Smartkarma Daily Briefs

This is our first report on the Royal Bank of Canada, one of the top 2 banks in the country.
This quarter’s performance included significant capital markets revenue, led by excellent Global Markets results, as well as market share improvements in Investment Banking and origination operations across the sector.
We initiate coverage on the stock of the Royal Bank of Canada with a ‘Buy’ rating.

Toronto Dominion Bank: Initiation of Coverage – The Cowen Acquisition & Other Drivers

This is our first report on a major Canadian banker, Toronto Dominion Bank.
In Q1, the bank had a good quarter and delivered an all-around beat.
We initiate coverage on the stock of the Toronto Dominion Bank with a ‘Buy’ rating.

Wells Fargo & Co: Initiation of Coverage – Banking Crisis Impact & Recent Developments

This is our first report on one of the American banking major, Wells Fargo.
The company performed well in the quarter despite operating losses and managed an all-around beat.
Increasing interest rates fueled a rapid rise in net interest income.

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Apr 23

Daily Brief Industrials: Hong Kong Hang Seng Index, Jiangnan, LG Energy Solution, Woodside Energy Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Grinding to a Halt
Jiangnan Group (1366 HK): Scheme Vote on 15 May
Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain
Woodside Energy Group Ltd: Upside From BHP Assets & Pluto KGP Interconnector

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Grinding to a Halt

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

Jiangnan Group (1366 HK): Scheme Vote on 15 May

By Arun George

The Jiangnan (1366 HK) scheme document is out with the court meeting scheduled for 15 May. The IFA considers the HK$0.40 per share offer to be fair and reasonable.
Key conditions include approval by at least 75% independent shareholders (<10% rejection). The shareholder with a blocking stake has provided an irrevocable on 22 March.
This is a done deal. At the last close and for the 31 May payment, the gross and annualised spread is 3.9% and 44.0%, respectively.

Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain

On 20 April, Chile’s government announced that it will be nationalizing the country’s lithium industry. Chile is the second largest producer of lithium in the world.
The nationalization of the lithium industry in Chile will likely have a long-term negative impact on the rechargeable batteries related companies in Korea.
This is mainly due to greater challenges of getting access to lithium at more affordable prices.

Woodside Energy Group Ltd: Upside From BHP Assets & Pluto KGP Interconnector

Woodside Energy Group delivered a decent financial performance in 2022, driven by higher prices and adding former BHP assets to the portfolio and the Pluto KGP interconnector.
Besides that, Woodside Energy completed subsea tieback and enhancement initiatives across its Gulf of Mexico and West Australian LNG assets, keeping the plants occupied.
We give Woodside Energy Group Ltd. a ‘Buy’ rating with a revised target price.

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Apr 23

Daily Brief Health Care: Pharmaron Beijing Co., Ltd. (A) and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China Healthcare Weekly (Apr.21) – A Brutal Reality, Benign Returns from China Biotech, Pharmaron

China Healthcare Weekly (Apr.21) – A Brutal Reality, Benign Returns from China Biotech, Pharmaron

By Xinyao (Criss) Wang

Pharmaceutical companies shouldn’t always emphasize being the first to enter the market, but focus on how to best enter the market and maintain a dominant position as long as possible.
It’s truly felt that the assets of China’s pharmaceutical companies are accelerating their global recognition. As their internationalization strategy becomes increasingly mature, investors are expected to obtain more benign returns.
For Pharmaron, financial profit decline was the main reason for profit drop.If deducting fair value change of biological assets, operating profit growth was negative. We remain conservative about its outlook.

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Apr 23

Daily Brief ECM: ECM Weekly (23rd Apr 2023) – Rakuten Bank and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

ECM Weekly (23rd Apr 2023) – Rakuten Bank, Merdeka, ZJLD, Mankind, Lalatech, IMotion, Anta, KIT
International Flavors & Fragrances Inc.: Continued Growth In Nourish
Royal Bank of Canada: Initiation of Coverage – Canadian Banking Market Dynamics
Petróleo Brasileiro S.A. – Petrobras: Chartering of FPSO Vessels & Other Developments
Toronto Dominion Bank: Initiation of Coverage – The Cowen Acquisition & Other Drivers
Wells Fargo & Co: Initiation of Coverage – Banking Crisis Impact & Recent Developments
Woodside Energy Group Ltd: Upside From BHP Assets & Pluto KGP Interconnector

ECM Weekly (23rd Apr 2023) – Rakuten Bank, Merdeka, ZJLD, Mankind, Lalatech, IMotion, Anta, KIT

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
All eyes were on Rakuten Bank (5838 JP) listing this week. It didn’t disappoint, neither did Merdeka Battery Materials.
Anta Sports Products (2020 HK) pulled off one of the largest placements so far in 2023, despite being net cash.

