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Smartkarma Daily Briefs

Mar 13
0

Daily Brief South Korea: S.M.Entertainment Co, Bukwang Pharmaceutical and more

By | Daily Briefs, South Korea

In today’s briefing:

  • HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer
  • Bukwang Pharmaceutical (003000 KS): High R&D Cost Put Pressure on Profit; Pain to Continue in Future

HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer

By Douglas Kim

  • On 12 March, HYBE (352820 KS) announced that it is no longer pursuing S.M.Entertainment Co (041510 KS) in an M&A battle with Kakao Corp (035720 KS).
  • This will result in a very high probability of Kakao winning the M&A battle of SM Entertainment.
  • Many institutional investors are likely to have pushed back on HYBE’s capital raising efforts, which seems to have been the clincher of HYBE backing out of this M&A for SM. 

Bukwang Pharmaceutical (003000 KS): High R&D Cost Put Pressure on Profit; Pain to Continue in Future

By Tina Banerjee

  • Bukwang Pharmaceutical (003000 KS) has reported operating loss of KRW1.2 billion in 2022 due to the increased R&D cost, driven by the clinical progress of JM-010.
  • Bukwang’s subsidiary, Contera Pharma, is developing JM-010 as a treatment for dyskinesia in patients with Parkinson’s disease. JM-010 is in phase 2 clinical trial in the U.S. and Europe.
  • Bukwang has been aiming to list Contera Pharma to secure funds for clinical research, which has still not materialized. With current low-risk appetite, Contera Pharma IPO may not sail smooth.

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Mar 13
0

Daily Brief United States: KLA-Tencor Corp, Alta Equipment Group Inc, Polygon and more

By | Daily Briefs, United States

In today’s briefing:

  • MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact
  • Heavy Lifting
  • The Unbundling of Blockchain Infrastructure

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

By Brian Freitas

  • The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
  • The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
  • Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.

Heavy Lifting

By subSPAC

  • The heavy equipment dealership industry, known for its lucrative opportunities, has consolidated significantly in recent years, with major players acquiring smaller dealerships.
  • Alta Equipment, based in Michigan, has emerged as a beneficiary of this trend, expanding its geographic reach and gaining access to trained technicians, giving it a competitive advantage over smaller players.
  • However, as the industry continues to consolidate, will Alta be able to maintain its momentum, or will it face challenges from larger rivals?

The Unbundling of Blockchain Infrastructure

By Etherbridge

  • Opportunity in any market exists in anything that causes the perception of the investor to take on a new shape.
  • For many years, the Fat Protocol Thesis popularised by Placeholder VC has dominated the perception of the digital asset market.
  • But as the market and, more importantly, those who have come to use this new technology platform change, so too does the perception of where value will be captured.

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Mar 13
0

Daily Brief Quantitative Analysis: A-H Premium Weekly (Mar 10th): China Shenhua and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • A-H Premium Weekly (Mar 10th): China Shenhua, PetroChina, China Southern, ZTE, CRRC, CICC
  • Northbound Flows (Mar 10th): CTG, Moutai, Byd, CMB, Yili, Longi Green Energy, Tongwei, Luxshare
  • Hong Kong Connect Flows (Mar 10th): China Mobile, Tencent, China Vanke, ICBC, CCB

A-H Premium Weekly (Mar 10th): China Shenhua, PetroChina, China Southern, ZTE, CRRC, CICC

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 115.1% as of Mar 10th.
  • The average A-H premium changed by 3.2ppt week on week, led by health care, communication services, information technology.
  • We highlight weekly changes in A-H premium for China Shenhua, PetroChina, China Southern, ZTE, CRRC, CICC.

Northbound Flows (Mar 10th): CTG, Moutai, Byd, CMB, Yili, Longi Green Energy, Tongwei, Luxshare

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of March 10th.
  • We estimate the weekly outflows to be US$1,487.9 million, led by financials, materials, and offset by industrials, health care, utilities.
  • We highlight flows for China Tourism Group Duty Free, Kweichow Moutai, Byd, China Merchants Bank, Inner Mongolia Yili Industrial, Longi Green Energy Technology, Tongwei, Luxshare Precision Industry.

Hong Kong Connect Flows (Mar 10th): China Mobile, Tencent, China Vanke, ICBC, CCB

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of March 10th.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for China Mobile, Tencent, China Vanke, ICBC, CCB.

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Mar 13
0

Daily Brief Crypto: The Unbundling of Blockchain Infrastructure and more

By | Crypto, Daily Briefs

In today’s briefing:

  • The Unbundling of Blockchain Infrastructure

The Unbundling of Blockchain Infrastructure

By Etherbridge

  • Opportunity in any market exists in anything that causes the perception of the investor to take on a new shape.
  • For many years, the Fat Protocol Thesis popularised by Placeholder VC has dominated the perception of the digital asset market.
  • But as the market and, more importantly, those who have come to use this new technology platform change, so too does the perception of where value will be captured.

