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Smartkarma Daily Briefs

Apr 03
0

Daily Brief TMT/Internet: Meituan, Cainiao Smart Logistics, Socionext and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT
  • TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon
  • Socionext Lock-Up – Up 2.67x Since IPO. US$930m Worth of Shares to Be Unlocked

ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT

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.
  • Alibaba (ADR) (BABA US)‘s restructuring news caused some exiciting in the IPO market this week, with Hong Kong filings picking up as well. 
  • On the placements front, all eyes remain on Meituan (3690 HK) and whether Prosus (PRX NA) will do a placement.

TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon

By Daniel Hellberg

Socionext Lock-Up – Up 2.67x Since IPO. US$930m Worth of Shares to Be Unlocked

By Clarence Chu

  • Socionext (6526 JP) was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup will expire on 9th Apr 2023.
  • Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation in 2015.
  • Coming up for six-month lockup expiry are the Development Bank of Japan, Fujitsu and Panasonic, the trio had each trimmed their respective stakes in the IPO.

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Apr 03
0

Daily Brief Energy/Materials: Aag Energy Holdings and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Weekly Deals Digest (02 Apr) – AAG, Liontown, Mincor, Toshiba, Rakuten Bank, Trial, Harita Nickel

Weekly Deals Digest (02 Apr) – AAG, Liontown, Mincor, Toshiba, Rakuten Bank, Trial, Harita Nickel

By Arun George

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Apr 03
0

Daily Brief Industrials: Toshiba Corp, Hyundai Elevator Co, Dongfang Electric, Hainan Meilan International Airport, Virgin Galactic Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius
  • Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group
  • Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year
  • Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook
  • Space Race Reality Check

Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius

By Arun George

Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

By Douglas Kim

  • On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.
  • The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator. 
  • Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman’s stake remain key negatives. 

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

By Osbert Tang, CFA

  • Dongfang Electric (1072 HK)‘s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. 
  • Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.
  • DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.

Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook

By Eric Chen

  • FY22 results announced last week were in line excluding non-recurring items. The results provided latest evidence of monetization potential of its passenger traffic and insights into its cost base.
  • We trim 2023 net profit estimate by 10% to RMB520 million and maintain RMB1 billion net profit estimate for 2025.  Expect 25%/150% return by 2023/25 respectively based on 20x P/E.
  • Duty-Free concession agreement renewal in 2025 is a key positive catalyst, but we also caution potential follow-on share issuance this year could be an overhang on stock price.  

Space Race Reality Check

By subSPAC

  • This week, space launch company Virgin Galactic’s funding woes escalated as emergency talks with potential investors fell through.
  • As a result, the company announced a staggering 85% workforce reduction and paused operations until further funding is secured.
  • Since going public in 2021 with a $3.7 billion valuation, Virgin Orbit’s value has plummeted by 99% as of its last close, highlighting the realities of space investing.

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Apr 03
0

Daily Brief Industrials: Toshiba Corp, Hyundai Elevator Co, Dongfang Electric, Hainan Meilan International Airport, Virgin Galactic Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius
  • Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group
  • Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year
  • Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook
  • Space Race Reality Check

Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius

By Arun George

Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

By Douglas Kim

  • On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.
  • The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator. 
  • Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman’s stake remain key negatives. 

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

By Osbert Tang, CFA

  • Dongfang Electric (1072 HK)‘s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. 
  • Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.
  • DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.

Meilan Airport (357 HK): Higher Visibility into Earnings Recovery Outlook

By Eric Chen

  • FY22 results announced last week were in line excluding non-recurring items. The results provided latest evidence of monetization potential of its passenger traffic and insights into its cost base.
  • We trim 2023 net profit estimate by 10% to RMB520 million and maintain RMB1 billion net profit estimate for 2025.  Expect 25%/150% return by 2023/25 respectively based on 20x P/E.
  • Duty-Free concession agreement renewal in 2025 is a key positive catalyst, but we also caution potential follow-on share issuance this year could be an overhang on stock price.  

Space Race Reality Check

By subSPAC

  • This week, space launch company Virgin Galactic’s funding woes escalated as emergency talks with potential investors fell through.
  • As a result, the company announced a staggering 85% workforce reduction and paused operations until further funding is secured.
  • Since going public in 2021 with a $3.7 billion valuation, Virgin Orbit’s value has plummeted by 99% as of its last close, highlighting the realities of space investing.

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Apr 03
0

Daily Brief Health Care: Remegen and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Remegen Co Ltd (9995.HK/688331.CH) – The Story Has Changed

Remegen Co Ltd (9995.HK/688331.CH) – The Story Has Changed

By Xinyao (Criss) Wang

  • Considering DS-8201’s outstanding data and strong competing drugs, RC48 would probably contribute revenue to RemeGen mainly from GC and UC indications in China.Overseas revenue would be mainly from UC indication.
  • After Pfizer acquired Seagen, there are concerns that RC48 (a “Me-Worse”) may be returned by Pfizer. If it is the case, only the revenue in China market should be considered.
  • Based on 2022 annual results, we think it is time to reassess the outlook and sales forecast of RC48 and RC18, because the story has changed for RemeGen.

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Apr 03
0

Daily Brief ECM: ECM Weekly (2nd Apr 2023) – Meituan and more

By | Daily Briefs, ECM

In today’s briefing:

  • ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT
  • TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon

ECM Weekly (2nd Apr 2023) – Meituan, Rakuten Bank, SBI, Merdeka, ZJLD, Trial Hol, DPC, WCP, MLT

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.
  • Alibaba (ADR) (BABA US)‘s restructuring news caused some exiciting in the IPO market this week, with Hong Kong filings picking up as well. 
  • On the placements front, all eyes remain on Meituan (3690 HK) and whether Prosus (PRX NA) will do a placement.

TRACKING TRAFFIC/Alibaba Logistics Arm CaiNiao May Seek HK IPO Soon

By Daniel Hellberg

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Apr 03
0

Daily Brief Quantitative Analysis: Short Interest Movements (Q1 2023): HK and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Short Interest Movements (Q1 2023): HK, Korea, Taiwan, Australia
  • A-H Premium Weekly (Mar 31st): Yankuang Energy, CRRC, China Telecom, CCCC
  • HK Short Interest Weekly: Bidu, Baba, Byd Company
  • Hong Kong Connect Flows (Mar 31st): Tencent, Meituan, Bilibili, Lenovo, Kingsoft, CCB
  • Northbound Flows (Mar 31st): Moutai, CATL, Byd, Sinopec, Foxconn, Haier Smart Home

Short Interest Movements (Q1 2023): HK, Korea, Taiwan, Australia

By Brian Freitas

  • Total short interest in Hong Kong is HK$435.1bn, marginally higher from end-December. Short notional has moved in line with the Hong Kong Hang Seng Index (HSI INDEX). 
  • Total short notional of the KOSPI and KOSDAQ market has moved up since end-December and is in line with the move higher in the KOSPI2 INDEX and KOSDAQ 150 Index.
  • Short notional in Taiwan is lower over the quarter even as the TWSE INDEX has moved higher over the period. There has been big short covering on some stocks.

A-H Premium Weekly (Mar 31st): Yankuang Energy, CRRC, China Telecom, CCCC

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 113.6% as of Mar 31st.
  • The average A-H premium changed by -0.5ppt week on week, led by communication services, energy, utilities and offset by consumer staples, health care.
  • We highlight weekly changes in A-H premium for Yankuang Energy, CRRC, China Telecom, CCCC.

HK Short Interest Weekly: Bidu, Baba, Byd Company

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Mar 24th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We estimate the total short interest to  increase by 1.4% week on week and highlight short changes in Bidu, Baba, Byd Company.

Hong Kong Connect Flows (Mar 31st): Tencent, Meituan, Bilibili, Lenovo, Kingsoft, CCB

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 31st.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for Tencent, Meituan, Bilibili, Lenovo, Kingsoft, China Construction Bank.

Northbound Flows (Mar 31st): Moutai, CATL, Byd, Sinopec, Foxconn, Haier Smart Home

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 31st.
  • We estimate the weekly inflows to be US$1,598.1 million, led by consumer staples, industrials, communication services sectors, and offset by financials, materials.
  • We highlight flows for Kweichow Moutai, Contemporary Amperex Technology, Byd, China Petroleum And Chemical, Foxconn Industrial Internet, Haier Smart Home, Beijing Kingsoft Office Software.Inc, East Money Information, Gree Electric Appliances.

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Apr 03
0

Daily Brief Credit: Morning Views Asia: AAC Technologies Holdings and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: AAC Technologies Holdings, CIFI Holdings, Fosun International, Sands China

Morning Views Asia: AAC Technologies Holdings, CIFI Holdings, Fosun International, Sands China

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 03
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan |SPX-Sizzling 1Q Close; NUGGET: Labor Mobility Needed for Sustainable Wage Growth and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |SPX-Sizzling 1Q Close; NUGGET: Labor Mobility Needed for Sustainable Wage Growth
  • The Innovations Portfolios – Week Nineteen
  • Weekly Stock Bullfinder – Week of 4/3

Good Morning Japan |SPX-Sizzling 1Q Close; NUGGET: Labor Mobility Needed for Sustainable Wage Growth

By Mark Chadwick

  • OVERSEAS. Strong close to SPX on Friday +1.4% on the Day; 3.5%WoW; +7.0%QTD; Light Macro calender this week with Job report Key; OPEC+ surprise cut; Tesla Misses 1Q
  • JAPAN.  NKY Fut +0.7% vs Cash; USDJPY 132.9; At the start of the new fiscal year, strong tailwinds ahead for Japan: BOJ normalization; Shareholder AGMs; Shareholder returns improvements; Bullish !
  • NUGGET. Labor Mobility Needed for Sustainable Wage Growth in Japan. This is essential to extend the gains made this year, or we risk reverting to the status quo.

The Innovations Portfolios – Week Nineteen

By Pyari Menon

  • The three companies we write about this week are Tata Consultancy Svcs (TCS IN) , LG Chem Ltd (051910 KS) and CJ Cheiljedang (097950 KS)   
  • For the nineteen weeks since inception ended 31 March the combined innovation portfolio was +2.4%, versus DJIA -1.4%, S&P500 +3.6%, Nasdaq +9.7%, Russell2000 -2.6%, MSCI-ACWI-ETF +4.9%, all in US$ terms
  • For the nineteen since inception ended 31 March the small cap portfolio was up 8.0%, the mid cap portfolio was up 3.2% and the large cap portfolio was up 2.1%

Weekly Stock Bullfinder – Week of 4/3

By Weekly Stock Bull Finder

  • While other market narratives are swirling including inflation trends, regional bank contagion risks, and Fed Chair Powell’s next move, not enough attention is getting paid to background maneuvering by China and Russia and other “BRIC” alliance members to attempt to slowly erode and undermine the role of the US dollar in the global financial system.
  • BRICS stands for the group of five nations: Brazil, Russia, India, China, and South Africa, with poised expansion via rumored applications from Saudi Arabia, Turkey, and Egypt.
  • President Nixon took the U.S. dollar off the gold standard in 1971 – the end of the era of commodity-based money and replaced it with “inside money” or Treasuries which removed the limit on the amount of currency that could be printed. 

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Apr 03
0

Daily Brief Macro: US Banking System: Repeat of 2008 Unlikely as Fed Separates Balance Sheet from Interest Rate Policy and more

By | Daily Briefs, Macro

In today’s briefing:

  • US Banking System: Repeat of 2008 Unlikely as Fed Separates Balance Sheet from Interest Rate Policy
  • What USD Weakness Mean For Asset Returns
  • Managing Risk in SME Lending: A Perspective for Institutional Investors
  • Interpreting the Zweig Breadth Thrust Buy Signal
  • AFC Vietnam Fund March 2023 Report

US Banking System: Repeat of 2008 Unlikely as Fed Separates Balance Sheet from Interest Rate Policy

By Said Desaque

  • High losses on banks’ mortgage backed securities (MBS) portfolios are not due to degrading credit quality, but rising interest rates and high inflation that could impact bank lending standards.
  • Swift action by the Fed and Treasury to guarantee all bank deposits should limit the economic fallout stemming from recent events in the banking system.
  • The Fed’s balance sheet will be deployed to ensure future financial stability, while the federal funds rate will be the chosen tool to fight inflation.

What USD Weakness Mean For Asset Returns

By Cam Hui

  • The USD Index is on the verge of breaking long-term support. If it does, it would have multiple implications for asset class returns:
  • It would be bullish for gold and non-U.S. equities over U.S. equities.
  • It would be bearish for the near-term economic outlook and commodity prices.

Managing Risk in SME Lending: A Perspective for Institutional Investors

By Albert Maass

  • Institutional investors increasingly pursue SME loan portfolios for enhanced returns, diversification, and uncorrelated returns.
  • However rising interest rates, inflation, and market volatility necessitate reassessing risk management strategies in such portfolios due to potential negative impacts on SME performance and loan repayment ability.
  • Effective risk management in SME lending by institutional investors requires thorough due diligence, comprehensive risk models, stress testing, regular monitoring, communication with the external managers, and adaptability to market changes.

Interpreting the Zweig Breadth Thrust Buy Signal

By Cam Hui

  • The market flashed an extremely rare Zweig Breadth Thrust buy signal on Friday.
  • At first glance, it appears to be an excitingly bullish development, or a “what’s the credit limit on my VISA card” buy signal, but we have doubts.
  • We believe that despite the potential excitement generated by the ZBT buy signal, the U.S. equity market remains in a holding pattern.

AFC Vietnam Fund March 2023 Report

By Asia Frontier Capital

  • March was certainly another eventful month! Silicon Valley Bank’s collapse and Credit Suisse’s forced sale has put financial markets in their worst state of panic since the global financial crisis of 2008.
  • But given that Vietnam’s banks are mainly focused on the domestic economy and more traditional in nature, the Vietnamese stock market was less affected.
  • The VN-Index increased by +3.9% in March and the NAV of our AFC Vietnam Fund closed the month +1.8% at an NAV of USD 2,900, according to internal estimates.

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