Smartkarma Daily Briefs

Fidelity National Info (FIS) had a successful start to 2023, surpassing Wall Street expectations in terms of revenues as well as earnings.
FIS experienced significant recurring revenue growth in their banking and capital markets businesses and impressive organic growth in their e-commerce segment.
We give Fidelity National Information Services a ‘Buy’ rating with a revised target price.

Church & Dwight Co: Capacity Expansion Update & Other Drivers

Church & Dwight had a particularly robust Q1 as the company reported solid revenue growth of 10.2% and an all-around beat.
The management exceeded its Q1 outlook with organic sales increasing by 5.7%, driven by more robust performance across multiple brands, including Hero, THERABREATH, ARM & HAMMER laundry, and ARM & HAMMER litter.
With encouraging signs such as flat volume growth after a series of declines, the company’s team anticipates volume growth throughout the year.

Rockwell Automation: The Strategic Partnership with Autonox Robotics Could Be A Game Changer – Key Drivers

It was a successful second quarter for Rockwell Automation, as the company outperformed market expectations in terms of both sales and earnings.
The company’s strong execution, focus on business resiliency, and improved electronic component availability contributed to double-digit sales and margin growth.
Despite the uncertain economic environment, Rockwell Automation’s differentiated offerings continued to experience robust demand, with organic sales surpassing expectations.

Sirius XM Holdings Inc.: Launch Of Sports-Focused Social Channels & Other Developments

Sirius XM had a bad quarter and they failed to meet the revenue expectations as well as the earnings expectations of Wall Street.
Their launch of @SIRIUSXMSPORTS also enhances their social media presence and helps them to remain connected with subscribers and reach new audiences on Instagram.
We give Sirius XM Holdings a ‘Hold’ rating with a revised target price.

Snap Inc.: Acquisition Of Th3rd For 3D Scanning Capabilities & Other Drivers

It was a challenging yet promising quarter for Snap as it failed to meet the revenue expectations of Wall Street but surprisingly managed to deliver a positive bottom-line.
Despite a 7% year-over-year decrease in revenue, the company reached 383 million daily active users in Q1 and showcased the community’s continued growth.
Snap introduced My AI, an AI-powered chatbot, and unveiled new features at the Snap Partner Summit, emphasizing their commitment to innovation.

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May 28

Daily Brief Event-Driven: STAR50 Index Rebalance: Two Changes in June (As Expected) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

STAR50 Index Rebalance: Two Changes in June (As Expected)
SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains
SSE180 Index Rebalance: Small Impact but Not Widely Tracked
CSI300 Index Rebalance: 9 Changes as Discretion Used
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings
Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank
Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post

STAR50 Index Rebalance: Two Changes in June (As Expected)

The index committee has used a 6-month minimum listing history and that results in two changes. This is the first rebalance with less than 5 changes at a review.
One way turnover is estimated at 1.03% and will result in a one-way trade of CNY 1,025m. Given the adds are new listings, there will be some reverse funding flow.
There appears to be little pre-positioning on the adds while there is a bigger buildup on the deletes.

SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains

There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. There is over 1x ADV to sell on a few deletions.
We estimate a one-way turnover of 5.3% at the June rebalance leading to a one-way trade of CNY 3.84bn. Index arb activity could add to the impact on the stocks.
The adds outperformed the deletes from February to April but have given up a lot of the outperformance over the last month.

SSE180 Index Rebalance: Small Impact but Not Widely Tracked

There are 18 changes for the SSE180 Index that will be implemented at the close of trading on 9 June.
The impact on the stocks is small but this is not a widely tracked index, so there could still be opportunities for some high risk/reward basket trades.
With Northbound Stock Connect eligibility no longer drawing on the SSE180 Index constituents, the index could lose relevance over time.

CSI300 Index Rebalance: 9 Changes as Discretion Used

There are 9 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
While nearly all the changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used discretion.
The Energy sector is the biggest gainer in terms of index spots, while the Consumer Discretionary and Health Care sectors lose two index spots each.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings

There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
There were no new deals were discussed on Smartkarma this week.
Key updates took place for Toyo Construction (1890 JP), Silk Laser Australia (SLA AU), Sing Tao News Corp (1105 HK), and GK Goh Holdings (GKG SP).

Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank

The announcement of the changes for the June rebalance of the local China indexes was made post market close on Friday.
A busy week is coming up with rebalance implementations, review cutoffs and announcements.
There were inflows to iShares MSCI Japan ETF (EWJ US), Wisdomtree Japan Hedged Eq (DXJ US) and Jpmorgan Betabuilders Japan (BBJP US) during the week.

Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post

Rakuten Bank (5838 JP)‘s TOPIX inclusion is this week. And the Real World Float has gotten smaller since the offering. And some of those people aren’t going to sell near-term.
Swire Pacific (A) (19 HK)‘s P/B is back down to 0.31x as Cathay Pacific Airways (293 HK) tackles alleged language bias by flight attendants.
Understanding real money demand on the Rakuten (4755 JP) story is key. If there is any, that makes deal overhang smaller than it looks.

💡 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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✓ Company Data and News
✓ Events & Webinars

May 28

Daily Brief Consumer: SJM Holdings, Rakuten, Church & Dwight Co, Sirius Xm Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

SJM Holdings Ltd: Large Refi of Debt Buys Time for Grand Lisboa Palace to Prove Its US$3b Cost
ECM Weekly (28th May 2023) – HK Trip Notes, Rakuten, JD Ind, Horizon Const, Nippon Prologis, MINT
Church & Dwight Co: Capacity Expansion Update & Other Drivers
Sirius XM Holdings Inc.: Launch Of Sports-Focused Social Channels & Other Developments

SJM Holdings Ltd: Large Refi of Debt Buys Time for Grand Lisboa Palace to Prove Its US$3b Cost

By Howard J Klein

Legacy concessionaire SJM needs a strong performance from its Cotai flagship to create positive cash flow to service debt and keep gains in mass market share.
The company has closed 5 satellite casinos, a move that indicates a shift in strategic goals aimed at building out from its two IRs.
Thus far, SJM has not fully participated in the early Macau recovery cycle to make it a BUY but it needs to build on its 81% of mass revenue.

ECM Weekly (28th May 2023) – HK Trip Notes, Rakuten, JD Ind, Horizon Const, Nippon Prologis, MINT

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, HK market sentiment is likely to be put to test again with the upcoming listing for Growatt Technology.
The REIT were once again at the front lines this week for placements, while Rakuten (4755 JP) has so far been holding up.

Church & Dwight Co: Capacity Expansion Update & Other Drivers

Church & Dwight had a particularly robust Q1 as the company reported solid revenue growth of 10.2% and an all-around beat.
The management exceeded its Q1 outlook with organic sales increasing by 5.7%, driven by more robust performance across multiple brands, including Hero, THERABREATH, ARM & HAMMER laundry, and ARM & HAMMER litter.
With encouraging signs such as flat volume growth after a series of declines, the company’s team anticipates volume growth throughout the year.

Sirius XM Holdings Inc.: Launch Of Sports-Focused Social Channels & Other Developments

Sirius XM had a bad quarter and they failed to meet the revenue expectations as well as the earnings expectations of Wall Street.
Their launch of @SIRIUSXMSPORTS also enhances their social media presence and helps them to remain connected with subscribers and reach new audiences on Instagram.
We give Sirius XM Holdings a ‘Hold’ rating with a revised target price.

💡 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

May 28

Daily Brief Industrials: AVIC (Chengdu) UAS Co Ltd, CRRC Corp Ltd A, JD Industrials, Rockwell Automation, Textron Inc, Toyo Construction, Japan Post Holdings, Kurita Water Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

STAR50 Index Rebalance: Two Changes in June (As Expected)
SSE180 Index Rebalance: Small Impact but Not Widely Tracked
JD Industrials IPO: The Bull Case
Rockwell Automation: The Strategic Partnership with Autonox Robotics Could Be A Game Changer – Key Drivers
Textron Inc.: Major Contracts With The U.S
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings
Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post
Revision of the Corporate Governance Code Requires Substantive Discussion, Not Individual Issues

STAR50 Index Rebalance: Two Changes in June (As Expected)

The index committee has used a 6-month minimum listing history and that results in two changes. This is the first rebalance with less than 5 changes at a review.
One way turnover is estimated at 1.03% and will result in a one-way trade of CNY 1,025m. Given the adds are new listings, there will be some reverse funding flow.
There appears to be little pre-positioning on the adds while there is a bigger buildup on the deletes.

