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Smartkarma Daily Briefs

Daily Brief Thematic (Sector/Industry): Five Japanese Stocks to Watch in 2023 and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Five Japanese Stocks to Watch in 2023
  • Smartkarma Webinar | Healthcare in India: High Conviction Picks and Opportunities
  • Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print
  • Presentation for Webinar: China Healthcare – Outlook and Opportunities in 2023
  • China EV: Challenges from Tesla Price Cuts
  • Oilfield Services: Another Great Year Ahead

Five Japanese Stocks to Watch in 2023

By Mark Chadwick

  • We highlight five stocks that we have talked about in the past year
  • We continue to like small cap GROWTH and we think that decarbonization will remain a key thematic
  • NEC is a standout value name where we see a potential catalyst over the coming year in Open RAN

Smartkarma Webinar | Healthcare in India: High Conviction Picks and Opportunities

By Smartkarma Research

In this next webinar we will discuss Smartkarma Insight Provider, Tina Banerjee‘s high conviction ideas from Indian healthcare sector, with solid fundamental profile and strong growth prospects. Nifty Pharma index plunged ~6% from its recent peak in November. With COVID-related high bases gradually behind us, lesser pricing pressure in the U.S. market, new product launches gaining momentum, and continuous recovery in the domestic healthcare market, we expect recent pullback offers attractive entry opportunities for long-term investors. 

The webinar will be hosted on Wednesday, 18 January 2023, 17:00 SGT/HKT.

Tina Banerjee is an equity research analyst with more than 15 years of experience, and an interest in fundamentally strong global healthcare companies. She has been helping investors to find future winners in healthcare space to grow their wealth by focusing on the strength and potential of the business models of the companies. Her initiating coverage reports and pitch help investors to know ‘what to buy’, ‘why to buy’, and ‘when to buy’. Tina’s clients always remain on top of the sector with the help of her timely and detailed notes on earnings or any news update. Tina also provides a broader view on the entire healthcare sector through periodic thematic reports.


Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print

By Mark Chadwick

  • OVERSEAS: SPX +1.3% SOX +1.3%; Optimism on soft inflation print drives stocks; Consumer+Tech lead; Apple to introduce touch screens for Mac; Off-Shore Wind Giant Vesta leads in Europe
  • JAPAN: NKY Futs +0.3% vs Cash; USDJPY steady at ¥132.45; Biz lobby urgest firms to lift wages above inflatio;  Buy U/G in Lastertec, TEL,  Nexon and D/G to Nintendo
  • DAILY NUGGETS:  Fast Retailing has raised the bar for corporate Japan with with their wage hikes.

Presentation for Webinar: China Healthcare – Outlook and Opportunities in 2023

By Xinyao (Criss) Wang

  • The most obvious opportunity in China healthcare at the current stage is import substitution. If import substitution is fully realized, it can bring a clear performance increase to the companies.
  • In 2023, we are optimistic that China healthcare would gain more household expenditure in the “Long COVID” effect, thus generating excess returns under the logic of expanding domestic demand.
  • We would recommend investors consider making layout in those non-COVID related companies in 2023.  We analyzed the outlook, investment logic and investment opportunities in medical device, biotech and CXO sectors.

China EV: Challenges from Tesla Price Cuts

By Victoria Li

  • Within three months, Tesla cut its car prices twice in China.
  • We believe this indicates demand in China’s auto demand might be much weaker than expected until Covid impact is eased
  • Model Y’s price cuts may only hurt AITO M5. While Model 3 may challenge customers’ interest on Xpeng P7, BYD Seal and Ora Lightning Cat.

Oilfield Services: Another Great Year Ahead

By Atrium Research

  • We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&Ps, and pricing power leading to margin expansion 
  • Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples In order to end the oil supply deficit, additional rigs are required to be deployed; providing organic growth and pricing power for oilfield service names.
  • This will create another year of margin expansion for oilfield service stocks as they take advantage of operating leverage.

