Smartkarma Daily Briefs

Japan Post Bank (7182 JP) has announced that the offering price has been set at JPY 1131/share, a 2.08% discount to the closing price. Settlement is on 20 March.
The buyback will run from 22 March to 12 May and at last prices will mop up 1.85% of shares outstanding or 4.62% of post-offering float.
In the short-term, we expect buying from Topix (TPX INDEX), MSCI and other global trackers to support the stock price.

Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook

Japan Post Bank (7182 JP) priced its offer at JPY1,131, a discount of 2.1% to the last close. JPB’s on-market buyback period runs from 22 March to 12 May.
Japan Post Holdings (6178 JP)/ JPH’s 2021 offering suggests that the share price will have support to trade above the offer price at delivery date and the on-market buyback period.
The offer price’s forward P/B of 0.45x and yield of 4.42% are attractive vs peers. JPB’s price ratio at the offer price is undemanding vs TOPIX Banks ETF and JPH.

SBI Sumishin Net Bank IPO – It Was All Good, till Friday

SBI Sumishin Net Bank (7163 JP) (SSNB) is looking to raise around US$390m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about implied valuations in the IPO price range

Fuji Oil: Probably The Last Chance For Itochu to Scoop Up Fuji Oil at a Bargain

By Oshadhi Kumarasiri

Having conducted several acquisitions and reinvested most of the operating cashflows into building its overseas business base, Fuji Oil Holdings (2607 JP) seems ready to unleash its earnings potential.
There could be more than a 100% upside to Fuji Oil shares if ROE returns to the historical median of 9% in the next few years.
Therefore, if Itochu Corp (8001 JP) has plans to takeover Fuji-Oil, the current price and the position in the business-cycle present the best opportunity to buy-out Fuji-Oil at a bargain.

What’s Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

By Aki Matsumoto

Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.
Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn’t be ruled out if the dilution of voting rights hinders fundraising.
The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.

Monotaro (3064) | Pricing in Downside Risks

By Mark Chadwick

We reassess our long-term financial model for Monotaro following 2 consecutive months of weak monthly data
Just two months into the new fiscal year, but YTD sales growth of 13% is far short of the full year target
Our DCF valuation highlights further 21% downside assuming 10y CAGR of 10.5%

Trial Holdings Pre-IPO – The Positives – Steady past Performance with an Expanding Footprint

By Shifara Samsudeen, ACMA, CGMA

Trial Holdings (5882 JP)‘s is looking to raise around US$375m in its Japan IPO.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
In this note, we will talk about the positive aspects of the deal.

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Mar 14

Daily Brief Equity Bottom-Up: China Internet Weekly (13Mar2023): ZTO and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com
Meituan: Scaling Back Ride-Hailing Business to Maintain Margins
JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy
Fuji Oil: Probably The Last Chance For Itochu to Scoop Up Fuji Oil at a Bargain
Shenzhen Mindray Bio-Medical Electronics (300760.CH) – Shareholders’ Stock Selling and the Outlook
Monotaro (3064) | Pricing in Downside Risks
Ricegrowers Limited (SunRice) – H1 FY23 Highlights Relative Freight Opportunity
REIT Watch – Hospitality S-REITs’ DPU rebound 32% in 2022
Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential
Impressive Progress on Multiple Fronts to End the Year

China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com

By Ming Lu

Grizzly Research LLC publishes a short selling report on ZTO.
Meituan plans to shift car hailing from direct operation to a platform for third-party operators.
Dada, which was acquired by JD.com last year, posts good 4Q22 results.

Meituan: Scaling Back Ride-Hailing Business to Maintain Margins

Several news media outlets reported last week that Meituan (3690 HK) is restructuring its ride-hailing services business to cut down costs as top line growth is slowing down.
Meituan launched ride-hailing services as a stand-alone app in 2017, it was merged into Meituan Super App in 2019. Relaunched as a stand-alone app in 2021 following Didi’s app removal.
Meituan has increased its headcount to compete with Douyin while has started hiring riders to launch services in Hong Kong which would likely to further drag down margins.

JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy

By Ming Lu

Total revenue increased by 41% YoY and revenue from external customers increased by 69% YoY in 4Q22.
We believe total revenue will grow by 26% in 2023 and 17% in 2024.
We also believe the stock has an upside of 58% and a price target of HK$20.

