Smartkarma Daily Briefs

There should be 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.

Market Information About Samsung Electronics’ Shareholder Return

The local market is increasingly convinced that Samsung Electronics’ quarterly dividends for the latter half of this year will experience a reduction.
Samsung Electronics plans to apply the updated regulations from the 2024 1st quarter dividends, following the conclusion of the capital market law revision at the end of this year.
It might be prudent to refrain from trading that bets on a reduction in the 1P discount in the first half of this year.

[Alibaba (BABA US, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate

By Shawn Yang

Taobao and Tmall have implemented two major reforms: 1) The launch of the Wanxiangtai Platform Unlimited Edition; 2) Changing the rules for displaying merchant sales volume from monthly to annual.
Although the new Wanxiangtai differs from PDD’s “Fangxintui” and “Quanzhantui” , the idea is to simplify and automate merchant promotion. We anticipate that this change will boost the take rate.
We increased our core e-commerce take rate estimate for BABA in FY24/FY25 to 3.85%/4.0%, respectively, and raised our TP to US$ 127.

Earnings: MCHP and IFX, SIMO Rumors, SMCI, POWI, GFS, COHR, WOLF, AMAT, CSCO

By Douglas O’Laughlin

Infineon’s big news is that they, too, will be building one of the largest Silicon Carbide fabs in the world. This makes Wolfspeed’s Siler City look puny in comparison.
Infineon is now looking to be number three in the Silicon Carbide device game, targeting ~500 million in 2023.
So given the impressive growth, Infineon is a bit late but plans to spend 5 billion dollars over five years for the factory in Kulim.

Dynatrace Inc.: Will The Rookout Acquisition Become A Major Growth Catalyst? – Key Drivers

Dynatrace Inc. delivered a strong result and managed an all-around beat in the quarter.
With a new CRO and a strong vision for the future, Dynatrace is in a good position in the cloud-based software landscape.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Unity Software Inc.: The VisionOS Upside & Other Major Drivers

Unity Software Inc. delivered a mixed set of results in its most recent result, with revenues above Wall Street expectations but below-par earnings.
The company ended the quarter with a strong acceleration in revenue growth, impressive margin improvements, and positive cash flow generation.
The company’s core subscription growth is robust, and its product portfolio continues to expand with new offerings, such as Unity 2022 LTS, Unity PolySpatial, and Unity Cloud.

Confluent. 2Q Wrap: Solid Results and Leadership Position In a $60B+ TAM

By Andrei Zakharov

I remain bullish on the stock and reiterate a $37 PT. Confluent (CFLT US) delivered upside to total revenue, gross margin, and non-GAAP operating margin estimates.
The company raised guidance for CY23 total revenue and profitability. There were plenty of positives, including cloud momentum and customer demand.
The US-based data streaming pioneer appears well positioned to outperform my estimates, and I see a path to profitability (non-GAAP) in CY24 at the earliest.

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Aug 22

Daily Brief Thematic (Sector/Industry): Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions and more

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

In today’s briefing:

Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions
China A-Shares: Construction Materials Slump
China TMT Update-Luckin/CATL/LI/700.HK:HoK Crisis;Coffee Price War Continue; Shenxing Battery
Cannabis – Cannabis News for the Week Ending August 18, 2023
Consumer Hardlines: Mattress Imports
Weekly Sustainable Investing Surveyor – Week Ended August 18, 2023

Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions

By Mark Chadwick

OVERSEAS. US Yields spike to hit 16 year high; Stocks rise SPX closed +0.7% with Tech leading; China woes continue as forecasts cut; NVDIA and TSLA rebound on street optimism
JAPAN. NKY Futures +0.7% vs Cash; USDJPY 146.2; BOJ on pace to buy record amt of bonds under new YCC regime; Foreigners unloading JGBs; Japan DX market > 2trn yen
Japan X. Flying Cars – investments pouring into the space globally. Skydrive, Japan’s Flying Car beacon bearer, partners with Suzuki to to push the boundries in the space.

