Smartkarma Daily Briefs

This is our first report on Danaher Corporation, a well-known manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company had a strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
It delivered market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.

Illinois Tool Works Inc.: Initiation of Coverage – Diversified Business Lines & Other Drivers

This is our first report on industrials giant, Illinois Tool Works.
The company achieved a 13% revenue increase on the top line, with 16% organic growth from its core businesses which is a good sign.
While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

Jinxin Fertility Co Ltd (1951.HK) – Hard to Achieve Performance Reversal in 2023

By Xinyao (Criss) Wang

We have seen some positive policies released in China to support assisted reproduction. However, domestic policy support is more of a short-term catalyst and would not fundamentally change Jinxin’s prospects.
The number of assisted reproductive centers in China is close to supply-demand equilibrium. It’s hard to support Jinxin’s valuation expansion by relying on China market. The breakthrough point is internationalization.
Jinxin’s 2023 performance wouldn’t rebound largely. Investors could do short-term trade based on positive news/policy related to ARS in China.There’s no signal to support the complete reversal of share price.

An Update to Our Pair Trade Between Emart & Coupang

By Douglas Kim

In this insight, we discuss an update of pair trade between Emart (long) and Coupang (short).
Back on 1 August 2022, we recommended a pair trade between E Mart Inc (139480 KS) (long) and Coupang (CPNG US) (short).
This pair trade has worked well in the past five months and we continue to like this pair trade (long Emart and short Coupang).

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Dec 29

Daily Brief Credit: Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts

Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

Danaher Corporation is a renowned manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company has had a decent financial performance off-late and has been consistently delivering market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.
Its acquisition-led growth strategy implies that it will be in regular need for debt in order to fund acquisitions.

Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts

Illinois Tool Works is an industrials major catering to a wide variety of end markets ranging from automotive to welding and construction projects.
The company’s financial performance has been decent despite the fact that the operating climate is still quite dynamic and challenging.
While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

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

Dec 29

Daily Brief Event-Driven: Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market

The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
Shareholders who tender will be paid within 7 business days.
An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

By Shifara Samsudeen, ACMA, CGMA

Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

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

Dec 29

Daily Brief TMT/Internet: Kingsoft Cloud, Meituan and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Kingsoft Cloud HK Listing: Significant Upside in the Medium Term
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Kingsoft Cloud HK Listing: Significant Upside in the Medium Term

Kingsoft Cloud (KC US) shares will begin trading on the Main Board of the HKEx on Friday, 30th December by way of an introduction.
The company’s competitive pricing strategy to onboard customers has impacted its profitability, however, KC has begun to shift focus on profitability by raising prices in the medium term.
Raising prices in the medium term will likely support KC’s profitability and we have valued the company using potential price hikes to non-key customers.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

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

Dec 29

Daily Brief Financials: KFin Technologies, London Stock Exchange and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

KFin Technologies IPO Trading – Previous Deals with Lackluster Demand Had Mixed Debuts
London Stock Exchange Group: Record Holdings

KFin Technologies IPO Trading – Previous Deals with Lackluster Demand Had Mixed Debuts

By Clarence Chu

KFin Technologies (1804170D IN) raised around US$180m in its India IPO. The IPO had been a 100% OFS.
KFin Technology (KFin) is a technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem.
We have looked at various aspects of the deal in our previous note, in this note, we talk about the demand and trading dynamics.

London Stock Exchange Group: Record Holdings

By Steven Holden

Percentage of UK funds invested in the LSE Group has risen from under 10% in 2012 to a record 41.8% today
Rise in ownership has been driven by high growth investors, with both Aggressive Growth and Growth strategies at their highest levels of ownership on record
The LSE Group has risen to the 22nd most widely held stock in the UK and the 12th largest on an average weight basis.

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

Dec 29

Daily Brief Industrials: Adi Sarana Armada, Danaher Corp, Illinois Tool Works and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Adi Sarana Armada (ASSA IJ) – Harnessing Logistics and Autos
Danaher Corporation: Initiation of Coverage – Business Strategy & Key Drivers
Illinois Tool Works Inc.: Initiation of Coverage – Diversified Business Lines & Other Drivers
Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts

Adi Sarana Armada (ASSA IJ) – Harnessing Logistics and Autos

By Angus Mackintosh

Adi Sarana Armada (ASSA IJ) continues to represent a unique proxy to play both transport and logistics in Indonesia through its auto business plus logistics including last-mile player Anteraja.
ASSA Rent is the largest car leasing leader in Indonesia, with Autopedia leading auto auctions and a leader in used car sales through Caroline, which is expanding its presence fast.
Anteraja has seen rapid growth and may see some slowdown from e-commerce but continues to gain share and ASSA logistics continue to diversify. Valuations are attractive on 10x FY2023E PER.

