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Smartkarma Daily Briefs

Apr 30
0

Daily Brief Macro: What Did Global Liquidity Do Last Week? and more

By | Daily Briefs, Macro

In today’s briefing:

  • What Did Global Liquidity Do Last Week?
  • Bond Market Monitor: The Bullish Case for Bonds Continues
  • Positioning Watch: The EUR Is the Only One Left at the Party
  • Wage Watch: Wage Negotiations in Germany to Taint the Disinflationary Picture?
  • USA: Record Underweight as Shift to Europe Accelerates

What Did Global Liquidity Do Last Week?

By Michael J. Howell

  • We exlore a new weekly time series on Global Liquidity. The data start in 2010 and reveal a strong leading relationship to World asset markets. This is confirmed statistically
  • Latest data show a US$5 trillion rise since the end-2022 and a US$10 trillion increase since the cycle low in late-October 2022. Further gains are bullish for asset prices
  • Behind expanding Global Liquidity is a strengthening World Shadow Monetary Base. This measures the collateral pool than can be levered up by credit providers. It is leading the way

Bond Market Monitor: The Bullish Case for Bonds Continues

By Warut Promboon

  • Xi’s call with Zelensky this week may not have any immediate impact but we believe the world is moving in the right direction.
  • The 2/10 spread remains in negative territory while inflation remains sticky but moved sideways.
  • We are leaning in favor of investment grade bonds and “BB” high yield bonds in general

Positioning Watch: The EUR Is the Only One Left at the Party

By Andreas Steno

  • Overall equity positioning remains short but the sentiment is not overly bearish across styles/sectors
  • EUR seems like the new safe haven. In will likely turn, but as long as the events are centered around the US, the EUR could be a place to hide
  • Industrial metals are not popular. Copper positioning has quickly went back to being net short again after being net long last week

Wage Watch: Wage Negotiations in Germany to Taint the Disinflationary Picture?

By Andreas Steno

  • This week Germany’s biggest public union Verdi reached an agreement with the government, and other unions will likely follow
  • The wage negotiations will surely have an effect on core inflation in Germany and EU
  • The average worker conditions will improve, positively impacting the economy

USA: Record Underweight as Shift to Europe Accelerates

By Steven Holden

  • Global equity funds move to record USA underweight of -7.02% below the benchmark.
  • Heavy rotation out of the USA and in to the major European nations over the last 6-months.
  • Record spread between the US underweight/DM Europe overweight highlights strong conviction in US underperformance and EU outperformance.

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Apr 30
0

Most Read: Mntech Co Ltd, Shandong Zhongji Electrical Eqpnt, AVIC (Chengdu) UAS Co Ltd, Bloomberry Resorts, Beijing Kingsoft Office Software-A, Kansai Paint, Micron Technology, Posco Chemical Co Ltd, Kunlun Tech and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively
  • ChiNext/​​ChiNext50 Index Rebalance Preview: Outperformance Maintained
  • STAR50 Index Rebalance Preview: Changes Depend on Minimum Listing History
  • PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
  • SSE50 Index Rebalance Preview: Five Changes Coming Up in June
  • What Did Global Liquidity Do Last Week?
  • Kansai Paint (4613) Announces Large Sale of Cross-Holdings – Buyback Here We Come
  • Memory Monitor: SK Hynix & Samsung Losses & Conservative Guidance Indicate Two-Track Chip Recovery
  • A Noteworthy Long Short Setup: Ecopro BM & Posco Future M
  • Index Rebalance & ETF Flow Recap: KS200, KQ150, HSI, CSI300/500, STAR50, SSE50, ChiNext, PCOMP, HDFC

Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively

By Sanghyun Park

  • The local ghost hedge fund began to excessively invest in credit, which leveraged 2.5 to 3 times when the eight manipulated stocks started to increase rapidly in price.
  • Then, the Financial Supervisory Service deemed this excessively-leveraged trading behavior as unusual, and news of an investigation into their activities broke out and triggered them to dump the shares.
  • The key now is identifying in advance the stocks that will experience similar selling patterns. To do so, we need to prioritize selecting stocks with high-margin balances in recent times.

ChiNext/​​ChiNext50 Index Rebalance Preview: Outperformance Maintained

By Brian Freitas

  • With 1 trading day left in the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
  • Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
  • The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the last month. We’d be inclined to trim positions.