International Flavors & Fragrances Inc.: Continued Growth In Nourish

International Flavors & Fragrances delivered a mixed set of results in the quarter.
Sales were up 4% on a comparable, currency-neutral basis for the quarter, with increases seen in almost all divisions.
Besides that, their scent division performed well, achieving a 6% year-over-year sales increase, driven by double-digit growth in fine fragrance and mid-single-digit growth in consumer fragrance.

Royal Bank of Canada: Initiation of Coverage – Canadian Banking Market Dynamics

This is our first report on the Royal Bank of Canada, one of the top 2 banks in the country.
This quarter’s performance included significant capital markets revenue, led by excellent Global Markets results, as well as market share improvements in Investment Banking and origination operations across the sector.
We initiate coverage on the stock of the Royal Bank of Canada with a ‘Buy’ rating.

Petróleo Brasileiro S.A. – Petrobras: Chartering of FPSO Vessels & Other Developments

Petróleo Brasileiro achieved strong in the quarter last quarter and managed an all-around beat.
By increasing the utilization rate of its refineries and introducing new products with renewable content, Petrobras continues to be competitive.
We give Petróleo Brasileiro S.A. – Petrobras a ‘Hold’ rating with a revised target price.

Toronto Dominion Bank: Initiation of Coverage – The Cowen Acquisition & Other Drivers

This is our first report on a major Canadian banker, Toronto Dominion Bank.
In Q1, the bank had a good quarter and delivered an all-around beat.
We initiate coverage on the stock of the Toronto Dominion Bank with a ‘Buy’ rating.

Wells Fargo & Co: Initiation of Coverage – Banking Crisis Impact & Recent Developments

This is our first report on one of the American banking major, Wells Fargo.
The company performed well in the quarter despite operating losses and managed an all-around beat.
Increasing interest rates fueled a rapid rise in net interest income.

Woodside Energy Group Ltd: Upside From BHP Assets & Pluto KGP Interconnector

Woodside Energy Group delivered a decent financial performance in 2022, driven by higher prices and adding former BHP assets to the portfolio and the Pluto KGP interconnector.
Besides that, Woodside Energy completed subsea tieback and enhancement initiatives across its Gulf of Mexico and West Australian LNG assets, keeping the plants occupied.
We give Woodside Energy Group Ltd. a ‘Buy’ rating with a revised target price.

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Apr 23

Daily Brief Equity Bottom-Up: Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain and more

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

In today’s briefing:

Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain
HDFC Bank: Steady Q4FY23 Results | Merger Update – RBI Concessions
Las Vegas Sands: Starting a Run as Macau Recovery Gains Speed. Up 23% YTD.
China Healthcare Weekly (Apr.21) – A Brutal Reality, Benign Returns from China Biotech, Pharmaron
BlackLine Inc.: Major Drivers
Ambev S.A.: Major Drivers
Broadridge Financial Solutions Inc.: Recurring Sales

Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain

On 20 April, Chile’s government announced that it will be nationalizing the country’s lithium industry. Chile is the second largest producer of lithium in the world.
The nationalization of the lithium industry in Chile will likely have a long-term negative impact on the rechargeable batteries related companies in Korea.
This is mainly due to greater challenges of getting access to lithium at more affordable prices.

HDFC Bank: Steady Q4FY23 Results | Merger Update – RBI Concessions

By Ankit Agrawal, CFA

HDFC Bank (HDFCB IN) reported a steady and broadly in-line-with-expected Q4FY23 earnings. In particular, its growth in deposits at 8.7% QoQ was commendable.
Advances also grew at a healthy pace of 6% QoQ. Retail advances grew 5% QoQ, while CRB (Commercial and Rural Banking) grew the most at 9.7% QoQ.
Aided by low credit costs, HDFCB continues to invest in expanding its geographical and digital distribution to deepen its penetration.

Las Vegas Sands: Starting a Run as Macau Recovery Gains Speed. Up 23% YTD.

By Howard J Klein

LVS just reported 1Q23 results showing a surging recovery of GGR and daily arrivals in Macau driving gains in revenue and profit profile.
Labor shortages that have limited availability of LVS’ 12,000 rooms are beginning to subside. Golden Week just ahead expected to reach +90% room occupancy.
Stock has moved over 20% since our buy call at $53. Our PT is raised to $80.

China Healthcare Weekly (Apr.21) – A Brutal Reality, Benign Returns from China Biotech, Pharmaron

By Xinyao (Criss) Wang

Pharmaceutical companies shouldn’t always emphasize being the first to enter the market, but focus on how to best enter the market and maintain a dominant position as long as possible.
It’s truly felt that the assets of China’s pharmaceutical companies are accelerating their global recognition. As their internationalization strategy becomes increasingly mature, investors are expected to obtain more benign returns.
For Pharmaron, financial profit decline was the main reason for profit drop.If deducting fair value change of biological assets, operating profit growth was negative. We remain conservative about its outlook.

