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Smartkarma Daily Briefs

Jan 17
0

Daily Brief Australia: Aristocrat Leisure and more

By | Australia, Daily Briefs

In today’s briefing:

  • Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem

Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem

By Howard J Klein

  • We have been bullish on the prospects of the Aussie gaming tech maker’s real world valuation in the light of its outstanding performance.
  • The company’s relatively low institutional holding profile suggests its visibility is limited.
  • WE put a one year PT on the stock at AUD$45 vs its current trade at AU$33 because it outperforms industry peers in ROE among other reasons.

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Jan 17
0

Daily Brief India: Fantasia Holdings Group Co and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: Azure Power Global Ltd, China Hongqiao, Fantasia Holdings Group Co

Morning Views Asia: Azure Power Global Ltd, China Hongqiao, Fantasia Holdings Group Co

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Jan 17
0

Daily Brief China: Wuxi Biologics, Tencent, Alibaba (ADR), Aier Eye Hospital Group, WM Motor Technology Co Ltd, Qingdao Ainnovation Technology Group, Kuaishou Technology and more

By | China, Daily Briefs

In today’s briefing:

  • Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good
  • Quiddity Primer for HSCEI Rebalance Events
  • Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows
  • China Internet Weekly (16Jan2023): Alibaba, Tencent, JD.com, ByteDance
  • EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios
  • Aier Eye Hospital Group (300015.CH) – The Truth Behind the Mirage
  • WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement
  • AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money
  • Kuaishou (1024 HK): Expanding Market, Will See Higher Growth and Profit
  • Tencent Reach for Sell Zone

Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good

By Ethan Aw

  • Wuxi Biologics Holdings is looking to raise up to US$513m by selling about 1.3% of Wuxi Biologics (2269 HK). 
  • This is the company’s 16th placement since it listed in June 2017. 
  • In this note, we will discuss deal dynamics, past deal performance, and share the scores on our ECM framework.

Quiddity Primer for HSCEI Rebalance Events

By Janaghan Jeyakumar, CFA

  • The Hang Seng China Enterprises Index (HSCEI INDEX) is one of the most widely discussed indices in the Hang Seng Indices family.
  • The HSCEI serves as a benchmark to reflect the overall performance of “Mainland” Securities listed in Hong Kong.
  • In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.

Alibaba: Buoyed By The Ending Crackdowns, Yet Expensive With No Turnaround in Sight For Cash Cows

By Oshadhi Kumarasiri

  • Alibaba (ADR) (BABA US), along with several other Chinese tech names have rallied more than 100% over the past 2.5 months with the Chinese government indicating regulatory crackdowns are over.
  • However, we think this could just be a temporary respite for tech names as there’s a lot more to be done in terms of a data security and privacy standpoint.
  • Nevertheless, Alibaba Group (9988 HK) is still quite expensive, given that government interventions have pretty much curtailed Alibaba’s avenues for growth in the domestic market.

China Internet Weekly (16Jan2023): Alibaba, Tencent, JD.com, ByteDance

By Ming Lu

  • The Chinese government may possibly buy minor shares in Alibaba and Tencent.
  • JD.com’s long-term competitor, Dangdang, opened a bookstore in JD.com’s app.
  • In 2022, both Tencent Video Account’s active user base and time on site reached 80% of We Chat.

EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios

By Simon Harris

  • BABA US is up 85% from October lows and continues to trade well in 2023 up 32% in January
  • Stock has benefitted from not only improved economic sentiment but also an end to the 2-year crack down on the Internet Sector
  • We suggest using call ratios to increase upside leverage prior to earnings release

Aier Eye Hospital Group (300015.CH) – The Truth Behind the Mirage

By Xinyao (Criss) Wang

  • Aier launched new hospital acquisition plan. Obviously, Aier hopes to maintain high growth through M&A funds. However, considering its national market layout,Aier is in the final stages of aggressive M&As.
  • Based on our data, Aier’s endogenous growth is actually very weak. Once external M&As fail to drive high growth, Aier’s overall performance growth would decline significantly. Aier is grossly overvalued.
  • We expect decreasing birth rate after COVID-19. Due to the fundamental changes in the population structure, the valuation system of all assets would be destroyed – The long logic doesn’t exist.

WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement

By Sumeet Singh

  • On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
  • WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
  • In this note, we will talk about the deal dynamics and  take an early look at its implications.

AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money

By Clarence Chu

  • Qingdao Ainnovation Technology Group (2121 HK) was listed on 27th Jan 2022, with its one-year lockup expiring on 27th January 2023.
  • Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.
  • Coming up for one-year lockup expiry are the pre-IPO shareholders. Bulk of them are in the money as some have invested as early as 2018.

Kuaishou (1024 HK): Expanding Market, Will See Higher Growth and Profit

By Ming Lu

  • Short video continued to accumulate active users in China and the company’s light-version grew the most rapidly.
  • We believe the revenue growth rate will rise from 2Q23 and the company will have positive operating profit from 2024.
  • We set the price target at HK$103, which is 44% over the market price.

Tencent Reach for Sell Zone

By Thomas Schroeder

  • Tencent faces formidable resistance at 385 that may not be seen for a while. 385 is where old lows and old highs coincide.
  • RSI is extended (ST sell and bounce). Buy volumes are descent but have been drifting since late 2022.
  • 385 a good zone to sell cash positions or short to challenge pivot supports outlined. 320 is an intermediate level to hold to keep things glued together.

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Jan 17
0

Daily Brief South Korea: Osstem Implant and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

By Douglas Kim

  • The case involving KCGI (a local corporate activist private equity fund) and Osstem Implant (048260 KS) is one of the more interesting situations rising in the Korea’s M&A/corporate activism markets. 
  • Osstem Implant is the number one dental implant company in Korea/Asia and the fourth largest player in this segment globally. 
  • We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&A fight between KCGI and Chairman Choi.

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Jan 17
0

Daily Brief United States: S&P 500, Bitcoin, Bitcoin Pro, Stanley Black & Decker, Platinum, Fastenal Co and more

By | Daily Briefs, United States

In today’s briefing:

  • SPX Trendline to Define
  • No Worry, DCG, Genesis, and Grayscale Won’t Cause Another Crash in the Crypto Market
  • The Return of the Bulls
  • Stanley Black & Decker Inc.: Initiation of Coverage – New Launches & Other Drivers
  • The Commodity Report #86
  • Fastenal Company: Initiation of Coverage – Financial Forecasts
  • Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

SPX Trendline to Define

By Thomas Schroeder

  • Adjusted our SPX resistance level given overshoots with a focus on SPX futures trendline at 4,080 and price pivot at 4,100.
  • We will take this week to measure overbought conditions and sentiment. Near term upside risk to SPX trendline that defines the LT trend.
  • We have not given up on our macro bear cycle as long as trendline caps. Fine tuning top signals is the chore at hand.

No Worry, DCG, Genesis, and Grayscale Won’t Cause Another Crash in the Crypto Market

By Edward Wu

  • DCG’s subsidiary Genesis is likely to become the next insolvent crypto lender,  market fears its failure will lead to the dissolving of Grayscale, which held 3% of bitcoin’s total supply;
  • Grayscale is a profitable business with $200 million annual fee income from the GBTC trust, DCG or any new buyer of Grayscale has no intention to dissolve the cash cow;
  • Even if Grayscale dissolve, it won’t cause another crash as only $1 billion value of bitcoin may be dumped into the market, only 3.3% of bitcoin daily trading volume;

The Return of the Bulls

By Kaiko

  • Price Movements: Bullish sentiment has returned to crypto, with BTC up 20% over the past week.
  • Market Liquidity: Binance.US’s market share relative to other U.S. exchanges climbed to 15%, a marked increase after dropping to 6% post-FTX.  
  • Derivatives: BTC open interest fell sharply after a short squeeze caused millions in liquidations.

Stanley Black & Decker Inc.: Initiation of Coverage – New Launches & Other Drivers

By Baptista Research

  • This is our first report on Stanley Black & Decker, one of the largest global manufacturers of tools and engineering systems catering to a wide variety of industries.
  • The company delivered an all-around beat in its last result and has been making significant progress toward narrowing its focus and overhauling its supply chain in recent times.
  • We initiate coverage on the stock of Stanley Black & Decker with a ‘Hold’ rating.