STAR50 Index Rebalance Preview: Changes Depend on Minimum Listing History

By Brian Freitas

  • The review period for the June rebalance ends 28 April. We expect the changes to be announced 26 May with the implementation taking place after the close on 9 June.
  • Using a 12-month minimum listing history results in no index changes. Using a 6-month minimum listing history results in two changes – we think this is what will be used.
  • The potential adds have outperformed the potential deletes but both sets of stocks have underperformed the SSE STAR50 (STAR50 INDEX) and the CSI Smallcap 500 Index – Shanghai (SH000905 INDEX). 

PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot

By Brian Freitas

SSE50 Index Rebalance Preview: Five Changes Coming Up in June

By Brian Freitas

  • With 2 trading days left in the review period, we see 7 potential adds/5 potential deletes in June. However, there can be a maximum of 5 changes at a rebalance.
  • We estimate one-way turnover of 5.58% at the June rebalance leading to a one-way trade of CNY 4.22bn. Index arb balances could increase the impact on the stocks.
  • The potential adds have outperformed the potential deletes over the last couple of months and have underperformed over the last week.

What Did Global Liquidity Do Last Week?

By Michael J. Howell

  • We exlore a new weekly time series on Global Liquidity. The data start in 2010 and reveal a strong leading relationship to World asset markets. This is confirmed statistically
  • Latest data show a US$5 trillion rise since the end-2022 and a US$10 trillion increase since the cycle low in late-October 2022. Further gains are bullish for asset prices
  • Behind expanding Global Liquidity is a strengthening World Shadow Monetary Base. This measures the collateral pool than can be levered up by credit providers. It is leading the way

Kansai Paint (4613) Announces Large Sale of Cross-Holdings – Buyback Here We Come

By Travis Lundy

Memory Monitor: SK Hynix & Samsung Losses & Conservative Guidance Indicate Two-Track Chip Recovery

By Vincent Fernando, CFA

  • SK Hynix and Samsung reported results in the last week, showing major losses for their memory businesses. More evidence of a ‘two-track recovery’ for different parts of the chip industry.
  • SK Hynix’s inventory situation worsened based on our analysis; Micron appears to be managing inventory moderately better than peers based on recent results.
  • Long Micron vs. Short Nanya Technology: Micron has continued to outperform Nanya Tech, as well as SK Hynix and Samsung.

A Noteworthy Long Short Setup: Ecopro BM & Posco Future M

By Sanghyun Park

  • Currently, the market cap of Ecopro BM surpassed Posco Future M. As a result, Ecopro BM is in a position to replace Posco Future M in the K-New Deal rebalancing.
  • They are direct peers with a high price cointegration. We should consider using the rebalancing event of this index as an inflection point from a Long Short pair trading perspective.
  • The likelihood of Ecopro BM being included in the Solactive Lithium Index in October could potentially increase the expected return of taking this Long Short position more preemptively.

Index Rebalance & ETF Flow Recap: KS200, KQ150, HSI, CSI300/500, STAR50, SSE50, ChiNext, PCOMP, HDFC

By Brian Freitas

  • Friday marked the end of the review cutoff for the MSCI, CSI300, CSI500, STAR50, SSE50, ChiNext and a bunch of other indices for the upcoming rebalances in May and June.
  • There are no major index events coming up this week as a lot of markets are shut on different days.
  • There were big inflows to mainland China ETFs during the week, while there was a big redemption from the iShares MSCI ACWI ETF (ACWI US). 

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Apr 29
0

Daily Brief South Korea: Dongwon Industries, Lionheart Studio and more

By | Daily Briefs, South Korea

In today’s briefing:

  • End of Mandatory Lock-Up Periods for 46 Companies in Korea in May 2023
  • Lionheart: Over Dependence on One-Single Game

End of Mandatory Lock-Up Periods for 46 Companies in Korea in May 2023

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in May 2023, among which 4 are in KOSPI and 42 are in KOSDAQ.
  • These 46 stocks on average could be subject to further selling pressures in May and could underperform relative to the market. 
  • Among these 46 stocks, the top 6 market cap stocks include KG Mobility, Dongwon Industries, Hugel, Yunsung F&C, Enchem, and Jeio. 

Lionheart: Over Dependence on One-Single Game

By Shifara Samsudeen, ACMA, CGMA

  • Founded in 2018, Lionheart Studio (426630 KS) is a South Korean multiplayer online role-playing games developer for mobiles and PCs.
  • The company’s game Odin: Valhalla Rising was based on Nordic mythology and was a huge success. Lionheart is planning to add more expansions to Odin.
  • The company tried to go public in October 2022 on KOSDAQ however, it cancelled its listing plans due to negative market sentiments at the time.   