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Daily Brief Macro: CX Daily: Behind the Massive Sell-Off in Chinese Wealth Management Products and more

By | Daily Briefs, Macro

In today’s briefing:

  • CX Daily: Behind the Massive Sell-Off in Chinese Wealth Management Products
  • UK: Expectations Still Need Re-Anchoring
  • Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back
  • What’s Working? High Stock Price, Leverage, High Value-Add Companies and Shorting

CX Daily: Behind the Massive Sell-Off in Chinese Wealth Management Products

By Caixin Global

  • In Depth: Behind the massive sell-off in Chinese wealth management products.

  • Pfizer CEO dismisses reports of a Paxlovid generic for China.

  • Local governments set to borrow $146 billion in first quarter.


UK: Expectations Still Need Re-Anchoring

By Phil Rush

  • Forceful rate hikes have pushed UK inflation swap rates towards normal levels, yet the work isn’t over. Consumer and business expectations remain extremely elevated.
  • Real income resistance is prolonging excess inflation through second-round effects that have repeatedly stepped up. 5% wage settlements are worryingly becoming the norm.
  • The BoE recognises the forces necessitating real losses. We still expect it to reinforce its credibility with another 50bp hike in Feb-23 ahead of April’s critical wage round.

Malaysia: Anwar Well-Positioned to Spur Economic Recovery as Capital Flows Back

By Prasenjit K. Basu

  • FX reserves, which had declined over 10% from Mar’22 to Oct’22, rebounded by 8.9% in Nov-Dec’22. Anwar’s inclusive policies will likely induce a steady rebound in net capital inflows. 
  • Base effects have facilitated 9.3%YoY real GDP growth in Q1-Q3 2022 led by strong private consumption and net exports; better growth cut the fiscal deficit to 4% of GDP YTD.    
  • Net foreign portfolio outflows averaged 1.75% of GDP since 2013. As FPI rebounds, and non-bumiputera businesses invest anew, Malaysia’s real GDP will grow 6% despite the OECD recession in 2023.

What’s Working? High Stock Price, Leverage, High Value-Add Companies and Shorting

By Eric Fernandez, CFA

  • The sharp downdraft predictably hurt smaller caps, lower priced and high beta shares more than their opposites. Small caps appear relatively undervalued.
  • Shorts are doing well. Not only did stocks drop, producing short beta, but highly shorted stocks fell much more, driving alpha.
  • Price momentum barely added value. Stocks that had rallied over the past year gained a bit more than others, but not enough to be meaningful. The trend was inconsistent.

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Daily Brief Event-Driven: Fujitsu (6702) Subsidiary Selldowns To Come and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Fujitsu (6702) Subsidiary Selldowns To Come
  • JCNC Is Even More Overstretched Vs. Astra
  • January TOPIX FFW Review – Some Big Sells
  • LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons
  • Petrodollars Fan Olam’s Agri Listing In Singapore And Saudi Arabia
  • Triton/Caverion: Hostile Competing Offer
  • K200 ETFs’ Swap Trading on Meritz & Fresh Buy-In JB Financial on Jan 27
  • EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol
  • PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

Fujitsu (6702) Subsidiary Selldowns To Come

By Travis Lundy


JCNC Is Even More Overstretched Vs. Astra

By David Blennerhassett

  • Jardine Cycle & Carriage (JCNC SP)‘s is currently trading tight at a ~6% discount to NAV.
  • The implied stub and JCNC/Astra International (ASII IJ) ratio are the highest outside the 2008 financial crisis.
  • Key catalysts for JCNC’s outperformance, such as the SIMSCI Index inclusion, have passed.  JCNC is trading rich. Look to reverse the stub.

January TOPIX FFW Review – Some Big Sells

By Travis Lundy


LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons

By Douglas Kim

  • This insight provides a trading strategy on LG Energy Solution (373220 KS) with a focus on the end of the ESOP shares lockup period on 27 January.
  • Currently, LG Energy Solution is trading at P/E of 46.5x in 2024 which is more than 100% higher than the P/E multiples of CATL (20.4x) and Tesla (19.2x) in 2024.
  • Our view is that in the long-term, LG Energy Solution should not trade at such high valuation premium to Tesla given the latter company’s higher return on capital.

