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Smartkarma Daily Briefs

Sep 01
0

Daily Brief Japan: Sekisui House, Kyocera Corp, Fujikura Ltd and more

By | Daily Briefs, Japan

In today’s briefing:

  • FTSE EPRA Nareit Index Rebalance: Two Adds for Japan
  • Kyocera (6971 JP) Founder Kazuo Inamori Passes – Implications for Holdings
  • JPX-Nikkei 400 Rebal 2023: End-Aug 2022

FTSE EPRA Nareit Index Rebalance: Two Adds for Japan

By Brian Freitas

Kyocera (6971 JP) Founder Kazuo Inamori Passes – Implications for Holdings

By Travis Lundy

  • Kazuo Inamori (稲盛和夫), founder of Kyocera Corp (6971 JP) and KDDI Corp (9433 JP) precursor company DDI (Dai Ni Den Den), and former chairman of JAL overseeing restructuring, has passed.
  • In his own name, he owns 10.212mm shares of Kyocera, and likely other assets. Inheritance tax would be due 10 months from now. 
  • Kyocera is not blowing out the lights compared to peers, but it is relatively inexpensive to its history and peers. If the shares are sold, Kyocera can buy them.

JPX-Nikkei 400 Rebal 2023: End-Aug 2022

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
  • Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-August 2022.

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Sep 01
0

Most Read: Baidu, Sekisui House, Giordano International, Leapmotor, Kyocera Corp, BYD, Shaanxi Coal Industry, Yankuang Energy Group, Doosan Enerbility, OZ Minerals Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSI, HSCEI, HSTECH: September Rebalance Flows Post Capping
  • FTSE EPRA Nareit Index Rebalance: Two Adds for Japan
  • Giordano (709 HK): Minimal Acceptance As Webb Ups Stake
  • Leapmotor IPO – Index Inclusion Timeline
  • Kyocera (6971 JP) Founder Kazuo Inamori Passes – Implications for Holdings
  • Berkshire BYD’s Selldown Likely to Follow Its PetroChina Playbook
  • FTSE China A50 Index Rebalance: Three Changes Upcoming
  • FTSE China 50 Index Rebalance: Yankuang Energy (1171) To Replace Shenzhou Intl (2313)
  • Doosan Enerbility: Post-Block Deal Trading
  • (Mostly) Asia M&A: August 2022 Roundup

HSI, HSCEI, HSTECH: September Rebalance Flows Post Capping

By Brian Freitas

FTSE EPRA Nareit Index Rebalance: Two Adds for Japan

By Brian Freitas

Giordano (709 HK): Minimal Acceptance As Webb Ups Stake

By David Blennerhassett

  • The Cheng-family Offer for Giordano International (709 HK) became open to tendering after the Composite Doc was issued on the 15 August.
  • With the first close less than a week away, acceptances are minimal – ~3.6%.
  • Separately, David Webb, who definitely will not be tendering, has increased his stake to 5.79%.

Leapmotor IPO – Index Inclusion Timeline

By Brian Freitas

  • Leapmotor (2007699D HK) is said to be looking to raise between US$1bn-US$1.5bn by selling 290.9m shares in its IPO. At the top end, the company will be valued at HK$53bn.
  • The performance of its peers over the last year leaves a lot to be desired and could lead to lower demand in the IPO.
  • Leapmotor (2007699D HK) should be added to the HSCI and the Hang Seng Tech Index, though timing depends on when the stock lists on the HKEX (388 HK). 

Kyocera (6971 JP) Founder Kazuo Inamori Passes – Implications for Holdings

By Travis Lundy

  • Kazuo Inamori (稲盛和夫), founder of Kyocera Corp (6971 JP) and KDDI Corp (9433 JP) precursor company DDI (Dai Ni Den Den), and former chairman of JAL overseeing restructuring, has passed.
  • In his own name, he owns 10.212mm shares of Kyocera, and likely other assets. Inheritance tax would be due 10 months from now. 
  • Kyocera is not blowing out the lights compared to peers, but it is relatively inexpensive to its history and peers. If the shares are sold, Kyocera can buy them.