China A-Shares: Construction Materials Slump

By Steven Holden

Concerns over Chinese Real Estate sector pushes ownership in Construction Materials stocks to their lowest levels on record.
Fund activity heavily skewed to the sell-side and driven by mass closures in Anhui Conch Cement, Huaxin Cement and Beijing New Building Materials.
Investor sentiment, as measured by A-Share fund activity and positioning, is as low as it gets for the Construction Materials sector.

China TMT Update-Luckin/CATL/LI/700.HK:HoK Crisis;Coffee Price War Continue; Shenxing Battery

By Shawn Yang

Luckin Coffee: Price war continue and competition in low tier cities expansion intensified
CATL/ LI: CATL unveils Shenxing Battery ( + / +)
700.HK: Honor of Kings Faces Reputation Crisis Recently( – )

Cannabis – Cannabis News for the Week Ending August 18, 2023

By Water Tower Research

Revenue of $129.2 million was +3.8% Q/Q, -0.3% Y/Y, and above consensus of $125.0 million.
Adjusted gross margins of 40.4% improved 2.1% Q/Q, declined 2.20% Y/Y, and exceeded estimates of 39.0%.
Expanding East Coast markets drove revenue growth and higher quarterly margins, and were partially offset by price compression in Florida, Illinois, and Massachusetts.

Consumer Hardlines: Mattress Imports

By Water Tower Research

Under Statistics, we update data for June 2023 versus June 2022 (Y/Y comp) and May 2023 (M/M comp).
Each table’s lower half provides similar data for the 12 countries targeted by the new AD petition.
In June, total imported units fell ~9% Y/Y but rose ~11% M/M.

Weekly Sustainable Investing Surveyor – Week Ended August 18, 2023

By Water Tower Research

The WTR Sustainable Index underperformed the broader market, falling 4.8% W/W versus the S&P 500 Index (down 2.1%), the Russell 2000 Index (down 3.4%), and the Nasdaq Index (down 2.2%).
Energy Technology (14.7% of the index) contributed to the index’s underperformance, falling 7.3%, while Industrial Climate and Ag Technology (46.6% of the index) was down 2.1%, ClimateTech Mining was down 7.8%, and Advanced Transportation Solutions was down 6.8%.
Top 10 Performers: LYTS, EOSE, PE, RIDE, PGTK, BWEN, ORGN, SOLO, TGEN, ADSE

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Aug 22

Daily Brief ECM: Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
Integral Corporation Pre-IPO – The Positives – Strong Track Record
Integral Corporation IPO: The Bull Case
Integral Corporation Pre-IPO – The Negatives – Ambitious Indicative Pricing
Sichuan Baicha Baidao Industrial Pre-IPO Tearsheet

Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well

Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
In this note, we will talk about the likely placement and past deal performance.

Integral Corporation Pre-IPO – The Positives – Strong Track Record

Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
In this note, we talk about the positive aspects of the deal.

Integral Corporation IPO: The Bull Case

By Arun George

Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September.
Integral primarily targets investments in Japanese medium-sized companies and invests its own capital both through investments in funds under management and through direct investments.
The bull case rest on rising AUM, strong operating income growth, cash flow potential through material unrealised carried interest and solid potential returns on its principal investments.

Integral Corporation Pre-IPO – The Negatives – Ambitious Indicative Pricing

Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
In this note, we talk about the not-so-positive aspects of the deal.

Sichuan Baicha Baidao Industrial Pre-IPO Tearsheet

By Ethan Aw

Sichuan Baicha Baidao Industrial (SCBCBDID CH) is looking to raise up to US$300m in its upcoming HK IPO. The deal will be run by CICC.
Sichuan Baicha Baidao Industrial (SBBI) sells new-style tea drinks through its ChaPanda stores, most of which are franchised.
As of the Latest Practicable Date (8th Aug 2023), ChaPanda’s store network comprised 7,117 stores, spanning across 31 provinces and municipalities in mainland China.

