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Smartkarma Daily Briefs

May 29
0

Daily Brief ESG: Legislation to Promote Women Directors Is the Solution and more

By | Daily Briefs, ESG

In today’s briefing:

  • Legislation to Promote Women Directors Is the Solution, but the Root Cause Is Why It Cannot Be Done

Legislation to Promote Women Directors Is the Solution, but the Root Cause Is Why It Cannot Be Done

By Aki Matsumoto

  • The lack of laws mandating female directors and the absence of specific numerical targets for ％ female directors in Corporate Governance Code have slowed the increase in % female directors.
  • The lack of understanding of the value of ensuring diversity on the board on companies is serious, as only 9.1% of companies that disclosed skills-matrix adopted “diversity” as a criterion.
  • It should be a catalyst for companies to understand the value of ensuring diversity on their boards, not merely numbers-crunching that a company only needs to hire one female director.

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May 29
0

Daily Brief Credit: Morning Views Asia: Meituan and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Meituan, Tata Motors ADR

Morning Views Asia: Meituan, Tata Motors ADR

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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May 29
0

Daily Brief ECM: Weekly Deals Digest (28 May) – Rakuten and more

By | Daily Briefs, ECM

In today’s briefing:

  • Weekly Deals Digest (28 May) – Rakuten, Growatt, JD Industrials, Toyo, Silk Laser, Penguin

Weekly Deals Digest (28 May) – Rakuten, Growatt, JD Industrials, Toyo, Silk Laser, Penguin

By Arun George

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May 29
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan |AI All the Way Tech Continues to Lead Equities UP; NUGGET: JP Drone Delivery-In Sight and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan |AI All the Way Tech Continues to Lead Equities UP; NUGGET: JP Drone Delivery-In Sight

Ohayo Japan |AI All the Way Tech Continues to Lead Equities UP; NUGGET: JP Drone Delivery-In Sight

By Mark Chadwick

  • OVERSEAS. AI Driven Tech Rally Continues; Debt Deal Close(r) as Biden-McCarthy Agree, Vote still to come;More Hikes to Come as Inflation Picks UP; (Another) Massive Boeing order in the works
  • JAPAN. NKY Futs 1.9% Prem  vs Cash; US Tech(AI) Driven Rally continues;Yen Shorts Accummulate as USDJPY pass 140; Tokyo Inflation Slows;Toyota Loses crown of top selling car to TESLA
  • NUGGET. Drone Delivery in Japan – within Sight; Japan Post(6178) leading the way aiming for 2023 commercialization.

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May 29
0

Daily Brief Event-Driven: Golden Eagle Retail (3308 HK): Controlling Family’s Privatisation Offer at HK$6.88 and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Golden Eagle Retail (3308 HK): Controlling Family’s Privatisation Offer at HK$6.88
  • CES China Semiconductor Chips Index Rebalance: Six Changes in June
  • Assessing the Canon Buyback and Follow-On Performance
  • CSI500 Index Rebalance: Adds Starting to Outperform
  • Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way
  • Golden Eagle (3308 HK): Wang Family Delisting Offer
  • Circling Uponor

Golden Eagle Retail (3308 HK): Controlling Family’s Privatisation Offer at HK$6.88

By Arun George

  • Golden Eagle Retail (3308 HK) disclosed a scheme privatisation offer from the controlling family at HK$6.88 per share, a 40.4% premium to the undisturbed price (HK$4.90 on 22 May).
  • Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The shareholder with a blocking stake has provided an irrevocable. 
  • The offer price is final. The offer is reasonable particularly as the sentiment on the department store sector remains weak. This looks like a done deal. 

CES China Semiconductor Chips Index Rebalance: Six Changes in June

By Brian Freitas

  • There are 6 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 June.
  • All the inclusions are also additions to the CSI 500 Index and the passive flows will come from multiple trackers.
  • The adds have outperformed the deletes over the last couple of weeks and there could be further outperformance over the next two weeks.