Berkshire BYD’s Selldown Likely to Follow Its PetroChina Playbook

By Arun George

  • BYD (1211 HK)’s shares declined by -8% on disclosure that Berkshire Hathaway Inc Cl B (BRK/B US) trimmed its stake from 20.04% to 19.92% of outstanding H Shares. 
  • Berkshire will likely follow its PetroChina (857 HK) playbook and materially sell down over the next few months. Buffet stated that the PetroChina exit was “a decision based on valuation.”
  • Berkshire will apply the same investment discipline to the BYD stake. While the shares are trading at a discount to historical multiples, the Berkshire stake is an overhang.

FTSE China A50 Index Rebalance: Three Changes Upcoming

By Brian Freitas

FTSE China 50 Index Rebalance: Yankuang Energy (1171) To Replace Shenzhou Intl (2313)

By Brian Freitas

Doosan Enerbility: Post-Block Deal Trading

By Sanghyun Park

  • The deal size amounts to ₩572B at a volume of 28.54M shares. The per-share disposal price is ₩20,050, a 7.6% discount from the previous day’s closing price, ₩21,700.
  • Enerbility can be a timely LONG target of pension-driven flow in the context where the NPS is seen actively doing portfolio rebalancing lately.
  • The volume digested by wall crossing seems quite small, as suggested by yesterday’s short selling volume, the flow volatility range is highly likely to be concentrated in one direction.

(Mostly) Asia M&A: August 2022 Roundup

By David Blennerhassett

  • For the month of August, 10 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$8.5bn.
  • The average premium for the new deals announced (or first discussed) in August was ~41%, and a year-to-date average of 38%.
  • This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.

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Aug 31
0

Daily Brief ESG: The Crux of the Problem Is the Company’s Reluctance to Increase the Number of Diverse Shareholders and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Crux of the Problem Is the Company’s Reluctance to Increase the Number of Diverse Shareholders

The Crux of the Problem Is the Company’s Reluctance to Increase the Number of Diverse Shareholders

By Aki Matsumoto

  • If stock price is high, then a stock split is the way to go, and stockbrokers have provided a mechanism for trading shares in less than single-unit in the past.
  • The issue isn’t “the trading unit should be lowered because people can’t buy shares with high stock prices” but “let’s improve so that people can become shareholders with one share.
  • If Japanese companies are reluctant to increase the number of diverse shareholders, this would be in line with their slower progress in solving issues: diversity, human rights, and environment.

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Aug 31
0

Daily Brief ECM: Doosan Enerbility Placement – Selldown by Parent Doesn’t Send the Best Signal and more

By | Daily Briefs, ECM

In today’s briefing:

  • Doosan Enerbility Placement – Selldown by Parent Doesn’t Send the Best Signal
  • Leapmotor IPO: Look Before You Leap
  • Leapmotor Pre-IPO – Peer Comparison – One of the Leaders in 2Q Volumes but Lags on Margins

Doosan Enerbility Placement – Selldown by Parent Doesn’t Send the Best Signal

By Clarence Chu

  • Doosan Corp (000150 KS) is looking to raise up to US$435m from trimming a portion of its stake in Doosan Enerbility (034020 KS).
  • The deal isn’t exactly a large one to process at just 5.2 days of three month ADV. Shares are offered at a discount range between 5.1-7.8%.
  • As there wasn’t a specific mention of the former’s intention to sell, we would argue that the deal isn’t particularly well flagged.

Leapmotor IPO: Look Before You Leap

By Arun George

  • Leapmotor (2007699D HK), a Chinese EV manufacturer, is pre-marketing a US$1.5 billion HKEx IPO, according to press reports.
  • We previously discussed the IPO in Leapmotor IPO: The Bull Case and Leapmotor IPO: The Bear Case. This note updates our view for the PHIP and recent developments.
  • While the 1Q and truncated 1H numbers outline rapid growth and declining loss margin, key metrics continue to lag peers over comparable periods. We would pass on the IPO. 