SSE180 Index Rebalance: Small Impact but Not Widely Tracked

There are 18 changes for the SSE180 Index that will be implemented at the close of trading on 9 June.
The impact on the stocks is small but this is not a widely tracked index, so there could still be opportunities for some high risk/reward basket trades.
With Northbound Stock Connect eligibility no longer drawing on the SSE180 Index constituents, the index could lose relevance over time.

JD Industrials IPO: The Bull Case

By Arun George

JD Industrials (2231713D CH)/JDI, a leading industrial supply chain technology and service provider in China, has filed for a US$1bn IPO. JD.com Inc (ADR) (JD US) owns a 77.95% stake.
JDI is the largest industrial supply chain technology and service provider in China in terms of GMV, customer coverage and SKU offerings in 2022, according to CIC.
The key elements of the bull case rest on large addressable markets, market share gains, robust product revenue growth underpinned by key accounts, improving underlying margin and strong cash generation.

Rockwell Automation: The Strategic Partnership with Autonox Robotics Could Be A Game Changer – Key Drivers

It was a successful second quarter for Rockwell Automation, as the company outperformed market expectations in terms of both sales and earnings.
The company’s strong execution, focus on business resiliency, and improved electronic component availability contributed to double-digit sales and margin growth.
Despite the uncertain economic environment, Rockwell Automation’s differentiated offerings continued to experience robust demand, with organic sales surpassing expectations.

Textron Inc.: Major Contracts With The U.S

It was a mixed first quarter for Textron as the company failed to meet the revenue expectations of Wall Street given the lower revenues observed at Bell.
Despite the Aviation, Industrial, and Systems segments offsetting the decline, Textron’s revenues were below expectations though it did manage an earnings beat.
Textron Aviation received an initial award on the US Navy Multi-engine Training System contract, and fleet utilization remained strong, contributing to aftermarket revenue growth.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings

There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
There were no new deals were discussed on Smartkarma this week.
Key updates took place for Toyo Construction (1890 JP), Silk Laser Australia (SLA AU), Sing Tao News Corp (1105 HK), and GK Goh Holdings (GKG SP).

Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post

Rakuten Bank (5838 JP)‘s TOPIX inclusion is this week. And the Real World Float has gotten smaller since the offering. And some of those people aren’t going to sell near-term.
Swire Pacific (A) (19 HK)‘s P/B is back down to 0.31x as Cathay Pacific Airways (293 HK) tackles alleged language bias by flight attendants.
Understanding real money demand on the Rakuten (4755 JP) story is key. If there is any, that makes deal overhang smaller than it looks.

Revision of the Corporate Governance Code Requires Substantive Discussion, Not Individual Issues

By Aki Matsumoto

Companies were occupied with meeting the raised standards, and there was little substantive discussion of how corporate governance should be implemented to achieve the corporation’s goal of maximizing shareholder interests.
A few companies have made steady progress, but we cannot expect corporate governance initiatives to go further than they are now if left to the efforts of well-intentioned companies.
Unless the benchmark is changed from TOPIX to another index with a smaller number of components, it will be nearly impossible to find a satisfactory engagement for a passive fund.

💡 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

May 28

Daily Brief Energy/Materials: Anhui Conch Cement, China Merchants Energy A, Rajshree Polypack, International Paper Co and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains
CSI300 Index Rebalance: 9 Changes as Discretion Used
RPPL: Q4 Weaker than Expected But On Track for Strong Earnings Growth Through FY25
International Paper Company: How Long Will The Struggles Continue? – Key Drivers

SSE50 Index Rebalance: 5 Changes as Adds Give Up Recent Gains

There are 5 changes for the SSE50 Index that will be implemented at the close on 9 June. There is over 1x ADV to sell on a few deletions.
We estimate a one-way turnover of 5.3% at the June rebalance leading to a one-way trade of CNY 3.84bn. Index arb activity could add to the impact on the stocks.
The adds outperformed the deletes from February to April but have given up a lot of the outperformance over the last month.