Fuji Oil: Probably The Last Chance For Itochu to Scoop Up Fuji Oil at a Bargain

By Oshadhi Kumarasiri

Having conducted several acquisitions and reinvested most of the operating cashflows into building its overseas business base, Fuji Oil Holdings (2607 JP) seems ready to unleash its earnings potential.
There could be more than a 100% upside to Fuji Oil shares if ROE returns to the historical median of 9% in the next few years.
Therefore, if Itochu Corp (8001 JP) has plans to takeover Fuji-Oil, the current price and the position in the business-cycle present the best opportunity to buy-out Fuji-Oil at a bargain.

Shenzhen Mindray Bio-Medical Electronics (300760.CH) – Shareholders’ Stock Selling and the Outlook

By Xinyao (Criss) Wang

Several original shareholders reduced their holdings of Mindray, which indicates that the senior executives and major shareholders aren’t optimistic about Mindray’s outlook, putting the Company’s long-term growth under scrutiny.
Mindray’s performance in overseas markets could be under pressure, which is an uncertain factor to drag down this year’s performance growth. Supply chain issue would hinder Mindray’s breakthrough in high-end fields.
Performance slowdown could continue if without breakthroughs in new growth points or internationalization. Our forecast on 2023 growth is about 15%-18%. Mindray’s valuation may fall back to 30-35 PE TTM.

Monotaro (3064) | Pricing in Downside Risks

By Mark Chadwick

We reassess our long-term financial model for Monotaro following 2 consecutive months of weak monthly data
Just two months into the new fiscal year, but YTD sales growth of 13% is far short of the full year target
Our DCF valuation highlights further 21% downside assuming 10y CAGR of 10.5%

Ricegrowers Limited (SunRice) – H1 FY23 Highlights Relative Freight Opportunity

By Research as a Service (RaaS)

We have compiled a summary of the results and outlook statements for our assessed peers of Ricegrowers Limited, trading as SunRice (ASX:SGLLV), with a particular focus on trading conditions, product pricing, freight costs, outlook statements and consensus earnings changes.
The overwhelming summary of trading conditions over CY22 was ‘challenging’ outside of Treasury Wine Estates (ASX:TWE) and Ridley Corporation (ASX:RIC).
The overwhelming outlook commentary assumes normalising weather conditions, price increases recouping cost inflation, lower freight costs, improved labour availability and higher earnings.

REIT Watch – Hospitality S-REITs’ DPU rebound 32% in 2022

By Geoff Howie

Of the 30 S-REITs which have declared full year 2022 distributions, median change in distribution per unit (DPU) increased marginally by 0.2 per cent year-on-year (y-o-y).
The five trusts with the highest y-o-y DPU increments for FY22 are: ARA US Hospitality Trust (760 per cent), Paragon REIT (34 per cent), CDL Hospitality Trusts (32 per cent), CapitaLand Ascott Trust (31 per cent) and Far East Hospitality Trust (24 per cent).
CDL Hospitality Trusts (CDLHT) declared a DPS of 5.63 Singapore cents for FY22, up 31.9 per cent y-o-y.

Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential

By Tina Banerjee

Lutronic Corp (085370 KS) recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business, which contributed 88% of revenue and grew 62% YoY.
Overall, business has recovered with the reopening of the dermatology clinics and resumption of elective procedures globally. In addition to product sales, sales of consumables and services are steadily increasing.
Despite stellar performance in 2022, ongoing lawsuit against U.S.-based competitor remains an overhang on Lutronic’s overseas growth aspirations, especially in the U.S.

Impressive Progress on Multiple Fronts to End the Year

By Water Tower Research

WWR provided an investor update for 4Q22 and FY22 results, which included a full-year net loss of $11.1 million, compared with a $16.1 million loss in 2021, driven by lower product development costs, partially offset by higher general and administrative costs, as the company continues to add to its team.
For the year, WWR spent $52.8 million in capex on Phase I of its Kellyton, AL graphite plant and has $75 million in cash remaining on its balance sheet as of the end of 2022, with no debt.
Agreement with Tier I battery OEM. WWR has entered into an agreement with a Tier I EV battery manufacturer that can result in a finalized offtake agreement for potentially all graphite anode material from the plant.

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Mar 14

Daily Brief ESG: What’s Solution for TSE Growth Market and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

What’s Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

What’s Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

By Aki Matsumoto

Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.
Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn’t be ruled out if the dilution of voting rights hinders fundraising.
The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.

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Mar 14

Daily Brief Credit: Morning Views Asia: Adani Transmission and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Morning Views Asia: Adani Transmission, Country Garden Holdings Co

Morning Views Asia: Adani Transmission, Country Garden Holdings Co

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.

