Smartkarma Daily Briefs

After the large tender offer in late 2021, SBI was always going to try to take Shinsei Bank private. Now they have launched their deal at ¥2,800/share.
That is below fair according to the Board, Special Committee, and implicitly to SBI. But the Shinsei Board has recommended shareholders tender so The Government will vote to squeeze out.
I expect some upset, the possibility of some activism, but it all plays out in the back end in my opinion. Not the front end.

HSI Index Rebalance: Yippee! Finally at 80!

By Brian Freitas

The Hang Seng index committee has added four stocks to take the number of Hong Kong Hang Seng Index (HSI INDEX) constituents to 80. A year late, but we’re there!
The next leg of the increase in the number of index constituents will take us up to 100. There is no timeline, so this should take a couple of years.
Estimated one-way turnover is 2.93% leading to a one-way trade of HK$5.7bn (US$730m). All adds will have over 2x ADV to buy from passive trackers.

JAPAN BUYBACKS: A Very Big Week

This past week, nearly 150 companies in Japan announced buyback programmes totalling ¥2.1trln. 3 Tenders, 26 ToSTNeT-3 buybacks (including at least 5 delayed starts).
The median on-market buyback was 2.40% of shares, the average 2.9% (both measured as practical maxima at announcement. Median/Average % of ADV was 7.6/9.2%.
My prediction that this will be a record year for stock buybacks still stands.

HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade

By Brian Freitas

There are no constituent changes for the Hang Seng Tech Index (HSTECH INDEX) in June but there are some free float changes and a bunch of capping changes.
Estimated one-way turnover is 3.2% leading to a one-way trade of HK$3bn (US$384m). There are 3 stocks with over 1 day of ADV to trade.
Trip.com (9961 HK) has over 1x ADV to buy from Hang Seng Tech Index (HSTECH) trackers. The stock is also an add to the Hong Kong Hang Seng Index (HSI).

SBI Shinsei Bank (8303 JP): SBI’s Contentious JPY2,800 Tender Offer

SBI Shinsei Bank (8303 JP) has recommended SBI Holdings (8473 JP)’s tender offer of JPY2,800 per share, a 12.6% premium to the undisturbed price (11 May).
There is no minimum acceptance condition. SBI and irrevocables from government entities represent 73.02% of voting rights, ensuring the implementation of tender squeeze-out procedures.
The special committee failed to unanimously recommend the offer. Minorities will feel short-changed as the outcome is predetermined and the offer tends to favour the government shareholders.

Yuexiu Property (123 HK): Rights Trade Playbook

On 20 April, Yuexiu Property (123 HK) announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.
Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.
The shares went ex-rights on 2 May and the rights start trading on 15 May. Link REIT (823 HK)’s trading over its rights period provides the playbook for Yuexiu’s trading.

HSCEI Index Rebalance: China Shenhua (1088 HK) Replaces Country Garden (2007 HK); Div Impact

By Brian Freitas

As expected, China Shenhua Energy Co H (1088 HK) replaces Country Garden Holdings Co (2007 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close 2 June.
Using prices from the close on 12 May, estimated one-way turnover is 2.1% leading to a one-way trade of HK$1.3bn (US$170m).
The change will lead to an increase in the fair value of the HSCEI 2023 Dividend Futures. We’d be sellers on a move higher towards 240 DIPS.

Nikkei 225 Index Consultation Makes Things Weirder, but Still a 0️⃣🍔

The Nikkei Index team has been quite conscious of market impact since the April 2000 debacle. For a few years after, things were quieter. In 2005, Fast Retailing spurred introspection.
Float was low and became lower. Selection behaviour changed. Now there is a new consultation where “technical listings” would stay in, and phased “stepwise” inclusion would reduce inclusion impact.
The proposal increases subjectivity, reduces the attractiveness of bets, but otherwise increases the likelihood they will follow the other selection rules. It STILL does not solve the high weight problem.

