Smartkarma Daily Briefs

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 – Mankind Pharma (6596876Z IN), Nexus Select Trust (NST IN), Tata Technologies (TATATECH IN), ADICON Holdings Limited (ADI HK), Horizon Construction Development (1887128D HK) IPOs.
Event-Driven developments – Aag Energy Holdings (2686 HK), Golden Energy & Resources (GER SP), Lian Beng (LBG SP), Penguin International (PBS SP), Estia Health (EHE AU), Liontown Resources (LTR AU).

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May 08

Daily Brief Technical Analysis: Agricultural Bank of China Ltd (1288 HK) – Target 13%-24% Uptrend in 2-3 Quarters. and more

By Smartkarma Daily Briefs | Daily Briefs, Technical Analysis

In today’s briefing:

Agricultural Bank of China Ltd (1288 HK) – Target 13%-24% Uptrend in 2-3 Quarters.
AAG Energy (2686) Favors Buying Weakness

Agricultural Bank of China Ltd (1288 HK) – Target 13%-24% Uptrend in 2-3 Quarters.

By David Coloretti, CMT

At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
The LT downtrend structure in 1288 HK was simply defined by its 2018/2022 sequence of lower highs and lower lows. This structure was broken last week.
LT momentum indicators (monthly RSI / MACD) have recently confirmed this bullish LT trend change. The current uptrend appears set to extend towards 3.60/3.90 (+13%-24%) in the coming 2-3 quarters.

AAG Energy (2686) Favors Buying Weakness

By Thomas Schroeder

AAG Energy (2686) exhibits a clear wedge range to trade with an intermediate positive outcome as long as lower wedge support stands up near outlined 1.50 support.
The intermediate cycle favors a bullish outcome as long as lower pattern support holds true. Wedge still needs time to mature.
1.70 is the level to clear for bull traction. Risk to 1.40 region if we fail to hold lower wedge support at 1.48.

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May 08

Daily Brief Event-Driven: JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in June & September
Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff
AAG Energy (2686 HK): New Scheme Vote Date, Different Result?
Kum Yang: Shorting Entry Timing on the Inevitable Block Deals
Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia
Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update
JAPAN FLOW: Foreign Investor Inflows May Increase
Skyworth (751 HK): Thoughts On Proration
Liontrust/GAM: Rescue All-Share Agreed Offer

JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings

Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
In this insight I look at several possible rankings for potential large buyback targets.

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in June & September

There is only one new listing as a potential inclusion to the HSCI in June. If added to the HSCI, it will also be added to Southbound Stock Connect.
There are 18 potential inclusions and 19 potential deletions for the HSCI in September. There are a few close adds and there could be another 5 deletions on Prolonged Suspension.
A lot of the potential deletions have large Southbound holdings. With all the stocks becoming sell-only, there could be unwinding of some positions over the next couple of months.

Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff

With two weeks left to the cutoff, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.
There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.

AAG Energy (2686 HK): New Scheme Vote Date, Different Result?

Aag Energy Holdings (2686 HK)’s disclosed a revised timetable to vote on Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer. The new scheme meeting is set for 2 June.
Our analysis suggests that in the best case, Xinjiang Xintai would need to further swing NO votes representing 6.52%-8.34% of outstanding shares to YES to get the scheme approved.
AAG’s case is unprecedented. The risk-reward remains unattractive as the upside to a scheme pass (13.5% upside) is equal to the downside to a scheme fail (average 13.5% downside).

Kum Yang: Shorting Entry Timing on the Inevitable Block Deals

By Sanghyun Park

Kum Yang IR director Park once mentioned that the block deals to sell the 2M treasury shares would likely occur in late May or early June.
There has been speculation in the market that the timing of the block deal may be postponed until after its inclusion in the KOSPI 200, allowing for short selling.
Considering the immediate funding needs faced by the company, setting an aggressive approach to shorting from shortly after its inclusion in the KOSPI 200 would be reasonable regarding entry timing.

Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia

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), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK),Origin Energy (ORG AU), Metro Pacific Investments Co (MPI PM).
Lowest spreads Liontown Resources (LTR AU), Healius (HLS AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service (3085 JP).

Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update

By Janaghan Jeyakumar, CFA

There have been some changes to my expectations for the TWSE Div+ index June 2023 index changes and capping flows.
I currently see 5 ADDs/DELs. Some of these names are different from the ones I specified in my previous insight.
In this insight, we take a look at my latest flow expectations.

JAPAN FLOW: Foreign Investor Inflows May Increase

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to one relatively simple indicator.
The policy backdrop points to greater corporate buying, greater foreign flow, greater selling by individuals and trust banks. The current timing probably matches.

Skyworth (751 HK): Thoughts On Proration

By David Blennerhassett

Back on the 23 December, Skyworth Group (751 HK) 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 the 28 March, terms were bumped to $5.00/share. Independent shareholders approved the whitewash waiver on the 5 May.
The Offer closes on the 18 May. The minimum proration is 7.8%. Expect the final proration to be higher.

Liontrust/GAM: Rescue All-Share Agreed Offer

By Jesus Rodriguez Aguilar

Liontrust is offering 0.0589 of its own shares per share of fallen angel GAM (which had CHF132 billion AuM by end 2020 vs CHF 23.3 billion now).
Although the GAM brand arguably retains some value, Liontrust is being somehow genereous, in my view. My fair value estimate (multiples based) is CHF 0.58/share.
Gross spread is +16.4%. I wouldn’t get involved right now, because spread is positive, there is risk of a legal challenge and next results are likely to be ugly.

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May 08

Daily Brief Equity Bottom-Up: Ihi (7013) | Multiple Engines for Growth and more

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

In today’s briefing:

Ihi (7013) | Multiple Engines for Growth
Alibaba (9988 HK): Chinese Authorities Turning Opposite to Encourage Non-State-Owned Companies
HK RE: Retail to Benefit from Tourism Recovery. Buy HLP 101 HK & NWD 17 HK on Attractive Valuation
US Banks – Is System Deposit Flight Being Contained?
Energy China (3996 HK): Tempting Risk-Return Payoff
BeiGene (6160.HK/BGNE.US) 23Q1 – Qualitative Changes Are Taking Place
PC Industry Monitor: Close Long Asus, Short Acer; Now Reverse the Trade and Long ACER Vs. Short Asus
Taiwan Tech Weekly: Hon Hai Earnings; Long/Short Into Asustek Results; Quanta Tracking Apple Shares
Amaero International Ltd – Frost & Sullivan Report Points to a Compelling Business Case
Shanghai Tofflon Science (300171.CH) 2022/23Q1 – It’s Better Not to Go Against the Trend

Ihi (7013) | Multiple Engines for Growth

By Mark Chadwick

We look for the new MTP to present a growth outlook in the Aerospace division driven by a recovery in the civilian aircraft market
IHI is a key beneficiary of structural growth themes of higher defense spending and energy transition
We believe that the market has been overly concerned about a growth plateau. At 9x TEV / NTM EBIT, the stock is a bargain versus global peers

Alibaba (9988 HK): Chinese Authorities Turning Opposite to Encourage Non-State-Owned Companies

By Ming Lu

Chinese authorities have begun to ban public opinion against non-state-owned companies.
These actions were the opposite to what the authorities did in past years.
We believe the authorities need non-state-owned companies to bail the unemployed young people out of the weak job market.

HK RE: Retail to Benefit from Tourism Recovery. Buy HLP 101 HK & NWD 17 HK on Attractive Valuation

By Jacob Cheng

Hong Kong retail sales strongly rebounded 41% yoy in March
During May Day Holiday (Apr 29 – May 3), there was 625k mainland visitors to Hong Kong, around 63% of pre-COVID level
Among all RE sub-sectors, retail and residential will be the first to recover (already seeing recovery), office will be lagging and the last.

US Banks – Is System Deposit Flight Being Contained?

