Smartkarma Daily Briefs

The reduction of credit loans by Korea Investment & Securities and Kiwoom Securities in the past week may have accelerated unwinding of positions of 8 stocks related to CFD selling.
The balance of credit loans for KOSPI increased 12.7% YTD. On the other hand, the balance of credit loans for KOSDAQ increased by 36.1% YTD.
As local securities companies further reduce credit loans and regulators also restrict CFD related leverage, a sound pair trade could be to go long KOSPI 200 and short KOSDAQ 150.

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Apr 28

Daily Brief Industrials: Yunsung F&C, Shandong Zhongji Electrical Eqpnt, Nidec Corp, AKR Corporindo, Air China Ltd (H), Selex Motor, Millennium Services Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
Nidec (6594 JP): Buy into Current Weakness
AKR Corporindo (AKRA IJ) – A Winning Formula
Air China (753 HK): Demonstrating Obvious Strengths
ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors
Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers

One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion

Due to the matched order fraud incident in recent days, there has been a significant change in the KOSDAQ top 50 rankings, presenting a great opportunity for Yunsung F&C.
The estimated size of the passive inflow that it is likely to receive is approximately 0.5-0.8x ADTV for ETFs alone, and 1.2-1.5x when expanded to all passive funds.
We should note that the level of market exposure to inclusion possibility has been significantly low. Therefore, we can expect a significant price impact at the time of the announcement.

ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained

By Research as a Service (RaaS)

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.

Nidec (6594 JP): Buy into Current Weakness

By Scott Foster

FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.
The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.
Projected valuations are attractive even if sales do not reach management’s ambitious target.

AKR Corporindo (AKRA IJ) – A Winning Formula

By Angus Mackintosh

AKR Corporindo1Q2023 results demonstrated its resilience with its petroleum and chemicals division continuing to grow in 1Q2023 with the added kicker of a large land sale at JIIPE.
The company’s JIIPE Industrial Estate will become an increasingly important earnings contributor but chemical distribution will be driven by smelters and fuel by the BP retail JV at the margin,
AKR Corporindo is an increasingly interesting proxy for the next stage of Indonesia’s economic growth through its exposure to smelters through its chemicals business and the overall economy through fuel.

Air China (753 HK): Demonstrating Obvious Strengths

By Osbert Tang, CFA

Air China Ltd (H) (753 HK)‘s 1Q23 result demonstrated a significant YoY and QoQ reduction in losses. At Rmb2.9bn, this is the smallest losses in last six quarters.
We witnessed a solid spike in overall yield and sharp margin recovery in the quarter. There is also encouraging performance in operating cash flow which turned around YoY to positive.
Its associate Cathay Pacific Airways (293 HK) has seen Mar capacity returned to 50% of pre-pandemic level with over 90% load. More resumption of international flights will drive 2H23.

ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors

By e27

Selex Motors produces electric two-wheelers and swappable battery packs that are purpose-built for last-mile cargo delivery
The company aims to utilise the funds to expand its two-wheeler production lines and set up battery-swapping systems in key cities in Vietnam, aiming to become the nation’s largest battery-swapping network provider
Established in 2018, Selex produces electric two-wheelers and swappable battery packs that are purpose-built for large applications, including last-mile cargo delivery

Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers

Millennium Services Group Ltd (ASX:MIL) has announced an update on Q3 FY23 revenue and cash flow from operating activities.
MIL achieved the first positive quarterly revenue growth since Q1 FY22 at +3.5%, while contract revenue growth was ~+12.6% on the pcp (excludes ad-hoc revenue).
The COVID-related ad-hoc revenue has now all but cycled out of the quarterly numbers while new contract wins cycle in.

