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Smartkarma Daily Briefs

Apr 07
0

Daily Brief Quantitative Analysis: ASX Short Interest Weekly (Mar 31st): Woodside Energy and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • ASX Short Interest Weekly (Mar 31st): Woodside Energy, Brambles, Liontown Resourc, Rio Tinto

ASX Short Interest Weekly (Mar 31st): Woodside Energy, Brambles, Liontown Resourc, Rio Tinto

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of ASX Stocks as of Mar 31st (reported today) which has an aggregated short interest worth USD45.3bn.
  • 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 Woodside Energy, Brambles, Liontown Resourc, Rio Tinto, Downer Edi.

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Apr 07
0

Daily Brief Technical Analysis: Defensives Worthy of a Tactical Overweight; Buys in Global Health Care and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Defensives Worthy of a Tactical Overweight; Buys in Global Health Care, Gold Miners, and Utilities

Defensives Worthy of a Tactical Overweight; Buys in Global Health Care, Gold Miners, and Utilities

By Joe Jasper

  • As recently as last week and throughout February/March we have recommended shifting to defensives due to our belief that $93 will cap upside on the $ACWI in 2023.
  • MSCI ACWI defensive Sectors including Health Care, Utilities, and Consumer Staples are hitting 2+ month RS highs, and are staging bullish price and RS reversals, as are gold miners (GDX-US).
  • This confirms our belief that now is the time to be tactically overweight defensives. We highlight buys in Health Care, Gold Miners, and Utilities, with the vast majority from Europe

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Apr 07
0

Daily Brief Credit: Formula One Group: Detailed Credit Analysis & Financial Strength Evaluation Report and more

By | Credit, Daily Briefs

In today’s briefing:

  • Formula One Group: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Medco Energi – Earnings Flash – FY 2022 Results – Lucror Analytics
  • PerkinElmer Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Waters Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

Formula One Group: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Formula One Group is major global media and entertainment company with decent fundamentals.
  • The management anticipates Ford’s contribution as a technical engine supplier will be valuable for the sport and Red Bull.
  • Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

Medco Energi – Earnings Flash – FY 2022 Results – Lucror Analytics

By Leonard Law, CFA

Medco Energi’s FY 2022 results were strong, in line with expectations. This was supported by increased production following the ConocoPhillips Indonesia acquisition in March, as well as the high oil-price environment. Moreover, copper and gold mining JV AMNT has started to mature, generating healthy dividends. Leverage improved to a healthy level, with Debt/EBITDA at 2.1x and Net Debt/EBITDA at 1.6x.

We expect Medco’s earnings to increase slightly in FY 2023, assuming oil prices are maintained at current levels, as ASP from its fixed-price contracts is likely to rise from a low base. In addition, the company should deleverage further going forward, supported by strong OCF generation and debt repayments. Management said that Medco intends to acquire more assets in future, although there are no imminent plans currently.

PerkinElmer Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • PerkinElmer is a major provider of life sciences, diagnostics, and applied services markets across the globe.
  • The company had a decent 2022 and their Life Sciences and Diagnostics business experienced organic growth of 9% for the entire year.
  • With the introduction of adeno-associated virus or AAV detection kits, the Life Sciences business has continued to innovate in cell and gene therapy.

Waters Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • This is our first report on major lab equipment manufacturer, Waters Corporation.
  • Its Pharma has also had decent growth, driven by both large and small molecule applications which has been led by the European markets.
  • Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

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Apr 07
0

Daily Brief Crypto: Q1 Liquidity Ranking for Crypto Assets and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Q1 Liquidity Ranking for Crypto Assets

Q1 Liquidity Ranking for Crypto Assets

By Kaiko

  • Last quarter I published the first liquidity ranking system for crypto assets, comparing each asset’s liquidity ranking to its market cap and investigating which token’s market cap is the most misleading from a liquidity standpoint.
  • Liquidity has arguably never been at more of a premium than right now in crypto, with USD payment rails being shut down and market makers pulling orders from exchanges.
  • With market depth at 10 month lows, price volatility has picked up and so it is essential investors can accurately evaluate the liquidity of each individual asset to gain an understanding of how much short term volatility to expect.

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Apr 07
0

Daily Brief ECM: Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1) and more

By | Daily Briefs, ECM

In today’s briefing:

  • Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)
  • Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking

Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)

By Travis Lundy

  • Rakuten Bank (5838 JP) has priced at a new range of ¥1,300-1,400/share, down from ¥1,630-1,930/share. That lowers TTM PER and PBR to well below where SBI Sumishin was priced.
  • This will now be universally recognised by pre-IPO analysts as a raging buy. Even at the top end. Important considerations:  Rakuten parent TAM, growth, index inclusions, etc. 
  • There are OTHER important considerations going forward which show themselves in the documents. 

Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking

By Oshadhi Kumarasiri

  • Rakuten Bank announced its IPO price range at ¥1,300-1,400 per share, which is 20-29% lower than the initially indicated price range at the time of filling of the IPO prospectus.
  • The new price puts Rakuten Bank (5838 JP) on 4.9-5.3x FY+2 PE, which is the lowest in Japan’s banking sector.
  • Japanese banks usually trade at a price-to-book of 0.2x per 1% ROE. This indicates that Rakuten Bank, which is priced at 1.0-1.1x, may deserve a fair price-to-book of over 2.0x.

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Apr 07
0

Most Read: Rakuten Bank, Kawasaki Kisen Kaisha, DB Inc, KT Corp, Jardine Cycle & Carriage, ZJLD Group, HS Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Rakuten Bank IPO – Lower Range Makes It Even More Attractive
  • Rakuten Bank IPO: New Price Range Is a Steal
  • MSCI Japan May QCIR: Couple of Potential Changes
  • DB Group: Kim Family Feud Leading to a Potential M&A Fight?
  • Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
  • Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)
  • JCNC’s Logic-Defying Valuation
  • ZJLD Group Pre-IPO Peer Comparison – Smallest but Compensated with Growth. Sentiment Picking Up
  • Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking
  • Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price

Rakuten Bank IPO – Lower Range Makes It Even More Attractive

By Sumeet Singh

  • Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$630m in its Japan listing in April 2023.
  • RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
  • In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.

Rakuten Bank IPO: New Price Range Is a Steal

By Arun George

MSCI Japan May QCIR: Couple of Potential Changes

By Brian Freitas

DB Group: Kim Family Feud Leading to a Potential M&A Fight?

By Douglas Kim

  • In this insight, we discuss another very interesting situation brewing which is the potential family feud at the DB Group.
  • One of the scenarios of the Kim family at DB Group is a sibling conflict between Nam-Ho Kim (Chairman) and his sister Ju-Won Kim.
  • Our base case valuation of DB Inc is target market cap of 488 billion won or 2,428 won per share, which is 36% higher than current price.

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

By Sanghyun Park

  • There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
  • If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
  • This implies an essential premise for us to set up a more aggressive preemptive position on KT.

Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)

By Travis Lundy

  • Rakuten Bank (5838 JP) has priced at a new range of ¥1,300-1,400/share, down from ¥1,630-1,930/share. That lowers TTM PER and PBR to well below where SBI Sumishin was priced.
  • This will now be universally recognised by pre-IPO analysts as a raging buy. Even at the top end. Important considerations:  Rakuten parent TAM, growth, index inclusions, etc. 
  • There are OTHER important considerations going forward which show themselves in the documents. 

JCNC’s Logic-Defying Valuation

By David Blennerhassett

ZJLD Group Pre-IPO Peer Comparison – Smallest but Compensated with Growth. Sentiment Picking Up

By Clarence Chu

  • ZJLD Group (ZJLD HK) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
  • ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
  • In this note, we discuss the industry dynamics and undertake a peer comparison.

Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking

By Oshadhi Kumarasiri

  • Rakuten Bank announced its IPO price range at ¥1,300-1,400 per share, which is 20-29% lower than the initially indicated price range at the time of filling of the IPO prospectus.
  • The new price puts Rakuten Bank (5838 JP) on 4.9-5.3x FY+2 PE, which is the lowest in Japan’s banking sector.
  • Japanese banks usually trade at a price-to-book of 0.2x per 1% ROE. This indicates that Rakuten Bank, which is priced at 1.0-1.1x, may deserve a fair price-to-book of over 2.0x.

Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price

By Travis Lundy

  • Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month. 
  • This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
  • There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.

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Apr 07
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan |Fed’s Bullard Offers Comfort; NUGGET: Kansai Electric- Watch the Nuke Restarts ! and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |Fed’s Bullard Offers Comfort; NUGGET: Kansai Electric- Watch the Nuke Restarts !
  • Commercial/Contract Furniture/Consumer Hardlines

Good Morning Japan |Fed’s Bullard Offers Comfort; NUGGET: Kansai Electric- Watch the Nuke Restarts !