Leapmotor Pre-IPO – Peer Comparison – One of the Leaders in 2Q Volumes but Lags on Margins

By Sumeet Singh

  • Leapmotor (LM) aims to raise around US$1.5bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
  • As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
  • In our previous notes, we spoke about the company’s past performance and its PHIP updates. In this note, we will undertake a peer comparison.

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Aug 31
0

Daily Brief Technical Analysis: Finding Leadership Within Emerging Markets and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Finding Leadership Within Emerging Markets
  • Headwinds Persist, Including Rising DXY, 10-Yr Treasury Yield, & Commodities; Buying Staples, Solar

Finding Leadership Within Emerging Markets

By Joe Jasper

  • We are starting to see early signs of a potential bottom on MSCI EM (EEM-US).
  • Specifically, the EEM-US has reversed topside its 6-month downtrend. If MSCI EM has indeed bottomed, we want to be buying the leaders; that is where this report comes in.
  • Specific themes include attractive opportunities in India and Thailand, and also many in Taiwan and South Korea. Attractive Sectors include Energy, Financials, Materials, and Industrials.

Headwinds Persist, Including Rising DXY, 10-Yr Treasury Yield, & Commodities; Buying Staples, Solar

By Joe Jasper

  • In last week’s Compass (Aug. 23) we discussed the increasing odds for a deeper pullback in the broad market indexes.
  • This was due to 5-week uptrend breaks on the SPX, NDX, and Russell 2000, the Fed tightening, and with Treasury yields, the U.S. dollar (DXY), and commodities (DJP) inflecting higher.
  • The market remains in pullback mode; the SPX, NDX, and Russell 2000 are all approaching 50-day MA support, the first big area of interest on this pullback.

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Aug 31
0

Daily Brief Quantitative Analysis: What Is Wrong with Inverse ETFs? and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • What Is Wrong with Inverse ETFs?

What Is Wrong with Inverse ETFs?

By Nicolas Rabener

  • Inverse ETFs come with significant risk disclosure because they are especially risky
  • And analyzing the performance of these products justifies the warnings
  • There is a significant difference between the performance of inverse ETFs & the underlying inverse indices

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Aug 31
0

Daily Brief Thematic (Sector/Industry): Japan Tourism | 3 Stocks to Buy for Open Borders and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Japan Tourism | 3 Stocks to Buy for Open Borders

Japan Tourism | 3 Stocks to Buy for Open Borders

By Mark Chadwick

  • Japan’s government has been more reluctant to open its borders than counterparts in the rest of the world. 
  • Before COVID, Japan welcomed around 31m tourists per annum. The latest cap sets the limit at 18m and drops the requirement for a negative COVID test. 
  • We believe these moves will have a significant positive impact on the retail sector and highlight 3 key beneficiaries

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Aug 31
0

Daily Brief Credit: H&H International – Earnings Flash – H1 FY 2022 Results – Lucror Analytics and more

By | Credit, Daily Briefs

In today’s briefing:

  • H&H International – Earnings Flash – H1 FY 2022 Results – Lucror Analytics
  • West China Cement – Earnings Flash – H1 FY 2022 Results – Lucror Analytics
  • Morning Views Asia: ABM Investama, Adaro Minerals

H&H International – Earnings Flash – H1 FY 2022 Results – Lucror Analytics

By Shu Hui Woon

H&H International’s H1/22 results were adequate in our view, despite the challenging operating conditions in China. The company is gradually diversifying its businesses, with ANC and PNC accounting for 48% of total H1/22 revenue. Moreover, demand for PNC products is increasing, and H&H is focused on leveraging this to expand in the US and China. The Swiss brand under ANC is also growing steadily. Going forward, these would allow the company to balance any revenue decline from the intensified BNC business. H&H has a moderate financial risk profile overall, with sound liquidity.