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Apr 28

Daily Brief Industrials: Yunsung F&C, Shandong Zhongji Electrical Eqpnt, Nidec Corp, AKR Corporindo, Air China Ltd (H), Selex Motor, Millennium Services Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained
Nidec (6594 JP): Buy into Current Weakness
AKR Corporindo (AKRA IJ) – A Winning Formula
Air China (753 HK): Demonstrating Obvious Strengths
ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors
Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers

One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion

Due to the matched order fraud incident in recent days, there has been a significant change in the KOSDAQ top 50 rankings, presenting a great opportunity for Yunsung F&C.
The estimated size of the passive inflow that it is likely to receive is approximately 0.5-0.8x ADTV for ETFs alone, and 1.2-1.5x when expanded to all passive funds.
We should note that the level of market exposure to inclusion possibility has been significantly low. Therefore, we can expect a significant price impact at the time of the announcement.

ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Maintained

By Research as a Service (RaaS)

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.

Nidec (6594 JP): Buy into Current Weakness

By Scott Foster

FY Mar-23 results fell short of expectations and management is guiding for a weak 1H in the new fiscal year. This looks like a buying opportunity.
The E-Axle business should reach break-even this year. Rising EV demand in China, Europe and elsewhere, plus general electrification, should take the overall Automotive operating margin to 10%.
Projected valuations are attractive even if sales do not reach management’s ambitious target.

AKR Corporindo (AKRA IJ) – A Winning Formula

By Angus Mackintosh

AKR Corporindo1Q2023 results demonstrated its resilience with its petroleum and chemicals division continuing to grow in 1Q2023 with the added kicker of a large land sale at JIIPE.
The company’s JIIPE Industrial Estate will become an increasingly important earnings contributor but chemical distribution will be driven by smelters and fuel by the BP retail JV at the margin,
AKR Corporindo is an increasingly interesting proxy for the next stage of Indonesia’s economic growth through its exposure to smelters through its chemicals business and the overall economy through fuel.

Air China (753 HK): Demonstrating Obvious Strengths

By Osbert Tang, CFA

Air China Ltd (H) (753 HK)‘s 1Q23 result demonstrated a significant YoY and QoQ reduction in losses. At Rmb2.9bn, this is the smallest losses in last six quarters.
We witnessed a solid spike in overall yield and sharp margin recovery in the quarter. There is also encouraging performance in operating cash flow which turned around YoY to positive.
Its associate Cathay Pacific Airways (293 HK) has seen Mar capacity returned to 50% of pre-pandemic level with over 90% load. More resumption of international flights will drive 2H23.

ADB Ventures, Touchstone Join US$3M Round of Vietnamese EV Maker Selex Motors

By e27

Selex Motors produces electric two-wheelers and swappable battery packs that are purpose-built for last-mile cargo delivery
The company aims to utilise the funds to expand its two-wheeler production lines and set up battery-swapping systems in key cities in Vietnam, aiming to become the nation’s largest battery-swapping network provider
Established in 2018, Selex produces electric two-wheelers and swappable battery packs that are purpose-built for large applications, including last-mile cargo delivery

Millennium Services Group Ltd – Contract Wins Now Evident in the Numbers

Millennium Services Group Ltd (ASX:MIL) has announced an update on Q3 FY23 revenue and cash flow from operating activities.
MIL achieved the first positive quarterly revenue growth since Q1 FY22 at +3.5%, while contract revenue growth was ~+12.6% on the pcp (excludes ad-hoc revenue).
The COVID-related ad-hoc revenue has now all but cycled out of the quarterly numbers while new contract wins cycle in.

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Apr 28

Daily Brief Energy/Materials: Aag Energy Holdings, Exxon Mobil and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote
A Pivotal Moment In Exxon Mobil’s Quarterly Results

AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote

The 27 April vote was adjourned as Aag Energy Holdings (2686 HK) Board was notified by “certain beneficial owners indicating that their latest voting instructions were not duly processed.”
The meeting would not be adjourned if the YES vote was going to sail through. A delay helps the offeror as these owners will vote YES and deal fatigue sets in.
Risk-Reward is still unfavourable at the last close. The deal break fair value range is HK$1.37-1.45 per share, with 16.0%-11.0% downside. This compares to the 13.5% upside from the offer.

