Smartkarma Daily Briefs

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Tryt Inc (9164 JP), Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group IPOs.
Event-Driven developments – 111 Inc (YI US), Healius (HLS AU), Invocare Ltd (IVC AU), Newcrest Mining (NCM AU), Origin Energy (ORG AU).

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Jul 24

Daily Brief Industrials: Hainan Meilan International Airport, DWF Group, AP Moeller – Maersk A/S, Lavoro and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company
Inflexion/DWF: Deal Announcement
Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)
Harvesting Gains

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

By Eric Chen

We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
The takeaway is mixed as we see both positives and negatives relative to our expectations.
We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

Inflexion/DWF: Deal Announcement

By Jesus Rodriguez Aguilar

There were no surprises and Inflexion launched the offer for DWF Group (DWF LN) well ahead of the 7 August PUSU deadline. DWF shares increased by c. 15%.
The final proposal maintains what was announced: 97p in cash plus a 3p dividend,8.0x EV/Fwd NTM EBIT and 8.2x Fwd P/E, and an 18% discount to the IPO price.
The closing share price pre-first announcement was 56.5p, taking it as break, the market is pricing a 94% chance to complete the deal. Spread is 2.6%/6.2% (gross/annualised). Long.

Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)

By Daniel Hellberg

Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
We expect Q2/H1 results to support our view that the worst of the storm has passed

Harvesting Gains

By subSPAC

In the past several years, the agricultural market has been subject to escalating uncertainty, catalyzed by a triad of disruptive forces, including a global pandemic, the geopolitical uncertainty exemplified by the ongoing war in Ukraine, and unpredictable climatic events leading to droughts and diminished yields.
These factors have injected volatility into the market, causing prices to move unpredictably due to periods of shortages and excess supply.
Despite the volatility, however, prices remain on a long-term upward trajectory.

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Jul 24

Daily Brief Financials: Korea Stock Exchange KOSPI 200, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback
EQD | NIFTY Index WEEKLY: Topping (In The) Tails

EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback

The KOSPI 200 (KOSPI2 INDEX EQUITY) last week closed the week down (CC=-1) after a strong rise the previous week. Could be getting ready to rise higher.
The index last week tested supports in the Market Reversal Matrix’s Q2/Median support area (around 335).
Valid support levels for the coming week (if CC=-2) are between 333 (Q2) and 324 (Q3).

EQD | NIFTY Index WEEKLY: Topping (In The) Tails

The NIFTY Index has been in a strong rally since early April 2023, returning almost +17% as of last Friday’s Close. The MRM tool shows the index is OVERBOUGHT WEEKLY .
The NIFTY Index has reached a “Tails” area of the current pattern: forecasts in these price areas are less reliable, but the MRM tool indicates the index is topping.
SHORT trades can be implemented at prices > Last Close (19745). Higher prices are possible, it could take +1/+2 weeks for the index to complete its topping process.

💡 Before it’s here, it’s on Smartkarma

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Jul 24

Daily Brief ECM: Weekly Deals Digest (23 Jul) – Rakuten Securities and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin
Pre-IPO Edding Group – CSO Model Is Hard to Sustain, but Business Transformation Faces Challenges
SATP Holding IPO Preview: Bringing SaaS And Automation To 50M+ SMBs In China
Black Sesame Pre-IPO – The Positives – Catering to a Growing Demand for Automotive Automation

Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Tryt Inc (9164 JP), Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group IPOs.
Event-Driven developments – 111 Inc (YI US), Healius (HLS AU), Invocare Ltd (IVC AU), Newcrest Mining (NCM AU), Origin Energy (ORG AU).

Pre-IPO Edding Group – CSO Model Is Hard to Sustain, but Business Transformation Faces Challenges

By Xinyao (Criss) Wang

Vancocin/Ceclor/FPN are currently the “cash cow” for Edding, but they’re facing the challenges of generics, VBP and increasing competition. Their current market leading position may be lost in the future.
Edding seeks business transformation as its CSO model doesn’t work under domestic negative policies. But peak sales of three innovative drugs Vascepa/Mulpleta/EDP 125 may not reach the level of Vancocin/Ceclor.
Edding’s core advantage still lies in sales capabilities. Its R&D capabilities have always been questioned. It’s unsure whether the market would give high valuation to a company without core competitiveness.