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Aug 22

Daily Brief Financials: Ping An Insurance (H), AIA Group Ltd, Westpac Banking, Integral Corporation, Longfor Properties, Vonovia , Binance Coin and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower
Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans
Integral Corporation Pre-IPO – The Positives – Strong Track Record
Integral Corporation Pre-IPO – The Negatives – Ambitious Indicative Pricing
Integral Corporation IPO: The Bull Case
Longfor Group – Earnings Flash – H1 FY 2023 Results – Lucror Analytics
Vonovia: Feedback From IR Confirms Our Investment Case
Top Trends of The Summer

Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?

The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.

AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower

1Q23 shows strong Value Of New Business (VONB), not sure of profit flow through
Comparative to 1H22 is easy vs loss of USD556m in the period, but risk to downside
Despite, stock buybacks, increased dividends market cap down 34% since peak this year

Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans

New release shows surge in Australia residential mortgage non-performing exposures QoQ
From March 2023 to June 2023 these NPLs rose by 10.5% and this is not an annualized rate
Its total NZ non-performing loans rose from AUD671m to AUD741m or 10.4% QoQ

Integral Corporation Pre-IPO – The Positives – Strong Track Record

Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
In this note, we talk about the positive aspects of the deal.

Integral Corporation Pre-IPO – The Negatives – Ambitious Indicative Pricing

Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
In this note, we talk about the not-so-positive aspects of the deal.

Integral Corporation IPO: The Bull Case

By Arun George

Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September.
Integral primarily targets investments in Japanese medium-sized companies and invests its own capital both through investments in funds under management and through direct investments.
The bull case rest on rising AUM, strong operating income growth, cash flow potential through material unrealised carried interest and solid potential returns on its principal investments.

Longfor Group – Earnings Flash – H1 FY 2023 Results – Lucror Analytics

By Charles Macgregor

Longfor’s H1/23 results were weaker than expected, with y-o-y declines of 35% in overall revenue to CNY 65 bn and 40% in revenue from property development to CNY 50 bn. That said, recurring income rose 10.4% to CNY 12.2 bn, which is becoming a meaningful annuity-like cash flow. This will be helpful in underpinning Longfor’s financial risk profile should there be a prolonged downturn in the property sector.

The company appears to have healthy access to bank funding, and should have sufficient liquidity to meet near-term debt maturities. That said, we highlight the risk of a potential reduction in the liquidity buffer, due to weak contracted sales and higher ST debt. Longfor recorded contracted sales of only CNY 7.6 bn in July 2023, compared to an average of CNY 11 bn per month in H1. ST debt surged 75% to c. CNY 39 bn, from c. CNY 22 bn at FYE 2022.

We maintain our “Hold” recommendation on the LNGFOR curve. The various notes appear to offer good value at current yields of 15-21%. That said, market technicals are very poor for private developers, with even the bonds of solid names such as Longfor experiencing volatility.

Vonovia: Feedback From IR Confirms Our Investment Case

By Alexis Dwek

Fundamentals of the German residential market our strong. The imbalance between demand and supply is widening.
Overall message from IR is positive. Market is pricing a bearish scenario. As the interest rates environment stabilizes, we should see improvements in the German real estate market
Trading at 61% to NTA. The market believes that the NTA that Vonovia shows is unsustainable in higher interest rate environment. The market remains very bearish.

Top Trends of The Summer

By Kaiko

Exceptionally low liquidity, macro factors, and a flurry of bad news were among the drivers of last week’s flash crash, pushing BTC to its lowest level in months and spurring a wave of liquidations across derivative markets.
While BTC 2% market depth has stabilized over the past few months at around 5k BTC, it remains more than 50% below its pre-FTX highs.
As BTC prices began falling towards $25k around 8pm UTC on August 17, market depth dropped 50% to just 2k BTC.

