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Smartkarma Daily Briefs

Apr 24
0

Daily Brief Credit: Morning Views Asia: Reliance Industries and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Reliance Industries, Sunac China Holdings

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 ECM: ZJLD Group: Limited Near-Term Post-IPO Upside and more

By | Daily Briefs, ECM

In today’s briefing:

  • ZJLD Group: Limited Near-Term Post-IPO Upside, but Long-Term Prospects Indicate a Promising Future
  • JD Property Pre-IPO – The Positives – Active on the Acquisition Front Leading to Growth

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.

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.

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Apr 24
0

Daily Brief Thematic (Sector/Industry): LRCX. Memory Bites. Hard and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • LRCX. Memory Bites. Hard
  • Deep Dive on Hong Kong Macro-Economics: HK as a Unique Gateway to China and an Offshore RMB Center
  • Baba/Pdd/Jd/Vips/BILI/700 HK/JDL: China TMT Update(Apr.24) – Taobao Cancels Fees for Promotion Event

LRCX. Memory Bites. Hard

By William Keating

  • With ~2x exposure to memory compared to its peers, LRCX is feeling the pain
  • Q1 revenues of  $3.87 billion were marginally higher than the forecasted midpoint, down 26.7% sequentially and down 4.4% YoY.
  • For the current quarter, LRCX expects revenues to decline a further ~ 20% to $3.1 billion at the midpoint.

Deep Dive on Hong Kong Macro-Economics: HK as a Unique Gateway to China and an Offshore RMB Center

By Jacob Cheng

  • Hong Kong is an important gateway to China, allowing foreign investors to invest in China. The City’s strategic location and strong financial infrastructure make it possible
  • In this insight we discuss Hong Kong’s uniqueness and its role in channeling capital to and from China, as well as HK being the most important offshore RMB Center 
  • These factors solidify Hong Kong’s significance in the global economy.  We expect Hong Kong to continue to ride on its unique competitive advantages

Baba/Pdd/Jd/Vips/BILI/700 HK/JDL: China TMT Update(Apr.24) – Taobao Cancels Fees for Promotion Event

By Shawn Yang

  • BILI/ 700 HK: April domestic game codes published by NPPA
  • JD/ PDD/ BABA/JDL: JD commits to maintain its low-price strategy
  • BABA/PDD/JD/VIPS: Taobao cancels fees and adjusts algorithm for upcoming “Super Cost-effective Event”

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Apr 24
0

Daily Brief Macro: Making Sense of a Mona Lisa Market and more

By | Daily Briefs, Macro

In today’s briefing:

  • Making Sense of a Mona Lisa Market
  • US Companies Preserve Profit Margins Via Higher Prices to Avoid Repeat of 2000-2003 Environment
  • Why You Shouldn’t Be Overly Bullish or Bearish

Making Sense of a Mona Lisa Market

By Cam Hui

  • The market is behaving like the enigmatic Mona Lisa as it is beset by a series of cross-currents that investors may not even be aware of.
  • The concerns over a potential debt ceiling impasse, as well as the de-dollarization narrative.
  • The possible effects of a credit crunch on the economy and the Fed’s reaction…and more.

US Companies Preserve Profit Margins Via Higher Prices to Avoid Repeat of 2000-2003 Environment

By Said Desaque

  • US equity prices declined -20% in real terms from 2021 Q4 to 2023 Q1, identical in magnitude to what transpired over the same time period after the internet bubble peak.
  • In contrast to the late-1990s, corporations are responding to rising unit labour costs by increasing selling prices, but this has produced economy-wide inflation.
  • Investors cannot have both rich equity valuations and high operating margins when the latter is due to companies simply raising prices to cover higher costs.

Why You Shouldn’t Be Overly Bullish or Bearish

By Cam Hui

  • A review of market conditions reveals bearish macro factors of a possible recession offset by bullish contrarian factors from extreme cautiousness from sentiment surveys.
  • A U.S. recession is probably in the cards, but most of the deterioration may have already been discounted.
  • This suggests a scenario where neither bulls nor bears gain the upper hand.

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Apr 24
0

Daily Brief Event-Driven: Another Reason To Like China Mobile (941 HK) and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Another Reason To Like China Mobile (941 HK)
  • Yuexiu Property (123 HK) Rights Offering
  • Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch
  • Merger Arb Mondays (24 Apr) – AAG Energy, Jiangnan, HKBN, Healius, Lian Beng, Toyo
  • Weekly Deals Digest (23 Apr) – HKBN, Jiangnan, Lian Beng, Yuexiu Property, ZJLD, Mankind, Adicon
  • Jiangnan (1366 HK): 15th May Court Meeting. IFA Says Fair

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.

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.

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

By Arun George

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

By Arun George

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.

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Apr 24
0

Most Read: Tong Hsing Electronic Industries Ltd, Yuexiu Property, China Mobile, Doubleugames Co, Ltd., LG Energy Solution, Yamada Denki, Aag Energy Holdings, Taiwan Semiconductor (TSMC) – ADR, Las Vegas Sands and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: MSCI STD, Yuanta Div+, ZJLD, Anta
  • Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue
  • Yuexiu Property (123 HK) Rights Offering
  • Another Reason To Like China Mobile (941 HK)
  • Overlooked Trading Angle in K-New Deal Rebalancing Event: Two LONG SHORT Pairs to Watch
  • Nationalization of Lithium Industry in Chile – Impact on Korean Rechargeable Batteries Value Chain
  • Last Week in Event SPACE: Yamada Denki, Genting, HKBN, Toyo Construction
  • Merger Arb Mondays (24 Apr) – AAG Energy, Jiangnan, HKBN, Healius, Lian Beng, Toyo
  • Nvidia, TSMC, ASML Trading Monitor –  TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders
  • Las Vegas Sands: Starting a Run as Macau Recovery Gains Speed. Up 23% YTD.

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.

Yuexiu Property (123 HK): US$1.1bn Dilutive and Unnecessary Rights Issue

By Arun George

  • Yuexiu Property (123 HK) will raise US$1.1bn through a rights offering – 30 rights shares for every 100 existing shares. The subscription price is HK$9.00, a 23.3% discount to TERP.
  • As Yuexiu is in no danger of breaching the three red lines, the rights issue is an opportunistic play on capitalising on the strong share price run.
  • Rights shares will be entitled to the final and special dividend announced on 15 March. Shares go ex-rights on 2 May and the rights start trading on 15 May.

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.

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.

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

By Douglas Kim

  • 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. 

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. 

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

By Arun George

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.

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.

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Apr 23
0

Daily Brief China: Hong Kong Hang Seng Index, Jiangnan, Pharmaron Beijing Co., Ltd. (A) and more

By | China, Daily Briefs

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

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.

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
0

Daily Brief Australia: Woodside Energy Group Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

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

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

By Baptista Research

  • 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
0

Daily Brief South Korea: LG Energy Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

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

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

By Douglas Kim

  • 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. 

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Apr 23
0

Daily Brief United States: Blackline Inc, Intl Flavors & Fragrances, Royal Bank Of Canada, Broadridge Financial Solutions, Inc, Wells Fargo & Co and more

By | Daily Briefs, United States

In today’s briefing:

  • BlackLine Inc.: Major Drivers
  • International Flavors & Fragrances Inc.: Continued Growth In Nourish
  • Royal Bank of Canada: Initiation of Coverage – Canadian Banking Market Dynamics
  • Broadridge Financial Solutions Inc.: Recurring Sales
  • Wells Fargo & Co: Initiation of Coverage – Banking Crisis Impact & Recent Developments

BlackLine Inc.: Major Drivers

By Baptista Research

  • 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.

International Flavors & Fragrances Inc.: Continued Growth In Nourish

By Baptista Research

  • 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

By Baptista Research

  • 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.

Broadridge Financial Solutions Inc.: Recurring Sales

By Baptista Research

  • 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.

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

By Baptista Research

  • 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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