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Mar 13
0

Daily Brief Technical Analysis: China Real Estate and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • China Real Estate

China Real Estate

By Untying The Gordian Knot

  • As a background, can I refer the reader to Substack Note No One Cares 有中国特色 Real Estate Liquidity Spiral to Solvency Challenge 31st October 2022 ?
  • It bottoms ticked recovery in the highly leveraged Real estate Index Hang Seng Mainland Property Index (HSPMI) and rallied 103% from trough to peak 27th January 2023.
  • The mainland listed Index CSI 300 Real estate (CSI300RE) trough (1st November) to peak (27th November) was 43.5%.

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Mar 13
0

Daily Brief Event-Driven: MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes
  • Japan Post Bank – Estimating Foreign Ownership and Deal Flowback
  • MVIS Australia A-REITs Index Rebalance:  Float/Capping Changes
  • MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact
  • Japan Post Bank Placement –  Still Misbehaving – Post-Pricing Performance of Some More Deals
  • HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer
  • STAR50 Index Rebalance Preview: Two Changes in June (Possibly)
  • Halcyon Agri (HACL SP): Board Recommends Conditional MGO
  • ThaiBev To Take Oishi Group Private
  • Merger Arb Mondays (13 Mar) – InvoCare, Origin, Tyro, Toyo, Oishi, AAG Energy, Yashili, Halcyon

MVIS Australia Equal Weight Index Rebalance: One Deletion & Other Changes

By Brian Freitas

Japan Post Bank – Estimating Foreign Ownership and Deal Flowback

By Travis Lundy

  • The word floating around late Friday as books closed was that foreigners had bid strongly. More than the entire Japan Post Bank (7182 JP) offering size in fact.
  • The offering is an interesting problem, as discussed before. Different people are going to buy it for different reasons. 
  • This insight looks at the breakdown of ratios and the resultant foreign ownership, along with post-offer supply/demand balance.

MVIS Australia A-REITs Index Rebalance:  Float/Capping Changes

By Brian Freitas

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

By Brian Freitas

  • The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
  • The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
  • Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.

Japan Post Bank Placement –  Still Misbehaving – Post-Pricing Performance of Some More Deals

By Sumeet Singh

HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer

By Douglas Kim

  • On 12 March, HYBE (352820 KS) announced that it is no longer pursuing S.M.Entertainment Co (041510 KS) in an M&A battle with Kakao Corp (035720 KS).
  • This will result in a very high probability of Kakao winning the M&A battle of SM Entertainment.
  • Many institutional investors are likely to have pushed back on HYBE’s capital raising efforts, which seems to have been the clincher of HYBE backing out of this M&A for SM. 

STAR50 Index Rebalance Preview: Two Changes in June (Possibly)

By Brian Freitas

  • The review period for the June rebalance ends 30 April. We expect the changes to be announced 26 May with the implementation taking place after the close on 9 June.
  • We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
  • One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 1,442m. The impact on the deletions will be larger than that on the inclusions.

Halcyon Agri (HACL SP): Board Recommends Conditional MGO

By Arun George

  • The IFA opines that China Hainan Rubber Industry (601118 CH)‘s MGO at S$0.413 per share is fair and reasonable. The Halcyon Agri (HACL SP) Board recommends accepting the offer.
  • Since the offer opened on 24 February, there have been no acceptances. Perhaps minorities held off until the full-year results and the IFA report. Board recommendation should drive acceptance.
  • The 50%+ minimum acceptance condition requires around 40% of minorities acceptance rate (47% excluding the Gondobintoro Family). This remains achievable. At the last close, the gross spread is 2.0%.

ThaiBev To Take Oishi Group Private

By David Blennerhassett

  • Thai Beverage (THBEV SP) is proposing to take 79.66%-held Oishi Group PCL (OISHI TB) private by a voluntary Delisting Offer. 
  • The Offer price is THB 59/share, a 26.9% premium to last close. 
  • This Delisting Offer requires a shareholder vote. Payment may occur sometime in August. 

Merger Arb Mondays (13 Mar) – InvoCare, Origin, Tyro, Toyo, Oishi, AAG Energy, Yashili, Halcyon

By Arun George

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Mar 13
0

Daily Brief Equity Bottom-Up: Taiwan Dual-Listings: TSMC Normalizes; UMC and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Dual-Listings: TSMC Normalizes; UMC, ChipMOS Compelling Discounts
  • [Alibaba (BABA US) Target Price Change]: No Growth in March Promotion, Cut TP to US$100
  • Bukwang Pharmaceutical (003000 KS): High R&D Cost Put Pressure on Profit; Pain to Continue in Future
  • Heavy Lifting

Taiwan Dual-Listings: TSMC Normalizes; UMC, ChipMOS Compelling Discounts

By Vincent Fernando, CFA

  • United Microelectronics ADRs trading at a discount, risk-reward appears compelling.
  • TSMC has normalized; and reports are that it may launch a Singapore-based 12-inch semiconductor fab.
  • ChipMOS discount still compelling; and we now have detailed coverage of the company.