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Aug 22

Daily Brief Credit: Longfor Group – Earnings Flash – H1 FY 2023 Results – Lucror Analytics and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Longfor Group – Earnings Flash – H1 FY 2023 Results – Lucror Analytics
Morning Views Asia: PT Pertamina (Persero), Softbank Group

Longfor Group – Earnings Flash – H1 FY 2023 Results – Lucror Analytics

By Charles Macgregor

Morning Views Asia: PT Pertamina (Persero), Softbank 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.

PT Pertamina (Persero)
Softbank Group

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Aug 22

Daily Brief Industrials: SK Rent A Car, Ventia Services Group Pty , Wisdom Marine Lines, Hanwha Ocean, HMM Co., Ltd., S.F. Holding, Emerson Electric Co, C.H. Robinson Worldwide and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

SK Rent A Car: SK Networks’ Tender Offer
Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
Quiddity Leaderboard T50/100 Sep 23: Final Expectations; AI Frenzy Fades; Wisdom Marine TDIV DEL
Quiddity Leaderboard TDIV Sep 23: Wisdom Marine Could Underperform the Index
Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It
Privatization of HMM: Hapag-Lloyd, Harim, Dongwon, and LX Groups [Short-Listed Bidding Candidates]
Monthly Chinese Express Tracker | July Growth Slows | Pricing Hits Record Low | (August 2023)
Emerson Electric Co.: A Story Of Digital Transformation To Empower Process Manufacturers – Key Drivers
C.H. Robinson Worldwide Inc.: 3 Catalysts Responsible For Its Growth! – Financial Forecasts

SK Rent A Car: SK Networks’ Tender Offer

By David Blennerhassett

Korean car rental play SK Rent A Car (068400 KS) has announced a Tender Offer from SK Networks (001740 KS), its largest shareholder with ~76%.
SK Rent shareholders have the option of receiving cash or SK Networks scrip. Appraisal rights are also afforded.
The shareholder vote is a lock. The current trade is the cash offer, which is trading tight to terms.

Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well

Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
In this note, we will talk about the likely placement and past deal performance.

Quiddity Leaderboard T50/100 Sep 23: Final Expectations; AI Frenzy Fades; Wisdom Marine TDIV DEL

Today is the base date for the T50 and T100 Indices for the September 2023 Rebalance.
In this insight, we take a look at the final expectations for ADDs/DELs for the T50 and T100 Indices.
Previously, I expected five and three changes for the T50 and T100 indices, respectively, but now I see four changes for both indices.

Quiddity Leaderboard TDIV Sep 23: Wisdom Marine Could Underperform the Index

In this insight, we take a look at Quiddity’s final flow expectations for the September 2023 index rebalance.
In my previous insight, I revised my AUM assumption upwards but now I have revised it downwards based on the latest available data.
Based on the latest available data, I see 47 names with positive index flow expectations and 3 names with negative index flow expectations (including the DEL Wisdom Marine).

Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It

Multiple local news outlets reported Hanwha Ocean is undergoing a 2.5 trillion won equity increase. The official disclosure regarding this matter is expected to be released within this month.
We have repeatedly observed a pattern of testing the waters through leaks to the local media. The case of Hanwha Ocean can also be seen in this light.
It’s challenging to envision this magnitude being absorbed seamlessly by the market. There is a considerable likelihood that both issuers and bankers will aggressively attract inflows of arbitrage-seeking hot money.

Privatization of HMM: Hapag-Lloyd, Harim, Dongwon, and LX Groups [Short-Listed Bidding Candidates]

By Douglas Kim

After the market close on 21 August, it was reported that Harim Group, Dongwon Group, LX Group, and Hapag-Lloyd have been short-listed as preliminary bidders for HMM.
KDB and KOBC are selling 38.9% stake in HMM on a fully diluted basis. The local media have mentioned that the potential sales price could be about 5-6 trillion won.
We continue to have a Negative view of HMM. e expect additional 20-30%+ downside risk over the next 6-12 months.