Petrodollars Fan Olam’s Agri Listing In Singapore And Saudi Arabia

By David Blennerhassett

  • After selling a 35.43% stake in Olam Agri to Saudi Arabia’s Public Investment Fund last month, Olam Group (OLG SP) intends to dual list the company in Singapore and Saudi Arabia. 
  • The stake sale implied a US$3.5bn value for the agricultural arm, or ~50% of OGL’s current market cap based on its remaining position in Olam Agri. 
  • Olam Agri may raise up to US$1bn via the listing. A separate London listing of OGL’s food ingredient business is expected to occur subsequent to Olam Agri’s listing.

Triton/Caverion: Hostile Competing Offer

By Jesus Rodriguez Aguilar

  • On 10 January, former significant shareholder Triton gatecrashed the Bain Capital consortium offer with an €8/share hostile competing offer, 14.3% premium to Bain’s). There could be upside up to c.€9.01.
  • Shareholder families have a c.27% (thus blocking) stake. Either they cash out in Triton’s offer, with a possible sweetener (a small increase could be likely) or will raise over Triton’s.
  • The shares are trading 0.62% above Triton’s offer on expectations of a bidding war and/or that offer is not declared unconditional by 30 June. Risk/return looks again positive. Long.

K200 ETFs’ Swap Trading on Meritz & Fresh Buy-In JB Financial on Jan 27

By Sanghyun Park

  • KOSPI 200 ETFs will have to sell Meritz FIRE and buy Meritz FINANCIAL at the close on January 27. JB Financial, the top reserved issue, will replace FIRE.
  • We should consider a Long Short for two Meritz companies just before the 27th. As a follow-up setup, we should aim for a potential widening of the swap arb spread.
  • As for the Long JB Financial, I would set the entry timing one week towards the implementation at the latest and look into Kodex Banks ETF (091170) for a hedge.

EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol

By Simon Harris

  • Chinese equity vol has been high over the last few months with extreme market moves on a number of headlines but is starting to calm down
  • US equity volatility continues to screen cheap despite calls for a challenging year and likely recession
  • We consider 2 relative vol trades to play a narrowing of the spread

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

By Douglas Kim

  • On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia’s Sovereign Fund (Public Investment Fund – PIF) and GIC (Singapore).
  • Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
  • This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.

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Daily Brief Equity Bottom-Up: Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact
  • Binjiang 3316 HK: More Room to Go, Results in March 2023 The Next Catalyst
  • China Dongxiang (3818 HK): Extremely Deep Discount to Cash and Investments
  • India Channel Insight #48 | SKF, Schaeffler, Schneider
  • Alibaba(Baba.US/9988.HK) 4Q22 Preview: Raise TP for Margin Beat and Topline Recovery
  • EVA Precision: Updates, Poised For a Rally
  • Lawson: Underappreciated China Expansion & Expanding Domestic Profitability Warrants an Upside
  • FUTU(FUTU.US) 4Q22 Preview: Solid Fundamentals Drive Long Term Growth
  • JD(JD.US/9618.HK) 4Q22 Preview: Topline Reacceleration Could Happen in C2Q23
  • Zai LAB (ZLAB.US/9688.HK):TTF Is Not a Done Deal, Both China and Globally

Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome Executive Chairman and Co-Founder, Kent Wong and CFO and Company Secretary, Gerald Yu. They will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Friday, 13 January 2023, 14:00 SGT.

About Taste Gourmet

Taste Gourmet Group Limited (8371 HK) is a Hong Kong based restaurant group offering a variety of cuisines under a portfolio of brands to a diversified customer base. Since the opening of its first restaurant in 2007, the group owned and operated a total of 34 restaurants offering Vietnamese, Japanese, Chinese, Western and Drink under 14 brands, comprising 11 self-owned brands such as La’taste Vietnamese Cuisine, Dab-Pa Peking & Szechuan Cuisine, Dab-Pa Peking & Szechuan Bistro, Dab-pa Modern Chinese Cuisine, Urawa Japanese Restaurant, Nabe Urawa, Rakuraku Ramen, Wasyohuya Yamaichi, Moments Together, Yakiniku Guu, San-Kinn; 3 licensed brands known as Parkview, Takano Ramen and Tirpse; and 1 joint venture brand known as Xianghui. 