Assessing the Canon Buyback and Follow-On Performance

By Travis Lundy

  • 10 days ago Canon Inc (7751 JP) announced its 18th ¥50bn buyback in 15yrs. They have a pattern, both in execution and outperformance. 
  • Historically, they are reasonably aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles. 
  • Here I look at both – buyback cycle performance and cycle outperformance. Good so far, and now I see a tactical trade but it’s not overwhelming.

CSI500 Index Rebalance: Adds Starting to Outperform

By Brian Freitas

  • There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 June.
  • One way turnover at the rebalance is estimated at 9.45% leading to a one-way trade of CNY 5.93bn. The IT and Industrials sectors gain the most index spots.
  • 8 adds to the CSI 500 Index are deletes from the CSI 300 Index while 3 deletes from the CSI 500 Index are adds to the CSI 300 Index.

Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction

By Arun George

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Golden Eagle (3308 HK): Wang Family Delisting Offer

By David Blennerhassett

  • PRC department store play Golden Eagle (3308 HK) has announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close. The price is final.
  • The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable. 
  • Apart from shareholder approval, there are no key regulatory approvals to be obtained. 

Circling Uponor

By Jesus Rodriguez Aguilar

  • Aliaxis SA (ALIVP BB) seeks market expansion and by offering a 55% premium (€25.75/share,10.0x EV/Fwd EBITDA) it’s quickly accumulated a 20% stake in Uponor OYJ (UNR1V FH), whose Board isn’t engaging.
  • The shares trade c.7% above the offer on expectations of others suitors, but the stake already owned by Aliaxis should act as a deterrent. My fair value estimate (EV/EBITDA) is €27.09/share.
  • The share price implies 6.6% perpetuity growth (in a mature industry) on a conservative 11.5% WACC. Oras (25% stake) isn’t giving into temptation. Aliaxis’d be happy with another 30%.

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May 29
0

Daily Brief Equity Bottom-Up: Cathay Pacific (293 HK): Hard Landing and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Cathay Pacific (293 HK): Hard Landing
  • Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’
  • COLI 688 HK – Value Emerging, the Only Pure Play in China Prop to Gain Mkt Share and Back to Growth
  • New Horizon Health (6606.HK) – What Makes a Really Good Story? Definitely Not Just Breakeven
  • The Future of Insurance

Cathay Pacific (293 HK): Hard Landing

By Osbert Tang, CFA

  • The recent discrimination incident will likely affect traffic recovery pace of Cathay Pacific Airways (293 HK) negatively if it turns into a full-scale boycott by mainland passengers.
  • The scenario of CX becoming majority-owned by Air China Ltd (H) (753 HK) is getting increasingly possible. This may not be totally positive to CX given CA’s weaker service ranking.
  • Consensus forecasts now look somewhat bullish following the incident, and the stock’s 0.7x P/B does not stand out as attractive relative to history or ROE (7% in FY25F).

Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’

By Vincent Fernando, CFA

  • The semiconductor stock rally in the U.S. caused by Nvidia’s monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.
  • TSMC and UMC’s ADR premiums don’t appear sustainable given their trading history.
  • Telecom CHT wasn’t affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.

COLI 688 HK – Value Emerging, the Only Pure Play in China Prop to Gain Mkt Share and Back to Growth

By Jacob Cheng

  • In this insight, we explore the investment thesis and major share price drivers for 688 HK
  • COLI saw share price weakness, and is trading at 0.46x P/B.  Potential risks are 1) fail to meet 20% growth target 2) slower than expected land acquisition
  • We see value emerging from the stock, and recommend BUY as long as the stock trades below HKD20 (as a technical indicator)

New Horizon Health (6606.HK) – What Makes a Really Good Story? Definitely Not Just Breakeven

By Xinyao (Criss) Wang

  • New Horizon Health (NHH) achieved high performance growth last year. However, we recommend investors take a calm and objective view of NHH’s current high growth rate if they see the real story.
  • NHH’s dual attributes of medical+consumption means large growth potential/strong profitability. Thus, the real expectation for NHH is not just about achieving breakeven, but more about how to achieve high profitablity.
  • If market education level falls short of expectations in the future, it’s difficult for NHH to achieve expected scale/profit margin. There would be greater valuation downward risk at that time.