Monthly Chinese Express Tracker | July Growth Slows | Pricing Hits Record Low | (August 2023)

By Daniel Hellberg

Chinese express parcel volume growth was 11.7% in July, far slower than in Feb-May
July ASP for all segments fell to 8.84 Yuan per piece, the lowest in at least ten years
Industry leader SF Holding partly insulated from margin pressure by air, international

Emerson Electric Co.: A Story Of Digital Transformation To Empower Process Manufacturers – Key Drivers

Emerson Electric’s results were a major disappointment as the company failed to meet the revenue as well as the earnings expectations of Wall Street.
The company’s focus on key growth areas, including energy transition, nearshoring, and its leading software portfolio, positions it to capture growth opportunities and drive value for its customers and stakeholders in the foreseeable future.
The company’s pricing strategies, and solid operational performance are key factors that contributed to the exceptional results in the third quarter.

C.H. Robinson Worldwide Inc.: 3 Catalysts Responsible For Its Growth! – Financial Forecasts

C.H.
Robinson Worldwide delivered disappointing results as the company could not meet the revenue and earnings expectations of Wall Street.
The company’s truckload and LTL businesses faced varying market conditions, with truckload volumes declining and LTL shipments remaining flat but declining AGP per order.

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Aug 22

Daily Brief Health Care: Olympus Corp, Jiangsu Hengrui Medicine, Coeptis Therapeutics Holdings, Mckesson Corp, Waters Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Olympus Corp (7733 JP): Slow Start of FY24; Unfavorable Macro Backdrop Continues to Hurt Business
Jiangsu Hengrui Medicine (600276.CH) 23H1 – Has the Turning Point of Performance Really Arrived?
Coeptistx (COEP) Deverra Deal Flash Note 21082023
McKesson Corporation: Decoding the Success Behind Their Broad-Based Momentum! – Major Drivers
Waters Corporation: New Line of SEC Columns & Other Major Developments

Olympus Corp (7733 JP): Slow Start of FY24; Unfavorable Macro Backdrop Continues to Hurt Business

By Tina Banerjee

Olympus Corp (7733 JP) announced muted Q1FY24 result. Revenue increased 8% YoY to ¥208B, while operating profit declined 50% YoY to ¥22B. A one-time gain has inflated the net profit.
Revenue missed about 3% compared to the plan. Product shipment hold and parts supply shortages represented about 1.5% points out of the total miss of 3%.
Olympus has reiterated FY24 guidance and expects FY24 revenue of ¥914B (+4% YoY) and operating profit of ¥163B (-13% YoY). In FY23, the company missed operating profit guidance.

Jiangsu Hengrui Medicine (600276.CH) 23H1 – Has the Turning Point of Performance Really Arrived?

By Xinyao (Criss) Wang

Hengrui’s performance recovery in 23H1 (especially 23Q2) was due to the low base last year caused by pandemic/lockdown. Increasing innovative drugs revenue proportion also reduced the negative impact of VBP.
People think the turning point of Hengrui’s performance has arrived, but we hold different opinions.Some big varieties haven’t entered VBP. It would take some time to achieve breakthrough in internationalization.
The negative impact of 23H2 anti-corruption hasn’t been reflected in interim report.Even if Hengrui’s performance growth could be back to 20-25% YoY in 2025/2026, over 60 PE/TTM is already expensive.

Coeptistx (COEP) Deverra Deal Flash Note 21082023

By ACF Equity Research

Deverra deal adds two patented assets to COEP product pipeline;
Reduces COEP risk profile and so contributes to our valuation range;
DVX201 – Unmodified NKC therapy from pooled donor CD34+ cells.