By Victor Galliano

Deposit outflows for 1Q23 in the most affected of the mid-sized US banks were in low double digits, much less severe than the deposit collapse suffered by First Republic
In fact, since the end of 1Q23, some smaller banks have reported slightly positive deposit flows, and the recent usage of Fed and FHLB funding lines is not alarming
We review a select group of mid-sized US banks focusing in on a number of key metrics; despite the challenging times, we like M&T Bank and Western Alliance

Energy China (3996 HK): Tempting Risk-Return Payoff

By Osbert Tang, CFA

China Energy Engineering (3996 HK) is a laggard in this round of “China style valuation” rally. With strong earnings and project backlog, there is good room to catch up.
Its 1Q23 earnings growth is ahead of the infrastructure trio, and so as the new contracts signed. Moreover, it has a faster growth in overseas market.
The 3-year EPS CAGR is projected at 16.3%, yet it just trades on 5x PER. Its ROE of 9.4% makes it attractively priced at only 0.4x P/B for FY23.

BeiGene (6160.HK/BGNE.US) 23Q1 – Qualitative Changes Are Taking Place

By Xinyao (Criss) Wang

A significant change in 23Q1 was not just a narrowing of net loss, but a sudden turnaround in sales profit under the rapid revenue growth, which was an important leap.
BeiGene’s commercialization capabilities largely rely on high expense level that significantly deviating from the industry average, making eventual commercialization success more difficult. BeiGene is an “outlier” even among global peers.
How to control expenses while ensuring sustained sales growth and long-term competitiveness is an important issue for BeiGene. If no new blockbuster product emerges ultimately, high valuation would not last.

PC Industry Monitor: Close Long Asus, Short Acer; Now Reverse the Trade and Long ACER Vs. Short Asus

Acer shares slumped 7% in a day after the company missed analyst expectations. Acer has now underperformed Asustek since our March 21st Long Asustek vs. Short Acer recommendation.
Despite the earnings miss, Acer management said it believed 1Q23 will be the trough for the business and metrics should be improving going forward.
We believe one can consider reversing our Long Asustek vs. Short Acer Trade to become Long ACER vs. Short Asustek, and hold this trade through Asustek’s upcoming earnings results.

Taiwan Tech Weekly: Hon Hai Earnings; Long/Short Into Asustek Results; Quanta Tracking Apple Shares

By Research as a Service (RaaS)

Major earnings this week including Hon Hai, Novatek, Wistron, Asustek, and more.
We believe one can consider Long Acer vs. Short Asustek into Asustek’s results this week.
Apple Suppliers — Quanta has tracked Apple’s success while others have lagged by a large margin.

Amaero International Ltd – Frost & Sullivan Report Points to a Compelling Business Case

Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
The company has provided to shareholders an executive summary from the Frost & Sullivan Feasibility Study for its titanium powder project in Abu Dhabi which concludes that the project is feasible across technical, financial and market parameters, and supports the Chairman’s prior guidance to shareholders.
Amaero is progressing an 827-tonne a year titanium powder facility in the United Arab Emirates which it expects to greenlight before the end of this financial year.

Shanghai Tofflon Science (300171.CH) 2022/23Q1 – It’s Better Not to Go Against the Trend

By Xinyao (Criss) Wang

Tofflon needs to go through a considerable period of adjustment after experiencing the high point of performance. Its “periodicity” is obvious, which means the performance high growth is not sustainable.
The decline in growth rate of contract liabilities suggests that the future prospects is highly uncertain. Overall margins could continue to drop due to reduction in high margin overseas orders.
Unless there’s a major catalyst, it’s difficult to see significant valuation boost in short term. Given the current downward trend in performance, valuation may continue to decline in the future.

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May 08

Daily Brief Macro: As The Economic Outlook Gets Worse and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

As The Economic Outlook Gets Worse, We’re Becoming More Upbeat
How Market Structure Tells the Story of a Market Top
How to Spot the U.S. Market Bottom
AFC Iraq Fund April 2023 Update: “Tag Ends of Currency Upheaval Sparks Market Rally”

As The Economic Outlook Gets Worse, We’re Becoming More Upbeat

By Michael J. Howell

Strong economies don’t have strong financial markets. Best time for equities is when policy-makers are trying to revive sluggish economies
Global Liquidity rises as economies slow, since slower real economies need less liquidity to operate and funds are shipped back into the financial sector. The cycle bottomed in October 2022
Equities should be valued against inflation not bond yields. Inflation is falling and it coincides with rising Global Liquidity

How Market Structure Tells the Story of a Market Top

By Cam Hui

Market structure analysis shows a late-cycle market with leadership concentrated in a few high-quality growth stocks.
This is the picture of a market top. New bull markets simply don’t start this way.
Investment-Oriented accounts should be cautious and use market strength to de-risk.

