Smartkarma Daily Briefs

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.

ARM Holdings IPO: Valuation Insights

ARM Holdings (1822695D US) is the world’s most widely licensed and deployed processor. Softbank Group (9984 JP) seeks to raise about US$6-10 billion by listing ARM on Nasdaq.
We previously discussed the IPO in ARM Holdings IPO: The Bull Case and ARM Holdings IPO: The Bear Case.
Our valuation analysis suggests that the rumoured target valuation of US$60-70 billion is unjustified. Our base-case DCF valuation is US$44.0 billion.

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.

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

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.

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

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.

Chenqi Technology Limited Pre-IPO Tearsheet

By Clarence Chu

Chenqi Technology Limited (CT HK) is looking to raise US$300m in its upcoming Hong Kong IPO.
Chenqi Technology (Chenqi) is a mobility technology and service company in China.
Founded by the GAC Group and Tencent, its key offerings include (i) mobility services, (ii) technology services, and (iii) ecosystem services.

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Aug 30

Daily Brief Thematic (Sector/Industry): Ohayo Japan|Equity Rally Continues; Tech Surges; JAPAN X: Fast Retailing Sets Its Sights on India and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan|Equity Rally Continues; Tech Surges; JAPAN X: Fast Retailing Sets Its Sights on India
What Will BRICS Bring to the World? – The Rise of The Rest
Weekly Sustainable Investing Surveyor – Week Ended August 25, 2023

Ohayo Japan|Equity Rally Continues; Tech Surges; JAPAN X: Fast Retailing Sets Its Sights on India

By Mark Chadwick

OVERSEAS: Equity Rally Continues SPX +1.5% with all Sectors Up; Tech Surges ->NDX100 +2.2%; China Banks Cuts Mortgage rates to shore up economy; BitCoin lease on life w/US Court Ruling
JAPAN: NKY Futures +0.7% v Cash; USDJPY 145.9; Yen’s buying power at 53 year low; Japan’s jobless rate ticks up-risk for higher wages; SDF Head says Military Capabilities Inadequate
JAPAN X: Fast Retailing Aims to Dominate India with Manufacturing Expansion. With more locally manufactured products, Fasty will be better able to grow share in India.

What Will BRICS Bring to the World? – The Rise of The Rest

By Xinyao (Criss) Wang

BRICS announced expansion of members. The intention behind is obvious – Based on successful westward integration, the future pattern and trends of the entire world would already be clear.
Setting up BRICS currency immediately seems “too hasty”. However, as de-dollarization is a consensus, a suitable payment system would be established sooner or later given the economy size/resources of BRICS.
The international order is about to undergo a radical change, and the trend of multipolarity will continue to accelerate. This would put more investment options on the table for investors.

Weekly Sustainable Investing Surveyor – Week Ended August 25, 2023

By Water Tower Research

RROYF provides a non-dilutive royalty financing solution (through a combination of short-term loans and the acquisition of revenue-based royalties) to privately held and publicly traded renewable energy and clean energy technology companies.
RROYF’s objective is to acquire a portfolio of long-term, stable, diversified renewable energy royalty and income streams to provide shareholders with capital appreciation and a growing, sustainable, long-term cash distribution.
RROYF is a pioneer and the first publicly traded company to provide this royalty financing for the renewable energy and clean technology sector.

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Aug 30

Daily Brief Event-Driven: Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros! and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

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)
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
Energy One: Busby Baulks At STG’s Offer
Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
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?
AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

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

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)

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.

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

The September rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest passive inflows will be on East Buy (1797 HK), JD.com (9618 HK), Ping An (2318 HK), Sinopharm (1099 HK), BYD (1211 HK), Lenovo (992 HK) and Trip.com (9961).
The largest passive outflows will be on Alibaba (9988 HK), Li Auto (2015 HK), Meituan (3690 HK), AAC Technologies (2018 HK), Kuaishou (1024 HK), COGARD (2007) and CG Services (6098).

