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Smartkarma Daily Briefs

Apr 17
0

Daily Brief ECM: TRACKING TRAFFIC/Lalatech IPO: Attractive Segment | ‘Unbelievable’ Cost Control | Hidden Competition and more

By | Daily Briefs, ECM

In today’s briefing:

  • TRACKING TRAFFIC/Lalatech IPO: Attractive Segment | ‘Unbelievable’ Cost Control | Hidden Competition
  • Pre-IPO Beijing Luzhu Biotechnology – The Eventual Revenue Scale and Profit Margins Could Be Limited

TRACKING TRAFFIC/Lalatech IPO: Attractive Segment | ‘Unbelievable’ Cost Control | Hidden Competition

By Daniel Hellberg

  • Lalatech’s largest segment by revenue — Chinese intra-city on-demand freight — features many of the attributes that are attractive to online logistics intermediaries
  • At the top of the list of red flags in its prospectus is Lalatech’s company’s dramatic 71% Y/Y reduction in Sales and Marketing expenses last year
  • Although Lalatech appears to be the leading platform for Chinese intra-city on-demand freight matching, the company faces ‘hidden’ competition from several larger groups

Pre-IPO Beijing Luzhu Biotechnology – The Eventual Revenue Scale and Profit Margins Could Be Limited

By Xinyao (Criss) Wang

  • Either vaccines or therapeutic biologics, Luzhu’s clinical progress has no advantages. There have been quite a few competing products on the market or candidates with faster development progress than Luzhu.
  • Luzhu applies the low price strategy to open the market. We’re not sure if it works or not, since it still depends on R&D efficiency, product quality and commercialization capabilities.
  • We tend to be conservative about the Company’s prospects because its eventual revenue scale and profit margins are likely to be very limited based on our analysis.

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Apr 17
0

Daily Brief Equity Bottom-Up: Lonking (3339 HK): Back to Attractive Zone and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Lonking (3339 HK): Back to Attractive Zone
  • Memory Monitor: Nanya Technology Hopeful of 2H23E DRAM Recovery
  • Baycurrent Consulting: Strong Earnings Beat with an Overly Conservative Guidance
  • Riding the Re-SPAC Wave

Lonking (3339 HK): Back to Attractive Zone

By Osbert Tang, CFA

  • After a poor FY22, 1H23 will stay challenging for Lonking Holdings (3339 HK). However, we expect pick-up in business momentum going forward, and export is a major growth driver.
  • Gross margin rebounded HoH and YoY in 2H22, and Lonking maintained good operating cost control. Recovery of equity market suggests potential big positive swing in investment income. 
  • Including investment portfolio, 92% of the current market capitalisation is net cash, providing solid downside buffer. Its 6.5x PER, 9.2% yield and 0.52x P/B are very attractive valuations.

Memory Monitor: Nanya Technology Hopeful of 2H23E DRAM Recovery

By Vincent Fernando, CFA

  • Nanya Technology’s recent results showed a margin and ASP decline that appears to have performed better than the industry average. 
  • However, Nanya Technology may have traded off better pricing and margins for a continuation of high inventory levels. Nanya shares have underperformed Micron since our Mar 30th piece.
  • Nanya said it expects a marginal recovery for the DRAM market in the second half of 2023E. SK Hynix will be a next major data point, to report April 26th.

Baycurrent Consulting: Strong Earnings Beat with an Overly Conservative Guidance

By Shifara Samsudeen, ACMA, CGMA

  • Baycurrent reported fourth quarter and full-year FY02/2023 results on Friday. 4Q revenues increased 32.1% YoY to ¥21.2bn (vs consensus ¥20.7bn) and OP increased 60.8% to ¥9.6bn (vs consensus ¥8.3bn).
  • Full-Year revenue and OP increased 32% and 39% YoY respectively to ¥76.1bn and ¥29.9bn, beating own guidance by 7% and 15% respectively.
  • The company’s FY02/2023E guidance is too conservative as there has been no signs of an earnings slowdown as DX consulting and high-value add projects would drive next phase of growth.

Riding the Re-SPAC Wave

By subSPAC

  • In the ever-changing landscape of SPACs, a new trend has emerged that has got investors talking: Re-SPACs.
  • Last week, electric vehicle startup Arrival announced its intention to Re-SPAC with Kensington Capital Acquisition Corp. V, signifying a growing interest among De-SPAC companies in exploring alternative capital-raising strategies.
  • Traditionally, SPACs have been a popular vehicle for ushering businesses into the public markets.