Adani Transmission
Country Garden Holdings Co

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Mar 14

Daily Brief Crypto: The Aftermath: What Happened to USDC? and more

By Smartkarma Daily Briefs | Crypto, Daily Briefs

In today’s briefing:

The Aftermath: What Happened to USDC?

The Aftermath: What Happened to USDC?

By Kaiko

In the hours following Sillicon Valley Bank’s collapse, news emerged that Circle, issuer of the USDC stablecoin, held $3.3bn of reserves in SVB, triggering panic that the stablecoin was no longer fully backed.
As of Sunday night, we know that Circle’s reserves are safe, but over the weekend both centralized and decentralized markets descended into chaos.
Today, we’ll walk you through what exactly happened.

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Mar 14

Daily Brief Thematic (Sector/Industry): Good Morning Japan |US Bank Turmoil Spur Safe Haven Bid; NUGGET:Japan Wage Hikes – Something Special and more

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

In today’s briefing:

Good Morning Japan |US Bank Turmoil Spur Safe Haven Bid; NUGGET:Japan Wage Hikes – Something Special
Intel’s Dividend Cut Debacle
Semiconductors: 2022 Review & 2023 Outlook
Shroom Shmooz: Thoughts on Pathways to More Robust Payor Coverage for PAT
SPAC Talk: The Deal or Bust Cycle Set to Continue
China/Asia TMT Update(Mar.14): PDD/CPNG/BILI/ZTO – Logistics Companies Increased Prices;

Good Morning Japan |US Bank Turmoil Spur Safe Haven Bid; NUGGET:Japan Wage Hikes – Something Special

By Mark Chadwick

OVERSEAS. Shares of US regional banks crash; Flight to safe haven assets as US2Yr yield crash; Also, strong Yen bid; Nomura expects Fed to CUT next (now that’s original).
JAPAN. NKY Futs -2.2% vs Cash; USDJPY strengthens to 133.21; Masatoshi Ito – founder of Ito-Yokado dies at 98; Nidec -Leadership Transition take shape; Japan Post Bank priced; Komatsu upgrade
NUGGET. JAL EXCEEDS union demands with wage settlement. Inflation may act as the slayer of inefficient companies as weaker companies will just not be able to keep up.

Intel’s Dividend Cut Debacle

By William Keating

Intel’s CFO had reiterated his support for maintaining the dividend on multiple occasions since December 2022, most recently at the latest earnings call on January 26 last.
On February 22, Intel issued a press release announcing a 66% dividend cut.
What caused Intel to change their position on the dividend over the course of three weeks last month?

Semiconductors: 2022 Review & 2023 Outlook

By William Keating

2022 was characterised by a historically strong H1 followed by a far weaker H2
The current downturn is impacting memory, PC and smartphone shipments the hardest
2023 is shaping up to be the reverse of 2022, i.e. historically weak H1 with recovery in H2

Shroom Shmooz: Thoughts on Pathways to More Robust Payor Coverage for PAT

By Water Tower Research

Affordability is an important condition for broad-based accessibility to psychedelic-assisted therapy (PAT), both now (ketamine) and in the future (MDMA, psilocybin, et al.).
This makes the evolution of payor coverage as critical a part of the development of PAT as the clinical trial outcomes and the progression toward a more accommodative regulatory environment.
Current payor coverage for ketamine-assisted therapy (KAT) is inconsistent at best.

SPAC Talk: The Deal or Bust Cycle Set to Continue

By Water Tower Research

The liquidations count continues to rise. While the SPAC IPO market appears to have gone back into its slumber with no pricings to report yet in March, the main theme of the SPAC market continues to be liquidations, as it has been particularly since October 2022.
So far in March, 26 SPACs are slated to liquidate their trusts (of which half have already been liquidated), which makes it the second-highest monthly total ever, only behind the excise tax panic-stricken December 2022 rush of 89 liquidations.
Based on the current count for March, which we suspect will not be the final number, $8.5 billion will be returned to Class A shareholders.