The Future of Insurance

By subSPAC

  • SPACs are often synonymous with high-risk, cash-intensive early-stage companies making their public debut, but occasionally, a SPAC deal like CCC Intelligent Solutions emerges and shifts the narrative.
  • CCC is a SaaS business with four decades of operational history in the property and casualty insurance sector that went public through a SPAC in 2021.
  • Over the company’s history, it has processed over $1 trillion in transactions for 30,000 businesses.

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May 29
0

Daily Brief Macro: US Debt Ceiling Raise Tells Us Gold Is Going Up… It Must Be Part Of Every Portfolio and more

By | Daily Briefs, Macro

In today’s briefing:

  • US Debt Ceiling Raise Tells Us Gold Is Going Up… It Must Be Part Of Every Portfolio
  • Back to a Focus on Technicals
  • Macro Watch – Here Is Why a Debt Ceiling Deal May Be NEGATIVE for Equities
  • China Recovery – Households

US Debt Ceiling Raise Tells Us Gold Is Going Up… It Must Be Part Of Every Portfolio

By Michael J. Howell

  • US debt ceiling agreement warns again about upcoming monetary inflation. Gold (and crypto) is a great hedge against monetary inflation, but less good against cost inflation
  • US debt problem demands near double-digit annual growth in Fed balance sheet over next decade… QE is not dead!
  • Gold could easily test US$3000/ oz. Bitcoin could do even better! Buy into any near-term weakness

Back to a Focus on Technicals

By Cam Hui

  • The debt ceiling drama has been too much of a distraction for U.S. equity investors. It’s time to focus again on the technicals.
  • A review of the market’s technical structure reveals serious negative divergences characterized by bubbly narrow leadership and weakening cyclical indicators.
  • While this doesn’t mean that the stock market is about to crash, it does indicate that investors should be prepared for reduced long-term return expectations from U.S. equities.

Macro Watch – Here Is Why a Debt Ceiling Deal May Be NEGATIVE for Equities

By Andreas Steno

  • The debt ceiling deal marks the end of USD liquidity increases
  • The US Treasury will issue bills and bonds again soon withdrawing liquidity
  • Will the USD continue to surge while risk assets will suffer? 

China Recovery – Households

By Untying The Gordian Knot

  • This is the second of three notes on China’s recovery.
  • Most, if not all, bullish consumer recovery scenarios have been based on the revenge spending model that analysts witnessed in other parts of the world.
  • There is no question that it is human to do things like recreation, shopping, and travel after three years of lockdowns.

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May 29
0

Daily Brief Industrials: Cathay Pacific Airways, Uponor OYJ and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Cathay Pacific (293 HK): Hard Landing
  • Circling Uponor

Cathay Pacific (293 HK): Hard Landing

By Osbert Tang, CFA

  • The recent discrimination incident will likely affect traffic recovery pace of Cathay Pacific Airways (293 HK) negatively if it turns into a full-scale boycott by mainland passengers.
  • The scenario of CX becoming majority-owned by Air China Ltd (H) (753 HK) is getting increasingly possible. This may not be totally positive to CX given CA’s weaker service ranking.
  • Consensus forecasts now look somewhat bullish following the incident, and the stock’s 0.7x P/B does not stand out as attractive relative to history or ROE (7% in FY25F).

