Smartkarma Daily Briefs

This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.

AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer

Aag Energy Holdings (2686 HK) disclosed a pre-conditional privatisation offer from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.85 per share, a 10.1% premium to the undisturbed price.
The pre-condition is Xinjiang Xintai shareholder approval. Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The price is final but light.
The total privatisation cost is HK$2,704 million vs AAG’s net cash of HK$2,270 million. The offeror is betting that minorities will not be able to launch a concerted NO vote.

Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group

The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.

AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer

On the 14 May 2018, coalbed methane producer AAG Energy Holdings (2686 HK) announced a partial offer (50.5%) from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.75/share.
Xinjiang Xintai has returned to the pit with a $1.85/share Offer by way of a Scheme. The Cancellation Price will NOT be increased.
This is hardly a knockout price, at a 10.1% premium to undisturbed; and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year.

Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy

This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here.

Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen

S.M.Entertainment Co (041510 KS) is trading through the partial offer terms as HYBE (352820 KS) and Kakao Corp (035720 KS) jostle for control.
The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.
Star Entertainment Group (SGR AU) is an extraordinarily toxic company. But just how much negative news is already baked into the share price?

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: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG

There are 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Onr new deals was discussed on Smartkarma this past week – AAG Energy (2686 HK)‘s Scheme. Jiangnan (1366 HK) also suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
Key updates took place for: Toshiba Corp (6502 JP), Newcrest Mining (NCM AU), Yashili International Holdings (1230 HK), Sembcorp Marine (SMM SP), and O2Micro International (OIIM US).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 19

Daily Brief China: Aag Energy Holdings, Gcl Poly Energy Holdings Limited, Hong Kong Hang Seng Index and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer
Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer

Aag Energy Holdings (2686 HK) disclosed a pre-conditional privatisation offer from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.85 per share, a 10.1% premium to the undisturbed price.
The pre-condition is Xinjiang Xintai shareholder approval. Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The price is final but light.
The total privatisation cost is HK$2,704 million vs AAG’s net cash of HK$2,270 million. The offeror is betting that minorities will not be able to launch a concerted NO vote.

Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group

The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.

AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer

On the 14 May 2018, coalbed methane producer AAG Energy Holdings (2686 HK) announced a partial offer (50.5%) from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.75/share.
Xinjiang Xintai has returned to the pit with a $1.85/share Offer by way of a Scheme. The Cancellation Price will NOT be increased.
This is hardly a knockout price, at a 10.1% premium to undisturbed; and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year.

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

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 19

Daily Brief Macro: Nigeria Goes to the Polls – What Will Happen if Obi Wins? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Nigeria Goes to the Polls – What Will Happen if Obi Wins?
Positioning Watch: Investors Are yet Again Short Bonds..
TPW Advisory Friday Musings: No Need To Chase

Nigeria Goes to the Polls – What Will Happen if Obi Wins?

By Mikkel Rosenvold

Africa’s most populous country, Nigeria, is headed for presidential elections on February 25th amidst democratic backsliding on the continent.
Young Nigerians hope that outsider, Peter Obi, can shake up Nigeria’s de-facto, two-party system. Obi is ahead in the polls but will face steep opposition in majority-Muslim states.
Overall, the best outcome for investors has less to do with the result and everything to do with how the election is conducted – namely ‘fairly, freely and peacefully’.

Positioning Watch: Investors Are yet Again Short Bonds..

By Andreas Steno

Equity positioning: No love for tech stocks, consumer discretionary, while overall positioning remains VERY short
FX positioning: Market is too long NZD, while traders are not really buying the USD rebound
Bond positioning: Shorts are getting crowded again after hawkish Fed rhetoric

TPW Advisory Friday Musings: No Need To Chase

By TPW Advisory

We have written extensively about cross asset market dynamics going back to Things I Don’t Understand last October to Stocks & Bonds – Only One Can Be Right to last week’s Two Steps Forward, One Step Back.
It seems fitting to unite these thoughts this week when the US narrative flipped from recession and rate cuts to no landing, solid growth and no rate cuts but rather more rate hikes.
We covered this dynamic in our most recent Monthly: Narrative Speed where we discussed how narratives are flipping faster than ever and the avalanche effect of small changes leading to one big cumulative moment when the script is flipped.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Industrials: Adani Enterprises, Jiangnan, ABB India Ltd, Honeywell International, Illinois Tool Works and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse
Jiangnan Group (1366 HK): Powering Up
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?
Honeywell International Inc.: Hydrogen Fuel Cells For Aviation & Other Drivers
Illinois Tool Works Inc.: Major Drivers

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse

On 8 February, MSCI announced special treatment for the Adani names in its indices, discussed in Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case.
Late on 15 February they came out with a revision of their implementation – which was problematic because some stocks had gone limit down many days in a row.
The stocks responded. But it clearly isn’t an easy implementation, and it clearly isn’t over.