By Mark Chadwick

  • OVERSEAS.  Bullard Calms Recession fears; SPX stabilizes; 2Yr Yields Rise: Non Farm Payrolls in Focus ahead of Good Friday Holidays
  • JAPAN. NKY Futs +0.5% vs Cash; USDJPY 131.7; ex-IMF Chief Economist Blanchard says BOJ to remain accomodative;  JP Corporates doubles buying of own stocks in 2022; Point 72 JP expansion
  • NUGGET.  KEPCO reconfirmed its plan to bring 2 addl Nuclear power plans online in a few months. The profit uptick will be considerable. We maintain KEPCO as a TOP PICK.

Commercial/Contract Furniture/Consumer Hardlines

By Water Tower Research

  • This note addresses the Business Institutional Furniture Manufacturers Association’s (BIFMA) Monthly Market Pulse (MMP) of incoming orders and sales for February 2023.
  • About 50+ BIFMA member companies voluntarily submit monthly sales and orders to a national accounting firm that aggregates and reports composite data.
  • Neither BIFMA nor any individual member has access to the raw data.

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Apr 07
0

Daily Brief Macro: Japan Watch: The Flight Back Home and more

By | Daily Briefs, Macro

In today’s briefing:

  • Japan Watch: The Flight Back Home

Japan Watch: The Flight Back Home

By Andreas Steno

  • The increase in Japan’s borrowing costs does pose a threat to further fluctuations in global bond markets. 
  • Given the immense holdings of Treasury bonds by Japanese investors and institutions, this could be a worrying reading for US investors.
  • Both medium- and long-duration Treasuries have become unattractive as hedging costs have eaten away the upside.

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Apr 07
0

Daily Brief Event-Driven: Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period? and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
  • JCNC’s Logic-Defying Valuation
  • Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
  • Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer
  • Industrivärden: Q1 Results and Discount to NAV

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

By Sanghyun Park

  • There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
  • If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
  • This implies an essential premise for us to set up a more aggressive preemptive position on KT.

JCNC’s Logic-Defying Valuation

By David Blennerhassett

Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price

By Travis Lundy

  • Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month. 
  • This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
  • There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.

Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer

By Arun George

  • Golden Energy & Resources (GER SP)’s valuation is dependent on three key assets – Golden Energy Mines (GEMS IJ), Stanmore Coal (SMR AU) and Ravenswood. GEMS/SMR have observable values.
  • The valuation of GEAR’s 50% stake in Ravenswood gets little publicity largely as it is unlisted. However, the annual report provides data points to value this key gold asset. 
  • Based on peer EV/Resource and EV/Reserve multiples, Ravenswood 50% stake is worth S$200-465 million. Using the midpoint valuation, the SoTP valuation is S$1.40 (39% upside to the last close).

Industrivärden: Q1 Results and Discount to NAV

By Jesus Rodriguez Aguilar

  • Industrivarden AB (INDUA SS) is resilient: NAV on 31 March was SEK 138.3 billion, or SEK 320/share, an increase q-o-q of SEK 27/share, +9%, with some minor additions to the portfolio.
  • The balance sheet is strong, with a debt/equities ratio kept at 4%. A+ rating was confirmed on 27 March. 5-year total return was 67.5% vs. 66% for the OMX30.
  • The discount to NAV of C shares is 8.1% (vs. 10.7% average over the last 8 years). During Q1 the discount has tightened from 13.6% on 31 December.

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Apr 07
0

Daily Brief Equity Bottom-Up: Xiaomi: Aggressive Spending on EVs as Smartphone Growth Slows Down and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Xiaomi: Aggressive Spending on EVs as Smartphone Growth Slows Down
  • Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023
  • Sinopharm Group (1099 HK): Strong 2022 Results; Double-Digit Top and Bottom-Line Growth to Continue
  • PT Metrodata Electronics (MTDL IJ) – The Digital Transformer
  • Indocement Tunggal Prakarsa (INTP IJ) – Building Through Sustainable and Digital Means
  • Formula One Group: Initiation of Coverage – Major Partnerships & Other Key Drivers
  • Prudential PLC: Initiation of Coverage – Expansion In Emerging Markets & Other Drivers
  • Ally Financial: Comparisons To The Recently Failed Banks Are Inappropriate
  • SDRL: Deal Is Done, Now for the Free Cash Flow
  • Sino Biopharmaceutical (1177.HK) – The Positives and the Negatives

Xiaomi: Aggressive Spending on EVs as Smartphone Growth Slows Down

By Shifara Samsudeen, ACMA, CGMA

  • Xiaomi Corp (1810 HK) ’s share price has been down more than 10% over the last 12-months with weakening of the company’s earnings particularly the smartphone business.
  • Xiaomi’s entry into premium segment has not much helped its smartphone biz as it faces stiff competition from Apple and Samsung in the premium segment.
  • The company spends aggressively on EVs to drive growth, however, with EV subsidies not renewed and intense competition, this may not help Xiaomi in the near term.

Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023

By Douglas Kim

  • In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2023. 
  • The excessive gaps in the preferred and common shares of CJ Corp, Samsung Electronics, and LG Electronics could reverse in the next several months, in our view. 
  • We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung SDI which have especially high discounts for the preferred shares versus their counterpart common shares.

Sinopharm Group (1099 HK): Strong 2022 Results; Double-Digit Top and Bottom-Line Growth to Continue

By Tina Banerjee

  • Sinopharm Group Co Ltd H (1099 HK) reported strong 2022 results, with annual revenue exceeding RMB550B and net profit achieving 10% YoY growth. Growth was driven by pharmaceutical distribution business.
  • EPS increased 10% YoY to RMB2.73, ahead of consensus of RMB2.64. The company has increased its final dividend to RMB0.82 per share from RMB0.75 per share in the prior year.
  • With favorable industry tailwind and China reopening, consensus expects Sinopharm to report double-digit revenue and EPS growth through 2025.

PT Metrodata Electronics (MTDL IJ) – The Digital Transformer

By Angus Mackintosh

  • PT Metrodata Electronics had a strong finish to the year with FY2022 net profit growth of +14.1% YoY driven by both its ICT distribution and Solutions & Consulting (S&C) businesses.
  • The S&C business continues to thrive on Indonesia’s ongoing digitalisation, especially in the financial sector with the advent of digital banking but also in the telecom and oil&gas sectors. 
  • PT Metrodata sees a slower outlook for the consumer outlook but strong momentum behind commercial sales and S&C as digitalisation continues, and new growth from the Public Sector. Valuations attractive.

Indocement Tunggal Prakarsa (INTP IJ) – Building Through Sustainable and Digital Means

By Angus Mackintosh

  • Indocement Tunggal Prakarsa (INTP IJ) released solid FY2022 results despite inclement conditions for the industry, as it utilised more low CV coal and alternative fuels and raised prices.
  • The company now has much better access to cheaper DMO coal, which accounted for 60% of requirements in 2H2022, which provides a lower and more sustainable cost base for 2023.
  • Indocement has continued to aggressively expand its distribution footprint across Indonesia in 2022, allowing it to access regional areas of demand. Valuations are attractive versus history.

Formula One Group: Initiation of Coverage – Major Partnerships & Other Key Drivers

By Baptista Research

  • This is our first report on a global media and entertainment player, Formula One Group.
  • Its fourth quarter result was mixed and the company surpassed the revenue expectations of Wall Street but missed out on meeting earnings expectations.
  • The company introduced a new brand campaign in the quarter to demonstrate F1’s position in the sporting and entertainment worlds.

Prudential PLC: Initiation of Coverage – Expansion In Emerging Markets & Other Drivers

By Baptista Research

  • This is our first report on Prudential, a major provider of life and health insurance.
  • Prudential had a very strong quarter with 19% sales growth.
  • Despite slower revenue recognition in the life insurance market, the company has been witnessing strong cash flows and returned over $800 million to shareholders in the latest quarter.

Ally Financial: Comparisons To The Recently Failed Banks Are Inappropriate

By Vladimir Dimitrov, CFA

  • Ally Financial has emerged as a potential target after the recent events in the banking sector.
  • There are certain macroeconomic risks involved, but the company has changed dramatically over the past decade.
  • There are also major differences between the recently failed banks and Ally Financial that need to be considered, according to the company.

SDRL: Deal Is Done, Now for the Free Cash Flow

By Hamed Khorsand

  • SDRL reported its long awaited fourth quarter results after the Company consummated the purchase of Aquadrill.
  • It was in the Q123 when SDRL was able to generate revenue from its new Brazilian contracts making it more likely investors would minimize their interest on the Q4 results
  • The purchase of Aquadrill provides scale to SDRL’s operations through a larger fleet size and being able to internally manage the Aquadrill fleet as contracts begin the expire

Sino Biopharmaceutical (1177.HK) – The Positives and the Negatives

By Xinyao (Criss) Wang

  • Sino Biopharm’s 2022 performance isn’t satisfactory, but the Company is gradually getting rid of the negative influence of VBP. We expect Sino Biopharm to achieve faster performance recovery than Hengrui.
  • Most of Sino Biopharm’s innovative drugs are biosimilars and Me-Too products, which will face fierce competition once approved for listing. The revenue target of HK$100 billion by 2030 looks challenging. 
  • Corporate governance deficiencies and lack of the next big variety are the reasons why the market is reluctant to offer high valuation. The new CEO needs time to prove his ability. 

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