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Smartkarma Daily Briefs

Oct 09
0

Daily Brief Quantitative Analysis: A-H Premium Weekly (Oct 6th): CMB and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • A-H Premium Weekly (Oct 6th): CMB, Postal Savings, Conch Cement, Beigene, Sinopec

A-H Premium Weekly (Oct 6th): CMB, Postal Savings, Conch Cement, Beigene, Sinopec

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 125.4% as of Oct 6th.
  • The average A-H premium changed by 8.1ppt week on week, led by health care, information technology, materials.
  • We highlight weekly changes in A-H premium for Cm Bank, Postal Savings, Conch Cement, Beigene, Sinopec Corp.

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Oct 09
0

Daily Brief Thematic (Sector/Industry): Semiconductor Events Deserving Your Attention @7/10/23 and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Semiconductor Events Deserving Your Attention @7/10/23
  • China’s Weight Loss Drug Market – The Investment Opportunities and the Risks Behind
  • US Banks – Cash +USD90bn in Week, CRE  -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks
  • October Restrictions, AEHR Earnings, TSMC Monthly Revenue, and Intel’s PSG Spin

Semiconductor Events Deserving Your Attention @7/10/23

By William Keating

  • TSMC reported revenues for September 2023 of ~NT$180.43 billion, a decrease of 4.4% MoM and a decrease of 13.4 % YoY.
  • Intel announces intent to spin out its Altera division, its latest endeavour to unlock greater shareholder value
  • Anthropic seeks yet further billions in funding after just closing an AWS deal worth up to $4 billion

China’s Weight Loss Drug Market – The Investment Opportunities and the Risks Behind

By Xinyao (Criss) Wang

  • Due to the popularity of GLP-1 target, the entire GLP-1 upstream and downstream industry chain has received great enthusiasm. We analyzed related investment opportunities but also concerns in this market.  
  • Domestic CXOs should focus on securing orders for overseas weight loss drugs. The market value increment brought by weight loss drugs to CXO should be higher than that of APIs.
  • Due to increasing competition/potential price war, how big the real market space is uncertain. So, the market value increment of weight loss drugs business for pharmaceutical companies could be lower-than-expected.

US Banks – Cash +USD90bn in Week, CRE  -0.55% YoY, C&I +0.36% YoY, Book Value Growth Dwindles 3 Wks

By Daniel Tabbush

  • US large banks’ new balance sheet data for 27 September show surging cash at +USD90bn in the week putting YoY growth highest all year, at 11.6%. This is risk aversion.
  • Commercial & Industrial lending, shows another subdued week, down USD1bn to 27 Sept WoW, and YoY growth at 0.36% compared with 12.5% early this year. Suggests a weak underlying economy.
  • CRE lending growth remains negative, and book value growth worsens in past 2 weeks, from +USD9.4bn to +USD4.0bn and now to +0.4bn WoW.

October Restrictions, AEHR Earnings, TSMC Monthly Revenue, and Intel’s PSG Spin

By Douglas O’Laughlin

  • Reuters reported on Monday that a new round of export controls just hit the Office of Management and Budget office.
  • That means it’s already been finalized by the Departments of State, Defense, Commerce, and Energy.
  • We are almost at the one-year anniversary of the October 7th export controls that tanked semiconductor stocks last year; this time, the stocks are looking way more sanguine.

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Oct 09
0

Daily Brief ECM: Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety and more

By | Daily Briefs, ECM

In today’s briefing:

  • Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

By Ethan Aw

  • EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
  • Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
  • In our previous note, we covered the company’s performance and undertook a peer comparison. In this note, we will share our thoughts on valuation.

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Oct 09
0

Daily Brief Credit: Morning Views Asia: Greentown China and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Greentown China, Tata Motors ADR

Morning Views Asia: Greentown China, 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.

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Oct 09
0

Daily Brief Event-Driven: NWS Holding (659 HK): Pre-Condition Satisfied and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • NWS Holding (659 HK): Pre-Condition Satisfied
  • Liontown Resources (LTR AU): Passive Selling on Lower Float
  • Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
  • HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium
  • SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

NWS Holding (659 HK): Pre-Condition Satisfied

By Arun George

  • The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
  • The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
  • A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

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.

