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Smartkarma Daily Briefs

Nov 08
0

Daily Brief Consumer: Swedish Match AB, Reach, I-Tail and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Offer Becomes Unconditional
  • National World/Reach: Possible Offer
  • I-Tail Corporation IPO: The Bear Case
  • I-Tail Corporation Pre-IPO – Peer Comparison Update – Adding in Its Only Local Peer

Offer Becomes Unconditional

By Jesus Rodriguez Aguilar

  • PMI has obtained acceptances of 82.59%, waives the 90% acceptance condition and extends the acceptance period until 25 November (settlement on 2 December).
  • SWMA shares are trading at an all-time high of SEK 115.8. Gross spread is 0.17% (estimated annual return is 2.52%). The market discounts that the offer will be successful.
  • Done deal. PMI is ready to wait until claiming final victory, quite possibly in the further extended acceptance period. It should be able to squeeze-out and delist. Accept offer.

National World/Reach: Possible Offer

By Jesus Rodriguez Aguilar

  • SPAC National World confirmed that it is at the early stages of exploring a possible offer for UK’s largest local publisher Reach (RCH LN), whose share price had dropped 64% YTD.
  • The approach comes when Reach seems to be turning a corner and digital is growing, more specifically data-led initiatives. The top ten shareholders own 61% of the share capital.
  • A good offer should be tabled to convince the suffering top ten shareholders (61% in aggregate). My TP is 163.4p (comparables/DCF). The shares are trading at 4.0x NTM P/E.

I-Tail Corporation IPO: The Bear Case

By Arun George

  • I-Tail (ITC TB), Thai Union Group (TU TB)’s pet care division, has started pre-marketing an up to US$600 million SET IPO, according to press reports.
  • In I-Tail Corporation IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case. 
  • The key elements of the bear case rest on its under-representation in the dog food category (largest pet food category), margins at or near the peak and declining FCF margin. 

I-Tail Corporation Pre-IPO – Peer Comparison Update – Adding in Its Only Local Peer

By Sumeet Singh

  • I-Tail, an OEM in the wet pet food category, aims to raise around US$500m in its Thailand IPO. It is a subsidiary of Thai Union Group (TU TB) .
  • As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
  • In our previous notes, we have looked at past performance, undertaken a peer comparison and spoken about valuation. In this note, we will add in its recently listed local peer.

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Nov 08
0

Most Read: Toshiba Corp, Mitsui & Co Ltd, Metro Pacific Investments Co, Sk Chemicals Co Ltd/New, Pilbara Minerals, Tube Investments of India, Tencent, Kawasaki Kisen Kaisha, Blibli and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Toshiba (6502) – Funding Deadline Risk Was Known 6+ Weeks Ago
  • Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling
  • MSCI SEA EM Nov SAIR: High Impact Deletions Expected
  • Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer
  • MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning
  • MSCI Australia Nov SAIR: Significant Pre-Positioning on the Potential Deletes
  • MSCI India November SAIR: Potential Changes & Higher Foreign Holding
  • China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom
  • KLine (Kawasaki Kisen (9107)) – ToSTNeT-3 For All The Marbles
  • BliBli IPO Trading – Upsized, Priced near Top-End but Should Be Trading at Least 50% Lower

Toshiba (6502) – Funding Deadline Risk Was Known 6+ Weeks Ago

By Travis Lundy

  • There are several bits of news in the past few weeks indicating financing commitments might not meet the 7 Nov deadline. Principal among them the JIC/JIP split many weeks ago. 
  • That suggested the 30 Sep and subsequent deadlines would be delayed. And it appears we now have the reason for it, and that is another cause of financing commitment delay.
  • This development suggests activists have another quiver in their arrow should privatisation not succeed. Toshiba has cheapened in the meantime.

Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling

By Travis Lundy

  • Mitsui & Co Ltd (8031 JP) on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.
  • Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.
  • The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There’s also a fair bit of index selling the next 6mos.

MSCI SEA EM Nov SAIR: High Impact Deletions Expected

By Brian Freitas

  • There should be quite a few deletions for South East Asia Emerging Markets. The number of potential inclusions is smaller and have a smaller probability of being added.
  • While the passive flow on the potential deletions is not massive, the impact in terms of days of ADV to trade is very high in most cases.
  • There has been a steady increase in cumulative excess volume on a few of the potential deletions and there will be unwinding against the passive flow.

Toshiba (6502 JP): JIP Lobs a Lower-Than-Expected Offer

By Arun George

  • The Nikkei Asia reports that JIP has submitted a formal proposal to privatise Toshiba Corp (6502 JP) for about JPY2.2 trillion (US$15 billion) based on “Toshiba’s current share price.” 
  • JIP’s offer is below expectations of around a JPY6,000 bid which is likely driven by the inability to secure sufficient debt financing. JIP remains in negotiations with banks. 
  • While there is a risk that JIP will be unable to improve its offer to secure Board approval, the downside is low as Toshiba/peers’ current price ratio is attractive. 

MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning

By Brian Freitas

  • We see 1 potential inclusion and 12 potential deletions for the MSCI Korea Index at the November SAIR. The final changes will depend on what day MSCI uses.
  • Nearly all the stocks have over 4 days of ADV to trade from passive trackers. There have been big moves on short interest and excess volume on some stocks.
  • The announcement will be made Friday morning pre-market open and there could be some big moves in the stocks this week.

MSCI Australia Nov SAIR: Significant Pre-Positioning on the Potential Deletes

By Brian Freitas

  • We see two inclusions and two exclusions for the MSCI Australia Index at the November SAIR. Passive trackers will need to trade between 5-8x ADV on the stocks.
  • Cumulative excess volume on the stocks has been increasing steadily over the last few months, indicating a fair amount of pre-positioning.
  • Short interest on the potential deletions has spiked over the last couple of months and pre-positioning could be close to (or larger than) the estimated passive selling.

MSCI India November SAIR: Potential Changes & Higher Foreign Holding

By Brian Freitas

  • Post the end of the review period, we see 7 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR.
  • Inclusion in the index will require passive trackers to buy 6-21 days of ADV on the stocks. That increases to 16-45 days of delivery volume.
  • Cumulative excess volume indicates pre-positioning on most potential adds. Foreign Portfolio Investors (FPI) have increased their holding on all potential adds over the July-September quarter.

China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom

By Ming Lu

  • Tencent and Alibaba are rumored to be acquired by state-owned companies.
  • Tencent charges for originally free function and JD.com re-organized to cut cost.
  • Autohome’s revenue stopped declining in 3Q22 and it is time to accumulate.

KLine (Kawasaki Kisen (9107)) – ToSTNeT-3 For All The Marbles

By Travis Lundy

  • On Thursday, Kawasaki Kisen Kaisha (9107 JP) announced earnings, lower-than-consensus guidance and a ¥100bn buyback via ToSTNeT-3 this week, and on market if not filled via ToSTNeT-3.
  • The stock fell 5+%. I wrote I thought it was a buy and that the buyback was “game-able.” It rose 10+% from then til now. 
  • That was the fun. Now we get the games. Positioning strategy matters. 

BliBli IPO Trading – Upsized, Priced near Top-End but Should Be Trading at Least 50% Lower

By Sumeet Singh

  • PT Global Digital (BliBli) raised around US$517m in its Indonesian IPO, after using the upsize option and pricing its deal just below the top-end.
  • BliBli provides e-commerce services across Indonesia to both retail consumers and institutions.
  • In our previous notes, we have looked at the company’s past performance. In this note, we will talk about the trading dynamics.

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Nov 07
0

Daily Brief United States: Datadog Inc, DraftKings Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • Grounding Myself in this Market Cycle
  • King No More

Grounding Myself in this Market Cycle

By BluSuit

  • At the moment of writing this, it’s 2:30 pm on a Sunday and I am in a ground blind. Every year at about this time of the year I take a few days off of work to unplug, have a few drinks with other family members and run off to the middle of the woods.
  • I get some of my best thinking done out here while I wait for a White Tail Buck to come by. It’s blissful.
  • Regardless of where I am or what I am doing, I am and always have been committed to maintaining my transparency, my thoughts and my investing story/process to all of you.

King No More

By subSPAC

  • Fantasy Sportbook Operator DraftKings saw its shares drop by 28% at the close on Friday, recording the worst in its trading history even as its management and CEO remained upbeat about the company’s future.
  • What was surprising about the steep decline was the fact that the company beat analyst expectations both on the revenue and EPS front in its most recent quarter while also raising its full-year guidance.
  • The market remains skeptical about the company’s business model and its decision to prioritize growth over profitability, a stark comparison to its peers who have cut costs in recent months.

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Nov 07
0

Daily Brief Singapore: Ascendas India Trust and more

By | Daily Briefs, Singapore

In today’s briefing:

  • REIT Watch – CapitaLand Reits see operational growth in Q3

REIT Watch – CapitaLand Reits see operational growth in Q3

By Geoff Howie

  • REIT Watch – CapitaLand Reits see operational growth in Q3 CLI’s funds business comprises five real estate investment trusts (Reits) and business trusts listed on the Singapore Exchange (SGX).
  • Ascendas Reit is now known as CapitaLand Ascendas Reit; Ascott Residence Trust is now known as CapitaLand Ascott Trust; while Ascendas India Trust is changed to CapitaLand India Trust.

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Nov 07
0

Daily Brief Indonesia: Blibli, Astra International, ABM Investama and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Blibli IPO: Trading Debut
  • Astra International (ASII IJ) – Driving into Indonesia’s Growth Areas
  • Morning Views Asia: ABM Investama, NagaCorp Ltd, Times China, Yuexiu Property

Blibli IPO: Trading Debut

By Arun George

Astra International (ASII IJ) – Driving into Indonesia’s Growth Areas

By Angus Mackintosh

  • Astra International (ASII IJ)‘s recent 9M2022 numbers confirmed its position as a well-rounded way to play Indonesia’s economic recovery through autos and commodities through its controlling stake in United Tractors.
  • The company has continued to deploy its war chest of funds from the Bank Permata sale, investing in commercial vehicle leasing, hydro-power, and digital banking in 3Q2022 alone.
  • Astra International (ASII IJ trades on 9.0x FY2023 PER and 8.5x FY2024E PER versus its 5-year average forward PER of 14x, making it attractive at current levels. 

