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Smartkarma Daily Briefs

Apr 25
0

Daily Brief Private Markets: Kujiale: 3D Design Platform for Home Décor and more

By | Daily Briefs, Private Markets

In today’s briefing:

  • Kujiale: 3D Design Platform for Home Décor
  • PICO: Leader in Chinese XR Market

Kujiale: 3D Design Platform for Home Décor

By Shifara Samsudeen, ACMA, CGMA

  • Founded in 2011, Kujiale (1716974D CH)  is a Chinese technology company that provides a 3D design and visualization platform for home decoration and furniture.
  • The company’s AR/VR tech platform allows users to generate design sketches to decorate and furnish their homes, as well as providing information and networking services on home design.
  • The company’s parent Manycore is the largest residential interior DDC cloud-based software provider (Kujiale is the flagship product offered by Manycore) with a market share of 56.5% in 2020.

PICO: Leader in Chinese XR Market

By Shifara Samsudeen, ACMA, CGMA

  • Pico Technology (1870309D CH)  is a Virtual Reality (VR) / Extended reality (XR) technology company that develops and sells VR glasses and comprehensive XR solutions.
  • The company is the market leader in the XR market in China and has a global presence. It was acquired by ByteDance in 2021.
  • PICO is a company to watch for in the VR/XR segment given it operates in a growing market and has already established itself as a prominent player in this space.

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Apr 25
0

Daily Brief Technical Analysis: Tencent Second Rejection – 305 Buy Zone and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Tencent Second Rejection – 305 Buy Zone

Tencent Second Rejection – 305 Buy Zone

By Thomas Schroeder

  • Tencent’s rally back to the 285 resistance saw a second rejection confirming a b-wave top and our base case call for a C wave slide to the 305 buy support.
  • Corrective structure to align with RSI low just under 30 as the buy zone. Sell volumes are on the backfoot.
  • Macro long zone remains at 305/280 to challenge the 385 bull/bear divide. Near resistance at 370.

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Apr 25
0

Daily Brief Credit: Morning Views Asia: Adani Ports & Special Economic Zone and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Adani Ports & Special Economic Zone, Hopson Development, Vedanta Resources

Morning Views Asia: Adani Ports & Special Economic Zone, Hopson Development, Vedanta Resources

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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Apr 25
0

Daily Brief Thematic (Sector/Industry): Smartkarma Webinar | High Yield Opportunities in Asia and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Smartkarma Webinar | High Yield Opportunities in Asia
  • China TMT Update(Apr.25) – 3690.HK/2150.HK/700.HK/TME: Meituan Riders in Shanwei Go on Strike
  • The Highlights : Cannabis News for the Week Ending April 21, 2023
  • Weekly Sustainable Investing Surveyor : Week Ended April 21, 2023

Smartkarma Webinar | High Yield Opportunities in Asia

By Smartkarma Research

In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Providers, Leonard Law, CFA and Trung Nguyen, as they share their thoughts on High Yield Opportunities in Asia. From developing trends, to what to expect in the space, join us for this next installment of our #webinar Wednesdays to get the full picture.

The webinar will be hosted on Wednesday, 26 April 2023, 17:00 SGT/HKT.

Leonard Law, CFA 
Leonard Law covers a portfolio of Chinese and Indonesian high-yield corporate credits. Prior to joining Lucror in 2017, he was an Associate Analyst with Moody’s Investors Service for three years, responsible for credit analysis and research.

Trung Nguyen 
Trung Nguyen is responsible for covering high-yield companies in the Southeast Asia region. He joined Lucror in 2013 from ST Asset Management, a credit investment arm of Temasek Holdings, where he spent over six years in investment research and portfolio management.

China TMT Update(Apr.25) – 3690.HK/2150.HK/700.HK/TME: Meituan Riders in Shanwei Go on Strike

By Shawn Yang

  • 3690.HK: Meituan food delivery drivers in Shanwei go on strike over low wages (-)
  • 2150HK: Lelecha confirm to launch franchise model, targeting at Mid and South-west China(+)
  • 700 HK / TME : WeChat tests in-app music function(+)

The Highlights : Cannabis News for the Week Ending April 21, 2023

By Water Tower Research

  • Broad equity indexes remained range-bound, as the S&P 500 and the MSCI World Index ended the week -0.06% and +0.07%, respectively.
  • The S&P 500 has been stuck between 4,070 and 4,170 for the past three weeks.
  • Small caps finished slightly better, with the Russell 2000 up 0.59% from last week.