BlackLine Inc.: Major Drivers

BlackLine completed a year of profitable expansion with strong financial results for the fourth quarter.
The company had total sales of $140 million in Q4 and managed an all-around beat, including a top-line growth of 21%.
Moreover, increased utilization was caused by a stronger-than-anticipated demand for professional services due to customers’ willingness to access the solutions’ embedded value.

Ambev S.A.: Major Drivers

Ambev delivered mixed results in Q4.
The company saw a 1.5% increase in volumes though its revenues were below Wall Street expectations.
Also, despite the impact of inflationary pressures on Ambev’s expenditures and expenses, normalized EBITDA increased in the quarter and the company delivered an earnings beat.

Broadridge Financial Solutions Inc.: Recurring Sales

Broadridge delivered a mixed set of results in the quarter.
Recurring sales increased by 8% on a constant currency basis, and both segments experienced significant growth but overall revenues were below analyst expectations.
However, the top-line growth combined with strict expense control helped to boost adjusted EPS by 11% which resulted in an earnings beat.

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Apr 23

Daily Brief Thematic (Sector/Industry): TSMC. Betting Big Is Nothing New and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

TSMC. Betting Big Is Nothing New
GEM Weekly (21 Apr 2023): China GDP and Activity Data, Indonesia Rates; Alibaba, TSMC, Ant Financial
Weekly Stock Bullfinder – Week of 4/24

TSMC. Betting Big Is Nothing New

By William Keating

Q1 2023 revenues of $16.72 billion, at the bottom end of the guided range, down 16.1% sequentially and 4.8% compared to the year ago period
TSMC pegged Q2 2023 as their trough quarter of the current semiconductor downturn
2023 CapEx of $34 billion at the midpoint, while flat sequentially, represents yet another in a long series of big bets on the future of semiconductors

GEM Weekly (21 Apr 2023): China GDP and Activity Data, Indonesia Rates; Alibaba, TSMC, Ant Financial

By Wium Malan, CFA

The Global Emerging Markets Weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
Macro data points: Chinese GDP, Industrial production, and retail sales; Indonesian interest rates
Companies mentioned:Alibaba Group (9988 HK), Ant Financial Services Group (6688 HK), Taiwan Semiconductor (TSMC) (2330 TT)

Weekly Stock Bullfinder – Week of 4/24

By Weekly Stock Bull Finder

Earnings Season Thus Far- Meanwhile Mixed Economic Messages Earnings season picks up this week with the technology heavyweights like Alphabet, Microsoft, Amazon, and Meta are all set to report their results.
During the upcoming week, 180 S&P 500 companies (including 14 Dow 30 components) are scheduled to report results for the first quarter.
Overall, 18% of the companies in the S&P 500 have reported actual results for Q1 2023 to date.

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Apr 23

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: MSCI STD and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI STD, Yuanta Div+, ZJLD, Anta
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Grinding to a Halt
Last Week in Event SPACE: Yamada Denki, Genting, HKBN, Toyo Construction
Jiangnan Group (1366 HK): Scheme Vote on 15 May
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Silk Laser, Arcland, Essential Metals, AAG, Lian Beng, Oishi

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

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.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Grinding to a Halt

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

Last Week in Event SPACE: Yamada Denki, Genting, HKBN, Toyo Construction

By David Blennerhassett

Yamada Denki (9831 JP) lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.
Genting Bhd (GENT MK)‘s implied stub and simple ratio (GENT/ Genting Singapore (GENS SP)) are currently at muti-year trough levels.
Buy Toyo Construction (1890 JP) <¥970. The proposed dividend could be in danger should YFO spill the board; but spilling the board to get better governance is a good thing.

Jiangnan Group (1366 HK): Scheme Vote on 15 May

By Arun George

The Jiangnan (1366 HK) scheme document is out with the court meeting scheduled for 15 May. The IFA considers the HK$0.40 per share offer to be fair and reasonable.
Key conditions include approval by at least 75% independent shareholders (<10% rejection). The shareholder with a blocking stake has provided an irrevocable on 22 March.
This is a done deal. At the last close and for the 31 May payment, the gross and annualised spread is 3.9% and 44.0%, respectively.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Silk Laser, Arcland, Essential Metals, AAG, Lian Beng, Oishi

By David Blennerhassett

There are 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed on Smartkarma this past week: Wesfarmers (WES AU)‘s tilt for Silk Laser (SLA AU); and Arclands Corporation (9842 JP)Offer for Arcland Service (3085 JP).
Key updates took place for Essential Metals (ESS AU), Genesis Minerals (GMD AU), Alliance Aviation (AQZ AU), AAG Energy (2686 HK), Lian Beng (LBG SP), and Oishi Group (OISHI TB).