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.


Binjiang 3316 HK: More Room to Go, Results in March 2023 The Next Catalyst

By Sameer Taneja

  • Binjiang Service Group (3316 HK) trades at 12.2x/9.5x FY22/23e with 32% of the market cap in net cash and a dividend yield of 5%/6.4% FY22e/23e (assuming a 60% payout). 
  • The company has asserted it will maintain its payout ratio at 60% and conserve cash for M&A. Its approach will be conservative and involve lengthy due diligence.
  • With an improving market environment and good results around the corner in March, we believe a rally to 30 HKD/share is within the realm of possibility.

China Dongxiang (3818 HK): Extremely Deep Discount to Cash and Investments

By Osbert Tang, CFA

  • With the recent rally in the equity markets in Hong Kong and China, we think the asset play investment thesis for China Dongxiang Group Co (3818 HK) has revived.  
  • We estimate its investment portfolio value may have increased by HK$2bn since end-Sep, yet market capitalisation only rose HK$500m, suggesting still significant 77% discount. 
  • Encouraging recent developments at Alibaba Group (9988 HK) and Ant Financial, which both are its holdings, are positive. The reduction is losses for sportswear business is an added driver. 

India Channel Insight #48 | SKF, Schaeffler, Schneider

By Pranav Bhavsar


Alibaba(Baba.US/9988.HK) 4Q22 Preview: Raise TP for Margin Beat and Topline Recovery

By Shawn Yang

  • We expect BABA’s  revenue in C4Q22 to be in line with cons., non-GAAP net income to beat cons. by 6%, supported by cost reduction in Freshippo, Taocaicai and Taobao Deal. 
  • Affected by logistics disruption and rising infections, we estimate BABA’s GMV and local consumer service in C4Q22 to decelerate compared to C3Q22. Both segments are to recover in C1Q23.
  • We raise TP from US$110 to US$130 to reflect upsides from rebound of discretionary demand, slowing Douyin eCommerce growth, and easing regulatory environment. Our TP implies 13x PE in FY2024.

EVA Precision: Updates, Poised For a Rally

By Sameer Taneja

  • Eva Precision Industrial Holdings (838 HK) has come off its lows but still trades at an attractive  7.8x/5x PE FY22e/23e and a dividend yield of 3.8%/5.9% FY22e/23e (assuming 30% payout).
  • The auto business should be propelled forward by orders from EV stalwarts, BYD, Nio, Tesla, etc. We expect the auto business (30% of revenue) to grow 50% in 2023.
  • Another two catalysts we look forward to are the split of the auto business to unlock value and the completion of the buyback announced by the company in 2022.

Lawson: Underappreciated China Expansion & Expanding Domestic Profitability Warrants an Upside

By Oshadhi Kumarasiri

  • Lawson’s Q3 OP of ¥16.2bn was around 20% above consensus suggesting that the company’s profitability is starting to outperform after being held back by upfront investments on store renovations.
  • Although this is the 3rd beat in a row, Lawson Inc (2651 JP)’s guidance has remained unchanged and the consensus OP only saw a marginal improvement.
  • After ignoring for so long, we think investors could soon start noticing Lawson’s growth prospects in China as the business there is starting to turn profitable.

FUTU(FUTU.US) 4Q22 Preview: Solid Fundamentals Drive Long Term Growth

By Shawn Yang

  • We expect FUTU to post C4Q22 revenue and non-GAAP net income 6.4% and 16.0% above consensus, driven by the improved turnover rate in HKEX and the rising interest rate. 
  • We believe the recent regulation measures has little impact on FUTU’s adjusted expectations now widely held by investors. We expect revenue growth to reaccelerate at 37%/31% YoY in 4Q22/2023.
  • Maintain BUY to FUTU and raise TP by US$1 to US$51.