Weekly Sustainable Investing Surveyor : Week Ended April 21, 2023

By Water Tower Research

  • WTR Sustainable Index: During the week ended April 21, 2023, the WTR Sustainable Index underperformed the broader market, falling 7.3% W/W versus the S&P 500 Index (down 0.1%), the Russell 2000 Index (up 0.6%), and the Nasdaq Composite Index (down 0.4%). Advanced Transportation Solutions (67.2% of the index) contributed to the index underperformance, falling 10.2%, while Energy Technology (8.3% of the index) was down 4.4% and Industrial Climate and Ag Technology was up 0.5%.
  • Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 27.6x versus 18.9x for the S&P 500.
  • Consensus estimates changes: During the week ended April 21, 2023, there were four increases (three in Energy Technology, and one in Industrial Climate and Ag Technology) 2022 revenue estimates.

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Apr 25
0

Daily Brief Crypto: Coinbase Targets Offshore Amid Falling Volumes and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Coinbase Targets Offshore Amid Falling Volumes

Coinbase Targets Offshore Amid Falling Volumes

By Kaiko

  • Last week, Coinbase received approval to operate an offshore derivatives exchange, based in Bermuda.
  • This move makes a lot of sense, particularly when looking at Coinbase’s share of total spot volumes.
  • Since the start of 2022, Coinbase’s share of volumes has almost halved, falling from 10% to 5% while Binance gained as much as 30% market share over the same time period, before losing some in the last couple of weeks with their reintroduction of fees.

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Apr 25
0

Daily Brief Event-Driven: AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
  • KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
  • CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
  • Quiddity Leaderboard SE600 Jun 23: Three ADDs/DELs Likely
  • Silver Lake/Software AG: Agreed Offer
  • Shockwave Medical Inc (SWAV US): Initial Thought on Takeover Talk and Probable Pricing

AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote

By Arun George

  • Ahead of Aag Energy Holdings (2686 HK)’s vote on 27 April, the gross spread to Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer sits uncomfortably high at 13.5%. 
  • The key risk remains that minorities vote down the scheme. Retail forums are active with mixed views on the offer. Peers have also modestly re-rated, which helps the NO camp. 
  • At the last close, the risk-reward profile is unfavourable as the downside to a scheme fail (-16.0%) is greater than the upside to a scheme pass (+13.5%).  

KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks

By Brian Freitas

CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete

By Brian Freitas

  • With 4 trading days to go the review period, we see 13 potential index changes at the June rebalance that will be implemented at the close on 9 June.
  • We estimate a one-way turnover of 1.94% at the June rebalance leading to a one-way trade of CNY 5.05bn.
  • With the review period nearly complete, the gap between the potential adds and deletes could narrow ahead of the announcement of the changes as pre-positions are built.

Quiddity Leaderboard SE600 Jun 23: Three ADDs/DELs Likely

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the STX Europe 600 and EUROSTX Indices for the March 2023 Rebalance.
  • There is roughly one more month left to the base date. At present, I see around 3 ADDs/DELs in the June 2023 review.
  • Separately, STX Europe 600 members Credit Suisse (CSGN SW) and Vantage Towers (VTWR GR) could possibly get deleted in the next few months triggering intra-review index changes.

Silver Lake/Software AG: Agreed Offer

By Jesus Rodriguez Aguilar

  • Silver Lake has announced its intention to launch a cash offer to delist Software AG at €30/share (53% premium, 12.7x EV/NTM EBITDA, 20.5x Fwd P/E), targeting 37% of the float.
  • The Board is suportive and Silver Lake does not seek a domination agreement. The offer price will not be adjusted by the next dividend (€0.05, ex-date 19 May).
  • My fair value estimate (EV/EBITDA based) is €26.54/share, the offer price seems adequate. The offer targets 37.6% of the float, feasible. Gross spread (incl. divi) is 0.97%, not terribly exciting.

Shockwave Medical Inc (SWAV US): Initial Thought on Takeover Talk and Probable Pricing

By Tina Banerjee

  • Shockwave Medical Inc (SWAV US) is reportedly drawing takeover interest from Boston Scientific. Shockwave can potentially be one of Boston Scientific’s largest ever acquisitions. Probable pricing still offers upside potential.
  • Shockwave has an addressable market opportunity of $8.5 billion. The company has guided for 2023 revenue of $660–680 million, which represents 35–39% YoY growth.
  • Addition of Shockwave will bolster Boston Scientific’s cardiovascular portfolio. No official announcement has been made by any of the companies. There is no certainty they will lead to a deal.