The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names

By Sanghyun Park

The possibility of experiencing a CFD margin call is a genuine and persistent concern. Even a small trigger causes selling pressure to intensify and results in a rapid downward trend.
The counter that the local market is closely monitoring is JPM. The selling pressure from the JPM counter since May 8th has exhibited an abnormal pattern.
Eight names are screened. They are KOSPI 200/KOSDAQ 150 constituents with JPM’s net selling volume to SO being 0.2% or higher, and a margin-equity ratio of 3% or higher.

Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 111 Inc (YI US), ARTERIA Networks Corp (4423 JP), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Hailan Holdings (2278 HK).
Lowest spreads – Healius (HLS AU),Liontown Resources (LTR AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service.

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May 15

Daily Brief Technical Analysis: TLT Triangle Power Move Brewing and more

By Smartkarma Daily Briefs | Daily Briefs, Technical Analysis

In today’s briefing:

TLT Triangle Power Move Brewing

TLT Triangle Power Move Brewing

By Thomas Schroeder

Triangle breakouts are considered one of the more powerful patterns with a higher reliability and followed by high momentum moves. TLT 102 and 109 breakout pivots.
Slowing growth and falling inflation set a bullish backdrop for bonds and lower yields. US 1 year yield exhibits a compelling bearish flat range.
KRE bear break represents the biggest threat to the SPX in May/June. We are maintaining our sell from SPX 4,200 for mid-June cycle low.

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May 15

Daily Brief Thematic (Sector/Industry): Ohayo Japan |US Stocks Tread Water Amid Debt Limit Talks; NUGGET:Bullish BEV Outlook-JP OEM’s Absent and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan |US Stocks Tread Water Amid Debt Limit Talks; NUGGET:Bullish BEV Outlook-JP OEM’s Absent
Weekly Stock Bullfinder – Week of 5/15

Ohayo Japan |US Stocks Tread Water Amid Debt Limit Talks; NUGGET:Bullish BEV Outlook-JP OEM’s Absent

By Mark Chadwick

OVERSEAS. SPX declined by 0.2% on Friday and 0.3% for the week. VIX trading at 17%, near its one-year lows, despite the possibility of a US default. We are wary..
JAPAN. NKY futures are trading at a 0.6% premium vs Cash; Foreign investors continue to buy; Earnings season continues to see strong improvements to shareholder returns; Remain bullish JAPAN.
NUGGET. Comprehrensive IEA report EV Outlook 2023. EV Sales to reach 14 million,+35%YoY in 2023 – Japanese OEMs continue to lag

Weekly Stock Bullfinder – Week of 5/15

By Weekly Stock Bull Finder

One of the lasting legacies of the COVID-19 pandemic was the acceleration of secular trends which were already in place prior to the start pandemic such as e-commerce, flexible working arrangements, streaming/entertainment at home, digital transformation, MRNA biotechnology, among others.
Many of these trends in place prior to the pandemic were turbocharged by a quick pivot and responses to adjust to the “new normal” disruption of the dealing with COVID-19 waves, lockdowns, and companies muddling through how to adapt their business model.
The aftermath of the combination of a bazooka fiscal and monetary stimulus has resulted in the Federal Reserve embarking on the most aggressive interest rate hiking campaign in decades in attempts to arrest and reverse inflation.

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May 15

Daily Brief Macro: A Pause ≠ A Pivot and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

A Pause ≠ A Pivot
How the Market Could Break Up to a Blow-Off Top
Positioning Watch: FX Market Positioning Is Completely Out of Sync with the Rest..
Rotation from Interest Rate to Credit Risk Looms as Bank Lending Standards Set to Tighten Further
The Real Deal

A Pause ≠ A Pivot

By Cam Hui

Is it time for the Fed to pause? Under what conditions would the Fed pivot to cutting rates?
We believe the Fed may pause rate hikes, but it’s unlikely to ease until it’s too late and a crisis erupts.
Expect a recession in H2 2023. Such an environment should be supportive of Treasury prices, but create headwinds for stock and commodity prices.