JD(JD.US/9618.HK) 4Q22 Preview: Topline Reacceleration Could Happen in C2Q23

By Shawn Yang

  • In C4Q22, we expect JD’s total revenue to grow 8% YoY, largely in line with cons. Non-GAAP net margin is expected to reach 2.0%, up 0.7ppt YoY.
  • We estimate JD’s GMV growth in C4Q22 to be ~7% YoY, slightly slower than C3Q22 due to logistics disruption in October and November.
  • Maintain BUY rating and raise TP to US$70.0 due to for acceleration in top line as well as margin improvement. Our TP implies 23x P/2023E.

Zai LAB (ZLAB.US/9688.HK):TTF Is Not a Done Deal, Both China and Globally

By Shawn Yang

  • ZaiLab and NovoCure (NVCR US, NR) surged on positive readout of Optune’s Phase III on Non-Small-Cell-Lung Cancer (NSCLC), a major indication win after the smaller ones in Glioblastoma and Mesothelioma.
  • We, however, caution that the readout is largely expected and Optune faces uncertainty in commercialization both globally and in China;
  • We raise TP to US$35 to reflect possible readouts in other cancer types

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Most Read: SBI Shinsei Bank, MatsukiyoCocokara, Taste Gourmet Group, Shinko Electric Industries, Astra International, Appier Group, LG Household & Health Care-Pref, Alibaba (ADR), LG Energy Solution and more

By | Daily Briefs, Most Read

In today’s briefing:

  • 2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines
  • MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
  • Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact
  • Fujitsu (6702) Subsidiary Selldowns To Come
  • JCNC Is Even More Overstretched Vs. Astra
  • January TOPIX FFW Review – Some Big Sells
  • Discussing the Currently Widened Pref-Ord Disparity in Korea
  • Aequitas 2023 Asia IPO Pipeline – Hong Kong
  • LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons
  • Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print

2023 High Conviction – SBI Shinsei Bank (8303 JP) – Still Reading Between the Lines

By Travis Lundy


MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period

By Brian Freitas

  • We expect a number of changes to the MSCI Standard indices for the Asia Pacific region at the first Quarterly Comprehensive Index Review to be implemented on 28 February.
  • As usual, most changes are expected in China with a smattering of adds and deletes for the other markets.
  • On average, the adds have outperformed the deletes over the last few weeks and months and pre-positioning should continue for the next couple of weeks.

Smartkarma Corporate Webinar | Taste Gourmet: Management Call on HK/China Reopening Impact

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome Executive Chairman and Co-Founder, Kent Wong and CFO and Company Secretary, Gerald Yu. They will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Sameer Taneja. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Friday, 13 January 2023, 14:00 SGT.

About Taste Gourmet

Taste Gourmet Group Limited (8371 HK) is a Hong Kong based restaurant group offering a variety of cuisines under a portfolio of brands to a diversified customer base. Since the opening of its first restaurant in 2007, the group owned and operated a total of 34 restaurants offering Vietnamese, Japanese, Chinese, Western and Drink under 14 brands, comprising 11 self-owned brands such as La’taste Vietnamese Cuisine, Dab-Pa Peking & Szechuan Cuisine, Dab-Pa Peking & Szechuan Bistro, Dab-pa Modern Chinese Cuisine, Urawa Japanese Restaurant, Nabe Urawa, Rakuraku Ramen, Wasyohuya Yamaichi, Moments Together, Yakiniku Guu, San-Kinn; 3 licensed brands known as Parkview, Takano Ramen and Tirpse; and 1 joint venture brand known as Xianghui. 

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.


Fujitsu (6702) Subsidiary Selldowns To Come

By Travis Lundy


JCNC Is Even More Overstretched Vs. Astra

By David Blennerhassett

  • Jardine Cycle & Carriage (JCNC SP)‘s is currently trading tight at a ~6% discount to NAV.
  • The implied stub and JCNC/Astra International (ASII IJ) ratio are the highest outside the 2008 financial crisis.
  • Key catalysts for JCNC’s outperformance, such as the SIMSCI Index inclusion, have passed.  JCNC is trading rich. Look to reverse the stub.