SATP Holding IPO Preview: Bringing SaaS And Automation To 50M+ SMBs In China

By Andrei Zakharov

SATP Holding, a leading China-based SMB finance and taxation solution provider, filed to go public in Hong Kong. The company is led by visionary Founder and CEO Shugang Zhang.
SATP Holding offers scalable SaaS-based bookkeeping and taxation solutions to SMBs in China. The proprietary SaaS system (SATP) automates tax filings and financial statement submissions.
According to Pitchbook and the company’s IPO prospectus, the founder-led software provider has raised ~$226M in funding across nine funding rounds.

Black Sesame Pre-IPO – The Positives – Catering to a Growing Demand for Automotive Automation

By Clarence Chu

Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
In this note, we will talk about the positive aspects of the deal.

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Jul 24

Daily Brief Event-Driven: LG Energy Solution (373220 KS) – Potential Float Increase Coming Up and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
111 (YI US): The Privatisation Offer Gets a Reboot
Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
Fortescue: Twiggy’s Share Separation
EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback
Inflexion/DWF: Deal Announcement
EQD | NIFTY Index WEEKLY: Topping (In The) Tails

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

111 (YI US): The Privatisation Offer Gets a Reboot

111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS.
The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Chindata Group (CD US), Estia Health (EHE AU), 111 Inc (YI US), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), ARTERIA Networks Corp (4423 JP), Inner Mongolia Yitai Coal Company Ltd (3948 HK).

Fortescue: Twiggy’s Share Separation

By David Blennerhassett

Prior to recent developments, Andrew Forrest held a 36.25% stake in Fortescue Metals (FMG AU).
An ASIC shareholder disclosure into the giant iron-ore miner earlier this year fuelled speculation, culminating in an ASX notice Andrew was separating from his wife after 31 years of marriage.
A private statement assures there will be no impact on the control of FMG. But that won’t put a stop to the rumour mill.

EQD | KOSPI 200 Index WEEKLY: Rising After a Brief Pullback

The KOSPI 200 (KOSPI2 INDEX EQUITY) last week closed the week down (CC=-1) after a strong rise the previous week. Could be getting ready to rise higher.
The index last week tested supports in the Market Reversal Matrix’s Q2/Median support area (around 335).
Valid support levels for the coming week (if CC=-2) are between 333 (Q2) and 324 (Q3).

Inflexion/DWF: Deal Announcement

By Jesus Rodriguez Aguilar

There were no surprises and Inflexion launched the offer for DWF Group (DWF LN) well ahead of the 7 August PUSU deadline. DWF shares increased by c. 15%.
The final proposal maintains what was announced: 97p in cash plus a 3p dividend,8.0x EV/Fwd NTM EBIT and 8.2x Fwd P/E, and an 18% discount to the IPO price.
The closing share price pre-first announcement was 56.5p, taking it as break, the market is pricing a 94% chance to complete the deal. Spread is 2.6%/6.2% (gross/annualised). Long.

EQD | NIFTY Index WEEKLY: Topping (In The) Tails

The NIFTY Index has been in a strong rally since early April 2023, returning almost +17% as of last Friday’s Close. The MRM tool shows the index is OVERBOUGHT WEEKLY .
The NIFTY Index has reached a “Tails” area of the current pattern: forecasts in these price areas are less reliable, but the MRM tool indicates the index is topping.
SHORT trades can be implemented at prices > Last Close (19745). Higher prices are possible, it could take +1/+2 weeks for the index to complete its topping process.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 24

Daily Brief Equity Bottom-Up: Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company and more

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

In today’s briefing:

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company
Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)
Harvesting Gains

Meilan Airport (357 HK): Mixed Takeaways from Conversations with the Company

By Eric Chen

We had a chance talking to the company about key topics about outlook of passenger traffic, recovery of duty-free sales and details about the arbitration.
The takeaway is mixed as we see both positives and negatives relative to our expectations.
We cut our forecast of 2023 net profit from RMB400 million to RMB300 million and expect the earnings to be back-end loaded.

Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of ‘Storm’ Passed (July 2023)

By Daniel Hellberg

Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
We expect Q2/H1 results to support our view that the worst of the storm has passed

Harvesting Gains

By subSPAC

In the past several years, the agricultural market has been subject to escalating uncertainty, catalyzed by a triad of disruptive forces, including a global pandemic, the geopolitical uncertainty exemplified by the ongoing war in Ukraine, and unpredictable climatic events leading to droughts and diminished yields.
These factors have injected volatility into the market, causing prices to move unpredictably due to periods of shortages and excess supply.
Despite the volatility, however, prices remain on a long-term upward trajectory.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 24

Daily Brief Macro: A New Cyclical Bull? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

A New Cyclical Bull?
The Risks to the Disinflation and Soft-Landing Bull
Steno Signals #58 – Rebound or recession? Or both?