[Alibaba (BABA US) Target Price Change]: No Growth in March Promotion, Cut TP to US$100

By Shawn Yang

  • Based on our recent checks, we expect that Tmall sales in the march promo were weaker-than-expected, especially in apparel and beauty make-up. 
  • Meanwhile, we maintain our prior forecast for Douyin’s overall eCommerce growth, and we expect that Douyin Mall’s share of Douyin eCommerce GMV is now higher than we previously estimated.
  • We cut the GMV growth of Taobao and Tmall from 4.4% YoY to 1.4% YoY in FY24, and cut BABA’s TP to US$ 100, implying 12.6x FY23 PE.

Bukwang Pharmaceutical (003000 KS): High R&D Cost Put Pressure on Profit; Pain to Continue in Future

By Tina Banerjee

  • Bukwang Pharmaceutical (003000 KS) has reported operating loss of KRW1.2 billion in 2022 due to the increased R&D cost, driven by the clinical progress of JM-010.
  • Bukwang’s subsidiary, Contera Pharma, is developing JM-010 as a treatment for dyskinesia in patients with Parkinson’s disease. JM-010 is in phase 2 clinical trial in the U.S. and Europe.
  • Bukwang has been aiming to list Contera Pharma to secure funds for clinical research, which has still not materialized. With current low-risk appetite, Contera Pharma IPO may not sail smooth.

Heavy Lifting

By subSPAC

  • The heavy equipment dealership industry, known for its lucrative opportunities, has consolidated significantly in recent years, with major players acquiring smaller dealerships.
  • Alta Equipment, based in Michigan, has emerged as a beneficiary of this trend, expanding its geographic reach and gaining access to trained technicians, giving it a competitive advantage over smaller players.
  • However, as the industry continues to consolidate, will Alta be able to maintain its momentum, or will it face challenges from larger rivals?

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Mar 13
0

Daily Brief Thematic (Sector/Industry): Asia Financials: The Fallout from SVB and Silvergate | Where’s the Biggest Asset/Liability Mismatch? and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Asia Financials: The Fallout from SVB and Silvergate | Where’s the Biggest Asset/Liability Mismatch?
  • Good Morning Japan |Contagion Fears Dominate; NUGGET: Effective Activism – TARGET, TIMING, TACTICS
  • “Sudden Death” of Silicon Valley Bank (SVB) – The Impact on China Healthcare
  • China Oil Sector: A Look from SOE Valuation Enhancement Angle
  • Weekly Stock Bullfinder – Week of 3/13
  • Pdd/3690.hk/700.hk/1877HK/BGNE：PDD Enters Local Life Services Business

Asia Financials: The Fallout from SVB and Silvergate | Where’s the Biggest Asset/Liability Mismatch?

By Stanley Tsai, CFA

  • The unfolding crisis is unlikely to have far-reaching impacts on Asia financial names, given their more robust deposit franchises and sector diversification.
  • That said, the Taiwanese financial holdcos do seem to be substantially more exposed than their peers in other markets owing to the USD fixed-income exposures at their life insurance units.
  • In a flight-to-quality scenario, we expect Fubon FHC to outperform the more geared Shin Kong FHC.

Good Morning Japan |Contagion Fears Dominate; NUGGET: Effective Activism – TARGET, TIMING, TACTICS

By Mark Chadwick

  • OVERSEAS. US stocks hit again on contagion fears as Fed takes control of Silicon Valley Bank; Lots of activity over the weekend to shore up confidence. 
  • JAPAN. NKY Futs -2.2% vs Cash. USDJPY strengthened to 135. With all activity in the US to shore up confidence,  Japan likely bottoms early; Ueda confiremed as BOJ Governor.
  • NUGGET. Dainippon Print(7912)  – Confluence of Target, Timing and Tactics. A spectacular win for Elliot, Activism in Japan and for Japan  

“Sudden Death” of Silicon Valley Bank (SVB) – The Impact on China Healthcare

By Xinyao (Criss) Wang

  • SVB has special institutions in China and its business mode is Venture Lending. The closure of SVB could make it harder for Chinese startups to raise money from US investors/banks.
  • The scale of SVB is small, but it cannot be said that it has no impact on the fundamentals of China healthcare companies. Investors need to reassess the potential risks.
  • SVB’s woes would not be a serious blow to the US if government takes timely action. However, if BRICS currency is established, it would be real fatal for the dollar.

China Oil Sector: A Look from SOE Valuation Enhancement Angle

By Osbert Tang, CFA

  • The oil majors – CNOOC Ltd (883 HK), China Petroleum & Chemical (386 HK) and PetroChina (857 HK) – are interesting plays on government’s plan to boost capital market valuations.
  • Higher dividend payout, privatisation of undervalued subsidiaries, return to A-shares, share buyback and upping stake by major shareholders are just some example of supporting tactics.
  • The government may possibly mobilise more offshore funds of SOEs to add stakes. We think ROE expansion and capital market valuations to gain importance in senior management KPIs.

Weekly Stock Bullfinder – Week of 3/13

By Weekly Stock Bull Finder

  • After breaking above the bear market trend line resistance area, last week’s banking sector contagion fears, spotlighted by Silicon Valley Bank’s (SVB) collapse, pushed the S&P 500 back below its 200 day moving average on high volume.
  • Startup-focused lender SVB Financial Group is the largest US bank failure since 2008 and was the 16th biggest in the U.S. at the end of last year with about $209 billion in assets.
  • Silicon Valley Bank’s failure is the largest since Washington Mutual went bust in 2008.

Pdd/3690.hk/700.hk/1877HK/BGNE：PDD Enters Local Life Services Business

By Shawn Yang

  • 1877HK/BGNE： Coherus announce FDA inspection of Toripalimab manufacturing facility in China in C2Q23（+）
  • 700HK：Honour of Kings (HOK) International Version first launches in Brazil (+); 
  • PDD/3690HK: PDD begins recruiting merchants for its local life services business (+/-)

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Mar 13
0

Daily Brief Macro: SVB Watch – Time to Figure Out Who’s Naked and more

By | Daily Briefs, Macro

In today’s briefing:

  • SVB Watch – Time to Figure Out Who’s Naked
  • Double-Dip Recession 1980-1982 = False Dawn 2023?
  • Will the Fed Crash the Stock Market?
  • Active Equity Portfolio Management Trumps Passive in the Post-Easy Money Environment
  • Where Are the Safe Havens?

SVB Watch – Time to Figure Out Who’s Naked

By Andreas Steno

  • Silicon Valley Bank is nothing but a symptom of years of excess money growth and it is now time to figure out who else is swimming naked. 
  • Money growth is negative, and idiots only survive in times of excess liquidity.
  • Here is what we know and what to expect for the week ahead

Double-Dip Recession 1980-1982 = False Dawn 2023?

By Cam Hui

  • The stock and bond market is in disagreement again. While cyclical industries are in relative uptrends, indicating expansion, the 2s10s yield curve is deeply inverted, indicating recession.
  • We believe the current equity market expectations of a cyclical recovery is simply unrealistic in light of the Fed’s focus on 2% inflation.
  • The current situation is highly reminiscent of the double-dip recession of 1980–1982. Investors are advised to be prepared to revise their risk profile as conditions may change later this year.

Will the Fed Crash the Stock Market?

By Cam Hui

  • The S&P 500 has been consolidating sideways since it staged an upside breakout through a falling trend line in January.
  • The upside breakout was constructive for stock prices, but until the consolidation period resolves itself either to the upside or the downside, it’s difficult to be definitive about direction.
  • While we are constructive on stock prices, some caution needs to be warranted here.

Active Equity Portfolio Management Trumps Passive in the Post-Easy Money Environment

By Said Desaque

  • The reaction of central banks to the global financial crisis (GFC) was a boon for passive investment funds after 2008 and, consequently, bubbles in equity and fixed income investment benchmarks.
  • Easy money and passive investment turned long-standing relative financial asset returns on their head: value stocks no longer outperformed growth counterparts. Small-cap stocks also began underperforming their larger brethren. 
  • Higher economic and inflation volatility in the future means that the nature of post-GFC investment returns will not return, thereby implying a much bigger opportunity for active fund management.

Where Are the Safe Havens?

By ByteTree Asset Management

  • Having been the poster child of the 2023 rally, the banks are back in the doghouse as fears grow about their credit quality.
  • This may be exaggerated, but over the years you come to realise there is no smoke without fire.
  • Silicon Valley Bank (SVB) has been funding the technology and life sciences sectors. 

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Mar 13
0

Daily Brief ECM: Weekly Deals Digest (12 Mar) – Japan Post Bank and more

By | Daily Briefs, ECM

In today’s briefing:

  • Weekly Deals Digest (12 Mar) – Japan Post Bank, SBI Sumishin, ASMPT, Oishi, InvoCare, Olam

Weekly Deals Digest (12 Mar) – Japan Post Bank, SBI Sumishin, ASMPT, Oishi, InvoCare, Olam

By Arun George

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