January TOPIX FFW Review – Some Big Sells

By Travis Lundy


Discussing the Currently Widened Pref-Ord Disparity in Korea

By Sanghyun Park

  • Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).
  • The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.
  • We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.

Aequitas 2023 Asia IPO Pipeline – Hong Kong

By Sumeet Singh

  • In this note, we will take a look at the Asia Pacific IPO pipeline for 2023, starting with Hong Kong. 
  • This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
  • The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons

By Douglas Kim

  • This insight provides a trading strategy on LG Energy Solution (373220 KS) with a focus on the end of the ESOP shares lockup period on 27 January.
  • Currently, LG Energy Solution is trading at P/E of 46.5x in 2024 which is more than 100% higher than the P/E multiples of CATL (20.4x) and Tesla (19.2x) in 2024.
  • Our view is that in the long-term, LG Energy Solution should not trade at such high valuation premium to Tesla given the latter company’s higher return on capital.

Good Morning Japan |Beta Rally Continues as Optimism Reigns Ahead of CPI Print

By Mark Chadwick

  • OVERSEAS: SPX +1.3% SOX +1.3%; Optimism on soft inflation print drives stocks; Consumer+Tech lead; Apple to introduce touch screens for Mac; Off-Shore Wind Giant Vesta leads in Europe
  • JAPAN: NKY Futs +0.3% vs Cash; USDJPY steady at ¥132.45; Biz lobby urgest firms to lift wages above inflatio;  Buy U/G in Lastertec, TEL,  Nexon and D/G to Nintendo
  • DAILY NUGGETS:  Fast Retailing has raised the bar for corporate Japan with with their wage hikes.

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Daily Brief Energy/Materials: S&P 500, Harmony Gold Mining Co Ltd, Matador Resources Co and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Awaiting CPI Thursday; Expect 4100-4165 SPX to Cap Upside; Buy Ideas Within Gold Miners, Insurance
  • Harmony Gold: Unconvincing Margins And Overestimated Price Support
  • Matador Resources: Downgraded To Sell; 50% Downside Possible

Awaiting CPI Thursday; Expect 4100-4165 SPX to Cap Upside; Buy Ideas Within Gold Miners, Insurance

By Joe Jasper

  • We currently see the market indexes as consolidating within broad horizontal trading ranges, and we expect these ranges to continue for months, and quite possibly for the entirety of 2023.
  • We see the top-end of the range at 4100-4165 on the S&P 500, while the bottom-end is at the 2022 lows (3490).
  • With yesterday’s break above 3910 it tells us a tradable rally has begun, with 4100-4165 our target

Harmony Gold: Unconvincing Margins And Overestimated Price Support

By Pearl Gray Equity and Research

  • Harmony Gold’s profitability ratios are severely compressed at both their current levels and their cyclical peaks.
  • Apart from lucrative dump mining sites, the company generally operates a high-cost model.
  • The security’s total return prospects are gloomy as Harmony’s stock lacks carry returns and its price returns remain severely speculative.

Matador Resources: Downgraded To Sell; 50% Downside Possible

By Pearl Gray Equity and Research

  • Matador Resources’ exponential growth trajectory could be crushed by less supportive oil and gas prices, which might compress the firm’s earnings per share.
  • However, acquisitions and expansion projects will be challenging during a period embodied by unfavorable capital structures and recession risk.
  • It’s been ten months since we covered Matador Resources’ (NYSE:MTDR) stock.

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Daily Brief Utilities: Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • It’s Not Who The Directors Come From, but Their Skills and Ability to Fulfill Their Fiduciary Duties

It’s Not Who The Directors Come From, but Their Skills and Ability to Fulfill Their Fiduciary Duties

By Aki Matsumoto

  • People who can make business strategy decisions that are economic sense should be hired to serve on the board, not necessarily investors or financial experts.
  • If the motivation to increase corporate value is weak, linking the compensation of directors to the expansion of corporate value or granting them the company’s stock is an alternative.
  • Investors aren’t necessarily the only ones with conflicts of interest with shareholders. Founders hold significant shares, and the same problem can be assumed for directors from financial institutions with cross-shareholdings.