McKesson Corporation: Decoding the Success Behind Their Broad-Based Momentum! – Major Drivers

McKesson Corporation managed to exceed analyst expectations in terms of revenue as well as earnings.
McKesson’s core distribution businesses, particularly pharmaceutical distribution, exhibited broad-based momentum with solid growth across customer channels.
We give McKesson Corporation a ‘Hold’ rating with a revised target price.

Waters Corporation: New Line of SEC Columns & Other Major Developments

Waters Corporation delivered an all-around beat in its most recent quarterly result, with organic constant currency growth of 3%.
Their organic performance in constant currency was driven by excellent growth in the Industrial segment and the academic and governmental sectors.
We give Waters Corporation a ‘Hold’ rating with a revised target price.

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Aug 22

Daily Brief Event-Driven: E-Guardian (6050) Partial Offer Update and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

E-Guardian (6050) Partial Offer Update
Market Information About Samsung Electronics’ Shareholder Return
Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
SK Rent A Car: SK Networks’ Tender Offer
SK Networks Launches a Tender Offer for SK Rent-A-Car
Quiddity Leaderboard T50/100 Sep 23: Final Expectations; AI Frenzy Fades; Wisdom Marine TDIV DEL
Offshore China ETFs Rebalance Preview: Two Changes Expected in September
Quiddity Leaderboard TDIV Sep 23: Wisdom Marine Could Underperform the Index
Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It

E-Guardian (6050) Partial Offer Update

By Travis Lundy

When this was launched, it traded more volume than expected on the first day, then again on the second day. Since then it has traded cheap vs initial estimates.
A week after the launch, two separate Large Shareholder Filings came out. Those bear scrutiny.
The back end trade is still an interesting one in my opinion.

Market Information About Samsung Electronics’ Shareholder Return

The local market is increasingly convinced that Samsung Electronics’ quarterly dividends for the latter half of this year will experience a reduction.
Samsung Electronics plans to apply the updated regulations from the 2024 1st quarter dividends, following the conclusion of the capital market law revision at the end of this year.
It might be prudent to refrain from trading that bets on a reduction in the 1P discount in the first half of this year.

Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover

There should be 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.

Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?

The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.

SK Rent A Car: SK Networks’ Tender Offer

By David Blennerhassett

Korean car rental play SK Rent A Car (068400 KS) has announced a Tender Offer from SK Networks (001740 KS), its largest shareholder with ~76%.
SK Rent shareholders have the option of receiving cash or SK Networks scrip. Appraisal rights are also afforded.
The shareholder vote is a lock. The current trade is the cash offer, which is trading tight to terms.

SK Networks Launches a Tender Offer for SK Rent-A-Car

By Douglas Kim

We have a positive view of SK Networks’ tender offer of SK Rent-A-Car.
SK Networks is trying to buy the entire SK Rent-A-Car which is enjoying solid growth in sales and profits. SK Networks plans to eventually delist SK Rent-A-Car.
The shareholders of SK Rent-A-Car have a choice of tendering their shares receiving cash (at the tender offer price of 13,500 won) or receiving shares in SK Networks.

Quiddity Leaderboard T50/100 Sep 23: Final Expectations; AI Frenzy Fades; Wisdom Marine TDIV DEL

Today is the base date for the T50 and T100 Indices for the September 2023 Rebalance.
In this insight, we take a look at the final expectations for ADDs/DELs for the T50 and T100 Indices.
Previously, I expected five and three changes for the T50 and T100 indices, respectively, but now I see four changes for both indices.

Offshore China ETFs Rebalance Preview: Two Changes Expected in September

Based on the close of 21 August, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in September.
NARI Technology Co Ltd A (600406 CH) and CSC Financial (601066 CH) should replace Tongwei Co Ltd A (600438 CH) and Shaanxi Coal Industry (601225 CH) in the ETFs.
There are couple of stocks with over 1x ADV to trade from the ETFs. Plus there are cash and carry positions that will need to be rebalanced, adding to flow.

