Smartkarma Daily Briefs

SK Innovation will buy back its shares, worth about 10% of the total issued shares, through a tender offer and offer SK On stocks as consideration instead of cash.
Even if there is allocation risk, as only 10% of SO are targeted, expectations that pricing discrepancy can sufficiently offset this should be the factor driving up the price today.
Additional trading openings? This depends on the disparity widening between the intrinsic value of SK On and the exchange ratio.

Mincor: Did Twiggy Thwart BHP Offtake?

Earlier today (30 March), Mincor Resources NL (MCR AU) said BHP Group (BHP AU) would not agree to amend off-take agreement specifications, and will no longer accept lower-quality ore.
Mincor delivers 100% of its ore to BHP. It will continue to deliver on-specification ore to BHP, but has withdrawn its forward guidance.
Shares rolled over 5.7% to close at A$1.42/share, above Wyloo’s unconditional A$1.40/share. Offer.

Morning Views Asia: Indika Energy, Meituan

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.

Indika Energy
Meituan

Nanoco Group – Concentrating on organic business going forward

By Edison Investment Research

Nanoco’s H123 revenues benefited from the successful delivery of technical milestones for its European electronics customer, taking it close to full production validation of two different wavelength materials for use in sensing chips. Shortly after the period end, Nanoco signed the final agreements to settle the litigation with Samsung. The settlement frees management to concentrate on getting the company ready for volume production in anticipation of receiving its first production order later in CY23.

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Mar 31

Daily Brief Health Care: Jeol Ltd, Prodia, Dr Lal PathLabs Ltd, Remegen Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
Prodia (PRDA IJ) – Back to Core Testing
Dr Lal PathLabs (DLPL IN): Losing Path Amid Competition; Non-COVID Growth Underwhelming
[RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate

Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-March 2023.

Prodia (PRDA IJ) – Back to Core Testing

By Angus Mackintosh

Prodia (PRDA IJ) FY2022 results saw declines in revenues and profits but from a COVID-high base and the numbers are now well-above 2019, with strong prospects ahead.
The company is seeing a return to routine testing with tests per visit back to pre-COVID and revenues per visit also rising strongly, with a diverse customer base providing comfort.
Prodia also has an increasing digital angle with the rising use of its app and a new app that tracks patients’ health just launched. Prodia (PRDA IJ) is too cheap.

Dr Lal PathLabs (DLPL IN): Losing Path Amid Competition; Non-COVID Growth Underwhelming

By Tina Banerjee

Dr Lal PathLabs Ltd (DLPL IN) reported 2% and 8% revenue and net profit decline in Q3FY23, respectively. Q3 results were dragged by an 80% YoY decline in COVID-19 revenue.
While non-COVID revenue increased 9% YoY to INR4.78 billion, it declined 7% QoQ. In fact, Q3FY23 non-COVID revenue was the lowest over the last three quarters.
Although diagnostics is a big and attractive market opportunity in India, the sector is overcrowded, leading to heated price competition and declining realization per test.

[RemeGen (9995 HK) Target Price Change]: Provision for License Out Absence Is Adequate

RemeGen reported C2H22 top line in-line with our estimate but 9.4% below consensus. Gross margin, however, beat our estimate by 21ppt. Net-net, non-IFRS operating income missed our expectation by 15%;
The result highlighted RemeGen’s investment case hinging on successful license out. Product revenue itself cannot carry the company to profitability;
With WACC of 17%, we have already provisioned for the license out absence. But we still cut TP by HK$6 to reflect the increasing spending going forward.

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Mar 31

Daily Brief Industrials: Toshiba Corp, Japan Airlines, Sembcorp Marine, China Everbright Environment, Huitongda and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba – 3D Stake Reduction Reduces and Increases Risk
Nikkei 225 March 2023 Rebal Tomorrow
Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
China Everbright Environment (257 HK): The Dust Should Have Settled
[Huitongda (9878 HK, SELL, TP HK$18) Target Price Change]: Concerns Arise on OCF Outflow

Toshiba – 3D Stake Reduction Reduces and Increases Risk

An EDINET filing yesterday revealed that 3D Investment Partners had reduced their stake in Toshiba from 7.2% to 4.9%.
This significantly derisks the possibility of 3D becoming a forced seller and alters the risk reward here.
Nevertheless, it is still difficult to be especially bullish here given uncertainty regarding the tender vote is now a little higher.