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Apr 25
0

Daily Brief Equity Bottom-Up: Meituan (3690 HK): Delivery Workers on Strike and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Meituan (3690 HK): Delivery Workers on Strike
  • Keisei (9009): Connecting Narita and Tokyo
  • Nidec (6594) | Remain Cautious Despite Bullish Guidance
  • Oriental Land: The 33.5x FY27 Consensus OP Bubble
  • IHH Healthcare (IHH MK): Core Business Recovery; Fortis Open Offer to Come Soon
  • TRACKING TRAFFIC/Container Shipping: Momentum Bottomed | Shares Stabilized | Focus on May News
  • Taiwan Tech Weekly: This Is a Major Earnings Week; Are We Entering a 2-Track Semiconductor Recovery?
  • APAC Insurers Series (#2): AIA or Prudential?
  • Mercedes-Benz: Luxury Brand With Strong Pricing Power
  • Rakuten Bank – In Japan With 65% Loan Growth

Meituan (3690 HK): Delivery Workers on Strike

By Ming Lu

  • Meituan’s delivery workers started a strike in Shanwei City of Guangdong Province.
  • Meituan called many of its delivery workers from other cities nearby as substitutes.
  • We believe the hard job market pushes Meituan to the very font line of industrial relation.

Keisei (9009): Connecting Narita and Tokyo

By Henry Soediarko

  • Japan’s tourism scene is back in action albeit still missing a contribution from China.
  • On-The-Ground research in Japan has confirmed the above point and the crowded Narita airport.
  • Keisei Electric Railway Co (9009 JP)operates Skyliner which connects Narita Airport to downtown Tokyo. 

Nidec (6594) | Remain Cautious Despite Bullish Guidance

By Mark Chadwick

  • NIdec’s full year FY3/23 operating profit declined 41% to Y100b, far short of analyst estimates
  • However, FY3/24 corporate guidance for Y220b in operating profit is very bullish and assumes a V-shaped recovery in margins
  • Given the macro outlook and lack of clarity on the restructuring charges, we prefer to remain cautious. 

Oriental Land: The 33.5x FY27 Consensus OP Bubble

By Oshadhi Kumarasiri

  • Oriental Land (4661 JP)’s revenue in 4QFY23 could miss consensus by around 12%, but its profitability could exceed consensus expectations by around 20%.
  • The shares did not react to beating consensus and revising up its guidance in the last quarter. This suggests limited upside risk for the company’s shares following 4QFY23 earnings.
  • Despite consensus medium-term OP estimates, Oriental Land appears to be significantly overpriced, with shares trading at a consensus FY27 EV/OP multiple of 33.4x.

IHH Healthcare (IHH MK): Core Business Recovery; Fortis Open Offer to Come Soon

By Tina Banerjee

  • IHH Healthcare (IHH MK) reported 11% YoY revenue growth in its core hospital and healthcare business in 4Q22, mainly driven by higher inpatient admissions in most of the hospitals.  
  • In November 2022, India’s stock exchange regulator SEBI has advised IHH to proceed with the open offer for Fortis Healthcare (FORH IN) to acquire 26.1% stake after obtaining court permission.
  • IHH is cautiously optimistic of robust growth from its core business with the return of local and foreign patients to its hospitals.

TRACKING TRAFFIC/Container Shipping: Momentum Bottomed | Shares Stabilized | Focus on May News

By Daniel Hellberg

  • Our measures of momentum and profitability suggest industry bottomed in Q1 2023
  • In addition, shares of container shipping stocks have stopped reacting to (plentiful) bad news
  • Outcome of ongoing rate negotiations and Q1 earnings calls will drive near-term performance

Taiwan Tech Weekly: This Is a Major Earnings Week; Are We Entering a 2-Track Semiconductor Recovery?

By Vincent Fernando, CFA

  • This week will have some major earnings data points released. In Taiwan, UMC, Delta, Mediatek, ASE will report among other local names in our coverage.
  • Samsung & SK Hynix will report this week, providing major insight into the Memory chip space for companies such as Nanya Technology and Micron.
  • TSMC & ASML results last week indicate that the cycle could be bottoming in 2Q23E for these leading firms… But are we entering a two-track industry recovery?

APAC Insurers Series (#2): AIA or Prudential?

