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Smartkarma Daily Briefs

Jan 30
0

Daily Brief ESG: Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices and more

By | Daily Briefs, ESG

In today’s briefing:

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

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
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Daily Brief ECM: Aequitas ASEAN IPOs Bookrunner Performance (2019-2022) and more

By | Daily Briefs, ECM

In today’s briefing:

  • Aequitas ASEAN IPOs Bookrunner Performance (2019-2022)
  • Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns

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.

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.

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Jan 30
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Daily Brief Credit: Morning Views Asia: Adani Ports & Special Economic Zone and more

By | Credit, Daily Briefs

In today’s briefing:

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

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
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Daily Brief Thematic (Sector/Industry): Good Morning Japan |SPX Break Out In Sight ! ; PCE Inflation Delivers; Fed +25bps ? ; Awful INTEL and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |SPX Break Out In Sight ! ; PCE Inflation Delivers; Fed +25bps ? ; Awful INTEL
  • Chinese New Year Travel Market: Roundup And Implications
  • The Innovations Portfolio – Week Ten
  • China Financials Weekly: Jan 30 | A Bubbly Opening

Good Morning Japan |SPX Break Out In Sight ! ; PCE Inflation Delivers; Fed +25bps ? ; Awful INTEL

By Mark Chadwick

  • OVERSEAS.  SPX positive on day, +2.5%WoW; SOX +5.4%WoW;  PCE Inflation sets stage for benign Fed; INTEL, KLC puts damper on tech party; TELSA delivers again; AMEX not seeing consumer weakness;
  • JAPAN. NKY Futs vs Cash +0.1%; USDJPY 129.88; Tokyo Dec CPI highest since 1981; GS sees highest base pay hike in decades.;  Fanuc 3Q beats on Robots; Sagawa hikes prices
  • DAILY. NUGGETS. Stealth Immigration – Foreigner workers in Japan hit all time high 1.82 million/2.7% of labour force. Clear policy on Immigration needed to help secure Japan’s  future.

Chinese New Year Travel Market: Roundup And Implications

By Osbert Tang, CFA

The Innovations Portfolio – Week Ten

By Pyari Menon

  • The three companies we write about this week are Roche Holding Ltd (ROG VX) , Siemens Healthineers AG (SHL GR) and E Ink Holdings (8069 TT) 
  • For the ten weeks since inception ended 27 Jan the combined innovation portfolio was +4.0%, versus DJIA +.7%, S&P500 +2.7%, Nasdaq +4.3%, Russell2000 +3.3%, MSCI-ACWI-ETF +5.1%, all in US$ terms
  • For the first time in decades IBM lost its top position in patent registrations in US. IBM’s patent count declined 44% to 4,743 patents in 2022, versus Samsung Electronics’ 8,513

China Financials Weekly: Jan 30 | A Bubbly Opening

By Stanley Tsai, CFA

  • We expect to see a strong start to the week for China financials names, with sentiments buoyed by upbeat consumer spending data over the new year holiday.
  • Early signs point to relatively loose conditions in the interbank market as trading resumes across the board on Monday. The central bank’s easing bias will likely continue.
  • We see more momentum for the sector ahead of Q4 earnings (brokers > insurers > banks). Stock selection will become more important thereafter.

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Jan 30
0

Daily Brief Event-Driven: MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do
  • Clarifications About Osstem Implant Tender Event
  • Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts
  • NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
  • Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
  • Quiddity Flow Expectations HSCEI Mar 23: One Change + Caps for Meituan, Alibaba, and Tencent
  • S&P/​​​​​​ASX Index Rebalance Preview: High Impact Changes in March

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.

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.

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.

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.

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

By Arun George

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.

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 Equity Bottom-Up: Taiwan Dual-Listings: Post CNY Market Closure and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
  • Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023
  • Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
  • STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
  • 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
  • AI Takes the Write Way
  • Thungela: The Canary Has Stopped Singing

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.

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.

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

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.

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.

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.

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Jan 30
0

Daily Brief Macro: What the Bull Case Looks Like and more

By | Daily Briefs, Macro

In today’s briefing:

  • What the Bull Case Looks Like
  • Steno Signals: The Usd Liquidity Cushion Is Alive and Well
  • FOMC Preview: Party Now, Pay Later

What the Bull Case Looks Like

By Cam Hui

  • While the short-term breadth and momentum indicators like the percentage of S&P 500 above their 20 and 50 dma exhibit negative divergences, the percentage above their 200 dma has resilient
  • We interpret these readings as the S&P 500 may need a period of consolidation or pullback within a longer-term bull trend.
  • However, the best opportunities are to be found within cyclical stocks and in non-U.S. regions.

Steno Signals: The Usd Liquidity Cushion Is Alive and Well

By Andreas Steno

  • When the TGA is built up due to T-bills issuance, the ON RRP usage drops
  • Net/Net it meanas that USD liquidity keeps printing at more benign levels than anticipated by many
  • The USD liquidity additions will continue throughout February and March

FOMC Preview: Party Now, Pay Later

By Cam Hui

  • Ahead of the February FOMC meeting, our base-case scenario has changed to a cyclical and reflationary rebound in Q1 and Q2.
  • The rebound is led by the prospect of China re-opening its economy and the positive liquidity effects of the U.S. Treasury’s extraordinary measures to avoid default.
  • As the inflationary effects of the China re-opening become clear, the Fed will have to reconsider its rate pause and possibly raise rates by late Q2 or early Q3.

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Jan 30
0

Daily Brief Thailand: Alibaba (ADR) and more

By | Daily Briefs, Thailand

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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Jan 30
0

Daily Brief South Korea: Osstem Implant, KOSDAQ 150 Index and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Clarifications About Osstem Implant Tender Event
  • Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts

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.

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.

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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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