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Apr 17
0

Daily Brief Macro: The Market Leaders Hiding in Plain Sight and more

By | Daily Briefs, Macro

In today’s briefing:

  • The Market Leaders Hiding in Plain Sight
  • How to Position for the Coming Growth Slowdown
  • Sustainability Meets Innovation: ESG Derivatives Become Mainstream
  • US Corporate Outlook: Credit and Labour Hoarding Profit Risks Lurk in the Background

The Market Leaders Hiding in Plain Sight

By Cam Hui

  • The long-term structure of global markets is seeing a loss of leadership by U.S. equities and emerging new leadership in Europe.
  • The short-run outlook will depend on the results of earnings season.
  • Our base case calls for a choppy and range-bound market.Wait for the breakout, or breakdown.

How to Position for the Coming Growth Slowdown

By Cam Hui

  • The IMF warned about a growing risk of recession in the advanced economies: “A hard landing — particularly for advanced economies — has become a much larger risk.”
  • The risk of a substantial economic slowdown is rising based on our review of macro, fundamental, and real-time market factors.
  • Investors should position themselves by holding a diversified portfolio of stocks and bonds to protect themselves from possible future asset price volatility.

Sustainability Meets Innovation: ESG Derivatives Become Mainstream

By Albert Maass

  • ESG derivatives (SLDs) are emerging as a key financial instrument in sustainable finance, as they incentivize companies to improve their ESG practices and help investors achieve their sustainability goals.
  • As the market is rapidly growing and evolving, market participants and regulators are facing challenges related to data standardization, transparency, and greenwashing.
  • To ensure transparency and effective risk management, market participants must collaborate and adopt data standards and frameworks to support the successful growth and impact of SLDs.

US Corporate Outlook: Credit and Labour Hoarding Profit Risks Lurk in the Background

By Said Desaque

  • US non-financial corporations’ debt exposure has risen since the global financial crisis. Tighter bank lending standards will raise borrowing costs, while a higher federal funds rate raises debt servicing costs. 
  • The 2023 Q1 US corporate earnings reporting season should confirm the arrival of a corporate profits recession, while another contraction is expected in Q2.
  • Labour hoarding and falling profits make the current environment similar to the onset of the 2001 recession: corporations were eventually forced to reduce headcount to stabilise earnings and stock prices.

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Apr 17
0

Most Read: Rakuten Bank, Kotak Mahindra Bank, Tencent, Arcland Sakamoto, Newcrest Mining, Samsung SDI, Lotte Shopping Co and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Major Global Liquidity Warning – Don’t Fight the Feds
  • Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
  • Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank
  • Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
  • Arclands (9842) Overpays for Arclands Service Holdings (3085)
  • Merger Arb Mondays (17 Apr) – Newcrest, Essential, Healius, Lian Beng, Golden Energy, Arcland
  • Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
  • Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
  • ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon
  • Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Major Global Liquidity Warning – Don’t Fight the Feds

By Michael J. Howell

  • A major bull market in Global Liquidity has started. Be prepared the cycle is rising and looks set to expand towards a new top sometime around 2026.
  • A sharp uptick in the pace of liquidity injections into World financial markets occurred around October of last year in the wake of the British gilt crisis
  • China’s PBoC also began a major easing policy coinciding with the end of COVID-lockdowns. China matters hugely to the World economy because of her whopping size.

Rakuten Bank (5838) IPO – Let’s Go! (Part 2)

By Travis Lundy

  • SBI Sumishin Net Bank (7163 JP) lowered its listing price vs what were already lowered expectations from a year prior. Then Rakuten Bank (5838 JP) lowered its IPO range. 
  • SBI Sumishin dilly-dallied around IPO price for three days then went nuts, rising 40% as of Friday morning. Rakuten Bank’s IPO looks dirt cheap now. 
  • But it is worthwhile comparing it on a spectrum of OTHER Japanese banks and neobanks. 

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

By Brian Freitas

Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen

By David Blennerhassett

  • Prosus (PRX NA) moved 96mn shares of Tencent (700 HK) into CCASS. Tencent shares fell hard. If the share price fell because of a block offering, that would be unwarranted. 
  • Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials. 
  • Japan’s Finance Minister said that companies need to improve their PBRs, and that “increasing corporate value of listed companies would allow for Japan to realise sustainable growth.”

Arclands (9842) Overpays for Arclands Service Holdings (3085)

By Travis Lundy

  • On Friday Arcland Sakamoto (9842 JP) and restaurant franchise subsidiary Arcland Service (3085 JP), which it launched in 1993 and IPOed in 2007, announced they had agreed to merge. 
  • Arcland SHD runs 18 restaurant brands, of which Katsuya is most well-known, with a total of 750 or so restaurants managed globally. It has grown consistently.
  • The merger ratio is at an all-time high for Arcland SHD. This should be a done deal but I might expect some complaints. I think Arclands is probably overpaying. 

Merger Arb Mondays (17 Apr) – Newcrest, Essential, Healius, Lian Beng, Golden Energy, Arcland

By Arun George

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

By Sanghyun Park

  • Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
  • The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
  • We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.

Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review

By Sanghyun Park

  • We should aim for price movement patterns with relatively low market exposure. One of them is the post-effective upward price movement of deletions.
  • The relative price performance for one week after the implementation compared to KOSPI 200 was consistently positive, ranging from 2.41% to 6.82%.
  • Given the recent price movement of four deletion candidates, there is again a high possibility that the price distortion caused by MSCI flow will revert after the effective date.

ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon

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.
  • Momentum appears to be picking up on the IPO front with a few successful listing helping sentiment
  • On the placement front, GDR flow appears to have resumed.

Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

By Mark Chadwick

  • OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump’s into Generative AI; Boeing Production Woes
  • JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products
  • NUGGET. Elon Musk’s aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan’s Advantest(6857)

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Apr 16
0

Daily Brief Quantitative Analysis: TWSE Short Interest Weekly (Apr 14th): Yageo and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • TWSE Short Interest Weekly (Apr 14th): Yageo, Taiwan Cement, Mediatek, Wiwynn

TWSE Short Interest Weekly (Apr 14th): Yageo, Taiwan Cement, Mediatek, Wiwynn

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Apr 14th which has an aggregated short interest worth USD12.5bn.
  • 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 Yageo, Taiwan Cement, Mediatek, Wiwynn, Realtek Semi, Compal Elec, Cathay Financial, Chailease.

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Apr 16
0

Daily Brief ESG: Activist Investors Have Been Consistent and more

By | Daily Briefs, ESG

In today’s briefing:

  • Activist Investors Have Been Consistent, but Environment Around Companies Has Changed Significantly

Activist Investors Have Been Consistent, but Environment Around Companies Has Changed Significantly

By Aki Matsumoto

  • While the shareholding of banks and insurances has dropped significantly, that of foreign shareholders has risen to 30%, making it impossible to ignore the opinions of overseas investors as before.
  • Since the introduction of the Corporate Governance Code, the concept of governance and ROE has permeated companies, making it possible for them to understand the background of activist investors’ proposals.
  • Besides the close relationship between changes in valuations and changes in foreign shareholding, overseas investors account for 70% of TSE’s transactions, forcing management to increasingly listen to overseas investor’s voices.

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Apr 16
0

Daily Brief Industrials: Hong Kong Hang Seng Index and more

By | Daily Briefs, Industrials

In today’s briefing:

  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Nothing to See Here!

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Nothing to See Here!

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

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Apr 16
0

Daily Brief ECM: ECM Weekly (16th Apr 2023) – Rakuten Bank and more

By | Daily Briefs, ECM

In today’s briefing:

  • ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon

ECM Weekly (16th Apr 2023) – Rakuten Bank, Harita Nickel, Merdeka Battery, ZJLD, Adicon, Supcon

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.
  • Momentum appears to be picking up on the IPO front with a few successful listing helping sentiment
  • On the placement front, GDR flow appears to have resumed.

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Apr 16
0

Daily Brief Australia: Newcrest Mining and more

By | Australia, Daily Briefs

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Liann Beng, Newcrest, OZ Minerals, Glory Star New Media

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Liann Beng, Newcrest, OZ Minerals, Glory Star New Media

By David Blennerhassett

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Apr 16
0

Daily Brief South Korea: Samsung SDI and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

By Sanghyun Park

  • Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
  • The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
  • We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.

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