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Smartkarma Daily Briefs

Apr 24
0

Daily Brief TMT/Internet: China Mobile, Doubleugames Co, Ltd., Taiwan Semiconductor (TSMC) – ADR, HKBN Ltd, United Microelectron Sp Adr and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Another Reason To Like China Mobile (941 HK)
  • Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch
  • Nvidia, TSMC, ASML Trading Monitor –  TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders
  • Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week
  • Weekly Deals Digest (23 Apr) – HKBN, Jiangnan, Lian Beng, Yuexiu Property, ZJLD, Mankind, Adicon
  • Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch

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). 

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.

Nvidia, TSMC, ASML Trading Monitor –  TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders

By Vincent Fernando, CFA

  • TSMC and ASML reported results last week, with both companies beating consensus earnings expectations.
  • TSMC and ASML both expect their historically high margins to persist and have both shown a major decline in inventory levels. 
  • TSMC expects utilization to bottom in 2Q23E and improve thereafter; which we believe is strong indication of the cycle bottoming for leaders. TSMC however sees the overall industry taking longer.

Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

By Vincent Fernando, CFA

  • TSMC’s ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.
  • UMC ADR’s are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.
  • ASE ADR’s are trading at a 4.7% premium. ASE’s Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.

Weekly Deals Digest (23 Apr) – HKBN, Jiangnan, Lian Beng, Yuexiu Property, ZJLD, Mankind, Adicon

By Arun George

Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch

By Vincent Fernando, CFA

  • The divergence between the Philly Semiconductor Index and the Taiwan Market has continued despite both falling moderately.
  • Latest short interest data to note — Faraday Technology experienced a surge in short interest ahead of its earnings this week. UMC has high short interest and results this week.
  • Institutionally underheld stock Transcend Media has experienced rising institutional ownership recently and has a very high short ratio.

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Apr 24
0

Daily Brief Financials: Yuexiu Property, Jingdong Property, Sunac China Holdings and more

By | Daily Briefs, Financials

In today’s briefing:

  • Yuexiu Property (123 HK) Rights Offering
  • JD Property Pre-IPO – The Positives – Active on the Acquisition Front Leading to Growth
  • Morning Views Asia: Reliance Industries, Sunac China Holdings

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.

JD Property Pre-IPO – The Positives – Active on the Acquisition Front Leading to Growth

By Clarence Chu

  • Jingdong Property (JDP HK) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
  • JD Property (JDP) develops and manages modern infrastructure, consisting primarily of logistics parks, as well as business parks and other assets in China and in Asia.
  • In this note, we will talk about the positive aspects of the deal.

Morning Views Asia: Reliance Industries, Sunac China Holdings

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 24
0

Daily Brief Consumer: ZJLD Group, Matahari Department Store, Shangri-La Asia, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Consumer, Daily Briefs

In today’s briefing:

  • ZJLD Group: Limited Near-Term Post-IPO Upside, but Long-Term Prospects Indicate a Promising Future
  • Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth
  • Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback
  • Might Consider Creating Mechanism to Allocate Companies’ Cash in Cash Cow to Companies that Can Grow

ZJLD Group: Limited Near-Term Post-IPO Upside, but Long-Term Prospects Indicate a Promising Future

By Andrei Zakharov

  • ZJLD Group, a founder-led baijiu company, backed by PE firm KKR priced its Hong Kong IPO at HK$10.82/share. ZJLD Group shares are expected to start trading on Thursday, Apr.27.
  • The company’s IPO price implies a market cap of ~$4.6B, making it the Hong Kong’s largest IPO this year. Goldman Sachs and China Securities International acted as joint sponsors. 
  • Baijiu is the world’s most consumed liquor and accounted for ~70% of the alcoholic beverage market in China in 2021. Baijiu has a history of more than 5,000 years.

Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth

By Angus Mackintosh

  • Matahari Department Store (LPPF IJ) 1Q2023 results reflected a normalization of sales growth at a sold +14.2% YoY, with normalisation of rentals plus minimum wage increase impacting margins temporarily.
  • The company has resumed its store openings with seven new stores in 1Q2023 and 12-15 new stores planned for FY2023. New merchandising campaigns have made a strong impression in 1Q2023. 
  • Matahari will launch its new Suko brand in May in 20 stores plus 2H2023 will see its new modern format being rolled out. Valuations are attractive with a double-digit yield.

Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback

By Osbert Tang, CFA

  • Despite Shangri-La Asia (69 HK)‘s good share price performance YTD, it has still not yet fully reflected the strengths of and benefits from China’s re-opening. More upside to come.
  • Occupancy for Hong Kong and mainland China has surged 30-45pp YoY in Mar, and with China’s RevPAR for FY22 is down 56.5% from peak, we see massive rebound in profitability.
  • Share of China’s EBITDA was US$258m in FY22, from US$465m in FY16-19, suggests good room for recovery. It is cheap on ~70% discount to revalued NAV, vs. 37% in FY18.

Might Consider Creating Mechanism to Allocate Companies’ Cash in Cash Cow to Companies that Can Grow

By Aki Matsumoto

  • Share buybacks are likely to increase considerably in FY2023. One of the reasons for this is that the TSE has requested companies with stagnant stock prices to disclose improvement measures.
  • More important than the amount of share repurchase is how much ROE increased as a result. Whether shareholder returns were adequate for cash reserves and cash flow should be examined.
  • While Japanese companies today are in a cash cow situation as a whole, they are very cautious about investing aggressively.

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Apr 24
0

Daily Brief Energy/Materials: Aag Energy Holdings and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Merger Arb Mondays (24 Apr) – AAG Energy, Jiangnan, HKBN, Healius, Lian Beng, Toyo

Merger Arb Mondays (24 Apr) – AAG Energy, Jiangnan, HKBN, Healius, Lian Beng, Toyo

By Arun George

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Apr 24
0

Daily Brief Industrials: Jiangnan, Intuitive Machines , ZTO Express and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Jiangnan (1366 HK): 15th May Court Meeting. IFA Says Fair
  • Lunar Pioneers
  • TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

Jiangnan (1366 HK): 15th May Court Meeting. IFA Says Fair

By David Blennerhassett

  • On the 21st Feb, Chu Hui, Jiangnan (1366 HK)‘s chairman and major shareholder, offered HK$0.40/share by of a Scheme, a 12.68% premium to last close.
  • However, shares gained 63% in the morning session of the 16 Feb, before being suspended, therefore the premium was an impressive 83.49% over the last full trading day’s closing price.  
  • A shareholder with a blocking stake gave his irrevocable on the 22 March. The IFA reckons terms are fair and reasonable. This is done.  The Court Meeting is May 15th.

Lunar Pioneers

By subSPAC

  • In recent months, the once-thriving Space SPAC ecosystem has faced significant deflation, brought on by operational hurdles, delays, and challenges in raising funds.
  • Over the last three years, more than a dozen space-focused companies went public through SPACs, yet the majority now trade at a significant discount to their deal valuation.
  • Amidst this challenging landscape, lunar-focused space company Intuitive Machines is the latest to debut last month through a SPAC deal, which valued the company at close to $1 billion.

TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

By Daniel Hellberg

  • March parcel volume growth (22.7%) improved against an easy comp (-3.1%) from 2022
  • Prices are declining, too (-3.2% Y/Y) — not yet precipitous, but worst since Q1 2022
  • Based on what we see, ZTO’s 2023 volume targets will still be difficult to meet

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Apr 24
0

Daily Brief Industrials: Jiangnan, Intuitive Machines , ZTO Express and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Jiangnan (1366 HK): 15th May Court Meeting. IFA Says Fair
  • Lunar Pioneers
  • TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

Jiangnan (1366 HK): 15th May Court Meeting. IFA Says Fair

By David Blennerhassett

  • On the 21st Feb, Chu Hui, Jiangnan (1366 HK)‘s chairman and major shareholder, offered HK$0.40/share by of a Scheme, a 12.68% premium to last close.
  • However, shares gained 63% in the morning session of the 16 Feb, before being suspended, therefore the premium was an impressive 83.49% over the last full trading day’s closing price.  
  • A shareholder with a blocking stake gave his irrevocable on the 22 March. The IFA reckons terms are fair and reasonable. This is done.  The Court Meeting is May 15th.

