Smartkarma Daily Briefs

Despite ongoing difficulties with the global economic environment, Akamai produced strong results in the fourth quarter, exceeding market expectations in terms of both, revenues as well as earnings.
Their rapidly expanding Compute business, the sustained high demand for their security solutions, and higher-than-anticipated shipping traffic contributed to their revenue growth.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Biogen Inc.: Major Drivers

Biogen delivered an all-around beat in the last result.
TECFIDERA generic competition, ongoing interferon declines and some pricing pressure mostly brought on this reduction.
Based on these positive results, they started the Phase II/III AMETHYST investigation of litifilimab in CLE.

Chipotle Mexican Grill Inc.: Launch of Farmesa & Other Drivers

Chipotle Mexican Grill delivered a highly disappointing result for the last quarter.
The company failed to meet the revenue expectations as well as the earnings expectations of Wall Street despite AUVs expansion and improved restaurant-level margin.
The management faced several challenges this quarter, including one of the highest inflationary periods and an uncertain macro environment.

Cisco Systems Inc.: Major Drivers

Cisco Systems delivered another strong quarter, exceeding the top and bottom line expectations of analysts.
The company saw consecutive double-digit growth in its customer markets’ commercial and enterprise sectors, and the public sector performed better than usual.
We give Cisco Systems a ‘Hold’ rating with a revised target price.

Du Pont De Nemours and Company: Major Drivers

DuPont had a mixed fourth quarter and its revenues were below analyst expectations but the company managed to deliver an earnings beat.
The company has also succeeded in enhancing its grip on industrial-end markets such as healthcare and aerospace.
There was a strong pricing growth as well that helped mitigate the impact of inflation.

Enphase Energy Inc: Acquisition of 365 Pronto & Other Drivers

Enphase delivered a strong quarter driven by amazing revenues through its microinverters.
The company witnessed amazing growth in the gross margin as well as in the operating income.
The overall supply environment of the microinverters remains stable throughout the quarter.

Fortinet Inc.: Launch of FortiSP5 & Other Drivers

Fortinet had a mixed set of fourth-quarter results with revenues failing to meet Wall Street expectations despite market share gains.
The company succeeded in delivering an earnings beat and held on to its market positioning.
Its 42% product revenue growth has made the company one of the top product revenue companies in the cybersecurity industry.

The Kraft Heinz Company: Major Drivers

Kraft Heinz saw strong revenue momentum in the last quarter and managed to deliver an all-around beat with a good growth in base volumes.
The management claims to be outperforming the competition in food service and emerging markets.
In 2023, the management is looking towards expanding its marketing technology and personnel investments to propel the company’s growth.

Synopsys Inc.: Major Drivers

Synopsys had a strong start to the year and managed to meet the revenue expectations of Wall Street driven by its execution and robust technology portfolio.
The company saw $6.9 billion in noncancelable backlog despite slower revenue growth in the semiconductor industry and robust, steady, time-based business models.
Synopsys has a wide IP portfolio and they expect a continuance of designs, requiring more communication bandwidth, processing, storage, and security in ever more sophisticated silicon technologies.

TransDigm Group: Major Drivers

TransDigm managed to have another strong quarter and delivered an all-around beat.
It was another strong quarter with healthy growth in commercial revenues and bookings.
We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

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Feb 26

Daily Brief South Korea: Kum Yang Co Ltd, Hyundai Motor (2nd Pref) and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
Dividend Record Date Changes Already in Progress in Korea: Trading Ramifications

Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI

The changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) were announced post market close on Friday.
Busy start to the coming week with the MSCI implementation at the close on 28 February and a few announcements to other indices later in the week.
There were outflows from Tracker Fund of Hong Kong Ltd (2800 HK) during the week taking the YTD outflows to over US$1bn.

Dividend Record Date Changes Already in Progress in Korea: Trading Ramifications

By Sanghyun Park

Notable names that have proposed amendments to their articles of association for changing the dividend record date at this year’s AGM include Hyundai Motor Group, POSCO Holdings, and Kakao Corp.
There were skeptical views on how much response local big-name companies would show to Korea FSC’s plan. However, the response from large companies has been unexpectedly positive and aggressive.
We should consider the possibility that the preferred stock premium of companies whose dividend visibility has improved through this may continue to improve compared to those that have not.