How the Market Could Break Up to a Blow-Off Top

By Cam Hui

We continue to believe the path of least resistance for stock prices in the intermediate term is down.
However, the odds of an upside breakout and a blow-off top are rising, followed by a collapse in the stock market.
We would estimate the chances of the breakout and melt-up scenario at about one in three.

Positioning Watch: FX Market Positioning Is Completely Out of Sync with the Rest..

By Andreas Steno

Fixed Income and parts of equity space have already prepared for the recession
Commodity positioning is slowly but surely adjusting to a cyclical downturn as well
FX positioning remains in la-la-land with heavy longs in carry currencies

Rotation from Interest Rate to Credit Risk Looms as Bank Lending Standards Set to Tighten Further

By Said Desaque

The Fed’s latest quarterly survey of Senior Loan Officers conveyed that banks continued to tighten lending standards in Q1. Notably, all forms of commercial real estate (CRE) lending were tightened.
Banks expect lending standards to tighten further in 2023 H2 for commercial & industrial and CRE loans, but residential mortgages will be more selectively targeted.
Investors have hitherto focussed on interest rate risks at banks, but deteriorating credit quality should become an issue as lending standards tighten further.

The Real Deal

By Alfonso Peccatiello (Alf)

Our economic system is ultra-financialized and dependent on leverage.
That’s why understanding the incentive scheme for both investors and borrowers is an important step to piece the global macro puzzle together.
Real yields play a crucial role in that puzzle.

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May 15

Daily Brief Event-Driven: SBI Launches Opportunistic and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball
Yuexiu Property (123 HK): Rights Trade Playbook
The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names
Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng
Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction
Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair
InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer

SBI Launches Opportunistic, Unfair Offer for Shinsei (8303) And Shinsei Board Drops the Ball

After the large tender offer in late 2021, SBI was always going to try to take Shinsei Bank private. Now they have launched their deal at ¥2,800/share.
That is below fair according to the Board, Special Committee, and implicitly to SBI. But the Shinsei Board has recommended shareholders tender so The Government will vote to squeeze out.
I expect some upset, the possibility of some activism, but it all plays out in the back end in my opinion. Not the front end.

Yuexiu Property (123 HK): Rights Trade Playbook

On 20 April, Yuexiu Property (123 HK) announced plans to raise US$1.1 billion through 30 rights shares for every 100 existing shares rights offering, with a rights price of HK$9.00.
Since the announcement of the rights issue, Yuexiu shares have declined by -23.6% to the undisturbed price and by -18.2% compared to the TERP of HK$11.74 per share.
The shares went ex-rights on 2 May and the rights start trading on 15 May. Link REIT (823 HK)’s trading over its rights period provides the playbook for Yuexiu’s trading.

The Core of CFD Margin Call Risk May Lie in the JPM Counter, Not SG: Potentially Infected Names

By Sanghyun Park

The possibility of experiencing a CFD margin call is a genuine and persistent concern. Even a small trigger causes selling pressure to intensify and results in a rapid downward trend.
The counter that the local market is closely monitoring is JPM. The selling pressure from the JPM counter since May 8th has exhibited an abnormal pattern.
Eight names are screened. They are KOSPI 200/KOSDAQ 150 constituents with JPM’s net selling volume to SO being 0.2% or higher, and a margin-equity ratio of 3% or higher.

Merger Arb Mondays (15 May) – SBI Shinsei, Arteria, Toshiba, Yitai, Hailan, Allkem, Lian Beng

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 111 Inc (YI US), ARTERIA Networks Corp (4423 JP), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Hailan Holdings (2278 HK).
Lowest spreads – Healius (HLS AU),Liontown Resources (LTR AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service.

Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Nexus Select Trust (NST IN), Tata Technologies (TATATECH IN), ADICON Holdings Limited (ADI HK), Horizon Construction Development (1887128D HK) IPOs.
Event-Driven developments – ARTERIA Networks Corp (4423 JP), SBI Shinsei Bank (8303 JP), Toshiba Corp (6502 JP), Hailan Holdings (2278 HK), Inner Mongolia Yitai Coal Company Ltd (3948 HK), Allkem.

Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair

In response to media feedback calling out the low-balled Offer, the Ong family bumped the Offer Price for Lian Beng (LBG SP) by 9.7% to S$0.68/share and declared terms final.
At 0.43x P/RNAV, and with the bulk of the assets related to investment/development property, the price was still wrong,
The Circular is now out. The IFA considered terms to be not fair and not reasonable. The same opinion as in the 2021 Offer.

InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer

On the 7 March, PE outfit TPG took a 17.8% stake in InvoCare (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding Offer via a Scheme.
The Indicative proposal was subject to the completion of due diligence. InvoCare rejected the proposal on the 27 March. On the 24 April, TPG withdrew its NBIO.
TPG has returned with a revised A$13/share, inclusive of a A$0.60/share fully franked dividend. If the proposal becomes a binding transaction, InvoCare’s Board intends to unanimously recommend it.

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May 15

Daily Brief Equity Bottom-Up: Travelsky (696): The Ignored Travel Stock of China and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Travelsky (696): The Ignored Travel Stock of China
Melco Resorts: Stock at a Buy Point Here with Forward Prospects in Macau, Manila and Soon Cyprus
Long Acer Vs. Short Asustek: 6.9% Performance in One Week, Can REVERSE the Trade Again
Acotec Scientific (6669.HK) – What Value Boston Scientific Will Bring Is Crucial to Future Valuation
Jiangsu Expressway (177 HK): A Decent Play Even After Rally
Taiwan Tech Weekly: PC Market Bottoming, AMAT, Quanta Outperforms Peers, Samsung Tesla Meeting
Cisarua Mountain Dairy (CMRY IJ) – General Trade to Drive 2023 Growth
Zai Lab (9688.HK/ZLAB.US) 2022/2023Q1 – The True Colors and the Risks Behind
ASUS Q1’23 Revenues NT$ 102,376 Million,- 13% QoQ & -20% YoY. PC Segment to Grow ~20% in Q2’23
Hon Hai Sees Computing Products Rebound, PC Market Bottomed; EV Expanding

Travelsky (696): The Ignored Travel Stock of China

By Henry Soediarko

Travelsky Technology Ltd H (696 HK) is the IT provider for airports in China thus it should be one of the stocks to benefit from China’s reopening.
Despite already operating at a profit, the share price is still lagging behind the other travel-related names that are still loss-making.
Its operating numbers have already reached the 2019 level, a pre-COVID era, thus the opportunity to rebound is abundant.

Melco Resorts: Stock at a Buy Point Here with Forward Prospects in Macau, Manila and Soon Cyprus

By Howard J Klein

Melco shares have been hammered worse than peers during covid having fallen as low as a range ~US$4. Other factors contributed to downside, since eliminated.
1Q23 earnings release shows strong recovery arc in progress both in Macau and Manila.
With two markets firing and a third ready to open we see an attractive entry point here.

Long Acer Vs. Short Asustek: 6.9% Performance in One Week, Can REVERSE the Trade Again

By Vincent Fernando, CFA

Since we released our piece suggesting closing our original Long Asustek vs. Short Acer, and reversing to Long ACER vs. Short Asustek, this new trade has earned a 6.9% spread.
Given the latest performance between the two shares and the latest results from Asustek, we believe one can now close out Long Acer/Short Asustek… and reverse the trade again.
Hence we now like Long Asustek vs. Short Acer based on relative share performance and latest guidance from Asustek.

Acotec Scientific (6669.HK) – What Value Boston Scientific Will Bring Is Crucial to Future Valuation

By Xinyao (Criss) Wang

With the launch of new products and their accelerated admission to hospitals, Acotec’s revenue streams become more diversified, which would enhance its own risk resistance ability and core competitiveness.
Considering market size/increasing competition, Acotec’s growth ceiling is obvious if relies solely on domestic market. It becomes crucial whether Boston Scientific’s acquisition would bring expected value or have other intentions.
How much room for improvement in future valuation depends on Acotec’s performance in overseas markets. After all, if there is no internationalization breakthrough, Acotec’s valuation logic would not be reshaped.