Jiangnan Group (1366 HK): Powering Up

Jiangnan (1366 HK), a manufacturer of wires and cables for power transmission and distribution systems, was suspended yesterday at lunchtime pursuant to Hong Kong’s Code on Takeovers and Mergers.
But not before the share price gained 63% on clear news leakage.
Chu Hui, the chairman, CEO, and major shareholder, mulled taking the private six years ago.

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.

Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?

Jiangnan (1366 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 16 February.
It is likely that Mr Chu Hui (Chairman and CEO), the largest shareholder representing 34.99% of outstanding shares is reattempting to privatise Jiangnan.
The 83.9% share price run prior to the trading halt suggests that the offeror is very close to finalising a formal proposal at a hefty premium to the undisturbed price.

Honeywell International Inc.: Hydrogen Fuel Cells For Aviation & Other Drivers

Honeywell had another challenging quarter with inflation headwinds and supply chain constraints still at play.
Modest improvement in the supply chain helped Honeywell to reduce its cost to use backlog and deliver more building management systems and fire products resulting in organic growth in the building products.
Advanced materials grew in the quarter, as seen from the strong value capture across the demand and portfolio in fluorine products.

Illinois Tool Works Inc.: Major Drivers

Illinois Tool Works continues to face various challenges in this operating environment which is why it had a mixed financial performance in the last quarter of the year.
Automotive OEM revenues were up, and food equipment delivered a very strong quarter.
Welding delivery had quite a strong organic growth in the quarter, with a rise in equipment and consumables.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief TMT/Internet: Qualcomm Inc, Iridium Communications, Microchip Technology and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Qualcomm Technologies Inc.: New Launches & Other Drivers
IRDM: On Course for Growth
Microchip Technology Inc: New Launches & Other Drivers

Qualcomm Technologies Inc.: New Launches & Other Drivers

Qualcomm has been witnessing various short-term challenges impacting the semiconductor industry which is why its revenues in the last result were below Wall Street expectations.
In handsets, the recently announced Snapdragon Gen 2 mobile platform of the company in order to create AI-accelerated experiences for smartphones.
Within IoT, multiple end industries and the handset industry continue to experience weaker demand and elevated inventory levels.

IRDM: On Course for Growth

By Hamed Khorsand

IRDM grew the number of Internet of things (“IOT”) users in the fourth quarter to offset the seasonal maritime service decline.
Much of the attention is on IRDM’s satellite connectivity partnership with Qualcomm (QCOM) expected to begin generating revenue in the second half of 2023
IRDM reported fourth quarter revenue of $193.8 million compared to our estimate of $176.0 million

Microchip Technology Inc: New Launches & Other Drivers

Microchip had a solid fourth quarter that surpassed Wall Street expectations in terms of revenues as well as earnings.
Microchip has also increased the raw materials inventory to protect the internal manufacturing chains.
In terms of new launches, Microchip launched the MIC69303RT, a 3A Low-Dropout Voltage Regulator in the previous quarter.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Energy/Materials: Hanwha Solutions, Rajshree Polypack, Conocophillips, Copper and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule
RPPL: Q3FY23 Was Seasonally Weak As Expected, But Q4FY23 Is On Track To Be Strong
ConocoPhillips: Collaboration With Sempra Infrastructure & Other Drivers
Commodity Watch – What Super Cycle?

Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule

By Sanghyun Park

Hanwha Solutions received shareholder approval for its proposed demerger on February 13. The demerger will split Hanwha Solutions into two separate entities: Hanwha Galleria and Hanwha Solutions.
Hanwha Solutions will experience a passive outflow of 0.92x ADTV at the closing price on February 24 for KOSPI 200. A similar passive inflow will occur on March 31.
MSCI Standard will deliver an outflow of 0.43x ADTV at the close on March 31 as the weight of Hanwha Solutions, an existing constituent, will be reduced.

RPPL: Q3FY23 Was Seasonally Weak As Expected, But Q4FY23 Is On Track To Be Strong

By Ankit Agrawal, CFA

Q3FY23 tends to be the weakest quarter seasonally. Volume de-growth was -10% QoQ, in line with the expectation as per historical seasonality trend.
Q4FY23 is all set to be a strong quarter. Management is confident of closing FY23 as per the previously stated revenue and margin guidance.
The new value-added segment, Barrier Packaging, has started to contribute meaningfully to the revenue. Tube Laminates, another value-added segment, will also start to contribute soon.