Circling Uponor

By Jesus Rodriguez Aguilar

  • Aliaxis SA (ALIVP BB) seeks market expansion and by offering a 55% premium (€25.75/share,10.0x EV/Fwd EBITDA) it’s quickly accumulated a 20% stake in Uponor OYJ (UNR1V FH), whose Board isn’t engaging.
  • The shares trade c.7% above the offer on expectations of others suitors, but the stake already owned by Aliaxis should act as a deterrent. My fair value estimate (EV/EBITDA) is €27.09/share.
  • The share price implies 6.6% perpetuity growth (in a mature industry) on a conservative 11.5% WACC. Oras (25% stake) isn’t giving into temptation. Aliaxis’d be happy with another 30%.

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May 29
0

Daily Brief Energy/Materials: Inner Mongolia Yitai Coal Company Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction

Merger Arb Mondays (29 May) – Yitai, AAG Energy, Hailan, InvoCare, Silk Laser, Toyo Construction

By Arun George

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May 29
0

Daily Brief TMT/Internet: NVIDIA Corp, Piotech, Canon Inc, Hong Kong Hang Seng Index, Taiwan Semiconductor (TSMC) – ADR, CCC Intelligent Solutions Hold and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • NVIDIA. Yikes! Have We Missed The Boat?
  • CES China Semiconductor Chips Index Rebalance: Six Changes in June
  • Assessing the Canon Buyback and Follow-On Performance
  • CSI500 Index Rebalance: Adds Starting to Outperform
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way
  • Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’
  • The Future of Insurance

NVIDIA. Yikes! Have We Missed The Boat?

By William Keating

  • Q1’23 revenues of $7.19 billion, down 13% from a year ago but up 19% sequentially and ~10% higher than the guided midpoint.
  • Current quarter outlook for revenues of $11 billion, a ~55% sequential increase, sparked mayhem in the markets and sent NVIDIA’s stock soaring over 24% in after hours trading
  • Don’t go chasing waterfalls, there are many other ways to rise with the tide

CES China Semiconductor Chips Index Rebalance: Six Changes in June

By Brian Freitas

  • There are 6 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 June.
  • All the inclusions are also additions to the CSI 500 Index and the passive flows will come from multiple trackers.
  • The adds have outperformed the deletes over the last couple of weeks and there could be further outperformance over the next two weeks.

Assessing the Canon Buyback and Follow-On Performance

By Travis Lundy

  • 10 days ago Canon Inc (7751 JP) announced its 18th ¥50bn buyback in 15yrs. They have a pattern, both in execution and outperformance. 
  • Historically, they are reasonably aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles. 
  • Here I look at both – buyback cycle performance and cycle outperformance. Good so far, and now I see a tactical trade but it’s not overwhelming.

CSI500 Index Rebalance: Adds Starting to Outperform

By Brian Freitas

  • There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 June.
  • One way turnover at the rebalance is estimated at 9.45% leading to a one-way trade of CNY 5.93bn. The IT and Industrials sectors gain the most index spots.
  • 8 adds to the CSI 500 Index are deletes from the CSI 300 Index while 3 deletes from the CSI 500 Index are adds to the CSI 300 Index.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Tech Leads the Way

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’

By Vincent Fernando, CFA

  • The semiconductor stock rally in the U.S. caused by Nvidia’s monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.
  • TSMC and UMC’s ADR premiums don’t appear sustainable given their trading history.
  • Telecom CHT wasn’t affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.

The Future of Insurance

By subSPAC

  • SPACs are often synonymous with high-risk, cash-intensive early-stage companies making their public debut, but occasionally, a SPAC deal like CCC Intelligent Solutions emerges and shifts the narrative.
  • CCC is a SaaS business with four decades of operational history in the property and casualty insurance sector that went public through a SPAC in 2021.
  • Over the company’s history, it has processed over $1 trillion in transactions for 30,000 businesses.

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

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

  • ✓ Unlimited Research Summaries
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  • ✓ Custom Watchlists
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  • ✓ Events & Webinars
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