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys

By Arun George

HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium

By Brian Freitas

  • Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
  • HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
  • There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

By Brian Freitas

  • Over 90% of the way through the review period, we see 9 potential adds/10 potential deletes in December. However, there can be a maximum of 5 changes at a review.
  • We estimate a one-way turnover of 6.1% at the December rebalance leading to a one-way trade of CNY 5.27bn. Index arb balances could increase the impact on the stocks.
  • The adds have outperformed the deletes this year though there has been a deterioration in performance over the last few months.

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Oct 09
0

Daily Brief Equity Bottom-Up: Quick Take on ‘Golden Week’ Headline Tourism Traffic: Limited Improvement and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Quick Take on ‘Golden Week’ Headline Tourism Traffic: Limited Improvement, & Shy of Expectations
  • VIS (5347:TT): The Outlook Is a Bit Slower in 4Q23F
  • Dongfang Electric (1072 HK): Don’t Miss Out on This Undervalued Play
  • Taiwan Tech Weekly: Samsung & Nanya Earnings; AI Names Rebound Again
  • Banks lead Q3 2023 net institutional inflow
  • REIT Watch – Three S-Reits buck the trend in September

Quick Take on ‘Golden Week’ Headline Tourism Traffic: Limited Improvement, & Shy of Expectations

By Daniel Hellberg

  • Outbound daily traffic during the long holiday down -15% vs 2019, and short of expectations
  • Total domestic trips up 4% vs 2019, but average daily trips -9% & average daily spending -4%
  • Ten months in, the pace of China’s 2023 tourism recovery remains disappointingly sluggish

VIS (5347:TT): The Outlook Is a Bit Slower in 4Q23F

By Patrick Liao

  • Vanguard’s order visibility is about two months, and its order backlog is also about two months now.
  • Vanguard’s goal is to establish a 12″ wafer Fab, which we estimate will likely be viable around 2026F.
  • We believe that technology nodes below 28nm HKMG, specifically 40nm and below, would be suitable for transfer.

Dongfang Electric (1072 HK): Don’t Miss Out on This Undervalued Play

By Osbert Tang, CFA

  • The YTD underperformance of Dongfang Electric (1072 HK) has put it on very attractive PER of 5.8x for FY23. More importantly, it has delivered both earnings and new order growth. 
  • Financial position has improved with net cash of Rmb16.5bn and its recurring earnings soared 26.5% at 1H23. The adverse economic environment has not had an impact on its operations.
  • New orders amounted to Rmb48.9bn (+33.3% YoY), a record high, and we estimate backlog at Rmb166bn. This equals 2.5x FY23F revenue and suggests forward earnings are well covered.

Taiwan Tech Weekly: Samsung & Nanya Earnings; AI Names Rebound Again

By Vincent Fernando, CFA

  • Samsung Electronics and Nanya Technology will report their results this week. Samsung could reportedly increase NAND prices this month, giving a potential hint to the memory outlook they will provide.
  • Hon Hai will begin mass production of its Model C electric car in 4Q23E in Taiwan. This will provide a proof point for Hon Hai’s global EV platform business model.
  • Top gainers recently have included rebounding AI names — One can consider using the bounce to find AI shorts to pair against an Nvidia long.

Banks lead Q3 2023 net institutional inflow

By Geoff Howie

  • Banks lead Q3 2023 net institutional inflow INSTITUTIONS were again net buyers of Singapore stocks over the five trading sessions through to Oct 5, with S$100 million of net institutional inflow, and 24 primary-listed companies conducting buybacks with a total consideration of S$38.5 million.
  • ComfortDelGro saw S$71 million of net institutional fund inflow in Q3 2023, after booking S$44 million of net institutional fund outflow in H1 2023.

REIT Watch – Three S-Reits buck the trend in September

By Geoff Howie

  • IN THE third quarter of 2023, the Straits Times Index (STI) generated a 2.1 per cent total return, bringing its nine-month total return to 3.3 per cent.
  • During the quarter, the STI marginally outpaced the FTSE Asean Extended 60 Index and FTSE Asia Pacific Index, which recorded total returns of 1.1 per cent and declines of 1.1 per cent, respectively.
  • On the other side of the “higher-for-longer” Fed funds rate outlook, the iEdge S-Reit Index declined 4.2 per cent in total return in Q3 2023.

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Oct 09
0

Daily Brief Macro: Global Monetary Policy Outlook: Bracing for an Asymmetric Policy Rate Path and more

By | Daily Briefs, Macro

In today’s briefing:

  • Global Monetary Policy Outlook: Bracing for an Asymmetric Policy Rate Path
  • The Outside-The-Box Way to Play A Relief Rally
  • Term Premium and Real Rates: Drivers of Risk Appetite
  • The Hoo-Ha in the Bond Market

Global Monetary Policy Outlook: Bracing for an Asymmetric Policy Rate Path

By Said Desaque

  • Monetary policy conduct in Western economies is still dominated by inflation considerations, particularly tight labour markets. Strong demand for services makes it difficult for central banks to lower policy rates.
  • Tight labour markets are no longer regarded by central banks as being compatible with price stability. Labour hoarding will slow disinflation, making it more difficult to quickly reduce policy rates. 
  • Central banks are reviewing their estimates of their neutral policy rates due to the different inflationary backdrop. Various factors suggest that higher neutral policy rates for a considerable period.

The Outside-The-Box Way to Play A Relief Rally

By Cam Hui

  • The stock market is oversold, washed out and poised for a FOMO relief rally.
  • Our review of sector relative performance leads us to believe that the leadership in a rebound will be led by the cyclically sensitive materials stocks. 
  • In particular, gold and gold stocks have defied their inverse correlation to USD strength and could be strong beneficiaries under a relief rally scenario.

Term Premium and Real Rates: Drivers of Risk Appetite

By Cam Hui

  • The financial markets have taken a risk-off tone as bond yields rose against a backdrop of better news on inflation and employment, and expectations that the Fed has finished hiking.
  • If the nominal Fed Funds rate stays steady and inflation falls, this will induce higher real rates, excessively tight monetary conditions and eventually a pivot toward easing.
  • We believe the market is at or near the point of maximum pain and investors should be prepared for a FOMO scramble for bonds and risky assets.

The Hoo-Ha in the Bond Market

By Thomas Lam

  • The upward spike in Treasury yields, particularly at the longer-end, has introduced market anxieties lately
  • But the recent jump in the 10-year yield, unlike earlier periods, seems to be influenced by the unobserved term premium component
  • I introduce my long-maturity term premium estimate, attempt to tease out statistical relationships and conjecture on the potential rate path

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Oct 09
0

Daily Brief Australia: Liontown Resources and more

By | Australia, Daily Briefs

In today’s briefing:

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

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.

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Oct 09
0

Daily Brief South Korea: Eoflow , EcoPro Materials and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
  • Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys

By Arun George

Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

By Ethan Aw

  • EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
  • Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
  • In our previous note, we covered the company’s performance and undertook a peer comparison. In this note, we will share our thoughts on valuation.

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Oct 09
0

Daily Brief Singapore: Marco Polo Marine, Sabana Industrial REIT and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Banks lead Q3 2023 net institutional inflow
  • REIT Watch – Three S-Reits buck the trend in September

Banks lead Q3 2023 net institutional inflow

By Geoff Howie

  • Banks lead Q3 2023 net institutional inflow INSTITUTIONS were again net buyers of Singapore stocks over the five trading sessions through to Oct 5, with S$100 million of net institutional inflow, and 24 primary-listed companies conducting buybacks with a total consideration of S$38.5 million.
  • ComfortDelGro saw S$71 million of net institutional fund inflow in Q3 2023, after booking S$44 million of net institutional fund outflow in H1 2023.

REIT Watch – Three S-Reits buck the trend in September

By Geoff Howie

  • IN THE third quarter of 2023, the Straits Times Index (STI) generated a 2.1 per cent total return, bringing its nine-month total return to 3.3 per cent.
  • During the quarter, the STI marginally outpaced the FTSE Asean Extended 60 Index and FTSE Asia Pacific Index, which recorded total returns of 1.1 per cent and declines of 1.1 per cent, respectively.
  • On the other side of the “higher-for-longer” Fed funds rate outlook, the iEdge S-Reit Index declined 4.2 per cent in total return in Q3 2023.

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