CSI300 Index Rebalance: 9 Changes as Discretion Used

There are 9 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
While nearly all the changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used discretion.
The Energy sector is the biggest gainer in terms of index spots, while the Consumer Discretionary and Health Care sectors lose two index spots each.

RPPL: Q4 Weaker than Expected But On Track for Strong Earnings Growth Through FY25

By Ankit Agrawal, CFA

Rajshree Polypack’s (RPPL’s) Q4FY23 came in weaker than expected on both the sales volume and the margins front. Higher depreciation and interest costs led by capex further dampened the profitability.
However, RPPL is executing well on its revenue growth targets led by regular capex led investments. It is on track to do INR 450cr revenues by FY25.
RPPL has potential to post a PAT of INR 30cr+ by FY25, suggesting that RPPL is available at around 6x P/E on a base of FY25E PAT.

International Paper Company: How Long Will The Struggles Continue? – Key Drivers

International Paper had a challenging start to 2023 as its revenue was slightly down though still above analyst expectations.
International Paper reported $65 million of year-over-year incremental earnings benefits from building better IP initiatives, but lower prices across their portfolio and weaker demand impacted margins.
Despite these challenges, International Paper remained focused on their key priorities of taking care of employees, customers and maximizing shareholder value.

💡 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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✓ Company Data and News
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May 28

Daily Brief TMT/Internet: Cloudflare , Fidelity National Info Serv, First Solar Inc, Pegatron Corp, Snap Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Cloudflare Inc.: Does It Have A Sustainable Competitive Advantage? – Key Drivers
Fidelity National Information Services Inc.: Is The Recurring Revenue Growth in Banking and Capital Markets Here To Stay? – Key Drivers
First Solar Inc.: The Evolar AB Acquisition May Be Small But Is Key For Future Growth – Major Drivers
Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank
Snap Inc.: Acquisition Of Th3rd For 3D Scanning Capabilities & Other Drivers

Cloudflare Inc.: Does It Have A Sustainable Competitive Advantage? – Key Drivers

Q1 was a challenging quarter for Cloudflare as the company failed to meet the revenue expectations of Wall Street as a result of various the headwinds.
However, macroeconomic uncertainty lengthened sales cycles and affected close rates, resulting in a back-end weighted quarter.
Despite these challenges, Cloudflare remains resilient and profitable, with an operating profit of $19.4 million and generating $13.9 million of free cash flow.

Fidelity National Information Services Inc.: Is The Recurring Revenue Growth in Banking and Capital Markets Here To Stay? – Key Drivers

Fidelity National Info (FIS) had a successful start to 2023, surpassing Wall Street expectations in terms of revenues as well as earnings.
FIS experienced significant recurring revenue growth in their banking and capital markets businesses and impressive organic growth in their e-commerce segment.
We give Fidelity National Information Services a ‘Buy’ rating with a revised target price.

First Solar Inc.: The Evolar AB Acquisition May Be Small But Is Key For Future Growth – Major Drivers

First Solar had a very disappointing result in the last quarter as it failed to meet the revenue expectations as well as the earnings expectations of Wall Street.
With their CadTel technology, vertically integrated manufacturing process, and commitment to Responsible Solar, First Solar could stand out from competitors and maintains long-term competitiveness.
The recent acquisition of the European perovskite company, Evolar AB was also a part of the expansion strategy.

Index Rebalance & ETF Flow Recap: STAR50, SSE50, SSE180, KOSPI2, TW Top 50, HDFC/HDFCB, Rakuten Bank

The announcement of the changes for the June rebalance of the local China indexes was made post market close on Friday.
A busy week is coming up with rebalance implementations, review cutoffs and announcements.
There were inflows to iShares MSCI Japan ETF (EWJ US), Wisdomtree Japan Hedged Eq (DXJ US) and Jpmorgan Betabuilders Japan (BBJP US) during the week.