The Commodity Report #86

By The Commodity Report

  • Commodity trading houses have shown a stunning performance since 2020.
  • So far, there are only a few arguments for why this should change in the near future.
  • But also precious metals miners are shining – nevertheless, they have quite some performance to pick up compared to other miners as well as the broad commodity market.

Fastenal Company: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Fastenal, a major wholesale distributor of industrial and construction supplies.
  • The company delivered a strong performance in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
  • We initiate coverage on the stock of Fastenal Company with a ‘Hold’ rating.

Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Stanley Black & Decker one of the largest providers of tools and engineering systems across the world and caters to a wide variety of industries.
  • The company has seen significant progress toward narrowing its focus and overhauling its supply chain in recent times.
  • We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

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Jan 17
0

Daily Brief Japan: Mizuho Financial Group, Relia Inc, JPY, Money Forward, Tokyo Stock Exchange Tokyo Price Index Topix, Nitori Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
  • Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
  • Bond Watch – Will Japan Pull the Rug from Under the Yield Curve Control?
  • Money Forward (3994) | Corporate ARR +55% YoY
  • A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
  • Interiors Long-Term Growth in Japan a Plus for Nitori
  • Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization

Thinking About Japanese Banks – Go Big, Go Small, Go Insurance

By Travis Lundy

  • Japanese Banks have had a good run recently. From the day before the BOJ changed the 10yr yield target in December in its YCC programme to today, +30% vs TOPIX.
  • The question is how that is spread out. There are lots of banks. Some are cheaper than others. Some are better than others. Can we draw conclusions to trade better?
  • If you are looking at Japanese Banks to play a change in BOJ policy when Governor Kuroda’s term ends shortly, there are definitely conclusions one can draw. I offer comments.

Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP

By Travis Lundy

  • Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
  • They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
  • This is one of those times when I can reiterate, Japan Needs More Cowbell. 

Bond Watch – Will Japan Pull the Rug from Under the Yield Curve Control?

By Andreas Steno

  • Markets price more than 35 bps ahead of the BoJ meeting. Is that too much?
  • BoJ is not scared of inflation. They fear a lack of market functioning in JGB markets.
  • JPY may be overbought into the meeting, while USTs are oversold

Money Forward (3994) | Corporate ARR +55% YoY

By Mark Chadwick

  • Money Forward Q4 sales rose +42% YoY to Y6.2bn driven by corporate ARR (+55% YoY)
  • Full year revenue guidance for FY11/23 is in line with consensus 
  • We still see over 20% upside in the stock if the company hits the top end of revenue guidance

A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

By Aki Matsumoto

  • Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
  • If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
  • If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.

Interiors Long-Term Growth in Japan a Plus for Nitori

By Michael Causton

  • Growth in the Japanese home interiors and furniture markets is set to continue long-term. 
  • At present, just a handful of brands have any major presence led by Nitori Holdings (9843 JP) which continues to expand market share.
  • With multiple formats, Nitori looks set to continue to dominate but faces competition from unlikely quarters, especially Yamada Denki (9831 JP).

Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization

By Kirk Boodry

  • Q4 revenue growth of 43% was driven by growth in sales to corporates (+54%) on new user growth, customer mix, and upside from cross-selling
  • EBITDA erosion improved from the peak losses of Q3 and whilst it has not issued full-year FY23 guidance, it says it expects steady improvements as the year goes on
  • This was a good quarter but we expect that is largely reflected in the share price after a 61% run over the last six months

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Jan 17
0

Daily Brief Health Care: Wuxi Biologics, Osstem Implant, Aier Eye Hospital Group and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good
  • Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi
  • Aier Eye Hospital Group (300015.CH) – The Truth Behind the Mirage

Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good

By Ethan Aw

  • Wuxi Biologics Holdings is looking to raise up to US$513m by selling about 1.3% of Wuxi Biologics (2269 HK). 
  • This is the company’s 16th placement since it listed in June 2017. 
  • In this note, we will discuss deal dynamics, past deal performance, and share the scores on our ECM framework.

Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

By Douglas Kim

  • The case involving KCGI (a local corporate activist private equity fund) and Osstem Implant (048260 KS) is one of the more interesting situations rising in the Korea’s M&A/corporate activism markets. 
  • Osstem Implant is the number one dental implant company in Korea/Asia and the fourth largest player in this segment globally. 
  • We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&A fight between KCGI and Chairman Choi.