Morning Views Asia: ABM Investama, NagaCorp Ltd, Times China, Yuexiu Property

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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Nov 07
0

Daily Brief Australia: Perpetual Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Weekly Deals Digest (06 Nov) – Perpetual, Pendal, Nitro, ReadyTech, VNET, Singapore Medical, Blibli

Weekly Deals Digest (06 Nov) – Perpetual, Pendal, Nitro, ReadyTech, VNET, Singapore Medical, Blibli

By Arun George

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Nov 07
0

Daily Brief Thailand: I-Tail and more

By | Daily Briefs, Thailand

In today’s briefing:

  • I-Tail Corporation IPO: The Bull Case

I-Tail Corporation IPO: The Bull Case

By Arun George

  • I-Tail (ITC TB), Thai Union Group (TU TB)’s pet care division, has started pre-marketing an up to US$600 million SET IPO, according to press reports.
  • I-Tail is one of the largest original equipment manufacturers (OEMs) for wet cat & dog food in Asia, according to Frost & Sullivan.
  • The key elements of the bull case rest on strong top-line growth, market share gains, ambitious growth plans and the highest margin profile among peers.

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Nov 07
0

Daily Brief South Korea: Sk Chemicals Co Ltd/New and more

By | Daily Briefs, South Korea

In today’s briefing:

  • MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning

MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning

By Brian Freitas

  • We see 1 potential inclusion and 12 potential deletions for the MSCI Korea Index at the November SAIR. The final changes will depend on what day MSCI uses.
  • Nearly all the stocks have over 4 days of ADV to trade from passive trackers. There have been big moves on short interest and excess volume on some stocks.
  • The announcement will be made Friday morning pre-market open and there could be some big moves in the stocks this week.

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Nov 07
0

Daily Brief China: Yashili International Holdings, Hong Kong Hang Seng Index, Kunlun Energy, Akeso Biopharma Inc, Tencent, ABM Investama and more

By | China, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (07 Nov) – Yashili, Fengxiang, Kingston, Pendal, Perpetual, ReadyTech, Nitro
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • Kunlun Energy (135 HK): Kunlun Gas 3Q22 Masked by Non-Operating Factors
  • Akeso Biopharma (9926.HK) – The Recent Business Progress, the Valuation and the Challenges
  • China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom
  • Morning Views Asia: ABM Investama, NagaCorp Ltd, Times China, Yuexiu Property

Merger Arb Mondays (07 Nov) – Yashili, Fengxiang, Kingston, Pendal, Perpetual, ReadyTech, Nitro

By Arun George

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

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

Kunlun Energy (135 HK): Kunlun Gas 3Q22 Masked by Non-Operating Factors

By Osbert Tang, CFA

  • 3Q22 result of Kunlun Gas is weaker than expected, but this is due to lower other income and surge in non-operating expenses. Without them, profit growth is actually more encouraging.
  • While there is gross margin squeeze on higher input costs, Kunlun managed to reduce operating costs by 14.1%, successfully mitigated the negative impact.
  • Kunlun Gas contributed 62.5% of 1H22 net profit of Kunlun Energy (135 HK). Its solid 36.2% 9M22 earnings growth still points to healthy underlying momentum for its parent.

Akeso Biopharma (9926.HK) – The Recent Business Progress, the Valuation and the Challenges

By Xinyao (Criss) Wang

  • Akeso has made some business progress. We analyzed the commercialization outlook/concerns on its late stage products. Akeso still stays at the level of biotech, a long way from becoming biopharma.
  • The core challenge is whether bispecific antibody can bring better marginal clinical benefits than the combination of two mab, and why patients are willing to pay higher price for them?
  • The sales forecast of Akeso’s late stage products could be RMB2 billion to RMB3 billion. The market value by the end of Nov 4 was just reasonable but not undervalued.

China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom

By Ming Lu

  • Tencent and Alibaba are rumored to be acquired by state-owned companies.
  • Tencent charges for originally free function and JD.com re-organized to cut cost.
  • Autohome’s revenue stopped declining in 3Q22 and it is time to accumulate.

Morning Views Asia: ABM Investama, NagaCorp Ltd, Times China, Yuexiu Property

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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Nov 07
0

Daily Brief India: Tube Investments of India and more

By | Daily Briefs, India

In today’s briefing:

  • MSCI India November SAIR: Potential Changes & Higher Foreign Holding

MSCI India November SAIR: Potential Changes & Higher Foreign Holding

By Brian Freitas

  • Post the end of the review period, we see 7 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR.
  • Inclusion in the index will require passive trackers to buy 6-21 days of ADV on the stocks. That increases to 16-45 days of delivery volume.
  • Cumulative excess volume indicates pre-positioning on most potential adds. Foreign Portfolio Investors (FPI) have increased their holding on all potential adds over the July-September quarter.

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