Quiddity Leaderboard TDIV Sep 23: Wisdom Marine Could Underperform the Index

In this insight, we take a look at Quiddity’s final flow expectations for the September 2023 index rebalance.
In my previous insight, I revised my AUM assumption upwards but now I have revised it downwards based on the latest available data.
Based on the latest available data, I see 47 names with positive index flow expectations and 3 names with negative index flow expectations (including the DEL Wisdom Marine).

Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It

Multiple local news outlets reported Hanwha Ocean is undergoing a 2.5 trillion won equity increase. The official disclosure regarding this matter is expected to be released within this month.
We have repeatedly observed a pattern of testing the waters through leaks to the local media. The case of Hanwha Ocean can also be seen in this light.
It’s challenging to envision this magnitude being absorbed seamlessly by the market. There is a considerable likelihood that both issuers and bankers will aggressively attract inflows of arbitrage-seeking hot money.

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Aug 22

Daily Brief Consumer: SK Networks, Tongwei Co Ltd A, Premier Investments, Zhongsheng Group, Clorox Company, Mondelez International, Sichuan Baicha Baidao Industrial, Porsche Automobil Holding , Yerbae Brands , MGM Resorts International and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

SK Networks Launches a Tender Offer for SK Rent-A-Car
Offshore China ETFs Rebalance Preview: Two Changes Expected in September
Premier’s (PMV AU) Four-Way Split
Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility
The Clorox Company: Unmasking Their Strategy to Restore Pre-Pandemic Margins! – Major Drivers
Mondelez: Ignore The Noise And Invest In Strong And Well-Managed Brands
Sichuan Baicha Baidao Industrial Pre-IPO Tearsheet
Porsche Automobile Holding: H1 SOTP and Discount to NAV
YERB.U: Recent Announcements Reaffirm Investment Thesis
MGM Resorts International: An International Strategy That’s Raising Eyebrows? – Major Drivers

SK Networks Launches a Tender Offer for SK Rent-A-Car

By Douglas Kim

We have a positive view of SK Networks’ tender offer of SK Rent-A-Car.
SK Networks is trying to buy the entire SK Rent-A-Car which is enjoying solid growth in sales and profits. SK Networks plans to eventually delist SK Rent-A-Car.
The shareholders of SK Rent-A-Car have a choice of tendering their shares receiving cash (at the tender offer price of 13,500 won) or receiving shares in SK Networks.

Offshore China ETFs Rebalance Preview: Two Changes Expected in September

Based on the close of 21 August, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in September.
NARI Technology Co Ltd A (600406 CH) and CSC Financial (601066 CH) should replace Tongwei Co Ltd A (600438 CH) and Shaanxi Coal Industry (601225 CH) in the ETFs.
There are couple of stocks with over 1x ADV to trade from the ETFs. Plus there are cash and carry positions that will need to be rebalanced, adding to flow.

Premier’s (PMV AU) Four-Way Split

By David Blennerhassett

In tandem with a trading update this morning, Aussie retailer Premier Investments (PMV AU) announced a break-up of the empire. And the departure of the CEO.
Premier said it is exploring the demerger and creation of (at least) three new separate companies, encompassing Peter Alexander, Smiggle, and Apparel Brands (Just Jeans, Dotti and Portmans, etc.).
Separately, Richard Murray, who joined Premier from JB Hi-Fi Ltd (JBH AU) two years ago, will exit the company on September 15.

Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility

By Steve Zhou, CFA

China MeiDong Auto (1268 HK) announced a profit warning this morning, expecting a 90% decline in net profit for 1H23.
Luxury auto dealer in China is facing major uncertainties in its business model, with no visibility in the near term.
However, Zhongsheng Group (881 HK) currently employs the best long-term strategy amidst industry transformation. Suggest to keep a close eye on the name.