A New Cyclical Bull?

By Cam Hui

Technical buy signals are coming out of the woodwork, supported by strong price momentum and signs of broadening market breadth. Is this the start of a new cyclical bull?
Ultimately, the bull and bear decision amounts to a judgment call on regime change.
Is the economy emerging out of recession or is there a slowdown waiting around the corner to sideswipe stock prices and market expectations?

The Risks to the Disinflation and Soft-Landing Bull

By Cam Hui

Nothing in investing is easy. While the disinflation and soft-landing narrative is the dominant one, sentiment could change very quickly.
While we aren’t necessarily dismissing the bullish implications of the disinflation and soft-landing scenario, investors should be aware of the risks.
Consider the implications of catastrophic success, the last-mile inflation problem and the risk of a recession.

Steno Signals #58 – Rebound or recession? Or both?

By Andreas Steno

We have spent the last week studying the business cycle intensively to gauge how various asset classes look at the cycle right now.
It is safe to say that nothing has been normal in this post-Covid “cycle” and that is probably exactly the reason why we are currently stuck in a debate on whether the economy rebounds or goes into a recession.
Let’s have a look at the evidence.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jul 24

Most Read: Tryt Inc, LG Energy Solution, SBI Shinsei Bank, Wistron Corp, 111 Inc, JSR Corp, Rakuten Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals
TRYT IPO: Trading Debut
LG Energy Solution (373220 KS) – Potential Float Increase Coming Up
SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs
111 (YI US): The Privatisation Offer Gets a Reboot
Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods
Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin
Ohayo Japan | This Week: Fed Hike in the Bag, All Eyes on BOJ; NUGGET: Top 5 Reasons We Like Sony
Block Deals Pre-Disclosure Rule Changes in Korea Likely to Be Implemented Around October 2023

Tryt IPO Trading – Subscription Rates Mostly Outdid Recent Large Japan Deals

By Clarence Chu

Tryt Inc (9164 JP) raised around US$344m in its Japan IPO. The IPO consisted of 100% secondary shares.
Tryt Inc (Tryt) offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
In this note we will talk about the trading dynamics.

TRYT IPO: Trading Debut

Tryt Inc (9164 JP) priced its IPO at JPY1,200 per share to raise gross proceeds of US$339 million. The shares will start trading on 24 July.
We previously discussed the IPO in TRYT IPO: The Bull Case, TRYT IPO: The Bear Case, TRYT IPO: Valuation Insights and TRYT IPO: Revised IPO Price Range Remains Unattractive.
The market sentiment on the sector has broadly remained unchanged since the release of the prospectus. Our analysis suggests that Tryt is, at best, fully priced at the IPO price.

LG Energy Solution (373220 KS) – Potential Float Increase Coming Up

Selling from the ESOP program in the first quarter could result in an increase in LG Energy Solution (373220 KS)‘s float in local and global indices.
The largest buying from passive trackers could take place next month with over 3% of the real float needing to be bought.
Short interest has increased in the last month and short covering could take the stock higher ahead of the passive buying.

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.

Index Rebalance & ETF Flow Recap: ASX, SK Telecom, Yuanta ETFs

JFSL spun off from Reliance Industries (RIL IN) last week and Ventia (VNT AU) replaced Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX).
The IDX should announce the changes to the IDX30, LQ45 and IDX80 indices early in the coming week.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) while Taiwan focused ETFs had outflows.

111 (YI US): The Privatisation Offer Gets a Reboot

111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS.
The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

Merger Arb Mondays (24 Jul) – JSR, 111, Estia, Newcrest, InvoCare, Origin, Golden Eagle, Dali Foods

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Chindata Group (CD US), Estia Health (EHE AU), 111 Inc (YI US), ENM Holdings (128 HK), JSR Corp (4185 JP), Costa Group Holdings (CGC AU).
Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Penguin International (PBS SP), ARTERIA Networks Corp (4423 JP), Inner Mongolia Yitai Coal Company Ltd (3948 HK).

Weekly Deals Digest (23 Jul) – Rakuten Securities, Tryt, EbixCash, Lalatech, 111, Newcrest, Origin