Smartkarma Daily Briefs

Mankind Pharma (6596876Z IN) is looking to raise up to US$526m in its IPO by selling 40.06m shares at a price range of INR 1026 to INR 1080 per share.
The company has allocated 12.02m shares to anchor investors at INR 1080/share. That list includes marquee names and the lock-up reduces near-term float.
The IPO opens on 25 April and will close on 27 April. Shares are expected to start trading on 9 May and there are no near-term index inclusions expected.

KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)

With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX).
There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.

“Sell in May” Another Reason to Be Defensive; Value to Lead?; Buys in Medical Devices, Footwear

By Joe Jasper

The SPX made a high of 4169 last week, tagging our 4165-4200 resistance range. We still believe 4165-4200 will cap upside in 2023, with a reach to 4300-4325 also possible.
Considering limited upside in both scenarios, and with the seasonably weaker “sell in May and go away” period approaching, we continue to recommend higher allocations to defensives
This includes Utilities (XLU, RYU), Consumer Staples (XLP), Health Care (XLV, PPH), and gold miners (GDX).

UMP Healthcare: An Undervalued Gem with a Promising Future in Hong Kong’s Healthcare Market

By Sameer Taneja

UMP Healthcare (“UMP”) is Hong Kong’s leading private medical service network. Its network spans 1100+ service providers, 1mm+ scheme members, 2000+ contract customers, and over 1.13mm+ annual clinic visits.
Despite the consistent track record, UMP trades at a 61% discount to its IPO price, 6x PE, and 8% yield with 45% of its market cap in net cash.
We see ingredients in place for a multi-year re-rate, backed by HK’s new Healthcare Policy and the company’s strategic tilt towards higher margin service lines supporting future profit growth.

WuXi AppTec (2359.HK/603259.CH) 2023Q1 – The Signals Behind the Plunge in Stock Price

Excluding COVID-19 projects, some of WuXi AppTec’s conventional CXO business growth rate has declined significantly. So, the fading of COVID-19 dividend period is not the only reason for the performance decline.
The supply-side reform of innovative drugs is further deepened, and the effect of industry clearing is obvious. So, the “winner-takes-all” logic will be gradually deduced in the future.
WuXi AppTec’s controlling shareholders seem to “have foreseen something”- They could continue to reduce holdings on rallies in the future. Together with longer-than-expected industry winter, valuation center could further decline.

Pre-IPO YSB Inc (YSB.HK) – The Business Model Is Facing Challenges

The margins of pharmaceutical circulation B2B business is low. If there’s not enough incremental space of terminal customers, the simple B2B trading model is difficult to form a leapfrog growth.
Based on YSB’s business model, if terminal customers choose to use other platforms like JD Health/Alibaba Health, etc., YSB would face the risk of losing upstream and downstream users.
So far, we haven’t seen that YSB has established core competitiveness or moat to secure the terminal customers pool, casting doubts on its business model, investment logic and outlook.

Esco Lifesciences (1891571D SP) Pre-IPO: A Profitable Revenue Growth Saga

By Tina Banerjee

Esco Lifesciences Group (1891571D SP), a profitable lifesciences tool provider with a global presence, is looking to raise $300M in its upcoming HK IPO.
The company clocked revenue of S$117M in 2019, which steadily rose to S$155M in 2020 and S$172M in 2021, representing CAGR of 21%, outpacing lifesciences equipment market growth of 10%.
In May 2021, Esco raised $200M through series-A fund raising with investors holding nearly 24% of the shares. This puts its valuation at around $840M.

Johnson & Johnson: Continued MedTech & Pharma Expansion – Key Drivers

By Shifara Samsudeen, ACMA, CGMA

Johnson & Johnson reported strong operational performance in the quarter, demonstrating the power and adaptability of Johnson & Johnson as well as its dedication to enhancing global health outcomes.
They also anticipate a number of pipeline advances in 2023 that will boost confidence in their Pharmaceutical and MedTech companies.
Johnson & Johnson remains confident in its ability to generate near-term success, long-term growth, and shareholder value creation in the future.