The Clorox Company: Unmasking Their Strategy to Restore Pre-Pandemic Margins! – Major Drivers

The Clorox Company managed to exceed analyst expectations in terms of revenue and earnings.
Strong results at the quarter’s end highlight the tremendous progress the company has made with its strategic priorities.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Mondelez: Ignore The Noise And Invest In Strong And Well-Managed Brands

By Vladimir Dimitrov, CFA

Mondelez has outperformed the market both on an absolute and risk-adjusted basis.
The company is in a very good position to improve margins to higher levels than currently expected.
The stock remains as one of my favourite picks in the sector. The stock is one of the company’s favourite picks.

Sichuan Baicha Baidao Industrial Pre-IPO Tearsheet

By Ethan Aw

Sichuan Baicha Baidao Industrial (SCBCBDID CH) is looking to raise up to US$300m in its upcoming HK IPO. The deal will be run by CICC.
Sichuan Baicha Baidao Industrial (SBBI) sells new-style tea drinks through its ChaPanda stores, most of which are franchised.
As of the Latest Practicable Date (8th Aug 2023), ChaPanda’s store network comprised 7,117 stores, spanning across 31 provinces and municipalities in mainland China.

Porsche Automobile Holding: H1 SOTP and Discount to NAV

By Jesus Rodriguez Aguilar

My updated SOTP shows that the shares of Porsche SE are trading at a still massive 44.9% discount to NAV. The discount has come down from 50.8% on 28 February.
The shares of Porsche SE suffer from a double discount, the holding structure (with a new layer since the listing of Porsche AG) plus a non-voting discount.
My SOTP valuation indicates that the shares are significantly undervalued, but it is challenging to pinpoint a short-term catalyst that could realise this upside potential.

YERB.U: Recent Announcements Reaffirm Investment Thesis

By Atrium Research

Yerbaé announced the closing of the first tranche of its celebrity investment round, including various prominent athletes and entertainers.
The announcements include closing the first tranche of its celebrity investment round, an expansion into Costco, and record sales on Amazon Prime Day.
Celebrity Investment Round This morning, YERB.U announced that it has closed the first tranche of its celebrity investment round, raising ~$4M.

MGM Resorts International: An International Strategy That’s Raising Eyebrows? – Major Drivers

MGM Resorts International delivered an all-around beat in the most recent quarterly result, demonstrating robust growth, highlighted by a record for consolidated net revenues.
The company showcased strength across its diverse portfolio, with solid earnings from domestic operations, particularly notable in MGM China and BetMGM.
Regional operations also displayed year-over-year growth on a same-store basis, reflecting the company’s commitment to maximizing profitability while delivering exceptional customer service.

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Aug 22

Daily Brief Equity Bottom-Up: AIA – Results 24 Aug and more

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

In today’s briefing:

AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower
Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans
Wilmar’s Kuok Khoon Hong acquires 9 million shares
[Alibaba (BABA US, BUY, TP US$127) TP Change]: The New Wanxiangtai Will Enhance the Take Rate
REIT Watch – iEdge S-Reit Index vies for portfolio positioning
Olympus Corp (7733 JP): Slow Start of FY24; Unfavorable Macro Backdrop Continues to Hurt Business
Zhongsheng Group (881 HK): Could Be A Winner In The Long Run, But No Short-Term Visibility
Earnings: MCHP and IFX, SIMO Rumors, SMCI, POWI, GFS, COHR, WOLF, AMAT, CSCO
Monthly Chinese Express Tracker | July Growth Slows | Pricing Hits Record Low | (August 2023)
SDRL: Attractive Value, PT to $62

AIA – Results 24 Aug, Cratering Mkt Cap Suggests Malaise, Earnings Base May Be Structurally Lower

1Q23 shows strong Value Of New Business (VONB), not sure of profit flow through
Comparative to 1H22 is easy vs loss of USD556m in the period, but risk to downside
Despite, stock buybacks, increased dividends market cap down 34% since peak this year

Westpac – Non-Performing Exposures in Australia Mortgages Surge in June & NZ Non-Performing Loans