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Daily Brief Industrials: Schneider Electric Infrastructure, Caverion Corp, CDP Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • India Channel Insight #48 | SKF, Schaeffler, Schneider
  • Triton/Caverion: Hostile Competing Offer
  • CDP Holding Pre-IPO – Sales Have Grown but Continues to Rake in Losses

India Channel Insight #48 | SKF, Schaeffler, Schneider

By Pranav Bhavsar


Triton/Caverion: Hostile Competing Offer

By Jesus Rodriguez Aguilar

  • On 10 January, former significant shareholder Triton gatecrashed the Bain Capital consortium offer with an €8/share hostile competing offer, 14.3% premium to Bain’s). There could be upside up to c.€9.01.
  • Shareholder families have a c.27% (thus blocking) stake. Either they cash out in Triton’s offer, with a possible sweetener (a small increase could be likely) or will raise over Triton’s.
  • The shares are trading 0.62% above Triton’s offer on expectations of a bidding war and/or that offer is not declared unconditional by 30 June. Risk/return looks again positive. Long.

CDP Holding Pre-IPO – Sales Have Grown but Continues to Rake in Losses

By Clarence Chu

  • CDP Holdings (1782198D CH) is looking to raise up to US$400m in its upcoming Hong Kong IPO. 
  • CDP Holding (CDP) is a human capital management (HCM) service provider.
  • As per CIC, CDP was the No. 1 HCM SaaS+ platform in China in terms of revenue generated from HCM SaaS+ services in 2021.

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Daily Brief TMT/Internet: Shinko Electric Industries, Appier Group, LG Energy Solution, Alibaba (ADR), Hong Kong Hang Seng Index, Kakao Entertainment, Futu Holdings Ltd, JD.com Inc (ADR), iQIYI Inc, Mastercard and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Fujitsu (6702) Subsidiary Selldowns To Come
  • January TOPIX FFW Review – Some Big Sells
  • LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons
  • Alibaba(Baba.US/9988.HK) 4Q22 Preview: Raise TP for Margin Beat and Topline Recovery
  • EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol
  • PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment
  • FUTU(FUTU.US) 4Q22 Preview: Solid Fundamentals Drive Long Term Growth
  • JD(JD.US/9618.HK) 4Q22 Preview: Topline Reacceleration Could Happen in C2Q23
  • IQiyi(IQ.US) 4Q22 Preview: Strong Content Only Secures Temporal Performance
  • Mastercard: Turning Cautiously Positive On The Business As Recession Looms Ahead

Fujitsu (6702) Subsidiary Selldowns To Come

By Travis Lundy


January TOPIX FFW Review – Some Big Sells

By Travis Lundy


LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons

By Douglas Kim

  • This insight provides a trading strategy on LG Energy Solution (373220 KS) with a focus on the end of the ESOP shares lockup period on 27 January.
  • Currently, LG Energy Solution is trading at P/E of 46.5x in 2024 which is more than 100% higher than the P/E multiples of CATL (20.4x) and Tesla (19.2x) in 2024.
  • Our view is that in the long-term, LG Energy Solution should not trade at such high valuation premium to Tesla given the latter company’s higher return on capital.

Alibaba(Baba.US/9988.HK) 4Q22 Preview: Raise TP for Margin Beat and Topline Recovery

By Shawn Yang

  • We expect BABA’s  revenue in C4Q22 to be in line with cons., non-GAAP net income to beat cons. by 6%, supported by cost reduction in Freshippo, Taocaicai and Taobao Deal. 
  • Affected by logistics disruption and rising infections, we estimate BABA’s GMV and local consumer service in C4Q22 to decelerate compared to C3Q22. Both segments are to recover in C1Q23.
  • We raise TP from US$110 to US$130 to reflect upsides from rebound of discretionary demand, slowing Douyin eCommerce growth, and easing regulatory environment. Our TP implies 13x PE in FY2024.

EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol

By Simon Harris

  • Chinese equity vol has been high over the last few months with extreme market moves on a number of headlines but is starting to calm down
  • US equity volatility continues to screen cheap despite calls for a challenging year and likely recession
  • We consider 2 relative vol trades to play a narrowing of the spread

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

By Douglas Kim

  • On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia’s Sovereign Fund (Public Investment Fund – PIF) and GIC (Singapore).
  • Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
  • This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.

FUTU(FUTU.US) 4Q22 Preview: Solid Fundamentals Drive Long Term Growth

By Shawn Yang

  • We expect FUTU to post C4Q22 revenue and non-GAAP net income 6.4% and 16.0% above consensus, driven by the improved turnover rate in HKEX and the rising interest rate. 
  • We believe the recent regulation measures has little impact on FUTU’s adjusted expectations now widely held by investors. We expect revenue growth to reaccelerate at 37%/31% YoY in 4Q22/2023.
  • Maintain BUY to FUTU and raise TP by US$1 to US$51.

JD(JD.US/9618.HK) 4Q22 Preview: Topline Reacceleration Could Happen in C2Q23

By Shawn Yang

  • In C4Q22, we expect JD’s total revenue to grow 8% YoY, largely in line with cons. Non-GAAP net margin is expected to reach 2.0%, up 0.7ppt YoY.
  • We estimate JD’s GMV growth in C4Q22 to be ~7% YoY, slightly slower than C3Q22 due to logistics disruption in October and November.
  • Maintain BUY rating and raise TP to US$70.0 due to for acceleration in top line as well as margin improvement. Our TP implies 23x P/2023E.

IQiyi(IQ.US) 4Q22 Preview: Strong Content Only Secures Temporal Performance

By Shawn Yang

  • We forecast iQIYI 4Q22 top line would be in line, while bottom line would beat cons by 6.4%, largely due to the strong content pipeline and continued cost-saving measures.  
  • Although IQ conducted a series of cost saving measures, we expect these measures are not sustainable. Our top and bottom lines in 2023 are (3.4%)/3.4% vs cons.
  • Reiterate with SELL and TP US$ 4.15, implying 14.9X PE in 2023.

Mastercard: Turning Cautiously Positive On The Business As Recession Looms Ahead

By Vladimir Dimitrov, CFA

  • As M&A activity has cooled down, some risks for shareholders have been reduced and management has prioritized higher returns to shareholders.
  • Although I am turning cautiously positive on Mastercard, there are still risks that need to be considered, according to Mastercard’s chief executive.
  • The performance gap between Mastercard (NYSE:MA) and the S&P 500 that opened in 2021 has now been completely closed.

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Daily Brief Industrials: Schneider Electric Infrastructure, Caverion Corp, CDP Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • India Channel Insight #48 | SKF, Schaeffler, Schneider
  • Triton/Caverion: Hostile Competing Offer
  • CDP Holding Pre-IPO – Sales Have Grown but Continues to Rake in Losses

India Channel Insight #48 | SKF, Schaeffler, Schneider

By Pranav Bhavsar


Triton/Caverion: Hostile Competing Offer

By Jesus Rodriguez Aguilar

  • On 10 January, former significant shareholder Triton gatecrashed the Bain Capital consortium offer with an €8/share hostile competing offer, 14.3% premium to Bain’s). There could be upside up to c.€9.01.
  • Shareholder families have a c.27% (thus blocking) stake. Either they cash out in Triton’s offer, with a possible sweetener (a small increase could be likely) or will raise over Triton’s.
  • The shares are trading 0.62% above Triton’s offer on expectations of a bidding war and/or that offer is not declared unconditional by 30 June. Risk/return looks again positive. Long.

CDP Holding Pre-IPO – Sales Have Grown but Continues to Rake in Losses

By Clarence Chu

  • CDP Holdings (1782198D CH) is looking to raise up to US$400m in its upcoming Hong Kong IPO. 
  • CDP Holding (CDP) is a human capital management (HCM) service provider.
  • As per CIC, CDP was the No. 1 HCM SaaS+ platform in China in terms of revenue generated from HCM SaaS+ services in 2021.

💡 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