How to Spot the U.S. Market Bottom

By Cam Hui

A recession is likely on the horizon and historically stocks don’t bottom until the economy enters a downturn.
From a top-down perspective, investors can monitor macro indicators like PMI and employment statistics to spot the ultimate market bottom.
From a tactical perspective, alternative signals like insider buy can also be useful for timing low-risk entry points.

AFC Iraq Fund April 2023 Update: “Tag Ends of Currency Upheaval Sparks Market Rally”

By Asia Frontier Capital

The AFC Iraq Fund was up 15.9% in April, outperforming its benchmark, the Rabee Securities RSISX USD Index, which was up 12.5% for the month.
For the year, the AFC Iraq Fund is up an estimated 47.9% outperforming the index’s increase of 36.7%.
The market and the fund’s solid performance for the second month in a row on the back of February’s super performance enhanced by a revalued currency, underscores the underlying strength of the market’s recovery that has discounted the currency’s upheaval, as discussed here recently, and is beginning to discount its stability.

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May 08

Most Read: Japan Petroleum Exploration, Super Hi International Holding, Makalot Industrial, Aag Energy Holdings, Kum Yang, Toshiba Corp, Tokai Carbon Korea, Macronix International, Tencent, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in June & September
Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff
AAG Energy (2686 HK): New Scheme Vote Date, Different Result?
Kum Yang: Shorting Entry Timing on the Inevitable Block Deals
Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia
A Long Short Trading Event Likely to Have a High Hit Rate: HPSP & TCK
Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update
ECM Weekly (7th May 2023) – Mankind, Nexus REIT, Pertamina Hulu, Growatt, DXN, Giant Biogene, Ventia
JAPAN FLOW: Foreign Investor Inflows May Increase

JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings

Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
In this insight I look at several possible rankings for potential large buyback targets.

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in June & September

There is only one new listing as a potential inclusion to the HSCI in June. If added to the HSCI, it will also be added to Southbound Stock Connect.
There are 18 potential inclusions and 19 potential deletions for the HSCI in September. There are a few close adds and there could be another 5 deletions on Prolonged Suspension.
A lot of the potential deletions have large Southbound holdings. With all the stocks becoming sell-only, there could be unwinding of some positions over the next couple of months.

Yuanta/P-Shares Taiwan Dividend+ ETF Preview: Two Weeks to Cutoff

With two weeks left to the cutoff, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
Apart from the adds/deletes, there will also be capping and funding flows that will lead to an estimated one-way turnover of 13.5% and a one-way trade of US$886m.
There are 9 stocks with at least 5 days ADV to trade from passive trackers and another 12 stocks that have at least 1 day ADV to trade.

AAG Energy (2686 HK): New Scheme Vote Date, Different Result?

Aag Energy Holdings (2686 HK)’s disclosed a revised timetable to vote on Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer. The new scheme meeting is set for 2 June.
Our analysis suggests that in the best case, Xinjiang Xintai would need to further swing NO votes representing 6.52%-8.34% of outstanding shares to YES to get the scheme approved.
AAG’s case is unprecedented. The risk-reward remains unattractive as the upside to a scheme pass (13.5% upside) is equal to the downside to a scheme fail (average 13.5% downside).

Kum Yang: Shorting Entry Timing on the Inevitable Block Deals

By Sanghyun Park

Kum Yang IR director Park once mentioned that the block deals to sell the 2M treasury shares would likely occur in late May or early June.
There has been speculation in the market that the timing of the block deal may be postponed until after its inclusion in the KOSPI 200, allowing for short selling.
Considering the immediate funding needs faced by the company, setting an aggressive approach to shorting from shortly after its inclusion in the KOSPI 200 would be reasonable regarding entry timing.

Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia

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), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK),Origin Energy (ORG AU), Metro Pacific Investments Co (MPI PM).
Lowest spreads Liontown Resources (LTR AU), Healius (HLS AU), Penguin International (PBS SP), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Blackmores Ltd (BKL AU), Arcland Service (3085 JP).

A Long Short Trading Event Likely to Have a High Hit Rate: HPSP & TCK

By Sanghyun Park

The Korean local sector ETF with the fastest growing AUM is TIGER Fn Semiconductor Top 10 ETF, whose AUM has increased more than twice over the past two months.
HPSP (403870 KS) will replace Tokai Carbon Korea (064760 KS) by a comfortable margin in the upcoming review in October.
From a day trading perspective, this presents a significant Long-Short opportunity. Considering the relatively sizeable passive impact size, setting an entry point more aggressively may not be a bad idea.

Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update

By Janaghan Jeyakumar, CFA

There have been some changes to my expectations for the TWSE Div+ index June 2023 index changes and capping flows.
I currently see 5 ADDs/DELs. Some of these names are different from the ones I specified in my previous insight.
In this insight, we take a look at my latest flow expectations.

ECM Weekly (7th May 2023) – Mankind, Nexus REIT, Pertamina Hulu, Growatt, DXN, Giant Biogene, Ventia

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.
Nexus Select Trust will open books for India’s first Retail REIT, just as the first major India IPO for the year, Mankind Pharma seeks to list.
There was only Ventia (VNT AU) placement during the week, along with Giant Biogene Holding (2367 HK) lockup expiry.

JAPAN FLOW: Foreign Investor Inflows May Increase

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to one relatively simple indicator.
The policy backdrop points to greater corporate buying, greater foreign flow, greater selling by individuals and trust banks. The current timing probably matches.

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May 08

Daily Brief TMT/Internet: Macronix International, Tokyo Stock Exchange Tokyo Price Index Topix, Acer Inc, Taiwan Semiconductor (TSMC) – ADR, Canon Inc, Grid Dynamics Holdings Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update
JAPAN FLOW: Foreign Investor Inflows May Increase
PC Industry Monitor: Close Long Asus, Short Acer; Now Reverse the Trade and Long ACER Vs. Short Asus
Taiwan Tech Weekly: Hon Hai Earnings; Long/Short Into Asustek Results; Quanta Tracking Apple Shares
A Case Study of How Nothing Will Change Unless Management Changes
Navigating The Grid

Quiddity Leaderboard TWSE Div+ Jun 23: New Potential Index Changes and Flow Expectations Update

By Janaghan Jeyakumar, CFA

There have been some changes to my expectations for the TWSE Div+ index June 2023 index changes and capping flows.
I currently see 5 ADDs/DELs. Some of these names are different from the ones I specified in my previous insight.
In this insight, we take a look at my latest flow expectations.

JAPAN FLOW: Foreign Investor Inflows May Increase

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to one relatively simple indicator.
The policy backdrop points to greater corporate buying, greater foreign flow, greater selling by individuals and trust banks. The current timing probably matches.

PC Industry Monitor: Close Long Asus, Short Acer; Now Reverse the Trade and Long ACER Vs. Short Asus

Acer shares slumped 7% in a day after the company missed analyst expectations. Acer has now underperformed Asustek since our March 21st Long Asustek vs. Short Acer recommendation.
Despite the earnings miss, Acer management said it believed 1Q23 will be the trough for the business and metrics should be improving going forward.
We believe one can consider reversing our Long Asustek vs. Short Acer Trade to become Long ACER vs. Short Asustek, and hold this trade through Asustek’s upcoming earnings results.

Taiwan Tech Weekly: Hon Hai Earnings; Long/Short Into Asustek Results; Quanta Tracking Apple Shares

Major earnings this week including Hon Hai, Novatek, Wistron, Asustek, and more.
We believe one can consider Long Acer vs. Short Asustek into Asustek’s results this week.
Apple Suppliers — Quanta has tracked Apple’s success while others have lagged by a large margin.