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Feb 26

Daily Brief Singapore: SATS, Sembcorp Marine and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine
(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine

There is no good reason to buy Japan Post Bank (7182 JP)‘s dip until the offering. It’s unlikely to earn the ROE to deserve the PBR it has versus peers.
Brookfield and EIG/MidOcean’s revised NBIO will garner Origin Energy (ORG AU) board support; however, the terms are weird and unfair to investors holding fewer than 100k shares.
SATS (SATS SP) rights offer is not actually a surprise. Not at all. Passive funds will exercise.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals was discussed on Smartkarma this past week: New Century Resources (NCZ AU)off-market Offer;AAG Energy Holdings’ (2686 HK) ‘s Scheme; and Jiangnan (1366 HK)‘s MBO.
Key updates took place for: Nitro Software Ltd (NTO AU), Origin Energy (ORG AU), Pushpay Holdings (PPH NZ), Sembcorp Marine (SMM SP), and Boustead Projects (BOCJ SP).

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Feb 26

Daily Brief India: HealthCare Global Enterprises and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

HCG: Firing On All Cylinders – All Set For FY24 To Be A Defining Year

HCG: Firing On All Cylinders – All Set For FY24 To Be A Defining Year

By Ankit Agrawal, CFA

HCG continues to scale up well as its new centers are maturing. Its mature centers are also growing at a healthy pace.
Margins are improving across the board led by 1) Realization Improvement 2) Operational Efficiencies 3) Operating Leverage and 4) Improving Mix of Cases.
FY24 is all set to be a defining year in terms of HCG’s financial performance across growth and profitability.

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Feb 26

Daily Brief China: Swire Pacific (B), XPeng, Alibaba (ADR), Hong Kong Hang Seng Index and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise

By Eric Chen

BABA’s December results highlighted how the performance of this e-commerce giant – as a proxy for China consumption – increasingly tracks Chinese economy.
The Alibaba that suffered from China’s slump in 2022 should also be the Alibaba that stands to reap the fruits from China’s recovery in 2023.
Trading at 12x PE on the cusp of economic recovery, the payoff of BABA is much better for bulls than bears. Maintain $500 billion target valuation. Buy.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

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Feb 26

Daily Brief Japan: Toshiba Corp, Amvis Holdings Inc, Fujitec Co Ltd, Japan Post Holdings, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote
ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS
Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion

On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
It also announced that it would move to TSE Prime on 14 March.
This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.

Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote

By Arun George

At the Fujitec Co Ltd (6406 JP) EGM, Oasis successfully secured approval for four out of six candidates for outside directors. The tight vote shows that shareholders desire change.
Oasis fell short of its nominations constituting up to two-thirds of the Board. However, Oasis-aligned directors will represent 67% of outside directors which still can drive meaningful change.
The EGM results will spur optimism that Fujitec can close the performance gap with peers, resulting in a rerating. Fujitec remains attractive on a cash-adjusted P/E basis.

ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS

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.
On the IPO front, Pertamina Geothermal Energy‘s listing kicked of what is shaping up to be a busy 2023 for ASEAN IPOs
There were a few placements across the region but the biggest news was of Japan Post Bank (7182 JP)‘s planned selldown by Japan Post Holdings (6178 JP)

Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance

By Aki Matsumoto

If TSE were to require companies with low P/Bs to disclose improvement measures, more companies are likely to take immediate action to increase shareholder returns.
Reducing equity capital is effective in raising ROE, but simply draining cash accumulated from the past through shareholder returns will not lead to long-term stock price outperformance.
Among the components of ROE, ROA improvement is required rather than immediate increase in financial leverage. Companies should disclose their more detailed plans to increase ROA over the medium term.

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Feb 26

Daily Brief TMT/Internet: Alibaba (ADR), Hon Hai Precision Industry, Fortinet Inc, Micron Technology, Shopify Inc, Akamai Technologies, Synopsys Inc, Cisco Systems and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise
Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy
Fortinet Inc.: Launch of FortiSP5 & Other Drivers
Memory Monitor: Long Micron Vs. Short Nanya Technology; Nanya Relatively Over-Valued
Shopify Inc.: Introduction Of Commerce Components & Other Developments
Akamai Technologies Inc.: New Cloud Computing Services & Other Drivers
Synopsys Inc.: Major Drivers
Cisco Systems Inc.: Major Drivers

Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise

By Eric Chen

BABA’s December results highlighted how the performance of this e-commerce giant – as a proxy for China consumption – increasingly tracks Chinese economy.
The Alibaba that suffered from China’s slump in 2022 should also be the Alibaba that stands to reap the fruits from China’s recovery in 2023.
Trading at 12x PE on the cusp of economic recovery, the payoff of BABA is much better for bulls than bears. Maintain $500 billion target valuation. Buy.

Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy

By Vincent Fernando, CFA

Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.

Fortinet Inc.: Launch of FortiSP5 & Other Drivers

Fortinet had a mixed set of fourth-quarter results with revenues failing to meet Wall Street expectations despite market share gains.
The company succeeded in delivering an earnings beat and held on to its market positioning.
Its 42% product revenue growth has made the company one of the top product revenue companies in the cybersecurity industry.