A Pivotal Moment In Exxon Mobil’s Quarterly Results

By Vladimir Dimitrov, CFA

Exxon Mobil is about to report its Q1 2023 results, investors should keep their long-term view and dismiss any quarterly noise.
Management is now becoming increasingly aggressive in its expansion efforts and should provide more information on that during the quarter.
If you bought Exxon Mobil Corporation (NYSE:XOM) back in 2020 when I laid out my investment thesis on the company, then most likely you wouldn’t be bothered by the quarterly fluctuations of the stock.

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Apr 28

Daily Brief Health Care: Jeol Ltd, Samsung Biologics, OpGen and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Quiddity Leaderboard JPX-Nikkei 400: End-Apr 2023
Samsung Biologics (207940 KS): Slow Start of 2023; Stronger Growth in H2; 2023 Guidance Raised
OpGen – FIND agreement milestones achieved

Quiddity Leaderboard JPX-Nikkei 400: End-Apr 2023

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-April 2023.

Samsung Biologics (207940 KS): Slow Start of 2023; Stronger Growth in H2; 2023 Guidance Raised

By Tina Banerjee

Samsung Biologics (207940 KS) reported year-over-year improvement in sales and operating profit in 1Q23. However, net profit declined 4% YoY due to one-off factor stemming from an acquisition last year.
The company expects stronger growth in H2 due to revenue contribution of Plant 4 and the launch of Humira biosimilar in the U.S.
Based on the strength of CMO business, Samsung Biologics has raised 2023 revenue growth guidance to 15–20% YoY from 10–15% YoY announced in January.

OpGen – FIND agreement milestones achieved

By Edison Investment Research

OpGen has announced that Curetis (its German subsidiary) has successfully met the remaining key milestones for Unyvero A30 RQ under the initial R&D collaboration with FIND (a global non-profit alliance for diagnostics), triggering a $0.3m milestone payment to OpGen. This development follows the achievement of certain other key milestones in January 2023. While OpGen is still working on the next set of deliverables under the expanded scope of R&D agreement (April 2023), the successful completion of the feasibility phase indicates Unyvero’s potential adaptability for low- and middle-income countries (LMICs). As a step forward, OpGen will seek to expand the agreement towards clinical studies and subsequent commercialization.

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Apr 28

Daily Brief Financials: Metro Pacific Investments Co, Kiwoom Securities, Bank Negara Indonesia Persero, Tether and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Metro Pac (MPI PM): Delisting Offer from First Pac & Co
We Should Aim at Kiwoom Securities’ Potential Legal Risk-Induced Stock Price Decline
Metro Pacific Investments (MPI PM): PHP4.63 Delisting Tender Offer
Bank Negara Indonesia (BBNI IJ) – Quality Focus by Digital Means
Leveraging LSDs: The Next Era of Lending and Borrowing

Metro Pac (MPI PM): Delisting Offer from First Pac & Co

By David Blennerhassett

First Pacific Co (142 HK), together with three other entities, are proposing to delist Metro Pacific Investments Co (MPI PM) at PHP 4.63/share, a 22% premium to the 12-month VWAP.
The four bidders hold a combined stake in MPIC of 63.4%. The Offer is conditional on First Pac shareholder approval, a tendering threshold, and an MPIC shareholder vote.
Elsewhere, First Pac continues to trade cheap to its NAV. Nothing new there.

We Should Aim at Kiwoom Securities’ Potential Legal Risk-Induced Stock Price Decline

The recent matched order operation’s ringleader called in local major broadcasting companies for an interview and claimed the sell orders through SG on Monday were not from their CFD accounts.
The trigger is Kiwoom Securities’ Chairman Kim, who created a continuous and rapid decline in stock prices and led to a vicious cycle of endless margin calls and covering orders.
Rather than fishing for a bottom for the eight stocks from this point on, it seems necessary to actively design positions aimed at Kiwoom Securities’ legal risk-induced stock price decline.

Metro Pacific Investments (MPI PM): PHP4.63 Delisting Tender Offer

Metro Pacific Investments Co (MPI PM) disclosed a voluntary delisting tender offer from a consortium at PHP4.63 per share, an 8.7% premium to the undisturbed price (26 April).
The offer is conditional on shareholder approval and meeting the threshold for voluntary delisting (95% of outstanding shares) or obtaining an exemptive relief from the PSE.
The shareholder approval and delisting threshold require around 73% and 86% acceptance rate, which is a risk as the offer is far from a knockout bid.