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Apr 23

Daily Brief Macro: Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?
Optimizing Portfolio Performance and Mitigating Risk with Economic Scenario Generators

Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?

By Michael J. Howell

Latest weekly Global Liquidity data reveal a sharp hiccup caused by tax payments in the US and repo timing issues in China
This does not foretell of any future serious disruption to our expectations for easier liquidity conditions later this year and next
The jump in America’s TGA at the Fed signals weak tax revenues and warns that the debt-ceiling may be hit sooner, possibly by June/ July

Optimizing Portfolio Performance and Mitigating Risk with Economic Scenario Generators

By Albert Maass

Economic Scenario Generators (ESGs) are computational tools that generate plausible future economic scenarios, aiding risk management, asset valuation, and investment decision-making.
ESGs differ from Monte Carlo simulations in focus, inputs, complexity, and output, and are specifically designed for economic scenario analysis.
Many investor types, including pension funds, life insurance companies, family offices, asset managers, and sovereign wealth funds, can benefit from using ESGs to optimize portfolio performance and mitigate risk.

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Apr 23

Most Read: Lasertec Corp, JD Health, Bellevue Gold, Qisda Corp, Kotak Mahindra Bank, Sun Kwang, Oci Co Ltd, Dongwon Industries, TS Corporation, Tong Hsing Electronic Industries Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp
Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
Yuanta/P-Shares Taiwan Dividend Plus ETF: June Rebalance Preview
Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank
KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
Update on the Trading Opportunities Post OCI Spin-Off
Aggressive Shorting on Dongwon Industries, Which Has Not Been Noticed as a K200 Deletion
Korea Small Cap Gem #21: TS Corp – Addicted to Sugar
Index Rebalance & ETF Flow Recap: MSCI STD, Yuanta Div+, ZJLD, Anta

Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp

The March rebalances of the NIFTY indices and the Nikkei 225 (NKY INDEX) were implemented last week. Plus some ad hoc rebalances for the KOSPI2 INDEX and KOSDQ150 INDEX.
A quieter week coming up with multiple market holidays across markets. We also near the start of the review period for the MSCI May QCIR.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and iShares FTSE/Xinhua A50 China (2823 HK) during the week while there were outflows from some Korea ETFs.

Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?

With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it’s been a year later than originally planned to reach 80 index constituents.
We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.

S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200

Shareholders have approved OZ Minerals Ltd (OZL AU)‘s acquisition by BHP Group Ltd (BHP AU) and OZL is expected to stop trading after the close on 18 April.
OZ Minerals Ltd (OZL AU) will be replaced by Bellevue Gold (BGL AU) in the S&P/ASX 200 (AS51 INDEX) and by Seven Group Holdings (SVW AU) in the S&P/ASX 100.
There has been huge short covering on Seven Group Holdings (SVW AU) and Bellevue Gold (BGL AU) over the last few months.

Yuanta/P-Shares Taiwan Dividend Plus ETF: June Rebalance Preview

Using data from the close on 19 April, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
There will also be capping and funding flows that will lead to a one-way turnover of 13.6% and a one-way trade of US$885m.
There are 10 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1 day ADV to trade.

Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank

The review period for the MSCI May QCIR starts on Monday. The most ~~changes~~ inclusions by far are expected to be in China.
There will be an ad hoc change for the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 18 April.
After a period of sustained outflows, there were some inflows to the IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.

KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)

Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.

Update on the Trading Opportunities Post OCI Spin-Off

The Korea Exchange announced today (20 April) the change in index constituents and major dates for the Oci Co Ltd (010060 KS) spin-off.
Oci Co Ltd (010060 KS)’s shares will be suspended from trading from 27 April to 26 May 2023.
After the spin-off and relisting of holdco/opco shares, we believe that there is a greater probability of OCI Co (opco) shares outperforming OCI Holdings (holdco).

Aggressive Shorting on Dongwon Industries, Which Has Not Been Noticed as a K200 Deletion

By Sanghyun Park

Dongwon Industries’ float rate is less than 10% (1 – 63.15% – 27.65% = 9.20%), which makes it ineligible for KOSPI 200. KRX will reflect this in the June review.
The passive outflow size due to K200 deletion is expected to be about 50 billion won, which will cause an impact of about 28x ADTV.
Considering this deletion has not been sufficiently exposed in the market, the actual price impact may be even more significant and preemptive.

Korea Small Cap Gem #21: TS Corp – Addicted to Sugar

Ts Corporation (001790 KS) is the 21st company in our Korea Small Cap Gems series.
TS Corp is one of the largest sugar refining companies in Korea. Rising raw sugar prices generally have a positive impact on TS Corp’s sales and profits.
TS Corp owns very valuable real estate assets that are much larger than its current market cap (299 billion won).

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