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.

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%.

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

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%.

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

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.

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

By Research as a Service (RaaS)

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.

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Aug 30

Daily Brief Credit: Morning Views Asia: First Pacific Co and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

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

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.

First Pacific Co
Xiaomi Corp
Yankuang Energy Group

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Aug 30

Daily Brief Equity Bottom-Up: Pinduoduo (PDD): 2Q23 and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy
Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023
Taiwan Shorts Analysis: AI Supply Chain Stocks With High Short Squeeze Risk
Ultrajaya Milk (ULTJ IJ) – Back on Track with Dairy and Tea
Wuliangye (000858 CH): Classic Value Trap
Gogoro: Hunting for a Contrarian EV Buy; Valuing It as a Utility/Infra Business
Genting Berhad: 2Q23 Results Show Early Positive Ramping in Early Post Covid Era
ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation

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.

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

By Vincent Fernando, CFA

We analyze the most shorted stocks in Taiwan and highlight notable AI supply chain stocks who have have some of the highest short interest vs. float in the market.
Gigabyte Technology (2376 TT) , Global Unichip (3443 TT) , Gold Circuit Electronics (2368 TT) , Inventec Corp (2356 TT) , Mitac Holdings (3706 TT) – high short squeeze risk.
Some Apple (AAPL US) supply chain stocks, Display-related, and Memory-related stocks are also heavily shorted.

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.

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.

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.

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

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.

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

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

Daily Brief Macro: Political Risks in Asia: Lull In Geopolitical Competition Implies Softening of Risks and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Political Risks in Asia: Lull In Geopolitical Competition Implies Softening of Risks
Macro Nugget: US Real Estate and Interest Rates
Thailand: Election of New Premier Provides Only Short-Term Respite
Great Game: Ukrainian Breakthrough imminent?
CX Daily: Clock Ticking on Country Garden’s Debt Bomb
Istanbul or Bust: The Decline of Turkish Investor Positioning
The Energy Cable #35 – Are Monster Draws Ahead?
Philippines: Emerging Signs of Investment Recovery

Political Risks in Asia: Lull In Geopolitical Competition Implies Softening of Risks

By Manu Bhaskaran

The likelihood of serious geopolitical disruptions has been reduced as the US-China relationship is better managed and domestic political conditions in Asia stabilize.
While antagonistic non-military measures by Washington and Beijing may continue, both countries will avoid rocking the boat. The odds of a substantial escalation are thus low.
Other regional flashpoints such as Taiwan, the Sino-Indian border, and the South China Sea may see episodic confrontations but these will probably be contained.

Macro Nugget: US Real Estate and Interest Rates

By Emil Moller

As we approach the zenith of a historic hiking cycle, it’s hardly surprising to see mortgage applications plunging to unprecedented lows.
We’ve previously discussed how households that secured low rates have minimal motivation to relocate or refinance.
Consequently, there’s been a significant drop in volume, which is evident in the decline in purchase applications

Thailand: Election of New Premier Provides Only Short-Term Respite

By Manu Bhaskaran

The election of Pheu Thai’s Srettha Thavisin as the new Thai premier ends, for now, months of political limbo. We expect a lull in political infighting in the short run.
Partially-Restored business confidence and expansionary fiscal policy will bolster the short-run outlook, and Thailand’s bureaucrats may be able to pursue growth-promoting reforms.
However, the longstanding political divide has been reconfigured, rather than resolved. Meanwhile, the economy’s structural challenges remain daunting, whoever is in charge.

Great Game: Ukrainian Breakthrough imminent?

By Mikkel Rosenvold

Welcome to this week’s Great Game – our weekly coverage of the geopolitical arena.
This week our eyes remain fixed on Ukraine where we are finally seeing some movement and developments.
Last week, war reporters on X and other social media began fuzzing about an ongoing Ukrainian breakthrough.