By Alec Tseung

  • Given Pru’s demerger in 2021, it now offers investors a good alternative to AIA to tap into the development and the growth potential of the life insurance sector in Pan-Asia.
  • AIA has a more balanced business across so many markets in APAC, while Pru skews toward Southeast Asia.
  • Pru’s P/BV is currently at a 30% discount to AIA’s and is trading at the same level as the year-end when China just announced the re-opening of its borders.

Mercedes-Benz: Luxury Brand With Strong Pricing Power

By Alexis Dwek

  • Mercedes is a luxury brand with strong pricing power, well positioned to capture growth in EV as it invests significantly to transition into an all-electric, software-driven world
  • The launch of several models in the next few years will drive growth, as we believe the desirability remains very strong. 
  • We like the direct sales model and believe the operational focus and discipline of the Company are still to pay off. The valuation remains appealing at a P/E below 6x.

Rakuten Bank – In Japan With 65% Loan Growth

By Daniel Tabbush

  • There are few, if any banks, in Japan that compare with Rakuten’s 65% loan growth
  • The newly listed interbank stands out with exceptional ROE, not from leverage
  • Credit metrics remain strong, with NPL cover especially high vs peers

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Apr 25
0

Daily Brief Macro: The Week That Was in ASEAN@Smartkarma – Matahari Dept Store Has Style and more

By | Daily Briefs, Macro

In today’s briefing:

  • The Week That Was in ASEAN@Smartkarma – Matahari Dept Store Has Style, Bank Mandiri, and Astra Intl.
  • Weekly Market Monitor (16) – The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet
  • China Household
  • Don’t Get Fooled by the Tight Inventory Narrative – Economic Situation Continues to Worsen

The Week That Was in ASEAN@Smartkarma – Matahari Dept Store Has Style, Bank Mandiri, and Astra Intl.

By Angus Mackintosh

Weekly Market Monitor (16) – The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet

By Jeroen Blokland

  • ‘We lower the weight of equities. With markets pricing several Fed rate cuts, valuation rising, and earnings expectations too upbeat, catalysts for further increases are vanishing. 
  • After the significant decline in March building permits, the implied recession odds linked to this indicator are rising again.
  • There’s a classic example of reverse operating leverage going on: earnings growth is negative, while sales growth is positive. Most of the time, this is followed by a recession.

China Household

By Untying The Gordian Knot

  • The YoY growth in China Retail sales was 10.60%, TSF lending grew at 15.70%, and New Loans to Households increased by 65.10%.
  • Deposit growth was 12.68%. You look at the headline figures Individually; there is something for all versions of Bullish Reopening Narratives from the recent data.
  • The onshore investor has participated in the reopening theme and unwinding, but the Foreign Investor seems to believe more than the locals and continues to get more invested.

Don’t Get Fooled by the Tight Inventory Narrative – Economic Situation Continues to Worsen

By The Commodity Report

  • Don’t get fooled by the tight inventory narrative While many copper bulls continue to write about the low copper inventories I would like to inform you once again that there is simply no correlation between copper inventories and the price of the industrial metal.
  • If you want to be precise – you could even make the case that excessive lows in the LME copper inventory data actually mark cyclical highs in the price of the brownish metal.
  • US Leading Economic Index’s recession signal deepens in March, Conference Board reports: “The US LEI fell to its lowest level since November of 2020, consistent with worsening economic conditions ahead,” says CB’s senior manager for business cycle indicators.

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Apr 25
0

Most Read: China Mobile, Yuexiu Property, Tong Hsing Electronic Industries Ltd, Doubleugames Co, Ltd., Meituan, Aag Energy Holdings, Youlchon Chemical, Rakuten Bank , Zhejiang Huafeng Spandex A, Kcc Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Another Reason To Like China Mobile (941 HK)
  • Yuexiu Property (123 HK) Rights Offering
  • Index Rebalance & ETF Flow Recap: MSCI STD, Yuanta Div+, ZJLD, Anta
  • Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch
  • Meituan (3690 HK): Delivery Workers on Strike
  • AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote
  • KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks
  • Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations
  • CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete
  • KCC: Plans to IPO Its Subsidiary Momentive Performance Materials in the US as Early as 2023

Another Reason To Like China Mobile (941 HK)

By Travis Lundy

  • In March, the HK Secretary for Financial Services announced a waiver of stamp duty on dual counter trading market making. In November, the Govt of HK gazetted a bill.
  • HKEX launched plans in December. 9 large HK names announced in March they’d apply (Tencent, Kuaishou, Geely, BOC, Anta, AIA, China Resources Beer, Bidu, HKEX). Six more in April.
  • All the announcements are similar. But one on 21 April caught my eye because it is a big H/A with strong southbound support. That’s China Mobile (941 HK). 