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Apr 26

Daily Brief ESG: Next Corporate Governance Code Revision May Further Dissolve Parent-Subsidiary Listings and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Next Corporate Governance Code Revision May Further Dissolve Parent-Subsidiary Listings

Next Corporate Governance Code Revision May Further Dissolve Parent-Subsidiary Listings

By Aki Matsumoto

As statements of reasonableness are disclosed with respect to subsidiary listings that are less than reasonable, further elimination of parent-subsidiary listings is expected to progress.
The issue of parent-subsidiary listings will to come under further scrutiny, as no fundamental solution can be expected even if formal system for ensuring independence of a subsidiary is established.
Extending disclosure to affiliate relationships is a commendable step forward not only for minority shareholders of dependent companies, but also for shareholders of the listed parent company.

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Apr 26

Daily Brief Thematic (Sector/Industry): Deep Dive on Hong Kong Macro-Economics: Embracing Web3.0 and more

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

In today’s briefing:

Deep Dive on Hong Kong Macro-Economics: Embracing Web3.0, Fintech, and Blockchain Technology
China TMT Update (Apr.26) – 3690HK/ 1024HK/NIO/LEGN:Douyin Launches Local Services Conference

Deep Dive on Hong Kong Macro-Economics: Embracing Web3.0, Fintech, and Blockchain Technology

By Jacob Cheng

HK has recently organized several large-scale and international events such as Global Leaders Summit, Bank for International Settlement (BIS) meeting and Web 3.0 Conference in Hong Kong
Government has unveiled policies and initiatives to push for development of Web 3.0, Fintech and Blockchain related Technology, including better regulatory framework, licensing regimes and more collaboration
HK has also set up a HKD30bn fund Hong Kong Investment Corp to fund HK companies. These sectors offer tremendous opportunities and future of HK is exciting

China TMT Update (Apr.26) – 3690HK/ 1024HK/NIO/LEGN:Douyin Launches Local Services Conference

By Shawn Yang

3690HK / 1024HK: Douyin launches local services partner conference (-)
NIO: Wait times for NIO ES7 shortened to 3 weeks (-)
LEGN: Legend Bio announced positive Caltitude-4 data, raising private placement of US$200mn（/）

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Apr 26

Daily Brief Technical Analysis: Bitcoin (XBTUSD) – Recent Decline Is Logical / Necessary / Counter-Trend and more

By Smartkarma Daily Briefs | Daily Briefs, Technical Analysis

In today’s briefing:

Bitcoin (XBTUSD) – Recent Decline Is Logical / Necessary / Counter-Trend
MSCI Emerging Markets Index (MXEF): Weekly Close Confirms Bearish Multi-Week Risk
“Sell in May” Another Reason to Be Defensive; Value to Lead?; Buys in Medical Devices, Footwear
Late April Break for a 6-Week Decline

Bitcoin (XBTUSD) – Recent Decline Is Logical / Necessary / Counter-Trend

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.
Bitcoin (XBTUSD) confirmed a meaningful top in the past 2 weeks when it rejected material MT resistance levels and completed a bearish weekly reversal pattern.
With definitive bullish price and momentum triggers in play, we anticipate that a multi-week period of consolidation / correction will remain counter-trend. Searching for the next MT base towards 25200/25250.

MSCI Emerging Markets Index (MXEF): Weekly Close Confirms Bearish Multi-Week Risk

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.
Throughout Q4 2022 / Q1 2023 each material turning point has been confirmed by a definitive weekly reversal pattern. Last week produced a definitive bearish weekly reversal pattern.
Long-Term charts imply that MXEF has entered a sustainable multi- quarter uptrend. Last week’s bearish weekly confirmation however, confirms risk of a further counter-trend correction in the coming weeks.

“Sell in May” Another Reason to Be Defensive; Value to Lead?; Buys in Medical Devices, Footwear

By Joe Jasper

The SPX made a high of 4169 last week, tagging our 4165-4200 resistance range. We still believe 4165-4200 will cap upside in 2023, with a reach to 4300-4325 also possible.
Considering limited upside in both scenarios, and with the seasonably weaker “sell in May and go away” period approaching, we continue to recommend higher allocations to defensives
This includes Utilities (XLU, RYU), Consumer Staples (XLP), Health Care (XLV, PPH), and gold miners (GDX).

Late April Break for a 6-Week Decline

By Thomas Schroeder

Late April capitulation turn unfolding on the SPX trendline break and RTY wedge support breach. We turned bearish (shorting) on April 18 just under SPX 4,200.
A number of breakdown coming through in Asia – Korea’s bear impulse and Taiwan’s break of trendline support that turns the cycle to bearish. Japan will lag.
SPX MACD bear turn is in line with our late April bear phase. A cycle trough is due in 6 weeks time (second week of June).