Jiangsu Expressway (177 HK): A Decent Play Even After Rally

By Osbert Tang, CFA

We find good value in Jiangsu Expressway (H) (177 HK) – its 8.3x PER is cheap relative to 10.4% EPS CAGR and P/B multiple of 1.06x is below historical average.
It has an extremely secured dividend stream for the next two years, yielding at least 6.3%. 1Q23 result showed a solid recovery, and potentially adding upside to earnings outlook.
Key drivers are stronger traffic recovery, rise in contribution from clean energy, margin expansion through cost control and completion of new projects in the next two years.

Taiwan Tech Weekly: PC Market Bottoming, AMAT, Quanta Outperforms Peers, Samsung Tesla Meeting

By Vincent Fernando, CFA

This week is relatively in terms of earnings. Applied Materials (AMAT US) will however be reporting on the 18th U.S. time.
Hon Hai sees the PC market bottoming; Separately, we’ve closed our Long Acer vs. Short Asus and reversed it to Long Asus vs. Short Acer again.
Quant shares have surged post results, dramatically outperforming Apple and other key Apple suppliers.

Cisarua Mountain Dairy (CMRY IJ) – General Trade to Drive 2023 Growth

By Angus Mackintosh

Cisarua Mountain Dairy booked a solid +25% YoY growth in sales in 1Q2023, with a flat performance from dairy from a high base but very strong consumer foods growth.
Powdered milk prices and packaging costs have started to decline which will help to boost margins as the year progresses since Cisarua Mountain Dairy bought forward last year.
Cisarua Mountain Dairy is an increasingly interesting consumer proxy catering to Indonesia’s middle classes but increasingly focusing on the less affluent mass market as it grows distribution in general trade.

Zai Lab (9688.HK/ZLAB.US) 2022/2023Q1 – The True Colors and the Risks Behind

By Xinyao (Criss) Wang

2023 is a crucial year for Zai Lab.It’s the first time for Zai Lab to demonstrate the profitability of license-in model.If it fails, investors would lose confidence in the company.
There is little correlation between the four commercialized products, which makes commercialization difficult and leads to low efficiency/high costs for sales team. So, breakeven could be more distant than expected.
Zai Lab’s current pipelines are hard to make money. There are concerns whether its business model is sustainable in the long term. As its valuation lacks an “anchor”, risk is high.

ASUS Q1’23 Revenues NT$ 102,376 Million,- 13% QoQ & -20% YoY. PC Segment to Grow ~20% in Q2’23

By William Keating

Q1’23 revenues of NT$ 102,376 million, down 13% QoQ and down 20% YoY
Forecasting PC segment +20% but Components segment -5% QoQ in Q2’23
Outperforming both peers & the market with >50% revenues now coming from gaming…

Hon Hai Sees Computing Products Rebound, PC Market Bottomed; EV Expanding

By Vincent Fernando, CFA

In our view, Hon Hai 3Q23 results showcased stability for 2023E ahead of expected growth in 2024E-2025E.
The company has maintained its 2025E 10% gross margin target and highlighted how its EV business expansion is continuing.
While Consumer Electronics revenue is expected to fall this year, PC Products is expected to grow given the company believes the PC market has bottomed. Stay Long Hon Hai.

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May 15

Daily Brief Consumer: Melco Resorts & Entertainment, Cisarua Mountain Dairy, Invocare Ltd, Seria Co Ltd and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Melco Resorts: Stock at a Buy Point Here with Forward Prospects in Macau, Manila and Soon Cyprus
Cisarua Mountain Dairy (CMRY IJ) – General Trade to Drive 2023 Growth
InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer
Morning Views Asia: Melco Resorts & Entertainment, Sands China
100 Yen Shops to Hit ¥1 Trillion This Year but Seria’s Model Squeezing Profits

Melco Resorts: Stock at a Buy Point Here with Forward Prospects in Macau, Manila and Soon Cyprus

By Howard J Klein

Melco shares have been hammered worse than peers during covid having fallen as low as a range ~US$4. Other factors contributed to downside, since eliminated.
1Q23 earnings release shows strong recovery arc in progress both in Macau and Manila.
With two markets firing and a third ready to open we see an attractive entry point here.

