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Smartkarma Daily Briefs

Jan 30
0

Daily Brief Australia: PolyNovo Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • S&P/​​​​​​ASX Index Rebalance Preview: High Impact Changes in March

S&P/​​​​​​ASX Index Rebalance Preview: High Impact Changes in March

By Brian Freitas

  • We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
  • Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks. 
  • Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.

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Jan 30
0

Daily Brief United States: New Ruipeng Pet Group, Buzzfeed and more

By | Daily Briefs, United States

In today’s briefing:

  • Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns
  • AI Takes the Write Way

Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns

By Xinyao (Criss) Wang

  • Pet medical industry is the second largest core industry after pet food industry.Pet hospital,with dual attributes of medical treatment and consumption,represents the direction of consumption upgrading and has huge potential.
  • New Ruipeng maintained rapid growth these years, but its business is still in the investment period. The Company is hard to generate high profit/returns due to low gross margin level.
  • There’re still technical bottlenecks in China.If New Ruipeng can fill these market gaps in time and provide comprehensive pet medical solutions, its development space and moat will be much higher.

AI Takes the Write Way

By subSPAC

  • Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
  • Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
  • This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.

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Jan 30
0

Daily Brief China: Xiabuxiabu Catering, China Shenhua Energy Co H and more

By | China, Daily Briefs

In today’s briefing:

  • Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023
  • Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent

Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023

By Eric Chen

  • China catering players have seen strong recovery during the Chinese New Year starting from Jan 22th, amidst a broad-based revival of the service sector as a whole.
  • For Xiabuxiabu, latest data points suggest significant progress in turnaround and higher visibility into 2023 performance.
  • We see upside to our financial projection for 2023 and are more confident that Xiabuxiabu is the most attractively-priced to play re-opening in China catering sector. Expect 50% upside.

Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng China Enterprises Index (HSCEI INDEX) in March 2023.
  • According to our estimation, there could be one change for the HSCEI in March 2023 and there could be one-way index flows of US$440mn.
  • The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

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Jan 30
0

Daily Brief Japan: Kanematsu Electronics, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
  • Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest

By Arun George

Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

By Aki Matsumoto

  • The fact that TSE, which has revised Corporate Governance Code several times, is now discussing improving the quality of corporate governance shows that the governance practices have become a formality.
  • Regarding the expansion of English-language disclosure, there is need to eliminate the mismatch between the documents that companies translate into English and those that overseas investors demand to be translated.
  • Asset owners should keep encouraging asset managers to follow Stewardship Code. Appropriate action by asset managers to deal with the BOJ owned ETFs will encourage changes in the companies.

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Jan 30
0

Daily Brief India: Adani Enterprises, Biocon Ltd, Cipla Ltd, Dr. Reddy’s Laboratories, Vedanta Resources and more

By | Daily Briefs, India

In today’s briefing:

  • MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do
  • NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
  • 2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales
  • Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US
  • Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

By Travis Lundy

  • The Adani Group listcos have been on a wild ride for the last few years, rising from 10x TTM EV/EBITDA in March 2020 to 60x at end-September 2022. 
  • Adani Group “business incubator’ Adani Enterprises (ADE IN) last fall indicated it might raise $2.4bn of equity and combined 6 co market cap is down $135bn since.
  • A short seller report last week put the cat amongst the pigeons. Now MSCI is consulting investors about what it might do regarding Things.

NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping

By Brian Freitas

  • There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
  • A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
  • The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.

2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales

By Tina Banerjee

  • Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
  • Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
  • US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.

Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US

By Tina Banerjee

  • Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
  • Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
  • The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.

Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

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.

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Jan 30
0

Most Read: Kepco Engineering & Construction, Adani Transmission, Adani Enterprises, SenseTime Group, UnionBank of the Philippines, Kanematsu Electronics, Kanematsu Sustech, Tencent, Osstem Implant and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes
  • Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
  • MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do
  • Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
  • Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises
  • PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC
  • Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout
  • Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting
  • ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners
  • Clarifications About Osstem Implant Tender Event

Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes

By Brian Freitas

  • Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.
  • Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.
  • Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.

Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback

By Brian Freitas

  • The Adani Group stocks have taken a dive following the Hindenburg Research report. Group market cap is down more than US$47bn with company promoters taking the biggest hit.
  • The Adani Enterprises FPO is almost certain to be undersubscribed. MSCI, in an unprecedented step, is monitoring publicly available information and is seeking feedback from the investment community.
  • We find that the real float of some Adani Group stocks is much lower than the headline numbers and there could be selling if MSCI lowers the FIF.

MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

By Travis Lundy

  • The Adani Group listcos have been on a wild ride for the last few years, rising from 10x TTM EV/EBITDA in March 2020 to 60x at end-September 2022. 
  • Adani Group “business incubator’ Adani Enterprises (ADE IN) last fall indicated it might raise $2.4bn of equity and combined 6 co market cap is down $135bn since.
  • A short seller report last week put the cat amongst the pigeons. Now MSCI is consulting investors about what it might do regarding Things.

Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani

By Brian Freitas

Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises

By David Blennerhassett

  • Be long Kawasaki Kisen Kaisha (9107 JP) vs MOL and NYK. The shares are cheap on a forward basis. KLine is reducing the Real World Float, causing further potential squeeze.
  • Sabana Industrial REIT (SSREIT SP)‘s Partial Offer at 0.88x book is not overwhelming, but it is also not a control stake. It is probably priced near-right.
  • IF Osstem (048260 KS)‘s price were to go higher, it is conceivable there could be a bump, but don’t bet on it as long as the stock trades <KRW 190,000. 

PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC

By Brian Freitas

Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout

By Travis Lundy

  • Kanematsu Corp (8020 JP) announced two tender offers Friday to take out subsidiaries. One more liquid one. One very small sub. This is the larger, easier deal. 
  • Kanematsu Electronics is an IT shop, designing and executing system integration and maintenance services. It is a great business. The takeout is a 33% premium to an all-time high.
  • It might still be a bit cheap, but it is not egregious, and it would be quite difficult to block. 

Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting

By Travis Lundy

  • Kanematsu Corp (8020 JP) announced two tender offers late Friday to take out minorities in subsidiaries. One larger, safer deal. One smaller, illiquid, but potentially interesting one.
  • This is the interesting one. It is being done at the wrong price, and it has investors who might care who have been long-time holders.
  • This could get interesting. You have a buyer. A target. It’s pretty clean except for shareholder structure. And the buyer has room to pay up. 

ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners

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.
  • While the holiday shortened week didn’t see much action in Asia, but there was one more ADR filing in the US, adding to the mini-pipeline.
  • Adani’s ongoing FPO was the only live deal this week, although it had enough drama to make up for the lack of other deals.

Clarifications About Osstem Implant Tender Event

By Sanghyun Park

  • The acquirer would cancel the deal unless at least 2.394M shares (15.4% of SO) were tendered. This is the minimum purchase quantity condition that will trigger a cancellation.
  • If the minimum purchase volume is exceeded, will there be a pro rata allocation risk? The answer is no. The acquirer will purchase all the tendered shares
  • The cancellation risk seems slim as only 15.4% of the SO should be tendered, which doesn’t seem to be a challenging target.

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Jan 30
0

Daily Brief Energy/Materials: China Shenhua Energy Co H, Thungela Resources, Vedanta Resources and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent
  • Thungela: The Canary Has Stopped Singing
  • Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng China Enterprises Index (HSCEI INDEX) in March 2023.
  • According to our estimation, there could be one change for the HSCEI in March 2023 and there could be one-way index flows of US$440mn.
  • The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

Thungela: The Canary Has Stopped Singing

By Pearl Gray Equity and Research

  • Thungela’s Goedehoop mine continues to deliver robust results, but most of its assets are underperforming.
  • The stock’s more than 35% ex-post dividend yield had many investors excited.
  • Nevertheless, cyclicality could play its hand soon, according to the canary.

Morning Views Asia: Adani Ports & Special Economic Zone, Vedanta Resources

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.

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Jan 30
0

Daily Brief Industrials: Adani Enterprises and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

By Travis Lundy

  • The Adani Group listcos have been on a wild ride for the last few years, rising from 10x TTM EV/EBITDA in March 2020 to 60x at end-September 2022. 
  • Adani Group “business incubator’ Adani Enterprises (ADE IN) last fall indicated it might raise $2.4bn of equity and combined 6 co market cap is down $135bn since.
  • A short seller report last week put the cat amongst the pigeons. Now MSCI is consulting investors about what it might do regarding Things.

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Jan 30
0

Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC) – ADR, KOSDAQ 150 Index, Kanematsu Electronics, Intel Corp, STMicroelectronics NV, Buzzfeed and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
  • Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts
  • Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
  • Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
  • STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
  • AI Takes the Write Way

Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums

By Vincent Fernando, CFA

  • TSMC’s ADR premium is in the double digits, representing a major breakout.
  • ASE Technology’s premium is also in the double digits and the company will be reporting results next week.
  • Chunghwa’s premium is high for its tight range, and results will be coming out for the company this week.

Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts

By Sanghyun Park

  • KRX (and Korea FSS) no longer collects foreign investors’ entire trade records in real time, as foreign investors are no longer traced based on their unique registration numbers.
  • Foreign investors are likely to engage in more aggressive short-term trading. We need to be prepared for significant price volatility, mainly for small and mid-cap stocks.
  • System changes for trade history management changes will be completed within the third quarter. So, we will likely witness new trading patterns from the fourth quarter of this year.

Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest

By Arun George

Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E

By Vincent Fernando, CFA

  • Intel reported weak results at the end of last week, with its PC segment hit worst.
  • PC total addressable market to fall by 7.5% based on Intel’s guidance.
  • Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.

STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View

By Alexis Dwek

  • ST reported solid Q4 results, 4% above consensus expectations at the EBIT level. Q1 2023 guidance is much better than consensus expectations on sales (11% beat) 
  • ST confirmed its view that 2023 will be another growth year, with sales indicated at US$17.3bn, which is +7.5% year over year and well above consensus
  • Stock is up 21% since our initial note. We still see over 30% upside from here

AI Takes the Write Way

By subSPAC

  • Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
  • Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
  • This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.

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Jan 30
0

Daily Brief Financials: Alibaba (ADR) and more

By | Daily Briefs, Financials

In today’s briefing:

  • Aequitas ASEAN IPOs Bookrunner Performance (2019-2022)

Aequitas ASEAN IPOs Bookrunner Performance (2019-2022)

By Ethan Aw

  • In this note, we will take a look at bookrunner performance for ASEAN IPOs from 2019-2022. 
  • The following dataset includes all ASEAN IPOs above US$100m for the period of Calendar Years 2019-2022, which amounted to a total of 41 deals.
  • The deals you see in this note are based on our historical IPO tracker. Feel free to drop us a message for additional information on any of these IPOs.

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