Lunar Pioneers

By subSPAC

  • In recent months, the once-thriving Space SPAC ecosystem has faced significant deflation, brought on by operational hurdles, delays, and challenges in raising funds.
  • Over the last three years, more than a dozen space-focused companies went public through SPACs, yet the majority now trade at a significant discount to their deal valuation.
  • Amidst this challenging landscape, lunar-focused space company Intuitive Machines is the latest to debut last month through a SPAC deal, which valued the company at close to $1 billion.

TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

By Daniel Hellberg

  • March parcel volume growth (22.7%) improved against an easy comp (-3.1%) from 2022
  • Prices are declining, too (-3.2% Y/Y) — not yet precipitous, but worst since Q1 2022
  • Based on what we see, ZTO’s 2023 volume targets will still be difficult to meet

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Apr 24
0

Daily Brief Health Care: Jiangsu Hengrui Medicine and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined

Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined

By Xinyao (Criss) Wang

  • The contribution of innovative drugs cannot offset the generics revenue decline caused by VBP. Without PD-1 level big variety emerging, the pressure of VBP would continue for a long time. 
  • Hengrui launched Luzsana to develop global business, seeming to send “a compromise and ambiguous signal” to various complex forces within this traditional pharmaceutical empire. ADC pipeline remains to be seen.
  • Hengrui still has many problems that are difficult to solve. Even though there is a rebound, Hengrui’s stock price performance may not deliver excess returns, with lower-than-expected upside elasticity.

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Apr 24
0

Daily Brief Quantitative Analysis: A-H Premium Weekly (Apr 21st): Postal Savings Bank and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • A-H Premium Weekly (Apr 21st): Postal Savings Bank, China Rail, CRRC, China Coal, GWM
  • Hong Kong Connect Flows (Apr 21st): China Mobile, Anta, SMIC, Tencent, CCB, Sensetime
  • Northbound Flows (Apr 21st): Cosco Shipping, CATL, Shenzhen Inovance, Shandong Gold, East Money
  • TWSE Short Interest Weekly (Apr 21st): Mediatek, Unimicron Tech, Walsin Lihwa, Alchip Tech, Largan

A-H Premium Weekly (Apr 21st): Postal Savings Bank, China Rail, CRRC, China Coal, GWM

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 143 stocks over the last week. The average A-H premium was 110.7% as of Apr 21st.
  • The average A-H premium changed by -1.8ppt week on week, led by communication services, real estate, information technology.
  • We highlight weekly changes in A-H premium for Postal Savings Bank, China Rail, CRRC, China Coal, GWM, Everbright Sec, CSC Financial.

Hong Kong Connect Flows (Apr 21st): China Mobile, Anta, SMIC, Tencent, CCB, Sensetime

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of April 21st.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for China Mobile, Anta Sports Products, Semiconductor Manufacturing International, Meituan, Wuxi Biologics, Petrochina, Tencent, China Construction Bank, Sensetime.

Northbound Flows (Apr 21st): Cosco Shipping, CATL, Shenzhen Inovance, Shandong Gold, East Money

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of April 21st.
  • We estimate the weekly inflows to be US$221.4 million, led by industrials, energy, health care sectors, and offset by information technology, consumer staples.
  • We highlight flows for Cosco Shipping, Contemporary Amperex Technology, Shenzhen Inovance Technology, Shandong Gold Mining, East Money Information, Longi Green Energy Technology, Tongwei, Zhejiang Huayou Cobalt, Ping An Insurance.

TWSE Short Interest Weekly (Apr 21st): Mediatek, Unimicron Tech, Walsin Lihwa, Alchip Tech, Largan

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Apr 21st which has an aggregated short interest worth USD12.3bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in Mediatek, Unimicron Tech, Walsin Lihwa, Alchip Tech, Largan Precision, Quanta Computer, Wiwynn.

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Apr 24
0

Daily Brief ESG: Might Consider Creating Mechanism to Allocate Companies’ Cash in Cash Cow to Companies that Can Grow and more

By | Daily Briefs, ESG

In today’s briefing:

  • Might Consider Creating Mechanism to Allocate Companies’ Cash in Cash Cow to Companies that Can Grow

Might Consider Creating Mechanism to Allocate Companies’ Cash in Cash Cow to Companies that Can Grow

By Aki Matsumoto

  • Share buybacks are likely to increase considerably in FY2023. One of the reasons for this is that the TSE has requested companies with stagnant stock prices to disclose improvement measures.
  • More important than the amount of share repurchase is how much ROE increased as a result. Whether shareholder returns were adequate for cash reserves and cash flow should be examined.
  • While Japanese companies today are in a cash cow situation as a whole, they are very cautious about investing aggressively.

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Apr 24
0

Daily Brief Equity Bottom-Up: Nvidia and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Nvidia, TSMC, ASML Trading Monitor –  TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders
  • Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week
  • Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth
  • Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback
  • Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch
  • Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined
  • Lunar Pioneers
  • TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

Nvidia, TSMC, ASML Trading Monitor –  TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders

By Vincent Fernando, CFA

  • TSMC and ASML reported results last week, with both companies beating consensus earnings expectations.
  • TSMC and ASML both expect their historically high margins to persist and have both shown a major decline in inventory levels. 
  • TSMC expects utilization to bottom in 2Q23E and improve thereafter; which we believe is strong indication of the cycle bottoming for leaders. TSMC however sees the overall industry taking longer.

Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

By Vincent Fernando, CFA

  • TSMC’s ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.
  • UMC ADR’s are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.
  • ASE ADR’s are trading at a 4.7% premium. ASE’s Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.

Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth

By Angus Mackintosh

  • Matahari Department Store (LPPF IJ) 1Q2023 results reflected a normalization of sales growth at a sold +14.2% YoY, with normalisation of rentals plus minimum wage increase impacting margins temporarily.
  • The company has resumed its store openings with seven new stores in 1Q2023 and 12-15 new stores planned for FY2023. New merchandising campaigns have made a strong impression in 1Q2023. 
  • Matahari will launch its new Suko brand in May in 20 stores plus 2H2023 will see its new modern format being rolled out. Valuations are attractive with a double-digit yield.

Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback

By Osbert Tang, CFA

  • Despite Shangri-La Asia (69 HK)‘s good share price performance YTD, it has still not yet fully reflected the strengths of and benefits from China’s re-opening. More upside to come.
  • Occupancy for Hong Kong and mainland China has surged 30-45pp YoY in Mar, and with China’s RevPAR for FY22 is down 56.5% from peak, we see massive rebound in profitability.
  • Share of China’s EBITDA was US$258m in FY22, from US$465m in FY16-19, suggests good room for recovery. It is cheap on ~70% discount to revalued NAV, vs. 37% in FY18.

Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch

By Vincent Fernando, CFA

  • The divergence between the Philly Semiconductor Index and the Taiwan Market has continued despite both falling moderately.
  • Latest short interest data to note — Faraday Technology experienced a surge in short interest ahead of its earnings this week. UMC has high short interest and results this week.
  • Institutionally underheld stock Transcend Media has experienced rising institutional ownership recently and has a very high short ratio.

Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined

By Xinyao (Criss) Wang

  • The contribution of innovative drugs cannot offset the generics revenue decline caused by VBP. Without PD-1 level big variety emerging, the pressure of VBP would continue for a long time. 
  • Hengrui launched Luzsana to develop global business, seeming to send “a compromise and ambiguous signal” to various complex forces within this traditional pharmaceutical empire. ADC pipeline remains to be seen.
  • Hengrui still has many problems that are difficult to solve. Even though there is a rebound, Hengrui’s stock price performance may not deliver excess returns, with lower-than-expected upside elasticity.

Lunar Pioneers

By subSPAC

  • In recent months, the once-thriving Space SPAC ecosystem has faced significant deflation, brought on by operational hurdles, delays, and challenges in raising funds.
  • Over the last three years, more than a dozen space-focused companies went public through SPACs, yet the majority now trade at a significant discount to their deal valuation.
  • Amidst this challenging landscape, lunar-focused space company Intuitive Machines is the latest to debut last month through a SPAC deal, which valued the company at close to $1 billion.

TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group

By Daniel Hellberg

  • March parcel volume growth (22.7%) improved against an easy comp (-3.1%) from 2022
  • Prices are declining, too (-3.2% Y/Y) — not yet precipitous, but worst since Q1 2022
  • Based on what we see, ZTO’s 2023 volume targets will still be difficult to meet

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  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
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