China/Asia TMT Update(Mar.14): PDD/CPNG/BILI/ZTO – Logistics Companies Increased Prices;

By Shawn Yang

PDD: Temu launches in Australia and New Zealand (+); CPNG: Coupang withdraws from delivery service in Japan (+)
ZTO/PDD: Logistics companies increased parcel prices in Yiwu City (+/-)
BILI:BILI hold content creator seminar to discuss video metrics (+)

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Mar 14

Daily Brief ECM: Japan Post Bank (7182 JP): JPY1 and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook
SBI Sumishin Net Bank IPO – It Was All Good, till Friday
Sona Blw Precision Placement – US$585m Clean-Up Sale by Blackstone Will Lift the Overhang
ZKH Group IPO: The Bull Case
FMC Corporation: Initiation of Coverage – Business Strategy & Key Drivers
DaVita Inc.: Initiation of Coverage – Strong Value Proposition & Key Drivers
Parker-Hannifin Corporation: Initiation of Coverage – The Meggitt Synergies & Other Drivers
CF Industries Holdings Inc.: Initiation of Coverage – Business Strategy & Key Drivers
Centene Corporation: Initiation of Coverage – Recent Restructuring & Other Drivers
Trial Holdings Pre-IPO – The Positives – Steady past Performance with an Expanding Footprint

Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook

Japan Post Bank (7182 JP) priced its offer at JPY1,131, a discount of 2.1% to the last close. JPB’s on-market buyback period runs from 22 March to 12 May.
Japan Post Holdings (6178 JP)/ JPH’s 2021 offering suggests that the share price will have support to trade above the offer price at delivery date and the on-market buyback period.
The offer price’s forward P/B of 0.45x and yield of 4.42% are attractive vs peers. JPB’s price ratio at the offer price is undemanding vs TOPIX Banks ETF and JPH.

SBI Sumishin Net Bank IPO – It Was All Good, till Friday

SBI Sumishin Net Bank (7163 JP) (SSNB) is looking to raise around US$390m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about implied valuations in the IPO price range

Sona Blw Precision Placement – US$585m Clean-Up Sale by Blackstone Will Lift the Overhang

By Clarence Chu

Singapore VII Topco III (Blackstone-affiliate) is looking to raise at least US$585m in its stake sale of Sona BLW Precision Forgings (SONACOMS IN) .
The share sale is a clean-up one and will lift the overhang on the stock.
The block is marketed at a floor price of INR400/share, at a 8.3% discount to last close.

ZKH Group IPO: The Bull Case

ZKH Group (ZKH US), a leading MRO (maintenance, repair, and operations) procurement service platform in China, is pre-marketing an NYSE IPO to raise US$200-300 million.
The ZKH platform is for enterprise customers and the GBB platform is for micro businesses. Key backers include Tencent (700 HK) and Tiger Global.
The key elements of the bull case rest on large addressable markets, solid customer loyalty, improving gross margin, lower operating losses and a strong balance sheet.

FMC Corporation: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on FMC Corporation, a major agricultural sciences company in the U.S.
FMC achieved significant results in the quarter because of high volume growth and aggressive pricing and it managed to deliver an all-around beat.
Its new product sales are growing quickly, nearly doubling year over year, accounting for 11% of overall sales in the quarter.

DaVita Inc.: Initiation of Coverage – Strong Value Proposition & Key Drivers

This is our first report on major healthcare provider, DaVita.
DaVita produced an adjusted operating income of $317 million and adjusted profits per share from continuing operations of $1.11 for the fourth quarter, bringing the entire year squarely at the top of the revised target range it provided last quarter.
During the previous quarter, the international adjusted operating income fell by $15 million.

Parker-Hannifin Corporation: Initiation of Coverage – The Meggitt Synergies & Other Drivers

This is our first report on Parker-Hannifin Corporation, a global leader in motion and control technologies.
Parker-Hannifin delivered strong operating performance throughout the second quarter of the current fiscal and delivered an all-around beat.
We initiate coverage on the stock of Parker-Hannifin Corporation with a ‘Hold’ rating.

CF Industries Holdings Inc.: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on one of the largest producers of nitrogen products in the world – CF Industries.
CF’s overall performance was fairly good against the backdrop of a continually tight global supply-demand balance for nitrogen.
We initiate coverage on the stock of CF Industries with an ‘Outperform’ rating.

Centene Corporation: Initiation of Coverage – Recent Restructuring & Other Drivers

This is our first report on Centene Corporation, one of the largest health insurance players in the U.S.
Centene had a successful year in 2022 and ended it on a positive note with an all-around beat.
Total revenue grew by $3 billion, driven by strong organic growth in Medicaid, strong growth in Medicare membership, and the acquisition of Magellan.

Trial Holdings Pre-IPO – The Positives – Steady past Performance with an Expanding Footprint

Trial Holdings (5882 JP)‘s is looking to raise around US$375m in its Japan IPO.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
In this note, we will talk about the positive aspects of the deal.