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Apr 26

Daily Brief Credit: Morning Views Asia: Road King Infrastructure and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Morning Views Asia: Road King Infrastructure

Morning Views Asia: Road King Infrastructure

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.

Road King Infrastructure

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Apr 26

Daily Brief ECM: CPF Global Food Solution Pre-IPO – The Positives – One of the Largest Players in the Industry and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

CPF Global Food Solution Pre-IPO – The Positives – One of the Largest Players in the Industry
Lalatech IPO: Huge Drop in Operating Costs Prior to IPO Is Concerning
Horizon Construction Development IPO: The Bull Case
Pre-IPO YSB Inc (YSB.HK) – The Business Model Is Facing Challenges
Esco Lifesciences (1891571D SP) Pre-IPO: A Profitable Revenue Growth Saga
CPF Global Food Solution Pre-IPO – The Negatives – Muted Growth Prospects
Ross Stores Inc.: Collaboration With Adidas & Other Drivers
Omnicom Group Inc.: Success in Precision Marketing and Public Relations – Key Drivers
Analog Devices Inc.: The Next Big Thing in Mission-Critical Equipment – Key Drivers

CPF Global Food Solution Pre-IPO – The Positives – One of the Largest Players in the Industry

By Ethan Aw

CPF Global Food Solution (2247162D TB) is looking to raise around US$1bn in its upcoming Thailand IPO.
CPF Global Food Solution (CPFGS) is a subsidiary of CP Foods Group, offering food products and services to food operators and consumers locally and internationally.
In this note, we talk about the positive aspects of the deal.

Lalatech IPO: Huge Drop in Operating Costs Prior to IPO Is Concerning

Lalatech Holdings Co Ltd (LALA HK) is a technology driven logistics transportation platform with a global footprint. The company has filed for an IPO and plans to raise about US$1bn.
The company’s financials have shown significant improvement over the last 2 years with the company turning profitable at the operating profit line in 2022.
Huge drop in selling and marketing costs have helped cut down losses which seems too realistic and the company hasn’t provided sufficient explanation on these cost cuts.

Horizon Construction Development IPO: The Bull Case

By Arun George

Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.
HCD is the largest equipment operation service provider in China in terms of revenue in 2021, according to Frost & Sullivan.
The key elements of the bull case rest on market share gains, an anticipated post-COVID recovery boost, high revenue visibility, stable operating margin and young equipment life.

Pre-IPO YSB Inc (YSB.HK) – The Business Model Is Facing Challenges

The margins of pharmaceutical circulation B2B business is low. If there’s not enough incremental space of terminal customers, the simple B2B trading model is difficult to form a leapfrog growth.
Based on YSB’s business model, if terminal customers choose to use other platforms like JD Health/Alibaba Health, etc., YSB would face the risk of losing upstream and downstream users.
So far, we haven’t seen that YSB has established core competitiveness or moat to secure the terminal customers pool, casting doubts on its business model, investment logic and outlook.

Esco Lifesciences (1891571D SP) Pre-IPO: A Profitable Revenue Growth Saga

By Tina Banerjee

Esco Lifesciences Group (1891571D SP), a profitable lifesciences tool provider with a global presence, is looking to raise $300M in its upcoming HK IPO.
The company clocked revenue of S$117M in 2019, which steadily rose to S$155M in 2020 and S$172M in 2021, representing CAGR of 21%, outpacing lifesciences equipment market growth of 10%.
In May 2021, Esco raised $200M through series-A fund raising with investors holding nearly 24% of the shares. This puts its valuation at around $840M.

CPF Global Food Solution Pre-IPO – The Negatives – Muted Growth Prospects

By Ethan Aw

CPF Global Food Solution (2247162D TB) is looking to raise around US$1bn in its upcoming Thailand IPO.
CPF Global Food Solution (CPFGS) is a subsidiary of CP Foods Group, offering food products and services to food operators and consumers locally and internationally.
In this note, we talk about the not-so-positive aspects of the deal.

Ross Stores Inc.: Collaboration With Adidas & Other Drivers

Ross Stores delivered strong fourth-quarter sales and profitability results despite a very competitive holiday season, owing to customers’ positive response to the company’s expanded selection and value offerings.
The company delivered an all-around beat with earnings per share for Q4 reported at $1.31 on a net income of $447 million.
These figures compare to earnings per share of $1.04 on net earnings of $367 million for the 13 weeks ended January 29, 2022.