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Apr 29
0

Daily Brief Australia: Respiri Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Respiri – Commercialisation at the forefront

Respiri – Commercialisation at the forefront

By Edison Investment Research

Respiri released its Q323 activity report, updating investors on key highlights during the quarter. The period was marked by continued expansion of the company’s commercial footprint in the US, which included the signing of three additional contracts (taking the total client count to nine) and the appointment of a US-domiciled chief commercial officer to spearhead its growth strategy for the country. In addition, Respiri disclosed that it is in ongoing negotiations with two large insurers and four to six healthcare organisations, indicating a strong sales funnel. With the company recognising its first Centers for Medicare & Medicaid Services (CMS) reimbursement claims during the quarter and an increasing number of patients onboarded (including at Michigan Children’s Hospital and an undisclosed North Carolina-based healthcare organisation in Q123), we see initial validation for the company’s wheezo remote patient monitoring (RPM) model with subsequent traction likely with early patient responses. The period-end cash balance stood at A$0.9m, highlighting the need to raise capital in the near term, pending any material sales-related inflows.

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Apr 29
0

Daily Brief Thailand: Krung Thai Bank Pub and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Thai Banks 4Q22 Screener; We Reiterate that Krung Thai Is Our Top Pick

Thai Banks 4Q22 Screener; We Reiterate that Krung Thai Is Our Top Pick

By Victor Galliano

  • Krung Thai Bank Pub (KTB TB) remains our pick; it ranks top in terms of post-provision profitability, screens well on NPL coverage, funding and valuations, including its attractive PEG ratio
  • We also like Bank Of Ayudhya (BAY TB), with its sound pre and post-provision profitability in 1Q23, strong credit quality metrics and very attractive valuations
  • Kasikorn has seen its high cost of risk come down in 1Q23, but this remains elevated versus its domestic peers; Kasikorn may be a 2023 opportunity, one for the watchlist

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Apr 29
0

Daily Brief Singapore: Genting Singapore and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Genting Singapore: Record 1Q23 Results Confirm Speedy Recovery Ramp Ahead

Genting Singapore: Record 1Q23 Results Confirm Speedy Recovery Ramp Ahead

By Howard J Klein

  • Stock has become attractive at its still under the radar price.
  • Nomura projects Singapore revenues are trending rapidly back to 90% of pre-covid levels.
  • Adj. EBITDA of SG$774 (US$580m) for FY22—income attributable to holders up 85%

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Apr 29
0

Daily Brief United States: Crude Oil, Adeia, Immix Biopharma Inc, Carrier Global Corp, ATN International, Howmet Aerospace, Newmont Mining, Intuitive Surgical, Carlisle Cos and more

By | Daily Briefs, United States

In today’s briefing:

  • WTI Crude Oil Futures (CL1) – Weekly Close Setting Up to Confirm a Material MT Downtrend Bias
  • ADEA: Preview to Free Cash Flow
  • Immix Biopharma – CAR-T treatment continues to show promise
  • Carrier Global Corporation: Benefitting From Improvements In Supply Chain & Pricing – Key Drivers
  • ATNI: The Catalyst of a Tease
  • Howmet Aerospace Inc.: Continued Strength In Commercial Aerospace – Key Drivers
  • Newmont Corporation: Expansion & Development Projects – Key Drivers
  • Intuitive Surgical Inc.: Robust Growth in Procedures and Products – Key Drivers
  • Carlisle (CSL-US) 1Q23 Update

WTI Crude Oil Futures (CL1) – Weekly Close Setting Up to Confirm a Material MT Downtrend Bias

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 past 3 weeks have produced a failed new 2023 high in WTI Crude Oil futures (CL1), a bearish weekly reversal pattern and a break below the recent prominent gap.
  • A weekly close below the gap base at 75.72 will confirm a renewed and dominant MT downtrend bias and target a retest of the 2023 low at 64.12.

ADEA: Preview to Free Cash Flow

By Hamed Khorsand

  • ADEA has seen its stock price decline in the past month since announcing license agreements with two major NAND memory makers
  • This could have put too much emphasis on the semiconductor side of the business even though it is purely additive to the business model
  • The expected year over year decline in first quarter 2023 revenue is related to one-time license payment last year

Immix Biopharma – CAR-T treatment continues to show promise

By Edison Investment Research

Immix Biopharma continues to share encouraging data from the Phase Ib/II open-label NEXICART-1 trial. This study is investigating NXC-201, a CAR-T therapy, for the treatment of multiple myeloma (MM) and light chain amyloidosis (ALA). At the European Society for Blood and Marrow Transplantation 49th Annual Meeting in Paris, Immix announced positive results for the 58 patients enrolled so far. An overall response rate (ORR) of 92% was reported for patients with MM, and an ORR of 100% for patients with ALA. The therapy has also continued to show a favorable safety profile, building on a comprehensive data package to support NXC-201 as the first potential outpatient CAR-T therapy, offering significant market differentiation, in our view. Management plans to submit a biologics license application (BLA) for FDA approval in MM once 100 patients have been treated, and in ALA once 30–40 patients have been treated.

Carrier Global Corporation: Benefitting From Improvements In Supply Chain & Pricing – Key Drivers

By Baptista Research

  • Carrier Global’s results for the last quarter were an all-around beat and its cash flows, earnings, and sales were in line with the expectations of the management.
  • It delivered organic sales growth supported by double-digit growth in commercial HVAC and light commercial, trailer and global truck, and after-market.
  • Carrier made progress in its innovative Lynx platform and has launched various new capabilities this quarter.

ATNI: The Catalyst of a Tease

By Hamed Khorsand

  • ATNI started its first quarter earnings call with a tease that is likely to receive investor praise once officially announced. ATNI is finalizing a carrier service agreement 
  • ATNI already has a carrier service agreement with AT&T (T) where ATNI has been building wireless towers for FirstNet
  • During the first quarter ATNI added more broadband and mobile customers within each of its business segments.

Howmet Aerospace Inc.: Continued Strength In Commercial Aerospace – Key Drivers

By Baptista Research

  • With its earnings just around the corner, it is interesting to look at how Howmet Aerospace has been performing in recent times.
  • The company exited the last quarter with a strong acceleration in revenue despite the choppy backlog.
  • Commercial transportation, which impacts fastening systems and forged wheels, was up in the quarter, driven by higher volumes and higher aluminum prices.

Newmont Corporation: Expansion & Development Projects – Key Drivers

By Baptista Research

  • Newmont Corporation ended 2022 with a mixed fourth-quarter performance.
  • The company generated $3.2 billion in revenue in Q4 and started Q1 with a $2.7 billion of revenue.
  • Newmont improved the coaching and development of its frontline leaders to improve the effectiveness of its important control verifications.

Intuitive Surgical Inc.: Robust Growth in Procedures and Products – Key Drivers

By Baptista Research

  • Intuitive Surgical managed an all-around beat in the last quarter with decent revenue and products growth.
  • The new capital installs were quite strong, with customers building their Ion and da Vinci system capabilities.
  • A capable product portfolio and strong growth in procedures have supported quite a healthy capital placement quarter.

Carlisle (CSL-US) 1Q23 Update

By Guasty Winds

  • Carlisle’s earnings came in a little soft in the quarter, driven mostly by a greater magnitude of de-stock than first anticipated and some weather-related delays.
  • In addition, the company lowered guidance for the year for CCM with a hit to both margins and volumes.
  • I was already below guidance on margins for this year but I was too high on sales, and the deleverage has caused margins to come in <30% for 2023.

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Apr 29
0

Daily Brief India: Eicher Motors and more

By | Daily Briefs, India

In today’s briefing:

  • Eicher Motors (EIM IN) | Ramping Up

Eicher Motors (EIM IN) | Ramping Up

By Pranav Bhavsar

  • Strong demand for Eicher Motors (EIM IN) ‘s Royal Enfield bikes with returning customers.
  • The model “Hunter” is expanding the market and attracting a new set of customers.
  • Royal Enfield entering a new growth phase with new launches and customer service focus.

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Apr 29
0

Daily Brief Japan: Kansai Paint, Hokkoku Financial Holdings, Srg Takamiya, iShares MSCI ACWI ETF and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kansai Paint (4613) Announces Large Sale of Cross-Holdings – Buyback Here We Come
  • Hokkoku Financial (7381) Earnings Report Delay But HUGE Buyback. Again.
  • Takamiya (2445 JP) Initiation Report
  • Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

Kansai Paint (4613) Announces Large Sale of Cross-Holdings – Buyback Here We Come

By Travis Lundy

Hokkoku Financial (7381) Earnings Report Delay But HUGE Buyback. Again.

By Travis Lundy

  • Yesterday Hokkoku Financial Holdings (7381 JP) came out with an odd decision to delay earnings from 28 April to 8 May. Volume traded. 
  • Today, despite not reporting earnings, the Kanazawa-based regional bank announced a BIG buyback with subsequent share cancellation.  This was not unexpected. They have an aggressive policy which started last year.
  • Hokkoku Bank policy introduced last year is special. It has worked. They are pursuing it. Expect more policy action like this as banks report. 

Takamiya (2445 JP) Initiation Report

By Sessa Investment Research

  • Accelerating de facto standardization of the Iq System
  • Guiding for double-digit growth in sales and profit in FY23/3
  • Roadmap for sustainable growth. Takamiya is currently implementing its medium-term management plan ending in FY2024/3.

Stay Tactically Overweight Defensives; Remain Overweight Europe, Japan, & EAFE. Buys in Defensives

By Joe Jasper

  • Our 2023 outlook, initially discussed in our January 6th 2023 Int’l Compass, was for $93 to cap upside on the MSCI ACWI (ACWI-US); this has again proven prescient.
  • Since late-January/early-February we have recommended shifting to defensives, and MSCI ACWI defensive Sectors including Health Care (IXJ-US), Utilities (JXI-US), and Consumer Staples (KXI-US) are now hitting 3-4-month RS highs.
  • With the ACWI-US just now starting to turn down after testing $93, we continue to recommend a tactical overweight to the aforementioned defensive Sectors, and also to gold miners (GDX-US).

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Apr 29
0

Daily Brief China: Vinda International, China Education Group, Luckin Coffee, Tencent and more

By | China, Daily Briefs

In today’s briefing:

  • Essity Mulls Holding In Vinda (3331 HK)
  • China Education Group (839 HK): Sustaining the Healthy Track Record
  • [Luckin Coffee Inc. (LKNCY US, BUY, TP US$41) ]: Temporary Price Competition Has No Impact on Margin
  • Tencent: Internet VAS Business Still Playing Catch Up

Essity Mulls Holding In Vinda (3331 HK)

By David Blennerhassett

  • Tissue-Maker Vinda International (3331 HK) closed down 6.4% yesterday, recovering from a 13.8% fall intra day.
  • Vinda said its 1Q23 operating profit declined 85.4% to HK$65mn. Vinda also announced its controlling shareholder Essity (ESSITYB SS) will commence a strategic review of its 51.59% ownership.
  • A long-term shareholder potentially seeking a possible divestment, shortly after a company announces poor results, is not a great look.

China Education Group (839 HK): Sustaining the Healthy Track Record

By Osbert Tang, CFA

  • Adjusted net profit at China Education Group (839 HK) grew 15.1% in 1H23, accelerated from 5% in 2H22. We are delighted to see resumption of interim DPS at Rmb0.164.
  • FY23 outlook will be underpinned by higher education student enrollment and tuition increase. Strengthened financial position offers opportunities for both organic and M&A growth.
  • Potential upside will also come from completion of for-profit conversion at Jiangxi University of Technology. We consider its 7.9x PER, 1x P/B, 13.3% ROE and 5.5% yield attractive.

[Luckin Coffee Inc. (LKNCY US, BUY, TP US$41) ]: Temporary Price Competition Has No Impact on Margin

By Shawn Yang

  • We think the coffee price competition, mainly between Luckin and COTTI, is temporary, and will have little impact to Luckin’s gross margin. 
  • We also think COTTI’s low pricing strategy is unsustainable, and its franchisees are keen for price hike.  
  • We maintain the stock as BUY and maintain TP at US$41.

Tencent: Internet VAS Business Still Playing Catch Up

By Shifara Samsudeen, ACMA, CGMA

  • Tencent will report 1Q2023E earnings on 17th May. Online gaming revenues have declined YoY for 4-consecutive quarters while social networks revenue has been down for the last two quarters.
  • Our app data analysis suggests that grossing ranks of some of Tencent’s key domestic titles have dropped during 1Q2023 while international titles show an improvement during the quarter.
  • Our regression model suggests that Tencent’s internet value-added services biz’s revenues would grow at lower single digits in 1Q2023E and is still playing catch up with its own self.

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