Snap Inc.: Acquisition Of Th3rd For 3D Scanning Capabilities & Other Drivers

It was a challenging yet promising quarter for Snap as it failed to meet the revenue expectations of Wall Street but surprisingly managed to deliver a positive bottom-line.
Despite a 7% year-over-year decrease in revenue, the company reached 383 million daily active users in Q1 and showcased the community’s continued growth.
Snap introduced My AI, an AI-powered chatbot, and unveiled new features at the Snap Partner Summit, emphasizing their commitment to innovation.

💡 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

May 28

Daily Brief Industrials: AVIC (Chengdu) UAS Co Ltd, CRRC Corp Ltd A, JD Industrials, Rockwell Automation, Textron Inc, Toyo Construction, Japan Post Holdings, Kurita Water Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

STAR50 Index Rebalance: Two Changes in June (As Expected)
SSE180 Index Rebalance: Small Impact but Not Widely Tracked
JD Industrials IPO: The Bull Case
Rockwell Automation: The Strategic Partnership with Autonox Robotics Could Be A Game Changer – Key Drivers
Textron Inc.: Major Contracts With The U.S
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings
Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post
Revision of the Corporate Governance Code Requires Substantive Discussion, Not Individual Issues

STAR50 Index Rebalance: Two Changes in June (As Expected)

The index committee has used a 6-month minimum listing history and that results in two changes. This is the first rebalance with less than 5 changes at a review.
One way turnover is estimated at 1.03% and will result in a one-way trade of CNY 1,025m. Given the adds are new listings, there will be some reverse funding flow.
There appears to be little pre-positioning on the adds while there is a bigger buildup on the deletes.

SSE180 Index Rebalance: Small Impact but Not Widely Tracked

There are 18 changes for the SSE180 Index that will be implemented at the close of trading on 9 June.
The impact on the stocks is small but this is not a widely tracked index, so there could still be opportunities for some high risk/reward basket trades.
With Northbound Stock Connect eligibility no longer drawing on the SSE180 Index constituents, the index could lose relevance over time.

JD Industrials IPO: The Bull Case

By Arun George

JD Industrials (2231713D CH)/JDI, a leading industrial supply chain technology and service provider in China, has filed for a US$1bn IPO. JD.com Inc (ADR) (JD US) owns a 77.95% stake.
JDI is the largest industrial supply chain technology and service provider in China in terms of GMV, customer coverage and SKU offerings in 2022, according to CIC.
The key elements of the bull case rest on large addressable markets, market share gains, robust product revenue growth underpinned by key accounts, improving underlying margin and strong cash generation.

Rockwell Automation: The Strategic Partnership with Autonox Robotics Could Be A Game Changer – Key Drivers

It was a successful second quarter for Rockwell Automation, as the company outperformed market expectations in terms of both sales and earnings.
The company’s strong execution, focus on business resiliency, and improved electronic component availability contributed to double-digit sales and margin growth.
Despite the uncertain economic environment, Rockwell Automation’s differentiated offerings continued to experience robust demand, with organic sales surpassing expectations.

Textron Inc.: Major Contracts With The U.S

It was a mixed first quarter for Textron as the company failed to meet the revenue expectations of Wall Street given the lower revenues observed at Bell.
Despite the Aviation, Industrial, and Systems segments offsetting the decline, Textron’s revenues were below expectations though it did manage an earnings beat.
Textron Aviation received an initial award on the US Navy Multi-engine Training System contract, and fleet utilization remained strong, contributing to aftermarket revenue growth.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toyo Construction, Silk Laser, Sing Tao, GK Goh Holdings

There are 38 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
There were no new deals were discussed on Smartkarma this week.
Key updates took place for Toyo Construction (1890 JP), Silk Laser Australia (SLA AU), Sing Tao News Corp (1105 HK), and GK Goh Holdings (GKG SP).

Last Week In Event SPACE: Rakuten Bank/Group, Cathay/Swire Pacific, Japan Post