West China Cement – Earnings Flash – H1 FY 2022 Results – Lucror Analytics

By Leonard Law, CFA

West China Cement’s H1/22 results were in line with expectations. The company reported broad sales volume declines across all regions in China, owing to pandemic-related disruptions. Still, its revenue and gross margin were largely stable, as the better-than-expected ASP growth was able to offset increases in coal and electricity costs. Moreover, the FCF deficit was smaller than anticipated, as capex fell y-o-y. Net Debt/EBITDA weakened slightly, but remained strong at 1.8x (FYE 2021: 1.6x). Management anticipates more meaningful earnings growth and margin expansion in FY 2023, supported by the contribution from its new plant in Congo (expected to commence at end-2022).

Morning Views Asia: ABM Investama, Adaro Minerals

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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Aug 31
0

Daily Brief Event-Driven: A Taiwan Basket Trade For A Special Index Rebal and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • A Taiwan Basket Trade For A Special Index Rebal
  • HSI, HSCEI, HSTECH: September Rebalance Flows Post Capping
  • SKT ADR Play on the 31st for MSCI Exclusion
  • S&P BSE Quiddity Leaderboard Dec 2022: Multiple Adani Names with F&O Question Marks
  • Nitro’s Opportunistic A$1.58 Offer from Potentia
  • Doosan Corp: A Block Deal Sale of 4.5% Stake in Doosan Enerbility
  • Link Net: Axiata’s MTO Kicks Off Today
  • Leapmotor IPO – Index Inclusion Timeline
  • Open Text/Micro Focus: Next Chapter in an Acquisition Growth Story
  • A Separation of Korea Zinc Group & Young Poong Group by the Choi & Jang Families?

A Taiwan Basket Trade For A Special Index Rebal

By Travis Lundy

  • The FTSE TWSE Taiwan indices get rebalanced in line with the standard FTSE Global indices – on the third Friday of September. 
  • The most interesting one is the probably the least famous. It has only one change but it has massive re-weightings because of the way the index is constructed. 
  • Historical patterns suggest a right-way long-short basket, reversed on the event, is a good trade.

HSI, HSCEI, HSTECH: September Rebalance Flows Post Capping

By Brian Freitas

SKT ADR Play on the 31st for MSCI Exclusion

By Sanghyun Park

  • We need a hedge to short SKT on the 31st. For this, we need to consider trading SKT ADR, which is pretty liquid as DTV reaches nearly $8mil.
  • The play structure is simple. It exploits the pattern that passive flow is concentrated on underlying shares rather than ADRs. We witnessed this pattern in the last two cases.
  • Passive outflow may be aggravated since SKT leaves not only STANDARD but also sub-indices such as ESG. So, the degree of a temporary DR premium can get thicker.

S&P BSE Quiddity Leaderboard Dec 2022: Multiple Adani Names with F&O Question Marks

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
  • Based on the latest data, I expect one ADD/DEL for SENSEX, one ADD/DEL for BSE 100, and 3 ADDs/DELs for BSE 200. 
  • The potential ADDs/DELs for SENSEX could see index flows of US$100mn or more but the other index changes are both small in size and volume impact (days-to-trade).

Nitro’s Opportunistic A$1.58 Offer from Potentia

By Arun George

  • Nitro Software Ltd (NTO AU) entered a trading halt in response to an AFR report that Potentia has lobbed an indicative non-binding proposal at A$1.58 per share.
  • Potentia’s offer follows its success in securing a 17% stake at A$1.58 per share on Monday night. The stake is large enough to deter rival schemes. 
  • The offer is opportunistic and unattractive. However, the ability of Potentia to relatively quickly secure a significant stake suggests that the Board will be under pressure to engage.

Doosan Corp: A Block Deal Sale of 4.5% Stake in Doosan Enerbility

By Douglas Kim

  • After the market close today, Doosan Corp (000150 KS) announced that it plans to sell a 4.5% stake in Doosan Enerbility (034020 KS) in a block deal sale.
  • The discount range on the block deal price is 5.1% to 7.8% based on today’s closing price of 21,700 won.
  • This block deal sale should have a positive impact on Doosan Corp but a negative impact on Doosan Enerbility.