Aier Eye Hospital Group (300015.CH) – The Truth Behind the Mirage

By Xinyao (Criss) Wang

  • Aier launched new hospital acquisition plan. Obviously, Aier hopes to maintain high growth through M&A funds. However, considering its national market layout,Aier is in the final stages of aggressive M&As.
  • Based on our data, Aier’s endogenous growth is actually very weak. Once external M&As fail to drive high growth, Aier’s overall performance growth would decline significantly. Aier is grossly overvalued.
  • We expect decreasing birth rate after COVID-19. Due to the fundamental changes in the population structure, the valuation system of all assets would be destroyed – The long logic doesn’t exist.

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Jan 17
0

Daily Brief Energy/Materials: Platinum and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • The Commodity Report #86

The Commodity Report #86

By The Commodity Report

  • Commodity trading houses have shown a stunning performance since 2020.
  • So far, there are only a few arguments for why this should change in the near future.
  • But also precious metals miners are shining – nevertheless, they have quite some performance to pick up compared to other miners as well as the broad commodity market.

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Jan 17
0

Daily Brief Industrials: Relia Inc, Sixt SE, Stanley Black & Decker, Fastenal Co and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
  • Liquid Universe of European Ordinary and Preferred Shares: January ‘23 Report
  • Stanley Black & Decker Inc.: Initiation of Coverage – New Launches & Other Drivers
  • Fastenal Company: Initiation of Coverage – Financial Forecasts
  • Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP

By Travis Lundy

  • Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
  • They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
  • This is one of those times when I can reiterate, Japan Needs More Cowbell. 

Liquid Universe of European Ordinary and Preferred Shares: January ‘23 Report

By Jesus Rodriguez Aguilar

  • Since mid-December, spreads have shown a mixed performance across our liquid universe (9 have widened, 9 tightened, 1 at same level).
  • Trade recommendations long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
  • Trade recommendations long prefs / short ords: Sixt, VW, Danieli, MFE-Media for Europe, Grifols, Atlas Copco, Ericsson.

Stanley Black & Decker Inc.: Initiation of Coverage – New Launches & Other Drivers

By Baptista Research

  • This is our first report on Stanley Black & Decker, one of the largest global manufacturers of tools and engineering systems catering to a wide variety of industries.
  • The company delivered an all-around beat in its last result and has been making significant progress toward narrowing its focus and overhauling its supply chain in recent times.
  • We initiate coverage on the stock of Stanley Black & Decker with a ‘Hold’ rating.

Fastenal Company: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Fastenal, a major wholesale distributor of industrial and construction supplies.
  • The company delivered a strong performance in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
  • We initiate coverage on the stock of Fastenal Company with a ‘Hold’ rating.

Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Stanley Black & Decker one of the largest providers of tools and engineering systems across the world and caters to a wide variety of industries.
  • The company has seen significant progress toward narrowing its focus and overhauling its supply chain in recent times.
  • We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

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Jan 17
0

Daily Brief Consumer: Aristocrat Leisure, Tokyo Stock Exchange Tokyo Price Index Topix, Nitori Holdings, WM Motor Technology Co Ltd and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem
  • A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
  • Interiors Long-Term Growth in Japan a Plus for Nitori
  • WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement

Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem

By Howard J Klein

  • We have been bullish on the prospects of the Aussie gaming tech maker’s real world valuation in the light of its outstanding performance.
  • The company’s relatively low institutional holding profile suggests its visibility is limited.
  • WE put a one year PT on the stock at AUD$45 vs its current trade at AU$33 because it outperforms industry peers in ROE among other reasons.

A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

By Aki Matsumoto

  • Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
  • If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
  • If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.

Interiors Long-Term Growth in Japan a Plus for Nitori

By Michael Causton

  • Growth in the Japanese home interiors and furniture markets is set to continue long-term. 
  • At present, just a handful of brands have any major presence led by Nitori Holdings (9843 JP) which continues to expand market share.
  • With multiple formats, Nitori looks set to continue to dominate but faces competition from unlikely quarters, especially Yamada Denki (9831 JP).

WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement

By Sumeet Singh

  • On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
  • WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
  • In this note, we will talk about the deal dynamics and  take an early look at its implications.

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

Sign Up for Free

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
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