Yuexiu Property (123 HK) Rights Offering

By Travis Lundy

  • On Thursday morning, Yuexiu Property (123 HK) halted trading in its shares and then later in the day announced a rights offering. Shares fell hard but gained back a little.
  • The rights offering lowers BVPS by about 11.3% so the current price is “about right” for the fundamentals if the price the day before the news was right.
  • There are, however, flow dynamics which are of interest. There almost always are.

Index Rebalance & ETF Flow Recap: MSCI STD, Yuanta Div+, ZJLD, Anta

By Brian Freitas

  • The review period for the MSCI May QCIR started last week and there were ad hoc changes to the S&P/ASX family and the KOSDAQ 150 Index (KOSDQ150 INDEX).
  • The end of the coming week will mark the end of the review period for the upcoming rebalances for a bunch of indices with implementation scheduled in May and June.
  • There was inflow to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF for another week.

Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch

By Sanghyun Park

  • Two pairs of constituent changes marked in squares in INTERNET and GAME may offer meaningful trading opportunities: Seojin System IN / Ahnlab OUT and Com2us IN / Doubleugames OUT.
  • Along with TIGER ETF, stealth index funds follow these indices. So, constituent changes in INTERNET and GAME create a flow impact of 0.3~0.6x DTV, even not in the Top 3.
  • Also, INTERNET and GAME have less passive flow impact degradation risk due to momentum trading flows compared to BATTERY and BIO.

Meituan (3690 HK): Delivery Workers on Strike

By Ming Lu

  • Meituan’s delivery workers started a strike in Shanwei City of Guangdong Province.
  • Meituan called many of its delivery workers from other cities nearby as substitutes.
  • We believe the hard job market pushes Meituan to the very font line of industrial relation.

AAG Energy (2686 HK): Nervousness Ahead of the 27 April Vote

By Arun George

  • Ahead of Aag Energy Holdings (2686 HK)’s vote on 27 April, the gross spread to Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer sits uncomfortably high at 13.5%. 
  • The key risk remains that minorities vote down the scheme. Retail forums are active with mixed views on the offer. Peers have also modestly re-rated, which helps the NO camp. 
  • At the last close, the risk-reward profile is unfavourable as the downside to a scheme fail (-16.0%) is greater than the upside to a scheme pass (+13.5%).  

KOSPI200 Index Rebalance Preview: Materials to Replace Consumer Stocks

By Brian Freitas

Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations

By Victor Galliano

  • The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating
  • Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers
  • Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x

CSI300 Index Rebalance Preview: Potential Changes as Review Period Nearly Complete

By Brian Freitas

  • With 4 trading days to go the review period, we see 13 potential index changes at the June rebalance that will be implemented at the close on 9 June.
  • We estimate a one-way turnover of 1.94% at the June rebalance leading to a one-way trade of CNY 5.05bn.
  • With the review period nearly complete, the gap between the potential adds and deletes could narrow ahead of the announcement of the changes as pre-positions are built.

KCC: Plans to IPO Its Subsidiary Momentive Performance Materials in the US as Early as 2023

By Douglas Kim

  • On 24 April, KCC Corp announced that it plans to IPO its subsidiary Momentive Performance Materials Inc. in the US stock market as early as 2023.
  • In 2021, KCC raised its stake in MOM Holding from 50% + 1 share to 60%. Momentive EBITDA increased from $300 million in 2018 to $450 million in 2022.
  • Our valuation of KCC Corp suggests an NAV of 3.1 trillion won (post 50% discount) or NAV per share of 347,633 won per share, representing 49% higher than current price.

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Apr 24
0

Daily Brief South Korea: Doubleugames Co, Ltd. and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch

Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch

By Sanghyun Park

  • Two pairs of constituent changes marked in squares in INTERNET and GAME may offer meaningful trading opportunities: Seojin System IN / Ahnlab OUT and Com2us IN / Doubleugames OUT.
  • Along with TIGER ETF, stealth index funds follow these indices. So, constituent changes in INTERNET and GAME create a flow impact of 0.3~0.6x DTV, even not in the Top 3.
  • Also, INTERNET and GAME have less passive flow impact degradation risk due to momentum trading flows compared to BATTERY and BIO.

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