ConocoPhillips: Collaboration With Sempra Infrastructure & Other Drivers

ConocoPhillips had a mixed result in the last quarter as the company was able to surpass the revenue expectations of Wall Street given its diversified and deep portfolio.
From a portfolio perspective, the company’s deep asset base is very well-positioned to generate solid cash flow and has generated a high return on capital.
The company has many new LNG opportunities in the United States and in Qatar which provide a strong upside.

Commodity Watch – What Super Cycle?

By Andreas Steno

Where is the global commodity super cycle that everyone keeps predicting?
Industrial metals have outperformed energy (as we predicted) and will likely continue to do so
Selective positioning in the commodity space remains of vital value with no super cycle in sight

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Industrials: Adani Enterprises, Jiangnan, ABB India Ltd, Honeywell International, Illinois Tool Works and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse
Jiangnan Group (1366 HK): Powering Up
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?
Honeywell International Inc.: Hydrogen Fuel Cells For Aviation & Other Drivers
Illinois Tool Works Inc.: Major Drivers

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse

On 8 February, MSCI announced special treatment for the Adani names in its indices, discussed in Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case.
Late on 15 February they came out with a revision of their implementation – which was problematic because some stocks had gone limit down many days in a row.
The stocks responded. But it clearly isn’t an easy implementation, and it clearly isn’t over.

Jiangnan Group (1366 HK): Powering Up

Jiangnan (1366 HK), a manufacturer of wires and cables for power transmission and distribution systems, was suspended yesterday at lunchtime pursuant to Hong Kong’s Code on Takeovers and Mergers.
But not before the share price gained 63% on clear news leakage.
Chu Hui, the chairman, CEO, and major shareholder, mulled taking the private six years ago.

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.

Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?

Jiangnan (1366 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 16 February.
It is likely that Mr Chu Hui (Chairman and CEO), the largest shareholder representing 34.99% of outstanding shares is reattempting to privatise Jiangnan.
The 83.9% share price run prior to the trading halt suggests that the offeror is very close to finalising a formal proposal at a hefty premium to the undisturbed price.

Honeywell International Inc.: Hydrogen Fuel Cells For Aviation & Other Drivers

Honeywell had another challenging quarter with inflation headwinds and supply chain constraints still at play.
Modest improvement in the supply chain helped Honeywell to reduce its cost to use backlog and deliver more building management systems and fire products resulting in organic growth in the building products.
Advanced materials grew in the quarter, as seen from the strong value capture across the demand and portfolio in fluorine products.

Illinois Tool Works Inc.: Major Drivers

Illinois Tool Works continues to face various challenges in this operating environment which is why it had a mixed financial performance in the last quarter of the year.
Automotive OEM revenues were up, and food equipment delivered a very strong quarter.
Welding delivery had quite a strong organic growth in the quarter, with a rise in equipment and consumables.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Health Care: Classys, Fresenius Medical Care Ag & Co, Basilea Pharmaceutica Ag, Cardinal Health, Gilead Sciences and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Classys (214150 KS): Record-High Sales and Profit in 2022; Geography Expansion to Accelerate Growth
Fresenius Medical Care (FME GR): Look Before You Leap; Uncertainty & Cost Pressure Continue to Bite
Basilea Pharmaceutica – Profitability sooner than expected
Cardinal Health Inc: Major Drivers
Gilead Sciences Inc.: Advancement In Autoimmune Immunotherapy Pipeline & Other Drivers

Classys (214150 KS): Record-High Sales and Profit in 2022; Geography Expansion to Accelerate Growth

By Tina Banerjee

Classys (214150 KS) reported strong performance in 2022, with highest ever revenue and profit, driven by increased sales of equipment and consumables due to increased global awareness of major products.
Revenue from export recorded a CAGR of 30% during 2017–2022, mainly driven by strong growth in Brazil. Classys launched Shrink Universe in Korea and Ultraformer MPT in global market.
For 2023, Classys has guided for revenue of KRW170B (+20% YoY), driven by Shrink Universe’s expansion into the global market, full-fledged domestic sales of Volumemers, and increasing volume of consumables.

Fresenius Medical Care (FME GR): Look Before You Leap; Uncertainty & Cost Pressure Continue to Bite

By Tina Banerjee

Fresenius Medical Care Ag & Co (FME GR) is reporting decelerating organic revenue growth and earnings decline. The company has revised 2022 revenue and earnings guidance twice in last year.
Earnings are heavily impacted by the unprecedented US labor market situation constraining capacity and accelerating wage inflation, and worsening macroeconomic environment driving cost inflation and supply chain disruptions.
For 2022, the company expects low single-digit percentage revenue growth and high teens to mid-twenties percentage decline in net income. CEO has stepped down within two months of taking charge.

Basilea Pharmaceutica – Profitability sooner than expected

By Edison Investment Research

Basilea reported strong FY22 results following the successful execution of its strategic realignment to focus on anti-infectives. The top-line beat (c 21% ahead of the top end of guidance) was driven by accelerating global uptake of its marketed assets, primarily Cresemba, which recorded 22% year-on-year growth in royalties (to CHF65m). In combination with the receipt of milestone payments, lower-than-expected operating expenses and the sale of oncology assets, management was able to achieve profitability (FY22 net profit of CHF12.1m) a year earlier than anticipated. As Cresemba peaks, we expect additional support to come from the successful US launch of Zevtera (NDA expected in March/April 2023) and the introduction of novel late pre-clinical/clinical anti-infective assets in Basilea’s development pipeline. Our updated valuation is CHF785m or CHF65.7/share (previously CHF921.7m or CHF77.8/share), reflecting our revised estimates and the recent sale of oncology assets, partially offset by lower net debt (CHF46.7m at end-FY22) following repayment of the 2022 convertibles.

Cardinal Health Inc: Major Drivers

Cardinal Health, one of the largest wholesalers of the healthcare industry in the U.S., continued its strong performance in the last quarter and managed to deliver an all-around beat.
Cardinal Health’s total revenue has increased by 13% in the last quarter, and the gross margin increased by 3%, driven by the Pharma segment.
There was an increasing overall pharmaceutical demand and a strong performance from the Generics programs.

Gilead Sciences Inc.: Advancement In Autoimmune Immunotherapy Pipeline & Other Drivers

Gilead had a very strong quarter with solid growth in each of its core franchises and across all geographies led by oncology and HIV.
In the U.S., Sunlenca received its foremost approval for heavily treatment-experienced adults having multidrug-resistant HIV infection.
The company continues to add further programs, including its new preclinical candidate to collaborate with lenacapavir for its long-acting HIV treatment programs.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Financials: Hong Kong Hang Seng Index, Mori Trust Sogo Reit, Kolte Patil Developers, Hopson Development, Nesco Ltd, KakaoBank, NU Holdings Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Top Asia Shorts
Mori Trust Sogo REIT (8961) Small Index Upweight on 27 Feb
Kolte Patil: Q4FY23 Is All Set to Bring a Strong Close to FY23
Weekly Wrap – 17 Feb 2023
Nesco: Business Is Now As Usual Similar to Pre-COVID Level
President Yoon Calls for Greater Competition and Social Contribution by the Korean Banks
Nubank (NU US); Strong Execution to Drive Premium ROE into 2023 and Beyond

Top Asia Shorts

By Thomas Schroeder

After Asian indexes met targets we have now turned negative in a domino sequence.
Our table pounding inflationary higher USD and higher yield thesis is seeing the dollar on the move with yield in hot pursuit.
Bull divergence in yield and the USD warn or a multi month rise. This is just the beginning of the pain trade to unwind peak inflation and peak rate positioning.

Mori Trust Sogo REIT (8961) Small Index Upweight on 27 Feb

Mori Trust Sogo Reit (8961 JP) and Mori Trust Hotel Reit (3478 JP) will merge at the end of this month.
They pay divs, there is a unit split, then NEWCO.
If you are in the biz and you care, there is a small index thing to do.

Kolte Patil: Q4FY23 Is All Set to Bring a Strong Close to FY23

By Ankit Agrawal, CFA

Kolte Patil reported weaker than expected Q3FY23 accounting earnings due to slight delay in arrival of OC for some projects. However, sales velocity and business development activity was robust.
Reported Q3FY23 earnings had weak margins due to revenue contribution from two low-margin projects.
Q4FY23 is on track to be strong both in terms of reported earnings (which depends on the timing of OC) and sales velocity.

Weekly Wrap – 17 Feb 2023

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

and more…

Nesco: Business Is Now As Usual Similar to Pre-COVID Level

By Ankit Agrawal, CFA

BEC revenues continue to match the pre-COVID level suggesting that the business has now normalized fully post-COVID. COVID led shift in working habits has had no structural impact.
IT Office Leasing revenues grew 6%+ QoQ, led by the improvement in occupancy rates. Profitability also improved led by operating efficiencies.
BEC’s EBIT margin came in significantly lower than expected due to one-off expense of INR 15cr for demolition of a factory shed to build a new exhibition hall.

President Yoon Calls for Greater Competition and Social Contribution by the Korean Banks

By Douglas Kim

We discuss the increasing likelihood of formation of another Internet bank, challenger banks, and other measures to foster competition and increase social contribution on the Korean banking sector in 2023.
The Korean banks underperformed in the past week due to President Yoon pointing out “banks and telcos need to share the increasing living costs.”
We believe Kakao Bank is likely to underperform the market in the next several months as investors fear about greater competitive pressure, especially on the existing Internet banks.

Nubank (NU US); Strong Execution to Drive Premium ROE into 2023 and Beyond

By Victor Galliano

4Q22 results confirm that Nubank is the benchmark among EM neobanks in terms of activity rates, as well as trends in revenues and costs per client and digital efficiencies
We see further potential for broadening and deepening the product offer to customers, at little incremental cost especially in Brazil, to drive cost effective revenue growth
Our proprietary Nubank model forecasts are broadly in sync with positive consensus estimates; we forecast group ROE of close to 30% in FY 2025, despite high cost of credit assumptions

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Feb 18

Daily Brief Consumer: Hainan Meilan International Airport, Clorox Company, Estee Lauder Companies Cl A, Devro PLC, Tokyo Stock Exchange Tokyo Price Index Topix, Sirius Xm Holdings, Starbucks Corp and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Meilan Airport (357 HK): Takeaway from Recent Passenger Throughput
The Clorox Co: Major Drivers
The Estee Lauder Companies Inc.: Major Drivers
SARIA/Devro: Increased and Final
Different Criteria for Exercising Voting Rights for Overseas and Domestic Institutional Investors
Sirius XM Holdings Inc.: Major Drivers
Starbucks Corporation: Web3 Odyssey Program & Other Drivers

Meilan Airport (357 HK): Takeaway from Recent Passenger Throughput

By Eric Chen

Strong passenger traffic year-to-date indicates that full-year passenger throughput for 2023 will be on par with 2019.
Concerns that China resuming outbound travel could turn domestic tourists away from Hainan are overblown, overlooking the huge pent-up leisure travel demand over last three years.
We expect investors will focus on pace and sustainability of the recovery when company announces 2022 results. Being eligible for Stock Connect Program in 2023 will be a key catalyst.

The Clorox Co: Major Drivers

Clorox delivered a solid set of results in the previous quarter with organic sales growth in 3 to 4 segments, double-digit earnings growth, and gross margin expansion, despite the challenges in the market due to an unstable global operating environment.
The company delivered an all-around beat and continued to work on the enhancement of its brand equity.
Clorox has been encountering different challenges in the macro environment for the past few quarters especially after the Covid-19 tailwinds have receded.

The Estee Lauder Companies Inc.: Major Drivers

Estee Lauder delivered a highly disappointing result despite surpassing Wall Street expectations in terms of revenues as well as earnings.
With its business continuing to be pressured by external headwinds resulting from the pandemic, the organic net sales and the earnings per share decreased in the quarter for Estee Lauder.
Estee Lauder should also benefit from the acquisition of Tom Ford in competing with L’Oréal.

SARIA/Devro: Increased and Final

By Jesus Rodriguez Aguilar

Shareholders have gently pressed. SARIA has upped by 4.4% (“increased and final”) its cash offer for casings manufacturer Devro to 320p+10p interim, which represents 10x EV/Fwd EBITDA and 17.1x Fwd P/E.
The increased consideration puts the offer almost in line with market leader Viscofan’s multiples (10.2x EV/Fwd EBITDA). The initial offer was already generous, even more so now.
The deal should complete. Spread (gross/annualised) is 1.06%/2.65%, assuming settlement by 14 July (settlement will happen the same day as the second permitted dividend payment).

Different Criteria for Exercising Voting Rights for Overseas and Domestic Institutional Investors

By Aki Matsumoto

The number of shareholder proposals in June 2022 was 241, significant increase from 136 in June 2021. It’s expected that the number of shareholder proposals will increase again this year.
The increase in the percentage of shareholder proposals recommended by voting advisors can be considered an increase in shareholder proposals that are quite reasonable from the shareholder’s point of view.
The percentage of overseas investors in favor of shareholder proposals increased, while that of domestic institutional investors remained unchanged at 7%, the same as the previous year.

Sirius XM Holdings Inc.: Major Drivers

Sirius XM had a mixed quarterly result.
This was a challenging environment for the company as the auto sales were the lowest in 11 years in 2022.
Sirius XM is trying to attract more consumers to its platform and continues holding the largest share of car music outside combined terrestrial radio.

Starbucks Corporation: Web3 Odyssey Program & Other Drivers