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Mar 14

Daily Brief Event-Driven: Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up
Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept
Names for a Preemptive Long Short Setup for KOSPI 200 June Rebalancing
Shorting Event on LX International’s Potential Rights Offer for HMM Takeover
SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation
MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility
Quiddity Leaderboard for BSE/SENSEX Jun 23: NMDC Could Be a BSE 200 ADD
G.K.Goh’s Offer Doc Out. No New News Otherwise
FY2022 Results and Discount to NAV

Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up

Japan Post Bank (7182 JP) has announced that the offering price has been set at JPY 1131/share, a 2.08% discount to the closing price. Settlement is on 20 March.
The buyback will run from 22 March to 12 May and at last prices will mop up 1.85% of shares outstanding or 4.62% of post-offering float.
In the short-term, we expect buying from Topix (TPX INDEX), MSCI and other global trackers to support the stock price.

Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept

Halcyon Agri (HACL SP) has issued the circular in response to China Hainan Rubber Industry (601118 CH)‘s conditional MGO.
The IFA reckons the Offer is fair and reasonable. The Independent Directors recommend that shareholders accept the Offer.
The first close is the 24 March. Hainan Rubber is under no obligation to extend the Offer beyond this date.

Names for a Preemptive Long Short Setup for KOSPI 200 June Rebalancing

By Sanghyun Park

Kum Yang and Youlchon Chemical are within the borderline for inclusion, whereas Hwaseung Enterprise and K Car are in the deletion zone.
Since the review period has reached 75%, it seems reasonable to consider a somewhat aggressive buildup for them.
We can also consider setting up preemptive positions only for Kum Yang and Hwaseung Enterprise and then sequentially look for entry opportunities for Youlchon and K Car later on.

Shorting Event on LX International’s Potential Rights Offer for HMM Takeover

By Sanghyun Park

The opinion rapidly spreading in the local market is that LX International is increasing its available shares by twice the amount to plan a paid-in increase for the HMM acquisition.
The size of an offering is estimated at ₩1.2T to ₩1.5T. The short-term price impact will undoubtedly be significant for LX International having a market cap of ₩1.2T.
The market has already witnessed a preemptive position buildup targeting this. However, since there is a time gap until the offering announcement, an entry point opportunity may still be available.

SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation

By Douglas Kim

SK Networks announced that it will repurchase 100 billion won in common shares and also cancel nearly 70 billion won of existing treasury shares.
The combined share buyback and treasury shares cancellation will represent nearly 14% of the company’s total outstanding shares.
The combined share buyback and treasury shares cancellation which will represent nearly 14% of the company’s total outstanding shares, will likely have a positive impact on SK Network’s share price.

MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility

By Douglas Kim

In this insight, we discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement in May 2023 amid heightened market volatility.
The potential inclusions (high probability) in the MSCI Korea index in May are Hanwha Aerospace and Ecopro. Potential adds (low probability) include POSCO International, Cosmo AM&T, and SM Entertainment.
The three most likely exclusions in the MSCI Korea index in May include Lotte Shopping, SD Biosensor, and S1 Corporation.

Quiddity Leaderboard for BSE/SENSEX Jun 23: NMDC Could Be a BSE 200 ADD

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
The BSE AllCap March 2023 Rebalance results were announced and this changes the main universe from which SENSEX, BSE 100, and BSE 200 members are selected.
In this insight, we take a look at the recent updates to my expectations and the price and volume performance of the candidates.

G.K.Goh’s Offer Doc Out. No New News Otherwise

The Offer Document for GK Goh Holdings (GKG SP)‘s MBO has been dispatched. The Offer price of $1.26/share, which is final, is a 38.5% premium to last close.
The Offer is conditional on the Goh family holding 90%, which may be reduced to 50%. GKG Investment, with 62.89%, has given an irrevocable to tender.
There is no IFA opinion in the Offer Doc. This will be present in the Circular which is expected to be sent out by the 28th March, at the latest.

FY2022 Results and Discount to NAV

By Jesus Rodriguez Aguilar

NAV/Share down 19% for FY2022 in line with falls in the market. Private/alternative assets represented 36.3% of GAV and 39.86% of NAV. Discount to NAV was 35.8% as of YE2022.
The discount to NAV was 36.7% as of 10 March. GBL is buying and cancelling its own shares, which creates value as it’s done at a deep discount to NAV.
GBL has completed its transition towards a 40% of private/alternative assets in portfolio, but still needs to convince investors to lower its discount to levels closer to Investor AB.