Omnicom Group Inc.: Success in Precision Marketing and Public Relations – Key Drivers

Omnicom Group delivered an all-around beat as its revenues increased by 1%, while non-GAAP adjusted operating income remained unchanged.
Net interest expense decreased as interest income exceeded the company’s expectations.
We give Omnicom Group a ‘Hold’ rating with a revised target price.

Analog Devices Inc.: The Next Big Thing in Mission-Critical Equipment – Key Drivers

Despite significant macroeconomic uncertainty in the first quarter of fiscal 2023, Analog Devices managed to deliver an all-around beat.
These successes were driven by the company’s unwavering commitment to customer collaboration, the rising demand for cutting-edge technologies, and effective operational management.
We give Analog Devices a ‘Hold’ rating with a revised target price.

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Apr 26

Daily Brief Equity Bottom-Up: Actionable Tactical Trade: Long China Mobile H-Share 941HK on Strong Southbound Momentum & A/H Prem. and more

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

In today’s briefing:

Actionable Tactical Trade: Long China Mobile H-Share 941HK on Strong Southbound Momentum & A/H Prem.
Shimano (7309) | The Hangover
[Tencent (700 HK, BUY, TP HK$433) Earnings Preview]: Still a BUY, but Not Our Top Pick
Wynn Macau: We like the Bonds Now Moving to the Shares Later This Spring
Oriental Watch: Recovery of HK Sales in Jan-Feb 2023, Trading at 15% Yield, 50% of Mkt Cap in Cash
CIMC Enric (3899 HK): It’s Not My Fault, I’m Resilient
UMP Healthcare: An Undervalued Gem with a Promising Future in Hong Kong’s Healthcare Market
WuXi AppTec (2359.HK/603259.CH) 2023Q1 – The Signals Behind the Plunge in Stock Price
Vivendi: Leadership Position in Media, Entertainment, Culture, and Communication
Ricegrowers Limited (SunRice) – Global Market Forecasts Positive for SunRice

Actionable Tactical Trade: Long China Mobile H-Share 941HK on Strong Southbound Momentum & A/H Prem.

By Jacob Cheng

This insight is a short note that aims to ride on short term momentum for the stock
Since April, southbound trade contributes to 72% of China Mobile H-share turnover. So, southbound trade is the major share driver
For entire market, A-share is trading at 40% premium to H-share. For China mobile, the A/H premium is currently at 80%. Strong upside for H-share if premium is to narrow

Shimano (7309) | The Hangover

By Mark Chadwick

Shimano reported Q1 results post close. Operating profit fell 26% YoY and full year guidance was cut 21%
We believe that sales in 2023 have simply reverted back to trend. We expect sales to grow in 2024 as underlying demand drivers remain intact
With the stock down 9% over the past year, we believe the market has discounted the profit revision. We see good value at 17x EV/EBIT

[Tencent (700 HK, BUY, TP HK$433) Earnings Preview]: Still a BUY, but Not Our Top Pick

By Shawn Yang

We estimate that Tencent 1Q23’s rev./non-IFRS net income beat cons. by 3.6%/4.5%. We forecast that VAS/ads/others will have 6.5%/15.3% /17.6% YoY growth in 1Q23.
We maintain BUY rating for Tencent because of 1) video account, especially the rapid growth of Wechat Beans (微信豆); and 2) recovery of ads revenue from Ecommerce and gaming.
We remove Tencent from our top buy ideas because: 1) current consensus has been high; 2) lack of hit title in upcoming pipeline; and 3) launch of DNF casts shadow

Wynn Macau: We like the Bonds Now Moving to the Shares Later This Spring

By Howard J Klein

Wynn’s issuance of US$600m in convertible bonds for its Macau subsidiary pushes out maturities by five years, easing investor concerns about debt levels.
The Macau gaming market is in early stages of pent up demand recovery compared with Las Vegas which is in a mature stage of the cycle.
Premium mass and VIP customers key to Wynn Macau business model are returning at a faster rate than industry observers have judged. Decline of junkets not hurting VIP in 2023.

Oriental Watch: Recovery of HK Sales in Jan-Feb 2023, Trading at 15% Yield, 50% of Mkt Cap in Cash

By Sameer Taneja

The census and statistics department data for watches and jewelry showed a sharp rebound for HK in Jan-Feb 2023 (up 63% YoY). China sales, we estimate, continue to be resilient.
Over the last month, secondhand watch pricing has also shown an uptrend of 3-4%. This leads us to believe that demand is having a decent uptick in April.
The stock trades at 7.2x PE FY23e, with >50% of the market capitalization in cash and a 15% dividend yield (assuming a 100% payout ratio).

CIMC Enric (3899 HK): It’s Not My Fault, I’m Resilient

By Osbert Tang, CFA

We see the recent sell-down of CIMC Enric Holdings (3899 HK) unjustified. 1Q23 revenue grew a healthy 19.6%, and management indicated excellent margin expansion as well.
New orders signed accelerated in Mar to 21.6%, from just 10.7% in Jan-Feb. Its order backlog reached Rmb18.9bn (+22.3%). For hydrogen business, new orders even grew 61%.
Guidances are for double-digit revenue growth in FY23, and besides better gross margin, lower tax rates have benefited net margin. We estimate 1Q23 profit may have increased ~50%.

UMP Healthcare: An Undervalued Gem with a Promising Future in Hong Kong’s Healthcare Market

By Sameer Taneja

UMP Healthcare (“UMP”) is Hong Kong’s leading private medical service network. Its network spans 1100+ service providers, 1mm+ scheme members, 2000+ contract customers, and over 1.13mm+ annual clinic visits.
Despite the consistent track record, UMP trades at a 61% discount to its IPO price, 6x PE, and 8% yield with 45% of its market cap in net cash.
We see ingredients in place for a multi-year re-rate, backed by HK’s new Healthcare Policy and the company’s strategic tilt towards higher margin service lines supporting future profit growth.

WuXi AppTec (2359.HK/603259.CH) 2023Q1 – The Signals Behind the Plunge in Stock Price

By Research as a Service (RaaS)

Excluding COVID-19 projects, some of WuXi AppTec’s conventional CXO business growth rate has declined significantly. So, the fading of COVID-19 dividend period is not the only reason for the performance decline.
The supply-side reform of innovative drugs is further deepened, and the effect of industry clearing is obvious. So, the “winner-takes-all” logic will be gradually deduced in the future.
WuXi AppTec’s controlling shareholders seem to “have foreseen something”- They could continue to reduce holdings on rallies in the future. Together with longer-than-expected industry winter, valuation center could further decline.

Vivendi: Leadership Position in Media, Entertainment, Culture, and Communication

By Alexis Dwek

For 2022, Vivendi reported a solid set of results as both revenues and EBITA grew strongly despite the challenging market environment
For 2023, positive momentum is expected to be sustained, as management stays confident in the growth prospects.
Underlying market growing close 4.6% CAGR to 2026. Solid growth prospects for the Company

Ricegrowers Limited (SunRice) – Global Market Forecasts Positive for SunRice

The latest release of the USDA Rice Crop Outlook Report (April 13) provides useful data on the global and US rice markets, which has implications for the rice-related businesses within Ricegrowers Limited, trading as SunRice (ASX:SGLLV).
The global rice market is forecast to see the second consecutive year of demand exceeding supply (due mainly to supply issues), with global-ending rice stocks expected to be the lowest since 2017/2018 and equal to just four months’ demand.
Prices for most grades, as a result, remain at record highs (US-medium-grain, which is a proxy for Australian grades) or trending higher in recent months (including Thailand +4%-5% and Vietnam +7%).

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Apr 26

Daily Brief Macro: Japan Watch #2: Ueda Is Under Increasing Pressure to Act and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Japan Watch #2: Ueda Is Under Increasing Pressure to Act
Operating Leverage in Reverse: The Impact on Equity Markets
Resilience in World Economy Is Only of Modest Help to Asia
Avoiding Recession Raises All Rates
China’s Recovery Progresses but Elements of Fragility Remain
CX Daily: Hubris And Heartache: Behind The Tragedy Of Beijing’s Deadly Hospital Fire

Japan Watch #2: Ueda Is Under Increasing Pressure to Act

By Andreas Steno

Japanese inflation is getting increasingly embedded – >80% of basket components increase YoY.
Expectations ahead of the Ueda-led BoJ policy statement are low
In general, a move higher in the Japanese Core CPI speaks in favor of a defensive equity allocation

Operating Leverage in Reverse: The Impact on Equity Markets

By Jeroen Blokland

Operating leverage works both ways. With the gap between earnings growth and sales growth now negative, stock markets have entered a phase of ‘reverse operating leverage.’
To determine the impact of reverse operating leverage on future equity market returns, we looked at all instances when sales growth topped earnings growth since 2000.
As it turns out, a recession determines whether ‘reverse operating leverage’ hits equities or not. And since we expect a recession…

Resilience in World Economy Is Only of Modest Help to Asia

By Manu Bhaskaran

The world economy has been more resilient than thought but the demand for Asian manufactured goods has been hurt by cyclical headwinds and lower commodity prices.
Global services activity, in contrast, has done better but this provides fewer benefits for Asian exporters. Still, a fuller tourism recovery should provide a boost to Asia.
However, capital expenditures in developed economies are proving resilient, while positive dynamics such as infrastructure spending and investment inflows provide support for growth.