CX Daily: Clock Ticking on Country Garden’s Debt Bomb

By Caixin Global

Country Garden /Cover Story: Clock ticking on Country Garden’s debt bomb
Tax /: China extends tax incentives by two years to bolster housing market
Housing /: Li Auto’s first pure EV to use CATL’s fast-charging batteries

Istanbul or Bust: The Decline of Turkish Investor Positioning

By Steven Holden

Turkish fund ownership falls to record lows after significant rotation
No single company owned by more than 10% of managers. BIM and Koc Holdings the most widely held
Turkey falls to the 9th largest country allocation in the EMEA region

The Energy Cable #35 – Are Monster Draws Ahead?

By Ulrik Simmelholt

From supply to demand side weakness in 12 months. Key take aways: As opposed to last year, Germany is now seeing the demand side weaken. The supply side uncertainty is prevalent. A thermometer might be your best investment for trading markets this winter. Last Friday we received the August print of the business assessment from German firms via the Ifo Institut and it wasn’t pretty.
As we are nearing the levels seen around the energy crisis of last summer/early fall, we notice the difference in the cause for pessimism.
Last year it was all about the supply side with companies suffering from the high input prices, but this time around companies are telling a story of weakness on the demand side.

Philippines: Emerging Signs of Investment Recovery

By Steven Holden

Philippines fund ownership shows signs of life after decade long bear market
Asia Ex-Japan funds buy in to BDO Unibank, Bank of the Philippine Islands and Jollibee Foods Corp.
Despite this, The Philippines remains a zero allocation for 50% of the funds in our analysis.

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Aug 30

Most Read: SSE STAR50, Jio Financial Services, Prosus NV, Tcc Steel, East Buy Holding , Sinopharm Group Co Ltd H, VNG (VinaGame), Posco Future M, Shougang Fushan Resources, Core Concept Technologies Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China: Huge ETF Inflows & Impact on Stocks
Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
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)
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
VNG Pre-IPO – The Positives – Vietnam’s Mini-Tencent
Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

China: Huge ETF Inflows & Impact on Stocks

Nearly US$20bn has flowed into mainland China listed ETFs since 18 July and could be driven by the National Team supporting the market.
Most of the inflows have been focused on large cap indices including CSI 300, STAR50, CSI 500, SSE50, ChiNext and other sectoral and thematic ETFs.
The largest impact has been on the SSE STAR50 (STAR50 INDEX) constituents, but that has not stopped the slide in the stocks.

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing

Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.

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

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

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)

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.

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

The September rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest passive inflows will be on East Buy (1797 HK), JD.com (9618 HK), Ping An (2318 HK), Sinopharm (1099 HK), BYD (1211 HK), Lenovo (992 HK) and Trip.com (9961).
The largest passive outflows will be on Alibaba (9988 HK), Li Auto (2015 HK), Meituan (3690 HK), AAC Technologies (2018 HK), Kuaishou (1024 HK), COGARD (2007) and CG Services (6098).

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.

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

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%.

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

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.

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Aug 29

Daily Brief Private Markets: Indian Edtech Startup Gets $6m to Help Close Education Funding Divide and more

By Smartkarma Daily Briefs | Daily Briefs, Private Markets

In today’s briefing:

Indian Edtech Startup Gets $6m to Help Close Education Funding Divide
Malaysian Recommerce Startup CompAsia Rakes in Series A Funding Led by Gobi Partners

Indian Edtech Startup Gets $6m to Help Close Education Funding Divide

By Tech in Asia

GradRight, an India-based startup that helps students with selecting their university majors and financing their studies, has raised 500 million rupees (US$6.1 million) in series A funding from IvyCap Ventures.
The investment will be used to accelerate GradRight’s growth and expand its reach to lower- and middle-income students around the world.
Founded in 2020 by Aman Singh and Sasidhar Sista, the edtech startup runs an AI-powered platform that brings together prospective students, universities, and lenders.