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Mar 14

Daily Brief Macro: Silicon Valley Bank: Some Observations on Contagion and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Silicon Valley Bank: Some Observations on Contagion, Moral Hazard, and Monetary Policy
The Week That Was in ASEAN@Smartkarma – Sea Ltd’s Blindside Win, ROTI’s Freshly Baked, and Prodia
Our Oil Price Analysis // FED is Willing to Break the Market

Silicon Valley Bank: Some Observations on Contagion, Moral Hazard, and Monetary Policy

By Jeroen Blokland

The (equity) risk premium for banks (SPDR S&P Bank ETF (KBE US)) will go up while bank profitability will go down. There will be questions about smaller bank regulations.
Startups and smaller tech funds will struggle, potentially resulting in a lower valuation of the entire technology space (iShares US Technology ETF (IYW US)).
Unless the Bank Term Funding Program does not solve the liquidity issues, the Federal Reserve must continue raising rates, forcing another standoff with markets (SPDR S&P 500 (SPY US)) .

The Week That Was in ASEAN@Smartkarma – Sea Ltd’s Blindside Win, ROTI’s Freshly Baked, and Prodia

By Angus Mackintosh

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week saw insights on Sea Ltd (SE US) post spectacular results, and PT Nippon Indosari Corpindo (ROTI IJ), which also beat considerably, and on Prodia (PRDA IJ).
Last week also saw insights on Olam Group (OLG SP), Sabana Industrial REIT (SSREIT SP), Halcyon Agri (HACL SP), Oishi Group PCL (OISHI TB), and the Singapore Healthcare Sector.

Our Oil Price Analysis // FED is Willing to Break the Market

By The Commodity Report

According to S&P Global, the renewable output by the grid operator MISO averaged 333,012 GWh in Q4.
Despite Bonneville Power Administration’s (BPA) renewable output slipping 12% in Q4, it remained the footprint with the most renewable market share at 75.6% of its total fuel mix for Q4.
The latest ACP data shows that the total installed solar capacity in the US grew by 17% year on year, reaching 74.126 GW in Q4.

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Mar 14

Most Read: S.M.Entertainment Co, Japan Post Bank, Jiangsu Cnano Technology Co Ltd-A, KLA-Tencor Corp, Oishi Group PCL, SBI Sumishin Net Bank, Halcyon Agri and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank – Estimating Foreign Ownership and Deal Flowback
HYBE Gives Up the M&A Fight for SM Entertainment: Impact on Kakao’s Tender Offer
Japan Post Bank Placement – Still Misbehaving – Post-Pricing Performance of Some More Deals
Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up
STAR50 Index Rebalance Preview: Two Changes in June (Possibly)
MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact
ThaiBev To Take Oishi Group Private
Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook
SBI Sumishin Net Bank IPO – It Was All Good, till Friday
Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept

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.

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.

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

Japan Post Holdings (6178 JP) aims to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our previous notes, Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback and Japan Post Bank Placement – Misbehaving.
In this note, we talk about the updates since our last note and have a look at the post pricing performance of a few more deals.

Japan Post Bank (7182 JP): Offering Price Decided; Buyback & Passive Flow Coming Up

Japan Post Bank (7182 JP) has announced that the offering price has been set at JPY 1131/share, a 2.08% discount to the closing price. Settlement is on 20 March.
The buyback will run from 22 March to 12 May and at last prices will mop up 1.85% of shares outstanding or 4.62% of post-offering float.
In the short-term, we expect buying from Topix (TPX INDEX), MSCI and other global trackers to support the stock price.

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

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.

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

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.

ThaiBev To Take Oishi Group Private

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.

Japan Post Bank (7182 JP): JPY1,131 Offer Price; Updated Playbook

Japan Post Bank (7182 JP) priced its offer at JPY1,131, a discount of 2.1% to the last close. JPB’s on-market buyback period runs from 22 March to 12 May.
Japan Post Holdings (6178 JP)/ JPH’s 2021 offering suggests that the share price will have support to trade above the offer price at delivery date and the on-market buyback period.
The offer price’s forward P/B of 0.45x and yield of 4.42% are attractive vs peers. JPB’s price ratio at the offer price is undemanding vs TOPIX Banks ETF and JPH.

SBI Sumishin Net Bank IPO – It Was All Good, till Friday

SBI Sumishin Net Bank (7163 JP) (SSNB) is looking to raise around US$390m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about implied valuations in the IPO price range

Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept