m YoY and Pillar 3 data shows mortgage NPLs up nearly 10% in past 2 months
Net interest income only +6% YoY and -8% HoH, with operating costs +8% YoY and fee income down, there is nothing core holding the P&L together

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Oct 12

Daily Brief South Korea: Eoflow , Posco DX, Kia Corp, Kiwoom Securities and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

EOFlow’s Suspension Is Not (All) Negative
EOFLOW/Medtronic Tender: On Life Support
Eoflow: Temporary Trading Suspension
POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer
A Noteworthy ETF Flow Trading Opportunity Targeting the Pair Comprising Kia & Posco Future M
Kiwoom Securities: Announces Material Improvement in Shareholder Return Policies

EOFlow’s Suspension Is Not (All) Negative

By David Blennerhassett

On the 6th of October, a US district court judge entered a preliminary injunction (PI) against EOFlow (294090 KS), pending a trial. This development should have been expected.
Less expected was the suspension of EOFlow shares today, and the cessation of sales globally.
The latter measure appears extreme, noting the PI addresses only sales in the US, which EOFlow is not permitted anyway, without FDA approval. There’s clearly more than meets the eye.

EOFLOW/Medtronic Tender: On Life Support

By Arun George

In reaction to the preliminary injunction, Eoflow (294090 KS) shares were suspended as it is reviewing whether it is subject to a substantive review for KOSDAQ listing eligibility.
Medtronic Plc (MDT US) is in an unprecedented situation of potentially acquiring a company whose shares are suspended, has a preliminary injunction against it and exposure to possible liabilities.
Medtronic could have prevented this development by reaffirming its commitment to the deal. The transaction is on increasingly shaky grounds, which is reflected in the 38.2% gross spread.

Eoflow: Temporary Trading Suspension

By Douglas Kim

On 10 October, the Korea Exchange announced a temporary suspension of trading of Eoflow (294090 KS) shares starting 11 October.
Eoflow decided at its board of directors meeting the previous day (10th) to suspend production and sales of Eoflow patches until the outcome of the lawsuit is resolved.
In this insight, we provide various scenario analysis including the worst case, best case, and in-between cases of the Eoflow M&A tender offer process.

POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

By Brian Freitas

Posco DX (022100 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
Based on history, the approval for the transfer and the listing change could take place in the next two months.
That means a deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) and inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). But the timeline is important.

A Noteworthy ETF Flow Trading Opportunity Targeting the Pair Comprising Kia & Posco Future M

By Sanghyun Park

Kia is set to make a comeback, while the exclusion of Posco Future M is on the horizon.
The screening date is set for November 30th, and the effective date is December 18th, which means the ETF rebalancing will take place on December 15th.
The exposure period to the market is relatively short, so it’s essential to acknowledge the limited accumulation of learning effects. This suggests we can anticipate a notably substantial price impact.

Kiwoom Securities: Announces Material Improvement in Shareholder Return Policies

By Douglas Kim

On 10 October, Kiwoom Securities announced shareholder friendly policies. This could lead to Kiwoom Securities outperforming other major Korean securities companies in the next several months.
First, the company will return more than 30% of its net profit to the shareholders in the next three years through dividends and share buybacks/cancellations of treasury shares.
In addition, Kiwoom Securities plans to cancel all 1.4 million treasury shares it currently holds, representing 5.3% of outstanding shares.

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Oct 12

Daily Brief Thailand: Thai Credit Bank PCL and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

Thai Credit Bank Pre-IPO – The Negatives – Although NPLs Are Rising, and Market Seems Fragmented

Thai Credit Bank Pre-IPO – The Negatives – Although NPLs Are Rising, and Market Seems Fragmented

By Clarence Chu

Thai Credit Bank PCL (3674238Z TB) is looking to raise US$300m from its upcoming Thailand IPO via selling a mix of primary and secondary shares in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
In this note, we will talk about the not so positive aspects of the deal.

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Oct 12

Daily Brief Singapore: Automera Pte Ltd, Yanlord Land and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Singaporean Biotech Startup Automera Secures US$16M Series A Financing
Morning Views Asia: China Hongqiao, Sunny Optical Technology Group, Yanlord Land

Singaporean Biotech Startup Automera Secures US$16M Series A Financing

By e27

Singapore-based biotechnology startup Automera has secured US$16 million in a Series A round of investment co-led by early-stage life science accelerator and investment firm Accelerator Life Science Partners (ALSP) and Temasek-backed venture builder ClavystBio.
EDBI, Xora Innovation, and other undisclosed investors also participated.
Automera was established by Associate Professor Michael Lazarou, Loong Wang, and Taiyang Zhang at Talo Labs in collaboration with ALSP.

Morning Views Asia: China Hongqiao, Sunny Optical Technology Group, Yanlord Land

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.

China Hongqiao
Sunny Optical Technology Group
Yanlord Land

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Oct 12

Daily Brief Indonesia: Bababos and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

East Ventures Leads $3m Round of Indonesian Raw Materials Platform

East Ventures Leads $3m Round of Indonesian Raw Materials Platform

By Tech in Asia

MSMEs play a big role in Indonesia’s economy. In 2019, the Indonesian government reported that there were 65.4 million MSMEs in Indonesia, constituting 60.5% of its GDP.
But for many of these small companies across the region, digitalization is still a new concept, and this provides opportunities for big tech companies as well as startups to fill the gap.
One such player is Indonesia-based Bababos, which targets SMEs in the manufacturing space. The startup operates a platform that matches these SMEs with suppliers of raw materials like steel, polymers, and chemicals.

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Oct 12

Daily Brief United States: S&P 500 INDEX and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Growing Confidence That the Lows Are In; 4165-4200/200-Day MA on SPX Remains Key; Buys in Financials

Growing Confidence That the Lows Are In; 4165-4200/200-Day MA on SPX Remains Key; Buys in Financials

By Joe Jasper

We’ve discussed since late Sept increasing odds of a pullback to confluence of support at 4165-4200/the 200-day MA on SPX, and that if this support holds, it’s a normal pullback
Ongoing market dynamics allow us to be even more confident in our unchanged outlook; 4216 was the low for this pullback, with 4200 getting hit overnight (early Wednesday last week).
The broad equity market is not yet out of the woods, but as long as the SPX is above 4165-4200 and the 200-day MA, we are bullish.

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Oct 12

Daily Brief India: Raptee Energy Private Limited and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Ex-Tesla Exec’s EV Startup Charges Ahead with $3m Funding

Ex-Tesla Exec’s EV Startup Charges Ahead with $3m Funding

By Tech in Asia

In just five years, India’s electric-vehicle sector has surged, positioning the country to become the world’s largest EV market by 2030.
In addition to their cost and environmental advantages, EVs also enjoy tax benefits in India. However, despite having 3 million EVs on the road, the country hasn’t established standardized charging protocols for these vehicles.
With that in mind, Raptee said it is the first Indian EV startup to opt for the Combined Charging System Type 2 connectors, or CCS2. By integrating both AC and high-power DC charging, the system expedites the charging process, particularly at Level 3 charging stations.

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Oct 12

Daily Brief China: Shenzhen International, J&T Global Express, Ping An Healthcare and Technol, Yanlord Land and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook
J&T Global Express Pre-IPO – Thoughts on Valuation
Ping An Healthcare and Technology (1833.HK) – Valuation Could Fall Again Due to Clear Growth Ceiling
Morning Views Asia: China Hongqiao, Sunny Optical Technology Group, Yanlord Land

Shenzhen Intl (152 HK): Conversation with Company Affirms 2H23 Outlook

By Osbert Tang, CFA

Shenzhen International (152 HK) is well set to post a significant YoY and HoH growth in earnings in 2H23. Our discussion with the company confirmed this.
Profit from Yicheng Qiwanli is expected to be booked and there will be profit upside from REIT listing with logistics hubs at Hangzhou and Guizhou as underlying assets.
Significant reduction in USD and HKD-denominated debt will reduce its exposure to foreign exchange losses as well as high interest rate, both will be reflected in 2H23.

J&T Global Express Pre-IPO – Thoughts on Valuation

By Sumeet Singh

J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

Ping An Healthcare and Technology (1833.HK) – Valuation Could Fall Again Due to Clear Growth Ceiling

By Xinyao (Criss) Wang

PAGD successfully narrowed net loss. It seems that the Company doesn’t mind “sacrificing” revenue scale, which could be considered “a necessary price” to pay for the transition to 2B model.
PAGD mainly rely on Ping An Group channels to acquire B-end and F-end users, but based on our calculation, PAGD would encounter an obvious growth ceiling at certain revenue scale.
Although PAGD could achieve breakeven by divesting businesses with low strategic synergies and effective cost control, the Company’s long-term growth potential and prospects remain uncertain, leading to discounted valuation.