Avoiding Recession Raises All Rates

By Phil Rush

Global activity has remained remarkably resilient to recessionary forces. A prolonged path of stagnation may spare the acute pains of recession but carries other costs.
Persistent excess demand sustains inflationary pressures, including through second-round effects that are particularly pronounced in the UK.
Policy needs to stay tighter for longer, increasing the hysteresis potential as rates need to defer demand ever further into the future, opposite to the 2010s’ regime.

China’s Recovery Progresses but Elements of Fragility Remain

By Manu Bhaskaran

Economic data in March showed that the recovery is underway, but the pace is uneven and shows signs of slowing in areas like retail sales, fixed investment, and real estate.
Forward-Looking indicators such as corporate confidence, loan demand, and housing market sentiment are improving, but a “wait-and-see” attitude is prevalent.
We upgrade our views on Chinese growth given that the recovery remains on track, but this is subject to a considerable margin of error given our reservations.

CX Daily: Hubris And Heartache: Behind The Tragedy Of Beijing’s Deadly Hospital Fire

By Caixin Global

Hubris and Heartache: Behind the tragedy of Beijing’s deadly hospital fire
China lodges complaint about South Korean president’s ‘erroneous’ remarks on Taiwan
China loses more of its share of U.S. imports to ‘low-cost’ Asian rivals

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Apr 26

Daily Brief Event-Driven: Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Matched Order Fraud in Korea: Reason Behind Eight Stocks Hit Massively
AAG (2686 HK): Pros & Cons Ahead Of Scheme Vote
Mankind Pharma: IPO Details & Index Inclusion
KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)
Quiddity Leaderboard Singapore’s STI Sep 23: KDCREIT Facing Risk of Deletion
CSI500 Index Rebalance Preview: Potential Changes as Review Period Nears Completion

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.

AAG (2686 HK): Pros & Cons Ahead Of Scheme Vote

By David Blennerhassett

We’re down to the pointy end of AAG Energy Holdings (2686 HK)‘s Scheme. And at a gross/annualised spread of 15.6%/318%, all is not well.
The uncertainty is not without substance. A derisory Offer, one that is rejected by a proxy advisor; together with a silent, large shareholder no one seems to know.
Shareholders go to the vote this Thursday, the 27th April. Currently trading 5% below the undisturbed price.

Mankind Pharma: IPO Details & Index Inclusion

Mankind Pharma (6596876Z IN) is looking to raise up to US$526m in its IPO by selling 40.06m shares at a price range of INR 1026 to INR 1080 per share.
The company has allocated 12.02m shares to anchor investors at INR 1080/share. That list includes marquee names and the lock-up reduces near-term float.
The IPO opens on 25 April and will close on 27 April. Shares are expected to start trading on 9 May and there are no near-term index inclusions expected.

KOSDAQ150 Index Rebalance Preview: Adds Starting to Crack (After Huge Outperformance)

With 3 trading days left in the review period for the June rebalance, we see 8 potential changes and 2 close adds for the KOSDAQ 150 Index (KOSDQ150 INDEX).
There are two potential transfers from the KOSDAQ Market to KOSPI Market that could lead to more changes in May and/or June.
Nearly all potential deletions are trading near their lows and short interest has been increasing on some of the stocks. That will be covered closer to implementation of the rebalance.

Quiddity Leaderboard Singapore’s STI Sep 23: KDCREIT Facing Risk of Deletion

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for Singapore’s ST index (“STI”) between now and the September 2023 index review.
With roughly 4 more months left for the base date, Sembcorp Marine (SMM SP) seems to be an ADD but it is close to the border.
Since the ranking system used for this index in based on prices as at a single point in time, the rankings could change significantly and our expectations could change too.

CSI500 Index Rebalance Preview: Potential Changes as Review Period Nears Completion