Cisarua Mountain Dairy (CMRY IJ) – General Trade to Drive 2023 Growth

By Angus Mackintosh

Cisarua Mountain Dairy booked a solid +25% YoY growth in sales in 1Q2023, with a flat performance from dairy from a high base but very strong consumer foods growth.
Powdered milk prices and packaging costs have started to decline which will help to boost margins as the year progresses since Cisarua Mountain Dairy bought forward last year.
Cisarua Mountain Dairy is an increasingly interesting consumer proxy catering to Indonesia’s middle classes but increasingly focusing on the less affluent mass market as it grows distribution in general trade.

InvoCare (IVC AU): TPG’s Revised $13/Share Non-Binding Offer

On the 7 March, PE outfit TPG took a 17.8% stake in InvoCare (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding Offer via a Scheme.
The Indicative proposal was subject to the completion of due diligence. InvoCare rejected the proposal on the 27 March. On the 24 April, TPG withdrew its NBIO.
TPG has returned with a revised A$13/share, inclusive of a A$0.60/share fully franked dividend. If the proposal becomes a binding transaction, InvoCare’s Board intends to unanimously recommend it.

Morning Views Asia: Melco Resorts & Entertainment, Sands China

By Charles Macgregor

Melco Resorts & Entertainment
Sands China

100 Yen Shops to Hit ¥1 Trillion This Year but Seria’s Model Squeezing Profits

By Michael Causton

The 100 Yen shop model looked in danger when inflation began to bite and labour costs surged but the sector continues to expand
Their fixed price model meant there was little leeway to offset higher costs through higher prices but a survey shows 90% of respondents visited a Daiso store recently.
While Daiso has adapted quickly and looks to have a bright future, Seria Co Ltd (2782 JP) refuses to adapt and has seen profits plummet.

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May 15

Daily Brief Industrials: Toshiba Corp, Horizon Construction Development, Jiangsu Expressway (H), Lian Beng and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction
Horizon Construction Development IPO – Peer Comparison & Thoughts on Valuation
Jiangsu Expressway (177 HK): A Decent Play Even After Rally
Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair

Weekly Deals Digest (14 May) – Toshiba, Arteria, Shinsei, Yitai Coal, Allkem, Horizon Construction

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Nexus Select Trust (NST IN), Tata Technologies (TATATECH IN), ADICON Holdings Limited (ADI HK), Horizon Construction Development (1887128D HK) IPOs.
Event-Driven developments – ARTERIA Networks Corp (4423 JP), SBI Shinsei Bank (8303 JP), Toshiba Corp (6502 JP), Hailan Holdings (2278 HK), Inner Mongolia Yitai Coal Company Ltd (3948 HK), Allkem.

Horizon Construction Development IPO – Peer Comparison & Thoughts on Valuation

By Ethan Aw

Horizon Construction Development (1887128D HK) is looking to raise US$223m in its upcoming Hong Kong IPO.
HCD is an equipment operation service provider in China. It provides services covering the full cycle of projects.
In our previous notes, we looked at the company’s past performance and refiled PHIP updates. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

Jiangsu Expressway (177 HK): A Decent Play Even After Rally

By Osbert Tang, CFA

We find good value in Jiangsu Expressway (H) (177 HK) – its 8.3x PER is cheap relative to 10.4% EPS CAGR and P/B multiple of 1.06x is below historical average.
It has an extremely secured dividend stream for the next two years, yielding at least 6.3%. 1Q23 result showed a solid recovery, and potentially adding upside to earnings outlook.
Key drivers are stronger traffic recovery, rise in contribution from clean energy, margin expansion through cost control and completion of new projects in the next two years.

Lian Beng: Circ Out. IFA (Rightfully) Says Not Fair