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Smartkarma Daily Briefs

Aug 31
0

Most Read: Kenedix Office Investment Co, SBI Shinsei Bank, Prosus NV, Tcc Steel, East Buy Holding , Power Finance, Sinopharm Group Co Ltd H, Core Concept Technologies Inc, Star CM Holdings , Doosan Robotics and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
  • SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
  • Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
  • KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
  • Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
  • AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
  • HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
  • Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
  • STAR CM (6698 HK): Grave Accusations
  • Doosan Robotics IPO: The Bear Case

Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too

By Travis Lundy

SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle

By Travis Lundy

  • The SBI Holdings Tender Offer for SBI Shinsei Bank (8303 JP) was completed about four weeks ago, and in something of a surprise, only 3.7% of 26.98% minority holdings tendered.
  • The stock traded above terms every day during the Tender Offer Period. People accumulated in order to pursue their appraisal rights later. That is big. 
  • This week, SBI Shinsei announced the schedule of dates relating to the squeezeout EGM. The record date was early. The reverse stock split announced is as expected, possibly game-able.

Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!

By Travis Lundy

  • Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
  • What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
  • Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail. 

KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December

By Brian Freitas

  • Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
  • The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
  • The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.

Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)

By Travis Lundy

  • The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
  • There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
  • Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.

AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

By Brian Freitas

  • We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
  • The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
  • Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)

By Brian Freitas

Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

By Travis Lundy

  • Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another. 
  • DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
  • The “reason” for the offering mentions a desire to move to TSE Prime in future.

STAR CM (6698 HK): Grave Accusations

By David Blennerhassett

  • STAR CM Holdings (6698 HK), a variety program intellectual property creator and operator, was listed last December and promptly gained 475% by early August. All good so far.
  • Shares cratered on the 18 August (-23.4%) and are currently 76% adrift from its recent high. The reason? A viral clip from late pop diva Coco Lee discussing unfair treatment.
  • The music competition show, in which Coco appeared, pushed back on any impropriety; however, its broadcaster has temporarily suspended the program. This is no easy fix.

Doosan Robotics IPO: The Bear Case

By Arun George

  • Doosan Robotics (DOOSANROBO KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.  
  • In Doosan Robotics IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on business plan forecasts based on shaky assumptions, high cash burn, rising cash collection cycle and deteriorating balance sheet strength.

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Aug 30
0

Daily Brief Industrials: Doosan Robotics, First Trust Dj Internet Ind, Shenzhen International, ZTO Express Cayman , Braille Energy Systems and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Doosan Robotics IPO: The Bull Case
  • Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition
  • Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology
  • Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
  • ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
  • BES: Mixed Q3 Financials; Long-Term Thesis Intact

Doosan Robotics IPO: The Bull Case

By Arun George

  • Doosan Robotics (DOOSANROBO KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.   
  • The international bookbuilding will run from 28 August to 15 September, while the domestic book will be open from 11 to 15 September. Pricing will be announced on 19 September.
  • The bull case rests on the market share gains, rapid forecasted growth, the industry’s largest product lineup, rapid expansion in sales channels and key accounts growth.

Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition

By Ethan Aw

  • Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. 
  • Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module. 
  • In our previous notes, we talked about the company’s past performance. In this note, we undertake a peer comparison.

Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology

By Joe Jasper

  • Last week (8/22/23) we discussed our expectations for an oversold bounce due to an overwhelming number of indexes/Sectors/industries testing multi-month supports, combined with Treasury yields and the DXY testing resistance.
  • The bounce has begun with the SPP ending higher last week for the first time in a month, and it is possible we have seen the lows for this pause/pullback.
  • A meaningful correction cannot happen if the SPX is above 4300-4325, but we would not be surprised to see another month or more of consolidation between 4300 and 4600.

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

By Osbert Tang, CFA

  • Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
  • Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
  • SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below. 

ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher

By Daniel Hellberg

  • Solid Q2 results from ZTO, with deep unit cost reductions offseting weak pricing
  • But ultimately, Q2/H1 results are merely in-line with guidance — not better, nor worse
  • In this environment, it’s difficult to see what will move ZTO out of recent trading range

BES: Mixed Q3 Financials; Long-Term Thesis Intact

By Atrium Research

  • Braille reported Q3/23 financial results that were mixed compared to our expectations. 
  • Braille Battery remains well positioned to expand internationally and return to its historical sales growth rate of ~15% while expanding gross margin in the process.
  • The results were mixed relative to our expectations, being in line for revenue and adjusted EBITDA but missing on gross margin.

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Aug 30
0

Daily Brief Energy/Materials: Posco Future M, Shougang Fushan Resources, Solar AI Technologies, Rent.com.au Ltd, Schoeller Allibert SA and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
  • Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
  • Singapore’s Rent-To-Own Solar Startup Solar AI Bags US$1.5M Seed Financing
  • Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation
  • Schoeller Allibert – ESG Report – Lucror Analytics

Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts

By Sanghyun Park

  • KB Asset Management has announced the release of an inverse ETF, containing the top 10 core stocks in the secondary battery sector.
  • Given the substantial fluctuations in SSF trading volume in Korea, the flow increase of this ETF might temporarily lead to an unusually high level of backwardation.
  • Also, we may observe a phenomenon known as ‘wag-the-dog’ as the flow of this inverse ETF could act as a triggering factor for a temporary spark.

Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional

By Arun George

  • Shougang Fushan Resources (639 HK) shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.
  • The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.
  • If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%. 

Singapore’s Rent-To-Own Solar Startup Solar AI Bags US$1.5M Seed Financing

By e27

  • Singapore-based solar-as-a-service startup Solar AI Technologies has secured US$1.5 million in a seed funding round led by Earth Venture Capital with participation from Undivided Ventures, Investible, and climate-tech angel investor David Pardo.
  • The funds will primarily be used to upscale its rent-to-own (RTO) solar programme in the island nation before embarking on regional expansion in the next 12 months.
  • Started in 2020 by Chew (CEO), Gérald Chablowski (CTO), and Luke Ong, Solar AI seeks to make rooftop solar accessible and hassle-free for smaller, underserved property owners by providing them with zero upfront cost.

Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation

By Research as a Service (RaaS)

  • Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
  • The company has reported FY23 revenue of $2.77m, down 17.8% on the previous corresponding period (pcp) but in line with our expectations.
  • The EBITDA loss for the year was $2.48m, an increase of 55.5% on the pcp and a little higher than our forecast for a $2.3m EBITDA loss. 

Schoeller Allibert – ESG Report – Lucror Analytics

By Charles Macgregor

  • Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
  • We assess Schoeller Allibert’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
  • Schoeller Allibert is a leading manufacturer of returnable transit packaging (RTP) products in Europe.

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Aug 30
0

Daily Brief Industrials: Doosan Robotics, First Trust Dj Internet Ind, Shenzhen International, ZTO Express Cayman , Braille Energy Systems and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Doosan Robotics IPO: The Bull Case
  • Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition
  • Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology
  • Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
  • ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
  • BES: Mixed Q3 Financials; Long-Term Thesis Intact

Doosan Robotics IPO: The Bull Case

By Arun George

  • Doosan Robotics (DOOSANROBO KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.   
  • The international bookbuilding will run from 28 August to 15 September, while the domestic book will be open from 11 to 15 September. Pricing will be announced on 19 September.
  • The bull case rests on the market share gains, rapid forecasted growth, the industry’s largest product lineup, rapid expansion in sales channels and key accounts growth.

Doosan Robotics IPO – Peer Comparison – Has Niche Offerings but Doesn’t Lack Competition

By Ethan Aw

  • Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. 
  • Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module. 
  • In our previous notes, we talked about the company’s past performance. In this note, we undertake a peer comparison.

Oversold Bounce Underway Amid Consolidation Phase; Buys in IT Consulting, Uranium, Technology

By Joe Jasper

  • Last week (8/22/23) we discussed our expectations for an oversold bounce due to an overwhelming number of indexes/Sectors/industries testing multi-month supports, combined with Treasury yields and the DXY testing resistance.
  • The bounce has begun with the SPP ending higher last week for the first time in a month, and it is possible we have seen the lows for this pause/pullback.
  • A meaningful correction cannot happen if the SPX is above 4300-4325, but we would not be surprised to see another month or more of consolidation between 4300 and 4600.

Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked

By Osbert Tang, CFA

  • Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
  • Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
  • SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below. 

ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher

By Daniel Hellberg

  • Solid Q2 results from ZTO, with deep unit cost reductions offseting weak pricing
  • But ultimately, Q2/H1 results are merely in-line with guidance — not better, nor worse
  • In this environment, it’s difficult to see what will move ZTO out of recent trading range

BES: Mixed Q3 Financials; Long-Term Thesis Intact

By Atrium Research

  • Braille reported Q3/23 financial results that were mixed compared to our expectations. 
  • Braille Battery remains well positioned to expand internationally and return to its historical sales growth rate of ~15% while expanding gross margin in the process.
  • The results were mixed relative to our expectations, being in line for revenue and adjusted EBITDA but missing on gross margin.

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Aug 30
0

Daily Brief TMT/Internet: VNG (VinaGame), Energy One Ltd, Core Concept Technologies Inc, Zeus Co Ltd, ARM Holdings, Wistron Corp, Delta Electronics Thai, Gogoro and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • VNG Pre-IPO – The Positives – Vietnam’s Mini-Tencent
  • Energy One: Busby Baulks At STG’s Offer
  • Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
  • Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation
  • Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?
  • ARM Holdings IPO: Valuation Insights
  • Taiwan Shorts Analysis: AI Supply Chain Stocks With High Short Squeeze Risk
  • Quiddity Leaderboard SET50 Dec 23: JMT Network Addition and Centel Plaza Deletion Likely
  • VNG Pre-IPO – The Negatives – Vietnam’s Mini-Tencent
  • Gogoro: Hunting for a Contrarian EV Buy; Valuing It as a Utility/Infra Business

VNG Pre-IPO – The Positives – Vietnam’s Mini-Tencent

By Sumeet Singh

  • Vng (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
  • VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities
  • In this note, we talk about the positive aspects of the deal.

Energy One: Busby Baulks At STG’s Offer

By David Blennerhassett

  • Yesterday (28 August) software provider Energy One Ltd (EOL AU)  announced an indicative Offer, by way of a Scheme, from STG at A$5.85/share, a solid 44% premium to last close. 
  • Energy One has granted STG due diligence on an exclusive basis and the board is supportive if terms are firmed. All looks good. However …
  • … Vaughan Busby, a NED and founding CEO of Energy One, is not aligned with the board. And he holds ~14%. 

Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

By Travis Lundy

  • Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another. 
  • DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
  • The “reason” for the offering mentions a desire to move to TSE Prime in future.

Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation

By Douglas Kim

  • Our NAV valuation of Zeus Co suggests an implied price target of 32,991 won, which is 13% lower than current share price. 
  • Given the lack of upside, we would avoid Zeus shares at current prices.
  • Currently, JET Co is listed on Tokyo PRO Market Exchange. JET Co is expected to switch its listing to the Tokyo Standard Market Exchange. 

Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?

By David Blennerhassett

  • Zeus Co Ltd (079370 KS), a maker of semiconductor equipment, flat panel display equipment, and facility automation solutions, intends to spin off 95%-held J.E.T. Co (6228 JP) next month.
  • J.E.T., a  semiconductor etching equipment play, will list on the 25 September. Pricing is expected around the 5 September. 
  • Zeus’ share price has fallen 33% in the past month. That may be justified. 

ARM Holdings IPO: Valuation Insights

By Arun George

Taiwan Shorts Analysis: AI Supply Chain Stocks With High Short Squeeze Risk

By Vincent Fernando, CFA

Quiddity Leaderboard SET50 Dec 23: JMT Network Addition and Centel Plaza Deletion Likely

By Janaghan Jeyakumar, CFA

VNG Pre-IPO – The Negatives – Vietnam’s Mini-Tencent

By Sumeet Singh

  • VNG (VinaGame) (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
  • VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities
  • In this note, we talk about the not-so-positive aspects of the deal.

Gogoro: Hunting for a Contrarian EV Buy; Valuing It as a Utility/Infra Business

By Vincent Fernando, CFA

  • We spoke to Gogoro (GGR US), a beaten-down and under-covered Taiwan EV play listed in the US — As part of a hunt for contrarian plays.
  • The company has faced headwinds recently, with hardware sales relatively weak vs. its local market. The battery swapping business is compelling and steadily growing however.
  • We find the company fairly valued unless it can show more growth — We value it as two parts, a EV 2-wheeler hardware business and an infrastructure-like battery swapping business. 

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Aug 30
0

Daily Brief Health Care: Sinopharm Group Co Ltd H, PolyNovo Ltd and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
  • PolyNovo (PNV AU): FY23 Result- Sales Momentum Accelerates; Net Loss Widens on Higher Opex

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)

By Brian Freitas

PolyNovo (PNV AU): FY23 Result- Sales Momentum Accelerates; Net Loss Widens on Higher Opex

By Tina Banerjee

  • PolyNovo Ltd (PNV AU) reported record high sales of A$66.5M, up 59% YoY during FY23, mainly driven by strong momentum in the U.S. RoW sales increased 134% YoY to A$14M.
  • However, net underlying loss widened to A$2.3M in FY23 from A$2.0M in FY22 due to a 50% YoY increase in operating expenses due to increasing headcount and R&D investment.
  • In FY23, the U.S. customer accounts increased to 299 hospitals from 189 hospitals in FY22. PolyNovo continued geography expansion and entered Hong Kong, India, and Canada markets.

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Aug 30
0

Daily Brief Consumer: Prosus NV, East Buy Holding , PDD Holdings , Oriental Land, Chongqing Hongjiu Fruit , Ultrajaya Milk, Wuliangye Yibin Co Ltd A, Genting Bhd, Yerbae Brands and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
  • Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
  • Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy
  • Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023
  • Chongqing Hongjiu Fruit Lockup Expiry – Price Has Come Back Down to Earth but Expect More Selling
  • Ultrajaya Milk (ULTJ IJ) – Back on Track with Dairy and Tea
  • Wuliangye (000858 CH):  Classic Value Trap
  • Genting Berhad: 2Q23 Results Show Early Positive Ramping in Early Post Covid Era
  • YERB.U: Strong Q2 Financials; Increasing Target Price

Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!

By Travis Lundy

  • Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
  • What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
  • Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail. 

Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)

By Travis Lundy

  • The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
  • There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
  • Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.

Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy

By Ming Lu

  • PDD’s revenue increased by 66% YoY to RMB52 bn, significantly higher than the market consensus RMB43 bn.
  • The operating margin declined to 24% in 2Q23 from 28% in 2Q22 due to aggressive expansion outside China.
  • We believe the stock still has an upside of 47% for year end 2023. Buy.

Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023

By Oshadhi Kumarasiri

  • During the initial months of 2QFY24, both Tokyo Disneyland and Tokyo DisneySea experienced a significant double-digit QoQ drop in Google search interest.
  • Using Google Search trends data for the first two months of 2QFY24, we anticipate a QoQ decline of about 17% in Oriental Land’s Theme Parks revenue, dropping below ¥100bn.
  • 2QFY24 consensus OP is 2.5x above the company’s guidance, and both short and medium term consensus revenue and OP targets for Oriental Land (4661 JP) appear blatantly unachievable.

Chongqing Hongjiu Fruit Lockup Expiry – Price Has Come Back Down to Earth but Expect More Selling

By Ethan Aw

  • Chongqing Hongjiu Fruit (6689 HK) was listed on 5th Sep 2022, where it raised around US$71m in its Hong Kong IPO. Its one-year lockup will expire on 4th Sep 2023. 
  • Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. As per CIC, it was the largest fruit distributor by revenue in 2022. 
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

Ultrajaya Milk (ULTJ IJ) – Back on Track with Dairy and Tea

By Angus Mackintosh

  • Ultrajaya Milk (ULTJ IJ) remains a core proxy for the under-penetration of dairy products in Indonesia, which stands at less than half of Thailand in terms of per capita consumption.
  • Ultrajaya has seen a strong rebound in sales this year for its UHT milk sales but material pressure persisted in 1H2023 but will abate in 2H2023 improving margins.  
  • Its carton tea products are seeing a strong rebound and a new distribution warehouse in Cikarang will improve distribution. Ultrajaya‘s growth trajectory is resuming and valuations are attractive. 

Wuliangye (000858 CH):  Classic Value Trap

By Steve Zhou, CFA

  • Wuliangye Yibin Co Ltd A (000858 CH), the second largest Chinese liquor company in China, trades at one of the lowest PE multiples in the space. 
  • Kweichow Moutai (600519 CH), the largest Chinese liquor company trades at 26x 2024 expected earnings, and most other listed Chinese liquor names trade above 20x 2024 expected earnings.
  • Upon closer look, Wuliangye is actually a classic case of value trap – slow growth with no change or slowly deteriorating PE multiples. 

Genting Berhad: 2Q23 Results Show Early Positive Ramping in Early Post Covid Era

By Howard J Klein

  • The company is the most geographically diverse operator in the global gaming space. It has been something of a post-covid laggard relative to sector peers.
  • Return to modern profit largely comes from Malaysia Highlands flagship.
  • Big unnoticed catalyst could be its key position in the bidding wars for three new licenses to be awarded in metro New York. Genting active there since 2011.

YERB.U: Strong Q2 Financials; Increasing Target Price

By Atrium Research

  • Yerbaé reported strong Q2 financials that were in line with our estimates on sales ($4.1M) and beat our expectations for gross margins (56%).
  • Yesterday, Yerbaé Brands Corp. (YERB.U:TSXV, YERBF:OTC) reported Q2/23 financial results that were in line with our estimates for net revenue and beat our estimates for gross margin.
  • Gross revenue came in at $4.3M vs. our estimate of $4.5M with the promotional rate at 4% compared to our estimate of 7%.

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Aug 30
0

Daily Brief Financials: Power Finance, Hang Seng Index, First Pacific Co and more

By | Daily Briefs, Financials

In today’s briefing:

  • AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
  • EQD | Hang Seng Index (HSI) WEEKLY Weak Bounce: Resistance Analysis
  • Morning Views Asia: First Pacific Co, Xiaomi Corp, Yankuang Energy Group

AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

By Brian Freitas

  • We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
  • The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
  • Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.

EQD | Hang Seng Index (HSI) WEEKLY Weak Bounce: Resistance Analysis

By Nico Rosti

  • HSI reversal was overdue, but the bounce looks weak: so far it did not even reach Q1 resistance on week 1 and on week 2 (current).
  • Resistance level to watch where the current bounce could end is 18874, or any price around that area at Close, at the end of this week. High probability SHORT.
  • If some unexpected catalyst pushes the index to rally, look for resistance at 19459 on week 3, we think this won’t happen but a tail is always possible.

Morning Views Asia: First Pacific Co, Xiaomi Corp, Yankuang Energy Group

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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Aug 30
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Daily Brief Australia: Energy One Ltd, PolyNovo Ltd, Rent.com.au Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Energy One: Busby Baulks At STG’s Offer
  • PolyNovo (PNV AU): FY23 Result- Sales Momentum Accelerates; Net Loss Widens on Higher Opex
  • Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation

Energy One: Busby Baulks At STG’s Offer

By David Blennerhassett

  • Yesterday (28 August) software provider Energy One Ltd (EOL AU)  announced an indicative Offer, by way of a Scheme, from STG at A$5.85/share, a solid 44% premium to last close. 
  • Energy One has granted STG due diligence on an exclusive basis and the board is supportive if terms are firmed. All looks good. However …
  • … Vaughan Busby, a NED and founding CEO of Energy One, is not aligned with the board. And he holds ~14%. 

PolyNovo (PNV AU): FY23 Result- Sales Momentum Accelerates; Net Loss Widens on Higher Opex

By Tina Banerjee

  • PolyNovo Ltd (PNV AU) reported record high sales of A$66.5M, up 59% YoY during FY23, mainly driven by strong momentum in the U.S. RoW sales increased 134% YoY to A$14M.
  • However, net underlying loss widened to A$2.3M in FY23 from A$2.0M in FY22 due to a 50% YoY increase in operating expenses due to increasing headcount and R&D investment.
  • In FY23, the U.S. customer accounts increased to 299 hospitals from 189 hospitals in FY22. PolyNovo continued geography expansion and entered Hong Kong, India, and Canada markets.

Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation

By Research as a Service (RaaS)

  • Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
  • The company has reported FY23 revenue of $2.77m, down 17.8% on the previous corresponding period (pcp) but in line with our expectations.
  • The EBITDA loss for the year was $2.48m, an increase of 55.5% on the pcp and a little higher than our forecast for a $2.3m EBITDA loss. 

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Aug 30
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Daily Brief Thailand: Delta Electronics Thai and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Quiddity Leaderboard SET50 Dec 23: JMT Network Addition and Centel Plaza Deletion Likely

Quiddity Leaderboard SET50 Dec 23: JMT Network Addition and Centel Plaza Deletion Likely

By Janaghan Jeyakumar, CFA

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