Memory Monitor: Long Micron Vs. Short Nanya Technology; Nanya Relatively Over-Valued

By Vincent Fernando, CFA

Long Micron vs. Short Nanya – We remain biased to Long Micron vs. Nanya Technology based on multiple factors.
Relative valuation and inventory management appears to favor Micron. Nanya Technology’s inventory days blow-out increases risk of write-downs impacting its next earnings.
Potential news flow also appears to favor Micron as the US CHIPS Act rolls out.

Shopify Inc.: Introduction Of Commerce Components & Other Developments

Shopify delivered an all-around beat in the previous quarter and ended 2022 on a positive note.
The company introduced Shopify Audiences, Shopify Collabs, POS Go, Tap to Pay, integrated Twitter Shopping and YouTube channels, and continued to expand the Shop app to make it simpler for retailers to interact with and develop relationships with customers.
They also introduced Shopify Markets and Markets Pro.

Akamai Technologies Inc.: New Cloud Computing Services & Other Drivers

Despite ongoing difficulties with the global economic environment, Akamai produced strong results in the fourth quarter, exceeding market expectations in terms of both, revenues as well as earnings.
Their rapidly expanding Compute business, the sustained high demand for their security solutions, and higher-than-anticipated shipping traffic contributed to their revenue growth.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Synopsys Inc.: Major Drivers

Synopsys had a strong start to the year and managed to meet the revenue expectations of Wall Street driven by its execution and robust technology portfolio.
The company saw $6.9 billion in noncancelable backlog despite slower revenue growth in the semiconductor industry and robust, steady, time-based business models.
Synopsys has a wide IP portfolio and they expect a continuance of designs, requiring more communication bandwidth, processing, storage, and security in ever more sophisticated silicon technologies.

Cisco Systems Inc.: Major Drivers

Cisco Systems delivered another strong quarter, exceeding the top and bottom line expectations of analysts.
The company saw consecutive double-digit growth in its customer markets’ commercial and enterprise sectors, and the public sector performed better than usual.
We give Cisco Systems a ‘Hold’ rating with a revised target price.

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Feb 26

Daily Brief Industrials: Toshiba Corp, SATS, Fujitec Co Ltd, Japan Post Holdings, Hong Kong Hang Seng Index, Sembcorp Marine, Transdigm Group, Enphase Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine
Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote
ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay
TransDigm Group: Major Drivers
Enphase Energy Inc: Acquisition of 365 Pronto & Other Drivers

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine

There is no good reason to buy Japan Post Bank (7182 JP)‘s dip until the offering. It’s unlikely to earn the ROE to deserve the PBR it has versus peers.
Brookfield and EIG/MidOcean’s revised NBIO will garner Origin Energy (ORG AU) board support; however, the terms are weird and unfair to investors holding fewer than 100k shares.
SATS (SATS SP) rights offer is not actually a surprise. Not at all. Passive funds will exercise.

Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote

By Arun George

At the Fujitec Co Ltd (6406 JP) EGM, Oasis successfully secured approval for four out of six candidates for outside directors. The tight vote shows that shareholders desire change.
Oasis fell short of its nominations constituting up to two-thirds of the Board. However, Oasis-aligned directors will represent 67% of outside directors which still can drive meaningful change.
The EGM results will spur optimism that Fujitec can close the performance gap with peers, resulting in a rerating. Fujitec remains attractive on a cash-adjusted P/E basis.

ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS

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.
On the IPO front, Pertamina Geothermal Energy‘s listing kicked of what is shaping up to be a busy 2023 for ASEAN IPOs
There were a few placements across the region but the biggest news was of Japan Post Bank (7182 JP)‘s planned selldown by Japan Post Holdings (6178 JP)

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals was discussed on Smartkarma this past week: New Century Resources (NCZ AU)off-market Offer;AAG Energy Holdings’ (2686 HK) ‘s Scheme; and Jiangnan (1366 HK)‘s MBO.
Key updates took place for: Nitro Software Ltd (NTO AU), Origin Energy (ORG AU), Pushpay Holdings (PPH NZ), Sembcorp Marine (SMM SP), and Boustead Projects (BOCJ SP).

TransDigm Group: Major Drivers

TransDigm managed to have another strong quarter and delivered an all-around beat.
It was another strong quarter with healthy growth in commercial revenues and bookings.
We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

Enphase Energy Inc: Acquisition of 365 Pronto & Other Drivers

Enphase delivered a strong quarter driven by amazing revenues through its microinverters.
The company witnessed amazing growth in the gross margin as well as in the operating income.
The overall supply environment of the microinverters remains stable throughout the quarter.