Malaysian Recommerce Startup CompAsia Rakes in Series A Funding Led by Gobi Partners

By e27

Malaysia’s integrated re-commerce startup CompAsia has secured an undisclosed sum in a Series A investment round led by Gobi Partners.
This capital will help the startup expand across various touchpoints, bolstering human resources, training, and operational capabilities.
Additionally, the funds will be instrumental in optimising the firm’s digital assets and marketing strategies, specifically focusing on penetrating new markets like the Philippines, Thailand, and Indonesia.

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Aug 29

Daily Brief ESG: The Essence of the Matter Is the Low Return on Cash Flow Generated by the Company’s Business and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

The Essence of the Matter Is the Low Return on Cash Flow Generated by the Company’s Business
Genting Berhad – ESG Report – Lucror Analytics
Huhtamaki – ESG Report – Lucror Analytics

The Essence of the Matter Is the Low Return on Cash Flow Generated by the Company’s Business

By Aki Matsumoto

It’s necessary to clearly present cash allocation policy to investors and communicate with them, but unless this policy is convincing and feasible, investors cannot envision an increase in corporate value.
Companies that use ROE or ROIC as KPIs and disclose their cost of capital are still limited. The low return on cash flow may be the reason behind this.
As TOPIX is correlating more rapidly with nominal GDP than with P/B after 2020, there’s increasing need to communicate to investors that free cash flow will grow through cash allocation.

Genting Berhad – ESG Report – Lucror Analytics

By Leonard Law, CFA

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Genting Berhad’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

Huhtamaki – 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 Huhtamaki’s ESG as “Adequate”, in line with its Social pillar, while the Environmental and Governance pillars scored “Strong”. Controversies are “Immaterial” and Disclosure is “Strong”.

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Aug 29

Daily Brief ECM: Doosan Robotics IPO – The Positives – More than Doubled Its Revenue and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
VNG: Potential US Listing with the First Vietnamese “VIE” Structure
Doosan Robotics IPO Valuation Analysis
Millie’s Library IPO Analysis
Doosan Robotics IPO – The Negatives – But Losses Continue to Widen
Tuhu Car Pre-IPO PHIP Updates – Initially Looking for Growth, Now Searching for Profits
SF Holding HK IPO = A Drive to ‘Internationalize’ | Exposure Update | Recent Deals | New Comp Group

Doosan Robotics IPO – The Positives – More than Doubled Its Revenue

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 this note, we will talk about the positive aspects of the deal.

VNG: Potential US Listing with the First Vietnamese “VIE” Structure

By Alec Tseung

Vietnam’s tech giant, VNG, filed for US listing last week (valuation TBC).
Given the country’s current foreign ownership restriction, the listing will be done via an offshore entity that effectively controls the company through contractual agreements.
Investors should be aware of the risk, esp. after previous market concerns surrounding Chinese tech companies’ VIE structure.

Doosan Robotics IPO Valuation Analysis

By Douglas Kim

Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range.
We estimate Doosan Robotics to generate sales of 61.7 billion won (up 37.2% YoY) in 2023 and 97.7 billion won (up 58.2% YoY) in 2024.
If Doosan Robotics is compared to Fanuc, Doosan Robotics’ valuation would be much lower. However, one could argue that Doosan Robotics should have higher valuation than Rainbow Robotics.

Millie’s Library IPO Analysis

By Douglas Kim

Millie’s Library is trying to complete its IPO again in September 2023, after a failed attempt in November 2022. The IPO price range is from 20,000 won to 23,000 won.
Founded in 2016, Millie’s Library is a reading platform company that introduced the first monthly e-book subscription service in Korea in October 2017.
Our valuation analysis suggests base case target price of 31,769 won per share, which is 38% higher than the high end of the IPO price range of 23,000 won.

Doosan Robotics IPO – The Negatives – But Losses Continue to Widen