Danaher Corporation: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on Danaher Corporation, a well-known manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company had a strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
It delivered market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.

Illinois Tool Works Inc.: Initiation of Coverage – Diversified Business Lines & Other Drivers

This is our first report on industrials giant, Illinois Tool Works.
The company achieved a 13% revenue increase on the top line, with 16% organic growth from its core businesses which is a good sign.
While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

Danaher Corporation is a renowned manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company has had a decent financial performance off-late and has been consistently delivering market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.
Its acquisition-led growth strategy implies that it will be in regular need for debt in order to fund acquisitions.

Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts

Illinois Tool Works is an industrials major catering to a wide variety of end markets ranging from automotive to welding and construction projects.
The company’s financial performance has been decent despite the fact that the operating climate is still quite dynamic and challenging.
While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

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

Dec 29

Daily Brief Consumer: Shandong Fengxiang, Go Fashion India, Consumer Staples Select Sector SPDR Fund, E Mart Inc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
India Channel Insight #47 | Go Fashion, Lux Industries
Upgrading Staples and Health Care to Overweight; Stay Defensive, Expecting Test of YTD Lows on SPX
An Update to Our Pair Trade Between Emart & Coupang

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market

The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
Shareholders who tender will be paid within 7 business days.
An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.

India Channel Insight #47 | Go Fashion, Lux Industries

By Pranav Bhavsar

Our flash checks for Go Fashion India (GOCOLORS IN) and LUX Industries Ltd (LUX IN) suggest weak consumer sentiment continues to prevail.
Competitive intensity is an area of concern for category creator and leader Go Fashion India (GOCOLORS IN)
Rupa & Company (RUPA IN) is giving a tough fight to LUX Industries Ltd (LUX IN) in the rural markets.

Upgrading Staples and Health Care to Overweight; Stay Defensive, Expecting Test of YTD Lows on SPX

By Joe Jasper

Since late November we have been discussing our expectations for a pullback, while recommending shifting exposure to defensives (Staples, Utilities, Health Care) and/or taking profits.
The pullback is finally happening following breaks below 3910 support on the S&P 500, $177.50 support on the Russell 2000 (IWM), and $279 support on the Nasdaq 100 (QQQ).
These levels are now resistance, while major resistance remains at 200-dayMAs/YTD downtrends. Stick with defensives/cash as we believe a test of the YTD lows on the aforementioned indexes is likely.

An Update to Our Pair Trade Between Emart & Coupang

By Douglas Kim

In this insight, we discuss an update of pair trade between Emart (long) and Coupang (short).
Back on 1 August 2022, we recommended a pair trade between E Mart Inc (139480 KS) (long) and Coupang (CPNG US) (short).
This pair trade has worked well in the past five months and we continue to like this pair trade (long Emart and short Coupang).

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

Dec 29

Most Read: DMCI Holdings, Skyworth Group Limited, Delta Electronics Thai, Shandong Fengxiang, Kingsoft Cloud, Pan Pacific International Holdings, Meituan and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
Another Skyworth (751 HK) Partial Buyback
Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
Our Three Best Calls in 2022: Review and Outlook for 2023
Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
Kingsoft Cloud HK Listing: Significant Upside in the Medium Term
More Profit for Donki as It Expands Private Label, Even Freezers
China Consumer Discretionary: Reducing The Underweight
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes

From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
There are a few other potential changes to the index and the passive flow on the stocks will be material.

SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out

Central Plaza Hotel, Com7 PCL, Delta Electronics Thai and Ratch Group will replace Bangkok Life Assurance, IRPC PCL, KCE Electronics PCL and Srisawad Power in the SET 50 Index.
Passive trackers will need to buy between 2-4 days of ADV on the adds while selling between 0.6-3 days of ADV on the deletes.
The adds have significantly outperformed the deletes over the last few months. We’d use any big moves over the next couple of days to trim positions.

Another Skyworth (751 HK) Partial Buyback

Skyworth Group Limited (751 HK) has announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.
On 17 June 2020, Skyworth announced a partial buyback – 12.83% of shares out or 392.8mn shares, at HK$2.80/share, a 32.1% premium to last close.
Upon successfully completing this partial offer, Stephen Wong & concert parties would hold >50%, prior to the excise of any outstanding options.

Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI

The announcement of the changes to the Stock Exchange of Thailand SET 50 Index was made on 20 December and will be implemented at the close on 30 December.
There are a lot of review cutoffs for different indices in the coming week with announcements in January and February.
There were big inflows to Vanguard FTSE Emerging Markets ETF (VWO US) and big outflows from IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.

Our Three Best Calls in 2022: Review and Outlook for 2023

By Osbert Tang, CFA

Our positive calls on Fu Shou Yuan (1448 HK) and Air China Ltd (753 HK) and negative call on Conch Environment (587 HK) have generated the best wins in 2022.
These calls achieved returns of 56.8%, 34.2% and 43.5%, respectively, which we think are remarkable given the losses of 16.3% for HSI and 19.3% for HSCEI YTD.
In 2023, we expect Fu Shou Yuan continue to do well and Conch Environment to remain under pressure. It may be prudent to take some profit on Air China.

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market

By Shifara Samsudeen, ACMA, CGMA

The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
Shareholders who tender will be paid within 7 business days.
An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.

Kingsoft Cloud HK Listing: Significant Upside in the Medium Term

Kingsoft Cloud (KC US) shares will begin trading on the Main Board of the HKEx on Friday, 30th December by way of an introduction.
The company’s competitive pricing strategy to onboard customers has impacted its profitability, however, KC has begun to shift focus on profitability by raising prices in the medium term.
Raising prices in the medium term will likely support KC’s profitability and we have valued the company using potential price hikes to non-key customers.

More Profit for Donki as It Expands Private Label, Even Freezers

By Michael Causton

Pan Pacific International Holdings (7532 JP)’ Don Quijote stores rebounded strongly from Covid, despite the lack of inbound tourists, reflecting the hard work done to update stores and merchandise.
This innovation continues and Don Quijote stores recently even began offering several new private brand cosmetics ranges and new electronics, including a new small footprint freezer.
The company expects 15% of domestic sales from private brands alone but rising to 25% in the near term, with significant upside for operating profits.

China Consumer Discretionary: Reducing The Underweight

By Steven Holden

Active China funds are rotating back in to the Consumer Discretionary sector. Holding weights bottomed out in early 2022, with an increasing number of managers re-positioning themselves as overweight
Large increases in ownership across key stocks underpin the sector rotation. Pinduoduo saw an +8.4% increase in the percentage of funds invested, Trip.com Group +6.7% and NIO Inc +5.88%
If the rhetoric is that China is oversold here, then Consumer Discretionary stocks appears well placed to benefit from further inflows.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

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

Dec 29

Daily Brief Industrials: Adi Sarana Armada, Danaher Corp, Illinois Tool Works and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Adi Sarana Armada (ASSA IJ) – Harnessing Logistics and Autos
Danaher Corporation: Initiation of Coverage – Business Strategy & Key Drivers
Illinois Tool Works Inc.: Initiation of Coverage – Diversified Business Lines & Other Drivers
Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts

Adi Sarana Armada (ASSA IJ) – Harnessing Logistics and Autos

By Angus Mackintosh

Adi Sarana Armada (ASSA IJ) continues to represent a unique proxy to play both transport and logistics in Indonesia through its auto business plus logistics including last-mile player Anteraja.
ASSA Rent is the largest car leasing leader in Indonesia, with Autopedia leading auto auctions and a leader in used car sales through Caroline, which is expanding its presence fast.
Anteraja has seen rapid growth and may see some slowdown from e-commerce but continues to gain share and ASSA logistics continue to diversify. Valuations are attractive on 10x FY2023E PER.

Danaher Corporation: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on Danaher Corporation, a well-known manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company had a strong quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
It delivered market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.

Illinois Tool Works Inc.: Initiation of Coverage – Diversified Business Lines & Other Drivers

This is our first report on industrials giant, Illinois Tool Works.
The company achieved a 13% revenue increase on the top line, with 16% organic growth from its core businesses which is a good sign.
While the recent results were good, Illinois Tool Works is far from being immune to the potential macro problems and uncertainties ahead.

Danaher Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

Danaher Corporation is a renowned manufacturer and provider of instruments and various other offerings to the medical, diagnostics, and environmental sectors.
The company has had a decent financial performance off-late and has been consistently delivering market share gains and strong price execution amid strong foreign exchange headwinds and an inflationary environment.
Its acquisition-led growth strategy implies that it will be in regular need for debt in order to fund acquisitions.

Illinois Tool Works Inc.: Initiation of Coverage – Financial Forecasts