Link Net: Axiata’s MTO Kicks Off Today

By David Blennerhassett

  • After Axiata  (AXIATA MK) completed the acquisition of 66.03% in Link Net (LINK IJ) on the 22 June, Axiata was obligated to undertake a mandatory offer for the remaining 33.97%. 
  • The MTO commences today and concludes on the 28 September. Payment will be the 6 October.
  • There are no conditions attached to the MTO. Play the spread, where available.

Leapmotor IPO – Index Inclusion Timeline

By Brian Freitas

  • Leapmotor (2007699D HK) is said to be looking to raise between US$1bn-US$1.5bn by selling 290.9m shares in its IPO. At the top end, the company will be valued at HK$53bn.
  • The performance of its peers over the last year leaves a lot to be desired and could lead to lower demand in the IPO.
  • Leapmotor (2007699D HK) should be added to the HSCI and the Hang Seng Tech Index, though timing depends on when the stock lists on the HKEX (388 HK). 

Open Text/Micro Focus: Next Chapter in an Acquisition Growth Story

By Jesus Rodriguez Aguilar

  • Open Text agreed a 532p/share cash offer for legacy software, highly leveraged FTSE250 constituent, Micro Focus (98% premium, 2.3x EV/Fwd Revenues, 6.4x EV/Fwd EBITDA), taking advantage of target’s downwards re-rating.
  • My TP based (5.6x EV/Fwd EBITDA based) is 350p, which reflects macro challenges. Although the offer from Open Text seems every generous, ROIC could reach low single teens.
  • Gross spread is 2.35% and the estimated annual return would be 4.38% assuming settlement by mid-February. Irrevocables amount to 16.62%, the lengthy part will be antitrust and FDI approvals. Long.

A Separation of Korea Zinc Group & Young Poong Group by the Choi & Jang Families?

By Douglas Kim

  • The history of Young Poong Group goes back nearly 73 years ago in 1949 when two young men Ki-ho Choi and Byeong-hee Jang founded Young Poong.
  • Young Poong Group and Korea Zinc could be separated from each other with the Choi family controlling Korea Zinc and Jang family controlling Young Poong and related affiliates.
  • The bullish case for Young Poong and Korea Zinc would be that once they are separated, there could be greater management transparency and ownership structure which could boost overall efficiency. 

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Aug 31
0

Daily Brief Equity Bottom-Up: CGN Power (1816 HK): No Nuclear Jitters and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • CGN Power (1816 HK): No Nuclear Jitters
  • Prosus: 30% Discount Seems About Right
  • Antony Waste Handling Cell Ltd – Forensic Analysis
  • Ace Hardware (ACES IJ) – A Rebound in the Offing
  • Observability Pair Trade: Long Elastic / Short Splunk
  • Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management
  • Two Niche Semiconductor Industry Stocks Highly Exposed to EV Acceleration
  • Pinduoduo: Management Warns That 2Q22 Is Not a Good Benchmark For Future
  • Shenzhen Intl (152 HK): The Toughest Time Should Be over Now
  • Hangzhou Tigermed Consulting (3347.HK/300347.CH) 2022H1 – The Time Bomb Is Ticking

CGN Power (1816 HK): No Nuclear Jitters

By David Blennerhassett

  • Nuclear power is a clean energy source that contributes to energy savings and emissions reduction in society.
  • SASAC backed CGN Power (1816 HK) is China’s leading nuclear play, accounting for 55% of on-grid nuclear power generation, but just 1.2% of China’s total installed capacity of power generation.
  • As one of the few listed nuclear -plays in Asia, CGN trades at undemanding multiples, together with an attractive ROE and yield.

Prosus: 30% Discount Seems About Right

By Wium Malan, CFA

  • The initial impact, of the share repurchase program, was for Prosus’ simple discount to listed NAV to reduce from roughly 50% to around 25% within 4 weeks of implementation.
  • The weekly size of the share repurchase program has been reduced by ~40%, on a 4-week rolling average basis, since the discount has been below 30%.
  • We remain constructive on Tencent and, with Prosus at 25% or less simple discount to NAV, would own Tencent directly (long-only), or be long Tencent, short Prosus/Naspers.

Antony Waste Handling Cell Ltd – Forensic Analysis

By Nitin Mangal

  • Antony Waste Handling Cell Limited (AWHCL IN) is one of the key players operating in the Municipal Solid Waste (MSW) industry.
  • Key takeaways that warrant attention overlooked include disparity between accounting and management commentary on margins and reimbursements and stained auditor qualifications since F13
  • Other forensic checks consist of poor quality of debtors, subsidiary stress and few eye-brow raising related party transactions.

Ace Hardware (ACES IJ) – A Rebound in the Offing

By Angus Mackintosh

  • Ace Hardware Indonesia (ACES IJ) 1H2022 results continued to reflect a hangover from COVID-19 in terms of slower growth although the company continues to demonstrate its resilience.
  • The company’s store expansion continues with plans for 15 stores in total for 2022, whilst SSSG have seen a sharp recovery recently bringing YTD SSSG into positive territory.
  • Ace Hardware is one of Indonesia’s top quality retailers with the potential for a sharp recovery and valuation looks attractive on 15x FY2023E PER versus 27x 5-year average PER.

Observability Pair Trade: Long Elastic / Short Splunk

By Aaron Gabin

  • Like PANW and SNOW, Elastic continues to power through macro headwinds seen by many other software companies.
  • Elastic has a Crowdstrike like dynamic, where it is capturing new workloads from incumbents, in the cloud. In this case, Symantec’s share donator role is being played by Splunk.
  • In this tough volatile environment, we like an observability pair trade of Long ESTC / Short SPLK.

Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

By Vincent Fernando, CFA

  • We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.
  • Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.
  • Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. 

Two Niche Semiconductor Industry Stocks Highly Exposed to EV Acceleration

By Vincent Fernando, CFA

  • SDI Corporation (2351 TT) and Jih Lin Technology (5285 TT) are well positioned to generate significant long-term business from automotive end-market chip demand.
  • The companies are the #1 and #2 leaders globally by market share respectively for power lead frames.
  • Could receive earnings upgrades if CEV to EV market expectations are pulled forward.

Pinduoduo: Management Warns That 2Q22 Is Not a Good Benchmark For Future

By Oshadhi Kumarasiri

  • Pinduoduo (PDD US)’s 2Q22 was rather strong with revenue of RMB 31.4bn (consensus: RMB 23.6bn) and OP of RMB 8.7bn (consensus: RMB 3.6bn).
  • However, the management was quick to dismiss the pretence that piduoduo would be able to maintain these elevated growth/margin numbers throughout the rest of the year and over the medium-term.
  • This creates a lot of downside to consensus 2H22 and medium-term revenue and OP estimates in a time when valuation multiples have expanded over 70% from the March 2022 bottom.

Shenzhen Intl (152 HK): The Toughest Time Should Be over Now

By Osbert Tang, CFA

  • The 1H22 result of Shenzhen International (152 HK) is 4% ahead of indicated in profit warning. Key drags are toll roads and Shenzhen Airlines, but their 2H22 outlook is better.
  • It will see many new logistics projects to commence operations in the next 12-18 months. Also, SZI guided that it will continue to realise underlying asset value through strategic disposals.
  • We think the toughest time should be behind and expect more positive news on asset gains. The stock is very cheap at 0.41x P/B and 58% discount to appraised NAV. 

Hangzhou Tigermed Consulting (3347.HK/300347.CH) 2022H1 – The Time Bomb Is Ticking

By Xinyao (Criss) Wang

  • Tigermed had high revenue growth in 2022H1 but with a YoY decrease in net profit attributable to the owners of the Company, mainly due to poor performance of investment business.
  • Tigermed’s investment business is like a “time bomb” that would detonate in the future. Its “CRO+PE/VC business model” would trap its performance in a vicious circle due to unfriendly macro.  
  • We are conservative about Tigermed’s outlook and performance. Tigermed is difficult to achieve the V-shaped rebound. So we recommend investors to offload, or just do some short term trade.

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