Bank Negara Indonesia (BBNI IJ) – Quality Focus by Digital Means

By Angus Mackintosh

Bank Negara Indonesia achieved a strong set of 1Q2023 numbers despite moderate loan growth, where the headline masked some significant growth areas, whilst asset quality improvements led to lower provisions.
The bank continues to stride ahead with its digital initiatives with a multi-touchpoint approach, which has led to increased transactions and a positive impact on CASA and hence funding costs.
Bank Negara Indonesia remains an interesting proxy to the overall Indonesian economy through its high exposure to corporate and consumer lending. Valuations are attractive on 1.1x PBV for 15% ROE.

Leveraging LSDs: The Next Era of Lending and Borrowing

By Kaiko

The best design often goes unnoticed. DeFi lending and borrowing stalwarts Aave and Compound have proven themselves to be great design: critical for day-to-day functioning but largely taken for granted.
This becomes apparent when a competitor experiences an exploit, highlighting the reliability of Aave and Compound
When last we checked in on these protocols in December they were in a period of change.

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Apr 28

Daily Brief TMT/Internet: Fujitsu Ltd, Alibaba (ADR), Tencent, GoTo, MetaCRM, Unity Software, Cosmose , Netgear Inc, Centralnic, Nano Dimension and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big
Alibaba (BABA US): How Will Generative AI Improve Its Efficiency?
Tencent Holdings Ltd (700 HK) – Q2 2023 Correction Presents a MT Buying Opportunity at 302/330
GoTo: Sacrificing Growth to Improve Profitability
Startup Raises $2.5m to Build One-Stop Web3 CRM Tools
Unity Software Shanghai: Localizing Products and Services for Game Developers in China
SG’s Cosmose AI Hits $500m Valuation After Fresh Round
NTGR: Channel Partners and Demand
CentralNic Group – FY23 outlook maintained after record Q1
Nano Dimension – Record revenues in FY22

BIG Fujitsu (6702 JP) Buyback – It’s a Lot, but Not, but Still Big

By Shifara Samsudeen, ACMA, CGMA

Fujitsu earnings are out. Forecasts are in, lighter than consensus.
But there is a buyback. Looking at the way last year’s was executed is not that informative but it may be useful.
This one is big enough to matter but not big enough to get excited about until we get confirmation.

Alibaba (BABA US): How Will Generative AI Improve Its Efficiency?

By Eric Chen

Recent research conducted by industry players – most notably OpenAI – about the impact of generative AI on labor markets provides a framework for gauging its monetization potential.
We take a small step forward to apply them to two specific occupations in China including translators and computer programmers, which combined represent RMB1,400 bn TAM.
For China’s internet giants such as Alibaba, generative AI could result in cost savings of up to RMB20 bn, or 14% of its FY2023 net profit.

Tencent Holdings Ltd (700 HK) – Q2 2023 Correction Presents a MT Buying Opportunity at 302/330

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.
Since peaking in January 2023, Tencent Holdings Ltd (700 HK) has produced a meaningful ABC correction that is yet to confirm its completion.
We anticipate the correction confirming a MT bottom in the 302/330 range, ahead of a renewed multi-month uptrend. Our bullish multi-month target at 451.95 remains firm.

GoTo: Sacrificing Growth to Improve Profitability

GoTo (GOTO IJ) reported 1Q2023 results yesterday. Gross revenue increased 14.3% YoY to IDR5.98trn while adjusted EBITDA losses further declined to IDR3.52trn from IDR5.94trn in 1Q2022.
However, all growth matrices point towards a slowdown compared to the previous quarter with gross revenues of all segments and On-demand take rate declining QoQ in 1Q2023.
With GoTo prioritising profits over growth, we expect the company’s growth rates to further decline and wonder if the company could hold it for long?

Startup Raises $2.5m to Build One-Stop Web3 CRM Tools

By Tech in Asia

Most Web3 brands rely on Web2 apps such as Google Forms, Telegram, and Discord for customer support.
This makes customer relationship management (CRM) difficult due to rampant customer service fraud and the inability to identify end users across channels.
Based in Taiwan, MetaCRM says its Web3 CRM products can connect on-chain and off-chain data to create blockchain-native solutions and analytics tools.

Unity Software Shanghai: Localizing Products and Services for Game Developers in China

By Shifara Samsudeen, ACMA, CGMA

Founded in 2022, Unity Software Shanghai Co. (Unity 3D/Unity China) is a Chinese company that provides a 3D development platform, and AR/VR solutions to the gaming industry.
The company is a subsidiary of Unity Software (U US) and focuses on localisation Unity’s products and services to the Chinese market.
The company was valued at around US$1bn at the time of its formation and based on deal terms, might go for a listing when its valuation hits US$3.6bn.

SG’s Cosmose AI Hits $500m Valuation After Fresh Round

By Tech in Asia

Singapore-based Cosmose AI said it has received an undisclosed sum from nonprofit Near Foundation to build a payment system that allows users to shop with cryptocurrency at low transaction fees.
The deal bumped Cosmose AI’s valuation to US$500 million from US$100 million at the time of its series A round.
Using smartphone data, Cosmose AI analyzes foot traffic and engages consumers online, providing insights into offline shopping habits and driving footfall across 20 million venues in Asia.

NTGR: Channel Partners and Demand

By Hamed Khorsand

NTGR reported first quarter results asserting sell through was healthy but channel partners were not replenishing their inventory
Heading into the results, we had cited the lack of deep discounts in the quarter as a sign that inventory had stabilized.
NTGR is entering the second quarter with no expectation of channel partners coming back with increased order flow

CentralNic Group – FY23 outlook maintained after record Q1

By Edison Investment Research

CentralNic’s Q123 trading update confirms management is delivering on its strategy of robust organic growth, coupled with strong cash generation, which has improved shareholder returns and further deleveraged its balance sheet. The group is confident that it is trading at least in line with current market consensus for FY23 and we maintain our forecasts, which are slightly ahead of consensus. CentralNic’s latest agreement with Microsoft Bing in Online Marketing lowers the group’s execution risk by diversifying its advertiser demand pool and adds to its growth potential.

Nano Dimension – Record revenues in FY22

By Edison Investment Research

Nano Dimension’s FY22 results show that its ‘buy-and-build’ strategy has delivered a quadrupling of revenues during the year. The pace of revenue growth may potentially accelerate following Nano Dimension’s recent bid for 3D printing giant Stratasys.

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Apr 28

Daily Brief Consumer: Fast Retailing, Bloomberry Resorts, Blackmores Ltd, Kirin Holdings, Alibaba Group, JVC KENWOOD, Tianneng Power International, Tokyo Stock Exchange Tokyo Price Index Topix, Garrett Motion and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
Kirin Looks To Take Blackmores Private
Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO
JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
Blackmores (BKL AU): Kirin’s Binding A$95.00 Offer
Tianneng Power (819): Value Trap?
Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29
GTX: Q1 Sets Growth in Motion

The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time

Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.

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

Based on data to the close on 27 April, we do not expect any changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the August rebalance.
However, the Metro Pacific Investments Co (MPI PM) tender offer and voluntary delisting will open up an index spot that will need to be filled.
At the current time, Bloomberry Resorts (BLOOM PM) is the highest ranked non-index constituent and is the most likely replacement.

Kirin Looks To Take Blackmores Private

By David Blennerhassett

Japan’s Kirin Holdings (2503 JP) has proposed taking Aussie vitamin play Blackmores Ltd (BKL AU) private by way of a Scheme at A$95/share.
That’s a 23.7% premium to last close, and represents 23.1x LTM December 2022 EBITDA.
Irrevocables are 18% of shares out. This Scheme requires clearance from ACCC, FIRB – and China’s SAMR.

Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market

By Oshadhi Kumarasiri

Kirin Holdings (2503 JP) is eyeing the vitamin game with a proposal to buy Blackmores at AU$95 per share, representing a 23.7% premium over the stock’s most recent closing price.
Blackmores Ltd (BKL AU)‘s expertise in navigating China’s stringent regulations could be the missing piece for Kirin to gain access to the lucrative supplement market in China.
Our main concern is Kirin’s history of unsuccessful overseas business acquisitions, particularly outside of its core beer business.

Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO

By Caixin Global

Alibaba Group Holding Ltd. slashed prices for its core cloud services by as much as 50% and offered free trials of some cloud products for as long three months, fueling competition in an already crowded market.
Through the price cut, Alibaba Cloud hopes to make the cost of its cloud services significantly lower than costs offered by other data centers
The valuation of cloud companies is generally based on the price-to-sales ratio rather than the price-to-earnings ratio

JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos

Today, JVC KENWOOD (6632 JP) announced earnings, its forecast for this next year, and the outlines of its new Mid-Term Management Plan.
That plan has the run to 2025 seeing sales rise slightly, Operating margins rising slightly. EBITDA margins at last year’s level or better, and Operating CF like last year.
They also announced a buyback which they hoped would help them boost ROE and PBR to 1.0x as quickly as possible. The TSE pressure is working.

Blackmores (BKL AU): Kirin’s Binding A$95.00 Offer

Blackmores Ltd (BKL AU) has entered a binding proposal with Kirin Holdings (2503 JP) at A$95.00 per share, a 23.7% premium to the undisturbed price (16 April).
The offer is attractive. Marcus Blackmore, the largest shareholder, will vote in favour of the offer. Regulatory approvals should be forthcoming.
The scheme meeting is in July. At the last close, the gross and annualised spread for a late August payment is 0.8% and 2.2%, respectively.

Tianneng Power (819): Value Trap?

By Henry Soediarko

Tianneng Power International (819 HK) is a supplier of Chinese EV 2-wheelers and has enjoyed decent growth in the past few years.
The correlation of top-line growth with its customers suddenly turned negative, a warning sign.
Is it really cheap at 0.6x PBV? Maybe not, given the current status and the lead time before the recycling business is fully operational.

Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29

By Aki Matsumoto

This year, 26.4% of companies will hold AGMs on June 29. The trend will continue, with 1/4 companies holding AGMs on the day before the last business day of June.
Electronic provision of shareholder meeting materials (3-4 weeks in advance) and electronic voting platforms for institutional investors progressed, mainly for prime market listed companies.
The mismatch between supply and demand continues, with only 26.9% of companies providing English translations of business reports (materials for AGMs), a much-needed service for global institutional investors.

GTX: Q1 Sets Growth in Motion

By Hamed Khorsand

GTX benefited from steady order rates and product mix in the first quarter allowing the Company to surpass initial expectations. Automakers have increased production levels as semiconductor availability has improved.
For GTX, an expanded product offering beyond purely turbochargers is fueling revenue growth
GTX reported sales of $970 million in the first quarter of 2023 compared to $898 million in the fourth quarter of 2022. The improvement in results was related to demand

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Apr 28

Most Read: Tokyo Gas, Seoul City Gas, Samsonite, Fast Retailing, Activision Blizzard, Beijing Kingsoft Office Software-A, Blackmores Ltd, Bloomberry Resorts, Yunsung F&C, Aag Energy Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tokyo Gas (9531 JP) Mega Buyback Announced
A Crash in 8 Korean Stocks Related to CFD Derivatives: Margin Call in Korea
HSI Market Consultation: Foreign Companies, Industry Groups, HK Companies
The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
Activision Blizzard – An Unsightly Mess
SSE50 Index Rebalance Preview: Five Changes Coming Up in June
Kirin Looks To Take Blackmores Private
PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion
AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote

Tokyo Gas (9531 JP) Mega Buyback Announced

Five days ago, Tokyo Gas (9531 JP) announced a revision to earnings for the year to 31 March 2023. Today they reported results, and announced March 2024 guidance.
The company also announced a buyback programme to spend up to ¥113 billion to repurchase up to 53mm shares (12.2% of TSO). ¥113 billion is a very specific number.
With the price where it is, ¥113bn is “only” 9.6% of shares out but this is very interesting indeed.

A Crash in 8 Korean Stocks Related to CFD Derivatives: Margin Call in Korea

The biggest story in the Korean stock market in the past three days has been the crash in 8 stocks related to CFD derivatives.
As a result of the CFD related margin call selling, the following are the major impact on the 8 related stocks and the overall Korean stock market in our view.
They include a) overshooting on the downside on 8 related names, b) negative impact on the major rechargeable battery names, and c) negative impact on the overall Korean stock market.

HSI Market Consultation: Foreign Companies, Industry Groups, HK Companies

Hang Seng Indexes has started a consultation on the eligibility of Foreign Companies in the Hang Seng Index, a review of the seven Industry Groups and number of HK constituents.
We agree that foreign companies should be added to the index, no change needed to the Industry Groups, and the cap on the number of HK constituents should be removed.
There are a few potential adds due to the removal of the cap on HK companies, while there are potential foreign company additions later this year or in 2024.

The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time

Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.

Activision Blizzard – An Unsightly Mess

By Mio Kato

Last night the CMA chose to block the merger between Microsoft and Activision Blizzard in the UK on the grounds that it would harm competition in cloud gaming.
The merits of that position are highly debatable in our view but that does not mean that the decision is bad for consumers.
It also does not mean that the decision is bad for Microsoft in our view.

SSE50 Index Rebalance Preview: Five Changes Coming Up in June

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.

Kirin Looks To Take Blackmores Private

By David Blennerhassett

Japan’s Kirin Holdings (2503 JP) has proposed taking Aussie vitamin play Blackmores Ltd (BKL AU) private by way of a Scheme at A$95/share.
That’s a 23.7% premium to last close, and represents 23.1x LTM December 2022 EBITDA.
Irrevocables are 18% of shares out. This Scheme requires clearance from ACCC, FIRB – and China’s SAMR.

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

Based on data to the close on 27 April, we do not expect any changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the August rebalance.
However, the Metro Pacific Investments Co (MPI PM) tender offer and voluntary delisting will open up an index spot that will need to be filled.
At the current time, Bloomberry Resorts (BLOOM PM) is the highest ranked non-index constituent and is the most likely replacement.

One Unnoticed Addition to KOSDAQ 150: Yunsung F&C Through Special Inclusion

Due to the matched order fraud incident in recent days, there has been a significant change in the KOSDAQ top 50 rankings, presenting a great opportunity for Yunsung F&C.
The estimated size of the passive inflow that it is likely to receive is approximately 0.5-0.8x ADTV for ETFs alone, and 1.2-1.5x when expanded to all passive funds.
We should note that the level of market exposure to inclusion possibility has been significantly low. Therefore, we can expect a significant price impact at the time of the announcement.

AAG Energy (2686 HK): Adjourned Scheme Meeting Points to a Close Vote

The 27 April vote was adjourned as Aag Energy Holdings (2686 HK) Board was notified by “certain beneficial owners indicating that their latest voting instructions were not duly processed.”
The meeting would not be adjourned if the YES vote was going to sail through. A delay helps the offeror as these owners will vote YES and deal fatigue sets in.
Risk-Reward is still unfavourable at the last close. The deal break fair value range is HK$1.37-1.45 per share, with 16.0%-11.0% downside. This compares to the 13.5% upside from the offer.

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Apr 27

Daily Brief South Korea: Seoul City Gas, Hyundai Motor and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

A Crash in 8 Korean Stocks Related to CFD Derivatives: Margin Call in Korea
Hyundai Motor: Highest Operating Profit Among All Korean Companies in 2023

A Crash in 8 Korean Stocks Related to CFD Derivatives: Margin Call in Korea

The biggest story in the Korean stock market in the past three days has been the crash in 8 stocks related to CFD derivatives.
As a result of the CFD related margin call selling, the following are the major impact on the 8 related stocks and the overall Korean stock market in our view.
They include a) overshooting on the downside on 8 related names, b) negative impact on the major rechargeable battery names, and c) negative impact on the overall Korean stock market.

Hyundai Motor: Highest Operating Profit Among All Korean Companies in 2023