A Case Study of How Nothing Will Change Unless Management Changes

By Aki Matsumoto

Underlying Canon’s long-standing underperformance, which had frustrated shareholders, was the lack of diversity on the board, which gave domestic institutional investors an excuse to vote against re-election of inside directors.
Canon’s voluntary Nominating Committee also has challenges: with Mr. Mitarai, CEO since 1995, chairing the NC, it’s hard to imagine that discussions and decisions are conducted with objectivity and independence.
Although a female independent director might be hired at next AGM in response to the low approval rate for Mitarai’s reappointment, it’s not expected to make any significant changes immediately.

Navigating The Grid

By subSPAC

As the current digital landscape continues to evolve, companies are racing to adapt to the new normal.
Grid Dynamics has successfully capitalized on this demand, delivering services across Cloud, Data, AI, and Digital Experiences.
As a result, the company has enjoyed impressive growth and significantly expanded its clientele over the last few years.

💡 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 08

Daily Brief Financials: Hang Lung Properties, M & T Bank Corp, GAM Holding AG, Agricultural Bank Of China, Yanlord Land and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

HK RE: Retail to Benefit from Tourism Recovery. Buy HLP 101 HK & NWD 17 HK on Attractive Valuation
US Banks – Is System Deposit Flight Being Contained?
Liontrust/GAM: Rescue All-Share Agreed Offer
Agricultural Bank of China Ltd (1288 HK) – Target 13%-24% Uptrend in 2-3 Quarters.
Morning Views Asia: Greentown China, Vedanta Resources, Yanlord Land

HK RE: Retail to Benefit from Tourism Recovery. Buy HLP 101 HK & NWD 17 HK on Attractive Valuation

By Jacob Cheng

Hong Kong retail sales strongly rebounded 41% yoy in March
During May Day Holiday (Apr 29 – May 3), there was 625k mainland visitors to Hong Kong, around 63% of pre-COVID level
Among all RE sub-sectors, retail and residential will be the first to recover (already seeing recovery), office will be lagging and the last.

US Banks – Is System Deposit Flight Being Contained?

By Victor Galliano

Deposit outflows for 1Q23 in the most affected of the mid-sized US banks were in low double digits, much less severe than the deposit collapse suffered by First Republic
In fact, since the end of 1Q23, some smaller banks have reported slightly positive deposit flows, and the recent usage of Fed and FHLB funding lines is not alarming
We review a select group of mid-sized US banks focusing in on a number of key metrics; despite the challenging times, we like M&T Bank and Western Alliance

Liontrust/GAM: Rescue All-Share Agreed Offer

By Jesus Rodriguez Aguilar

Liontrust is offering 0.0589 of its own shares per share of fallen angel GAM (which had CHF132 billion AuM by end 2020 vs CHF 23.3 billion now).
Although the GAM brand arguably retains some value, Liontrust is being somehow genereous, in my view. My fair value estimate (multiples based) is CHF 0.58/share.
Gross spread is +16.4%. I wouldn’t get involved right now, because spread is positive, there is risk of a legal challenge and next results are likely to be ugly.

Agricultural Bank of China Ltd (1288 HK) – Target 13%-24% Uptrend in 2-3 Quarters.

By David Coloretti, CMT

At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
The LT downtrend structure in 1288 HK was simply defined by its 2018/2022 sequence of lower highs and lower lows. This structure was broken last week.
LT momentum indicators (monthly RSI / MACD) have recently confirmed this bullish LT trend change. The current uptrend appears set to extend towards 3.60/3.90 (+13%-24%) in the coming 2-3 quarters.

Morning Views Asia: Greentown China, Vedanta Resources, Yanlord Land

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.

Greentown China
Vedanta Resources
Yanlord Land

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May 08

Daily Brief Industrials: Toshiba Corp, IHI Corp, China Energy Engineering, Amaero International Ltd, AP Moeller – Maersk A/S and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia
Ihi (7013) | Multiple Engines for Growth
Energy China (3996 HK): Tempting Risk-Return Payoff
Amaero International Ltd – Frost & Sullivan Report Points to a Compelling Business Case
Maersk Q1: Earnings Fine | Guidance Intact | Takeaways for Container Shipping (And Inflation)

Merger Arb Mondays (08 May) – Toshiba, AAG, Lian Beng, Penguin, Golden Energy, Estia