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Feb 26

Most Read: Ebos Group Ltd, PolyNovo Ltd, ABB India Ltd, DGB Financial Group, HSBC Holdings, Toshiba Corp, Alibaba Group, Swire Pacific (B), Amvis Holdings Inc, XPeng and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
KOSPI200 Index Rebalance Preview: Changes in April & June
HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs

MSCI announced the changes to the GIMI on Friday as part of the February QCIR. MSCI also announced a review of the free float of the Adani Group companies.
FTSE will announce the changes to the All-World and All-Cap indices after the close of trading on Friday, 17 February. The same day is the S&P/ASX review cutoff for March.
Yet another weekly outflow for the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) taking the YTD outflow to over US$2.5bn.

S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete

We currently see 1 change for the ASX20 Index, 2 changes for the ASX100 Index, 4 changes for the ASX200 Index, 10 adds/7 deletes for the ASX300 Index in March.
On average, the potential adds to each of the indices have outperformed the potential deletes with the largest outperformance for the ASX300 Index.
Shorts have continued to increase positions on the potential deletes while covering their positions on the potential adds. We expect there are large pre-positions on some of the stocks now.

NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover

ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target

In a surprise, the Hang Seng index committee has decided not to make any changes to the Hong Kong Hang Seng Index (HSI INDEX) at the March rebalance.
This further delays the timeline for the index to reach 80 constituents. The earliest we will reach the target now is June 2023 (a year later than targeted).
Despite no changes to the index constituents, capping and float changes will lead to a one-way turnover of 2.61% resulting in a one-way trade of HK$5.1bn.

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business

By Oshadhi Kumarasiri

Alibaba’s 3QFY23 results marginally topped consensus. With the share price dropping 0.65% cf. +0.35% for the index, both results and the price reaction were in line with our expectations.
Yesterday’s results confirm that Alibaba (ADR) (BABA US)’s core businesses, Taobao and Tmall are in trouble and cost-cutting elsewhere is insufficient to offset the short-term weakness.
Therefore, we do think that this is a good opportunity to profit on the short side with Alibaba shares having the potential to fall another 40-45% in the short term.

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion

On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
It also announced that it would move to TSE Prime on 14 March.
This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

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Feb 26

Daily Brief Industrials: Toshiba Corp, SATS, Fujitec Co Ltd, Japan Post Holdings, Hong Kong Hang Seng Index, Sembcorp Marine, Transdigm Group, Enphase Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine
Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote
ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay
TransDigm Group: Major Drivers
Enphase Energy Inc: Acquisition of 365 Pronto & Other Drivers

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine

There is no good reason to buy Japan Post Bank (7182 JP)‘s dip until the offering. It’s unlikely to earn the ROE to deserve the PBR it has versus peers.
Brookfield and EIG/MidOcean’s revised NBIO will garner Origin Energy (ORG AU) board support; however, the terms are weird and unfair to investors holding fewer than 100k shares.
SATS (SATS SP) rights offer is not actually a surprise. Not at all. Passive funds will exercise.

Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote

By Arun George

At the Fujitec Co Ltd (6406 JP) EGM, Oasis successfully secured approval for four out of six candidates for outside directors. The tight vote shows that shareholders desire change.
Oasis fell short of its nominations constituting up to two-thirds of the Board. However, Oasis-aligned directors will represent 67% of outside directors which still can drive meaningful change.
The EGM results will spur optimism that Fujitec can close the performance gap with peers, resulting in a rerating. Fujitec remains attractive on a cash-adjusted P/E basis.

ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS

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.
On the IPO front, Pertamina Geothermal Energy‘s listing kicked of what is shaping up to be a busy 2023 for ASEAN IPOs
There were a few placements across the region but the biggest news was of Japan Post Bank (7182 JP)‘s planned selldown by Japan Post Holdings (6178 JP)

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals was discussed on Smartkarma this past week: New Century Resources (NCZ AU)off-market Offer;AAG Energy Holdings’ (2686 HK) ‘s Scheme; and Jiangnan (1366 HK)‘s MBO.
Key updates took place for: Nitro Software Ltd (NTO AU), Origin Energy (ORG AU), Pushpay Holdings (PPH NZ), Sembcorp Marine (SMM SP), and Boustead Projects (BOCJ SP).

TransDigm Group: Major Drivers

TransDigm managed to have another strong quarter and delivered an all-around beat.
It was another strong quarter with healthy growth in commercial revenues and bookings.
We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

Enphase Energy Inc: Acquisition of 365 Pronto & Other Drivers