Nikkei 225 March 2023 Rebal Tomorrow

The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy.
The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps.
One trade – long an ADD vs a Peer – is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.

Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal

Sembcorp Marine (SMM SP) is a month in to its new existence as a business more than twice as large as its old business after absorbing Keppel O&M.
There have been some noises about cost-cutting, which could be key to an early return to profitability.
Today, mid-day, we get news of the biggest ever offshore renewables contract win in a JV with General Electric – a deal worth €6bn (SGD 8.64bn). It’s big.

China Everbright Environment (257 HK): The Dust Should Have Settled

By Osbert Tang, CFA

Plunge in net profit, high gearing and slowdown in new projects are market concerns, but should have well reflected in its share price. Its 3.6x PER is just too cheap.
FY23 will see profit recovery, backed by decent project pipeline and lack of one-offs like impairment and exchange losses. Consensus forecast of 15% profit growth is too conservative.
Cash flow will improve over the next two years as collection of national subsidies accelerates, capex moderates and contribution from operating projects increases.

[Huitongda (9878 HK, SELL, TP HK$18) Target Price Change]: Concerns Arise on OCF Outflow

Huitongda (HTD) reported its 2H22 revenue (9.2%)/(9.0%) lower than our estimate and consensus. The non-IFRS net income beat our estimate/consensus by 23.6%/12.4% respectively.
HTD generated RMB652mn OCF outflow in 2H22, negatively impacted by both Covid and accounts receivables due to its SME focused model.
We maintain the stock as SELL rating and raise TP by HK$4.5 to HK$18.0 to factor in the shrinking minority interests on market value basis.

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Mar 31

Daily Brief Industrials: Toshiba Corp, Japan Airlines, Sembcorp Marine, China Everbright Environment, Huitongda and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba – 3D Stake Reduction Reduces and Increases Risk
Nikkei 225 March 2023 Rebal Tomorrow
Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
China Everbright Environment (257 HK): The Dust Should Have Settled
[Huitongda (9878 HK, SELL, TP HK$18) Target Price Change]: Concerns Arise on OCF Outflow

Toshiba – 3D Stake Reduction Reduces and Increases Risk

An EDINET filing yesterday revealed that 3D Investment Partners had reduced their stake in Toshiba from 7.2% to 4.9%.
This significantly derisks the possibility of 3D becoming a forced seller and alters the risk reward here.
Nevertheless, it is still difficult to be especially bullish here given uncertainty regarding the tender vote is now a little higher.

Nikkei 225 March 2023 Rebal Tomorrow

The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy.
The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps.
One trade – long an ADD vs a Peer – is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.

Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal

Sembcorp Marine (SMM SP) is a month in to its new existence as a business more than twice as large as its old business after absorbing Keppel O&M.
There have been some noises about cost-cutting, which could be key to an early return to profitability.
Today, mid-day, we get news of the biggest ever offshore renewables contract win in a JV with General Electric – a deal worth €6bn (SGD 8.64bn). It’s big.

China Everbright Environment (257 HK): The Dust Should Have Settled

By Osbert Tang, CFA

Plunge in net profit, high gearing and slowdown in new projects are market concerns, but should have well reflected in its share price. Its 3.6x PER is just too cheap.
FY23 will see profit recovery, backed by decent project pipeline and lack of one-offs like impairment and exchange losses. Consensus forecast of 15% profit growth is too conservative.
Cash flow will improve over the next two years as collection of national subsidies accelerates, capex moderates and contribution from operating projects increases.

[Huitongda (9878 HK, SELL, TP HK$18) Target Price Change]: Concerns Arise on OCF Outflow

Huitongda (HTD) reported its 2H22 revenue (9.2%)/(9.0%) lower than our estimate and consensus. The non-IFRS net income beat our estimate/consensus by 23.6%/12.4% respectively.
HTD generated RMB652mn OCF outflow in 2H22, negatively impacted by both Covid and accounts receivables due to its SME focused model.
We maintain the stock as SELL rating and raise TP by HK$4.5 to HK$18.0 to factor in the shrinking minority interests on market value basis.

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Mar 31

Daily Brief Technical Analysis: XPeng Inc (9868 HK) – Bullish Technical Triggers Confirm MT Uptrend – Target 25-30% Upswing and more

By Smartkarma Daily Briefs | Daily Briefs, Technical Analysis

In today’s briefing:

XPeng Inc (9868 HK) – Bullish Technical Triggers Confirm MT Uptrend – Target 25-30% Upswing

XPeng Inc (9868 HK) – Bullish Technical Triggers Confirm MT Uptrend – Target 25-30% Upswing

By David Coloretti, CMT

At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
XPeng Inc (9868 HK) has this week broken above the falling wedge pattern that captured its Dec/Mar correction. The bullish trend breakout in the weekly RSI confirms the uptrend bias.
Wedge patterns are commonly referred to as “Half Mast” patterns. They typically occur in the middle of trends, making textbook targets easy to calculate. Target 56.10 (+29%) in Q2 2023.

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Mar 31

Daily Brief Macro: US Dollar is Dead Redux and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

US Dollar is Dead Redux
Demographics Watch – a Public Debt Timebomb
Eurozone Deposits Stable, but a Lot Is Happening Underneath
EA: Surveys Shrug-Off Shock in Mar-23

US Dollar is Dead Redux

By Untying The Gordian Knot

Demographics Watch – a Public Debt Timebomb

By Andreas Steno

Ageing populations tend to act as a drain on public resources through the healthcare, social security and pension channels.
Though the make-up of the most heavily-indebted countries remains similar (Japan, Greece and Singapore continue to make the top 3), the gap between those countries has shrunk dramatically.
Left untethered, the ageing problem and its second-order economic impacts really are a ticking time bomb.

Eurozone Deposits Stable, but a Lot Is Happening Underneath

By Jeroen Blokland

Total Eurozone bank deposits have hardly declined, while US bank deposits have been coming down for just over a year.
Yet, depositors are switching from Overnight deposits, callable immediately and earning the lowest interest rate, to longer-maturity deposits with some yield pickup.
The decline in Overnight deposits has contributed to a decrease in M1 Money Supply Growth of 2.7%. This significantly impacts the inflation outlook.

EA: Surveys Shrug-Off Shock in Mar-23

By Phil Rush

Despite financial stability issues, resilience appears to have continued in the Euro area through March. Sentiment has stayed robust, with employment expectations elevated.
Consumers are the only group gloomier than their average. The positive sentiment is relatively narrow among EA members, unlike employment’s broad-based strength.
Tight labour markets are more directly relevant to inflationary pressures, which are far too high. Firms still expect widespread price increases across sectors.

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Mar 31

Daily Brief Thematic (Sector/Industry): Good Morning Japan |Tech Bid; Trump Indicated; NUGGET: BayCurrent-Japan’s Digital/Salary Gap Winner and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Good Morning Japan |Tech Bid; Trump Indicated; NUGGET: BayCurrent-Japan’s Digital/Salary Gap Winner
SenseTime to Roll Out Its Own ChatGPT Rival in Mid-2023
China TMT Update(Mar.31) – Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management’s Call

Good Morning Japan |Tech Bid; Trump Indicated; NUGGET: BayCurrent-Japan’s Digital/Salary Gap Winner

By Mark Chadwick

OVERSEAS. SPX Rally continues with further Tech gains; White House call for tighter Bank regulations; Trump indicated for hush money payment; US SEC seeking to ramp up Cryto oversight
JAPAN. NKY Futs +0.6% vs Cash; USDJPY 132.7; JP Equities to close quarter with >6% gains; TSE ramps up rhetoric againsts low PBR stocks; GIC lifts JP investment; Citadel Back
NUGGET. BayCurrent, – exploiting Japan’s Digital and Salary Gaps. With inflation rising in Japan, we expect increased DX spending and more skilled IT professionals to join BayCurrent. We remain bullish.

SenseTime to Roll Out Its Own ChatGPT Rival in Mid-2023

By Caixin Global

Chinese artificial intelligence leader SenseTime plans to launch its own chatbot model in mid-2023, the company said, becoming the latest tech company to join the global rush sparked by OpenAI’s ChatGPT.
Hong Kong-traded SenseTime said it made major progress in natural language processing and successfully developed a large pretrained model which will be rolled out in the middle of this year.
The model has been trained with more than 100 billion parameters to improve the performance of text generation and human-computer dialogue, SenseTime said Tuesday during its earnings call.

China TMT Update(Mar.31) – Baba/ 700HK/1024HK/BILI/BIDU/ATAT: Baba Management’s Call

Baba: Baba management holds a call with investors to explain recent movements.
700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）
ATAT：Accor formed alliance with Douyin to further explore independent growth (+)

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Mar 31

Daily Brief Event-Driven: Toshiba – 3D Stake Reduction Reduces and Increases Risk and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toshiba – 3D Stake Reduction Reduces and Increases Risk
Nikkei 225 March 2023 Rebal Tomorrow
Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)
Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
Mincor: Did Twiggy Thwart BHP Offtake?
Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto
Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023
SK Inc: Shares Cancellation & Updated NAV Valuation

Toshiba – 3D Stake Reduction Reduces and Increases Risk

An EDINET filing yesterday revealed that 3D Investment Partners had reduced their stake in Toshiba from 7.2% to 4.9%.
This significantly derisks the possibility of 3D becoming a forced seller and alters the risk reward here.
Nevertheless, it is still difficult to be especially bullish here given uncertainty regarding the tender vote is now a little higher.

Nikkei 225 March 2023 Rebal Tomorrow

The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy.
The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps.
One trade – long an ADD vs a Peer – is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.

Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)

SK Innovation will buy back its shares, worth about 10% of the total issued shares, through a tender offer and offer SK On stocks as consideration instead of cash.
Even if there is allocation risk, as only 10% of SO are targeted, expectations that pricing discrepancy can sufficiently offset this should be the factor driving up the price today.
Additional trading openings? This depends on the disparity widening between the intrinsic value of SK On and the exchange ratio.

Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal

Sembcorp Marine (SMM SP) is a month in to its new existence as a business more than twice as large as its old business after absorbing Keppel O&M.
There have been some noises about cost-cutting, which could be key to an early return to profitability.
Today, mid-day, we get news of the biggest ever offshore renewables contract win in a JV with General Electric – a deal worth €6bn (SGD 8.64bn). It’s big.

Mincor: Did Twiggy Thwart BHP Offtake?

Earlier today (30 March), Mincor Resources NL (MCR AU) said BHP Group (BHP AU) would not agree to amend off-take agreement specifications, and will no longer accept lower-quality ore.
Mincor delivers 100% of its ore to BHP. It will continue to deliver on-specification ore to BHP, but has withdrawn its forward guidance.
Shares rolled over 5.7% to close at A$1.42/share, above Wyloo’s unconditional A$1.40/share. Offer.

Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

By Douglas Kim

After the market close today, Samsung Sds announced a block deal of 1.51 million shares at a discount range of 3.5% to 4.5% to the closing price of 117,900 won.
Lee Seo-Hyun, the daughter of the late Samsung Chairman Lee Kun-Hee, is selling her 1.51 million shares of Samsung SDS (1.95% of oustanding shares) in a block deal.
The company faces continued overhang on additional stake sale due to the inheritance tax issue in the next 2-3 years. As a result, we would avoid the block deal sale.

Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
Stocks mentioned include Tian An China Investment (28 HK), CSPC Pharmaceutical Group (1093 HK), and Li Auto (2015 HK).

Quiddity Leaderboard JPX-Nikkei 400: End-Mar 2023

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-March 2023.

SK Inc: Shares Cancellation & Updated NAV Valuation

By Douglas Kim

On 29 March, SK Inc announced that it will cancel 0.95 million in treasury shares, which represents 1.3% of the company’s outstanding shares and 5% of treasury shares.
One of the concerns about SK Inc in the past several weeks has been lower DPS of 5,000 won in 2022 versus DPS of 8,000 won in 2021.
Our base case valuation of SK Inc is NAV of 19.7 trillion won (NAV per share of 266,113 won), representing a 54% upside from current levels.

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Mar 31

Most Read: Toshiba Corp, Japan Airlines, Soulbrain, Alibaba Group, SK Innovation, Rakuten Bank, Sembcorp Marine, Mincor Resources NL, Samsung Sds and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba – 3D Stake Reduction Reduces and Increases Risk
Nikkei 225 March 2023 Rebal Tomorrow
Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea
Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown
Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)
Rakuten Bank IPO – Thoughts on Valuation
Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal
Mincor: Did Twiggy Thwart BHP Offtake?
Samsung SDS Placement – Well Flagged and the Last One Did Well
Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

Toshiba – 3D Stake Reduction Reduces and Increases Risk

An EDINET filing yesterday revealed that 3D Investment Partners had reduced their stake in Toshiba from 7.2% to 4.9%.
This significantly derisks the possibility of 3D becoming a forced seller and alters the risk reward here.
Nevertheless, it is still difficult to be especially bullish here given uncertainty regarding the tender vote is now a little higher.

Nikkei 225 March 2023 Rebal Tomorrow

The Nikkei 225 March 2023 Rebalance is 31 March at the close. There is about US$1.75bn of funding to sell against US$1.85bn of 3 names to buy.
The impact on the Buy Side is middling at 3, 6.4, and 6.9 days of ADV to buy. The three DELETES are larger on average but they are all smallcaps.
One trade – long an ADD vs a Peer – is still worth doing. Indexers buy the stock, it goes into a dark closet, and never comes out.

Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea

Mirae Asset TIGER Fn Semiconductor TOP 10 ETF saw a rapid increase in AUM in a short period. Currently, AUM has reached 126 billion won.
Compared to the flow size, the price movement magnitude was substantial. What is particularly important is that the correlation between weight change direction and price impact was quite significant.
Considering Long Short basket trading based on the weight change direction on a day trading window seems worthwhile.

Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown

By Oshadhi Kumarasiri

Alibaba Group (9988 HK)‘s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.
Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.
Therefore, we would be looking to short Alibaba (ADR) (BABA US) yet again once this initial excitement settles.

Detailing & Assessing SK Innovation’s Exchange Offer with SK On Shares as Consideration (10% of SO)

SK Innovation will buy back its shares, worth about 10% of the total issued shares, through a tender offer and offer SK On stocks as consideration instead of cash.
Even if there is allocation risk, as only 10% of SO are targeted, expectations that pricing discrepancy can sufficiently offset this should be the factor driving up the price today.
Additional trading openings? This depends on the disparity widening between the intrinsic value of SK On and the exchange ratio.

Rakuten Bank IPO – Thoughts on Valuation

By Sumeet Singh

Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m 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 provide our thoughts on valuation.

Sembcorp Marine (SMM SP) JVs for S$8.6bn Multi-Year Offshore HVDC Converter Platforms Deal

Sembcorp Marine (SMM SP) is a month in to its new existence as a business more than twice as large as its old business after absorbing Keppel O&M.
There have been some noises about cost-cutting, which could be key to an early return to profitability.
Today, mid-day, we get news of the biggest ever offshore renewables contract win in a JV with General Electric – a deal worth €6bn (SGD 8.64bn). It’s big.

Mincor: Did Twiggy Thwart BHP Offtake?

Earlier today (30 March), Mincor Resources NL (MCR AU) said BHP Group (BHP AU) would not agree to amend off-take agreement specifications, and will no longer accept lower-quality ore.
Mincor delivers 100% of its ore to BHP. It will continue to deliver on-specification ore to BHP, but has withdrawn its forward guidance.
Shares rolled over 5.7% to close at A$1.42/share, above Wyloo’s unconditional A$1.40/share. Offer.

Samsung SDS Placement – Well Flagged and the Last One Did Well

By Clarence Chu

Lee Seo-Hyun, via KEB Hana Bank, is looking to sell her entire stake in Samsung Sds (018260 KS) to raise US$132m.
While a relatively large one to digest, the deal is very flagged.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Another Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

By Douglas Kim

After the market close today, Samsung Sds announced a block deal of 1.51 million shares at a discount range of 3.5% to 4.5% to the closing price of 117,900 won.
Lee Seo-Hyun, the daughter of the late Samsung Chairman Lee Kun-Hee, is selling her 1.51 million shares of Samsung SDS (1.95% of oustanding shares) in a block deal.
The company faces continued overhang on additional stake sale due to the inheritance tax issue in the next 2-3 years. As a result, we would avoid the block deal sale.

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Mar 30

Most Read: Nitori Holdings, Meituan, KT Corp, Aag Energy Holdings, Rakuten Bank, DGB Financial Group, Hang Seng China Enterprises Index, Soulbrain, Alibaba (ADR) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses
Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know
KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion
AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not
Rakuten Bank IPO – Peer Comparison – SBI Sumishin or Kakaobank?
Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision
HSCEI Dividend Futures: Nearing the Pointy End of Results Season
AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge
Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea
Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure

Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses

By Brian Freitas

The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.

Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know

Meituan (3690 HK) shares hit accounts on Friday, they showed up in the CCASS data. All but about 2.3mm shares worth. Another 248.8mm shares showed up on Monday.
That was the Prosus stake, which was expected as of November 2022 (evidently, they did not convert more Tencent shares in the interim.
The data tells us some things. It does not tell us much else. Be careful of the details.

KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion

By Brian Freitas

KT Corp (030200 KS) missed out on inclusion to the MSCI Korea Index at the May 2022 SAIR following a drop in foreign room below 15%.
Bottoming out at 6.5%, foreign room has started to increase again. The last data point shows foreign room at 14.43%, just shy of the 15% threshold for inclusion eligibility.
If foreign room increases above 15% in the next three weeks, KT Corp (030200 KS) will be added to the MSCI Korea Index at the May QCIR.

AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not

That was a quick turnaround. Two days after the pre-conditions were satisfied, the Scheme Document for Xinjiang Xintai (603393 CH)‘s privatisation of AAG Energy (2686 HK) has been dispatched.
The EGM and Court Meeting will take place on the 27 April, with payment, assuming all resolutions get up, on (or before) the 1 June.
The Independent Financial Adviser, Somerley, considers the terms of the Scheme “fair and reasonable.” However, their analysis clearly shows this is not the case.

Rakuten Bank IPO – Peer Comparison – SBI Sumishin or Kakaobank?

By Sumeet Singh

Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$900m 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. In this note, we will undertake a peer comparison.

Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision

DGB Financial Group’s market cap makes it virtually impossible to get deleted even with Kakao Pay’s GICS change in this June rebalancing.
It’s unclear whether this has damaged the price impact of K200 inclusion. Nevertheless, the intensity of the pre-rebalancing flow wasn’t aggressive, possibly due to the combination of factors, including this.
This suggests the possibility of an intense price impact resulting from a more concentrated flow right before the effective date, so we should prepare a setup that considers this.

HSCEI Dividend Futures: Nearing the Pointy End of Results Season

By Brian Freitas

The HSCEI 2023 dividend futures have dropped over the last week as results have trickled in and some of the larger dividend payers have cut their final dividends.
Over 50% of the DIPS are confirmed now and that number will increase significantly over the next couple of days as the remaining companies announce their final dividends.
From our estimates, just over 80% of the DIPS will be confirmed by tomorrow though over 66% of the total DIPS will have CNYHKD risk attached to it.

AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge

By Arun George

Aag Energy Holdings (2686 HK) scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.
The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying.
The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread.

Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea