Smartkarma Daily Briefs

There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma in the past week: Mitsui & Co’s tilt for Relia Inc (4708 JP).
Key updates took place for: Kingston Financial (1031 HK), Shandong Fengxiang (9977 HK), Jafco Co Ltd (8595 JP), Golden Energy & Resources (GER SP), and Esso Thailand (ESSO TB).

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Jan 22

Daily Brief South Korea: S.M.Entertainment Co and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

By Douglas Kim

On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member.
This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.
We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.

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

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

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✓ Company Data and News
✓ Events & Webinars

Jan 22

Daily Brief China: Hong Kong Hang Seng Index, China Internet Investment Finance Holdings and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
China Internet Investment Finance’s (810 HK): A Vague Offer Leads to a Sinking Feeling

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

China Internet Investment Finance’s (810 HK): A Vague Offer Leads to a Sinking Feeling

By Arun George

China Internet Investment Finance Holdings (810 HK)/CIIF disclosed that it received a letter from a potential offeror, stating that it is considering making a voluntary conditional cash offer.
The possible offer will have two conditions – a 50% minimum acceptance condition and that the shares remain listed. No price or timeline has been disclosed.
An offer if it materialises, will likely be a take-under due to the presence of a willing seller (Chairman) seeking a liquidity event and CIIF’s unjustified share price run.

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

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

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✓ Events & Webinars

Jan 22

Most Read: Brilliance China Automotive, Li Auto, PEXA Group, Adani Enterprises, Jinko Solar, Jb Financial Group, CP ALL PCL, Sabana Industrial REIT, Bank of Kyoto and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change
HSI Index Rebalance Preview: Better Late Than Never?
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi
ASX200 Index Rebalance: PEXA to Replace Pendal
SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro
CSI300 Index Rebalance Preview: Early Look at Potential Changes in June
KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)
CP ALL PCL (CPALL TB) – A King for All Seasons
Sabana REIT (SSREIT SP): Partial Offer from Volare
Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO

HSCI Index Rebalance Preview and Stock Connect: A Lot of Change

We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

HSI Index Rebalance Preview: Better Late Than Never?

There are currently 76 index constituents and we can (maybe? finally! hopefully 🤞) get to 80 members in March before commencing the next leg up to 100 index constituents.
We list 10 potential inclusions to the index in March. Adding all 10 stocks will lead to over 6% one-way turnover, so there will be fewer inclusions.
All stocks will have over 1 day of ADV to buy from passive trackers. Some stocks have short interest of over 7% of float.

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, HSI, HSCI, KS200, KQ150, CSI300, SENSEX, LQ45, PSEi

End December was the end of the review cutoff for a lot of indices that will rebalance within the next couple of months.
PEXA Group (PXA AU) replaces Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 12 January.
There were big outflows from Hong Kong and China focused ETFs led by Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK).

ASX200 Index Rebalance: PEXA to Replace Pendal

PEXA Group (PXA AU) will replace Pendal Group (PDL AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 12 January.
Passive S&P/ASX 200 (AS51 INDEX) trackers will receive PEXA Group (PXA AU) shares from their Link Administration (LNK AU) holdings and will have to buy the rest from the market.
There will be selling in Pendal Group (PDL AU) from S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index trackers as well as from global trackers.

SENSEX Index Rebalance Preview: Adani Enterprises Could Replace Wipro

A third of the way through the review period of the June rebalance, we see one potential index change with Adani Enterprises (ADE IN) replacing Wipro Ltd (WPRO IN).
Adani Enterprises (ADE IN) could move lower in the short-term due to the public issue of shares but should find support from passive buying from local and global index trackers.
Wipro Ltd (WPRO IN) has underperformed most of its peers by a wide margin over the last year and the passive selling could provide an entry point.

CSI300 Index Rebalance Preview: Early Look at Potential Changes in June

Two thirds of the way through the review period, we see 15 potential index changes at the June rebalance that will be implemented at the close on 9 June.
We estimate a one-way turnover of 2.35% at the June rebalance leading to a one-way trade of CNY 5.57bn.
The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last six months, though there is some near-term deterioration.

KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)

Jb Financial Group (175330 KS) will replace Meritz Fire & Marine Insurance (000060 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 27 January.
We estimate passive KOSPI2 INDEX trackers will need to buy 3.494m shares (KRW 36.34bn; 4.04 days of ADV) of Jb Financial Group (175330 KS) at the close on 27 January.
DGB Financial Group (139130 KS) could be added to the KOSPI2 INDEX in April, replacing Meritz Securities (008560 KS) following its merger with Meritz Financial Group (138040 KS).

CP ALL PCL (CPALL TB) – A King for All Seasons

By Angus Mackintosh

CP ALL is a unique and high-quality proxy for the recovery in domestic consumer demand plus increasing tourist arrivals, which should soon see a further boost from China.
We would expect a strong finish to the year with an even stronger pickup in 2023 across convenience stores, Lotus supermarkets and hypermarkets, as well as Siam Makro cash-and-carry.
CP ALL is a top growth pick in Thailand, with EPS expected to grow by +35% and 25% for FY2023E and FY2024E, with ongoing expansion and economic recovery.

Sabana REIT (SSREIT SP): Partial Offer from Volare

By Arun George

Sabana Industrial REIT (SSREIT SP) disclosed a partial offer from Volare to acquire a maximum of 109.6 million units at $0.465 per unit, a 9.4% premium to the undisturbed price.
The partial offer is conditional on minimum acceptances representing 10.00% of outstanding units. Quarz Capital, the activist fund, says the offer is attractive.
ESR Group (1821 HK), the sponsor, is unlikely to tender. Based on a proration of 13.54% and at the last close price of S$0.425, the breakeven price is S$0.420.

Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO

Japanese banks are the hottest new thing but unless you think Bank of Kyoto is going to change its spots, it’s still best thought of as a range trade.
WM Motors opts for a backdoor listing via merging with WE Solutions Limited (860 HK). There’s probably a good reason for doing so.
You pay for the liquidity of Japanese banks by paying a higher PBR against not as much improvement in ROE. That’s life.

💡 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

Jan 22

Daily Brief United States: USD, Campbell Soup Co, Cirrus Logic, Columbia Sportswear Co, Adobe Systems, Oracle Corp, Plug Power Inc, Cummins Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

The Dollar O’ Meter #1 – 5 Ways to Gauge the Usd Outlook
Campbell Soup: Key Drivers
Cirrus Logic Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
Columbia Sportswear: Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Risks (01/23)
Adobe Inc: Major Drivers
Oracle Corporation: New Cloud Zone & Other Developments
Plug Power Inc: Partnership With Nikola Corporation & Other Drivers
Cummins Inc: Acquisition Of Siemens’ Commercial Vehicles Business & Other Drivers

The Dollar O’ Meter #1 – 5 Ways to Gauge the Usd Outlook

By Andreas Steno

Our models suggest that we should see further weakness in the USD in the coming months.
Expected interest rate divergence (EU/US) would, all else equal, strengthen the Euro relative to the Dollar.
Another source of dollar weakness can be attributed to the rise in the Chinese credit impulse.

Campbell Soup: Key Drivers

Campbell Soup is off to a good start to the fiscal year and delivered an all-around beat.
Meals & beverages delivered a strong performance, and there is growth in key brands, particularly RTS (Ready-To-Serve) soups, Mexican sauces, and Italian soup, well-outpaced the growth.
We provide the stock of Campbell Soup with a ‘Hold’ rating and a revision in the target price.

Cirrus Logic Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

Cirrus delivered a decent quarterly result with an all-around beat, driven by greater smartphone unit volumes linked to its customers’ new product launches, resulting in revenue over the high end of its target range.
Furthermore, with the development of Cirrus’ 22-nm codec, audio sensing and other signal processing use cases will benefit from increased performance and power efficiency.
The management has been working with several customers to design their first amplifier created especially for this market.

Columbia Sportswear: Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Risks (01/23)

Columbia Sportswear delivered a mixed set of third-quarter results as it failed to meet the revenue expectations of Wall Street given the economic, geopolitical, and supply chain challenges.
Consumer challenges are being solved by innovations like Omni-Heat Infinity and the recently unveiled Omni-Heat Helix.
The patent-pending Omni-Heat Helix from Columbia uses highly effective insulation cells to optimize warmth while ensuring breathability.

Adobe Inc: Major Drivers

Adobe managed a decent result in the last quarter meeting the revenue expectations of Wall Street and managing an earnings beat.
The company delivered 15% growth in the top-line for the 2022 fiscal with $17.61 billion in revenue.
We remain confident in their long-term strategies and give Adobe a ‘Hold’ rating with a revised target price.

Oracle Corporation: New Cloud Zone & Other Developments

Oracle had a strong quarter and saw its revenue increase by 25%.
Even with Cerner excluded, total revenue increased by 9% in constant currency, exceeding Q1 and surpassing revenue from the same period last year.
Oracle’s liquidity is also solid as it held over $7.4 billion in cash and marketable securities at the end of the quarter.

Plug Power Inc: Partnership With Nikola Corporation & Other Drivers

Plug Power delivered another below par result in the quarter, failing to meet Wall Street expectations in terms of revenues as well as earnings.
The management claims that its fully developed green hydrogen platform has the potential to make it profitable.
In the hydrogen and fuel cell industries, Plug Power has a first-mover advantage which drives investor optimism.

Cummins Inc: Acquisition Of Siemens’ Commercial Vehicles Business & Other Drivers

Cummins delivered a mixed set of results for the quarter, surpassing the revenue expectations of Wall Street but missing out on earnings.
Also, through its subsidiary Meritor, Cummins announced the completion of its acquisition of the commercial vehicles business of Siemens.
Demand for the products of the company remained quite strong across its key regions and markets, which resulted in strong revenue in this quarter.

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

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

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✓ Company Data and News
✓ Events & Webinars

Jan 22

Daily Brief Japan: Bank of Kyoto, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO
Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

Last Week In SPACE: Bank of Kyoto, WM Motors, Japanese Banks, Hong Kong Aerospace, CP ALL/MAKRO

Japanese banks are the hottest new thing but unless you think Bank of Kyoto is going to change its spots, it’s still best thought of as a range trade.
WM Motors opts for a backdoor listing via merging with WE Solutions Limited (860 HK). There’s probably a good reason for doing so.
You pay for the liquidity of Japanese banks by paying a higher PBR against not as much improvement in ROE. That’s life.

Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

By Aki Matsumoto

METI’s survey confirms that “the number of outside directors has increased, but they aren’t completely independent, as they’re sometimes appointed by people with ties to the company” isn’t incorrect statement.
The reality is that the parent companies of Japan’s large asset management companies are financial institutions, and it’s high hurdle to vote against proposals by clients of the parent company.
The BOJ is a major shareholder in many companies through its ETF holdings. If the exercise of those voting rights changes, the management of listed companies in Japan should change.

💡 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

Jan 22

Daily Brief TMT/Internet: Hong Kong Hang Seng Index, Adobe Systems, Cirrus Logic, Oracle Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Adobe Inc: Major Drivers
Cirrus Logic Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
Oracle Corporation: New Cloud Zone & Other Developments

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

Adobe Inc: Major Drivers

Adobe managed a decent result in the last quarter meeting the revenue expectations of Wall Street and managing an earnings beat.
The company delivered 15% growth in the top-line for the 2022 fiscal with $17.61 billion in revenue.
We remain confident in their long-term strategies and give Adobe a ‘Hold’ rating with a revised target price.

Cirrus Logic Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

Cirrus delivered a decent quarterly result with an all-around beat, driven by greater smartphone unit volumes linked to its customers’ new product launches, resulting in revenue over the high end of its target range.
Furthermore, with the development of Cirrus’ 22-nm codec, audio sensing and other signal processing use cases will benefit from increased performance and power efficiency.
The management has been working with several customers to design their first amplifier created especially for this market.

Oracle Corporation: New Cloud Zone & Other Developments

Oracle had a strong quarter and saw its revenue increase by 25%.
Even with Cerner excluded, total revenue increased by 9% in constant currency, exceeding Q1 and surpassing revenue from the same period last year.
Oracle’s liquidity is also solid as it held over $7.4 billion in cash and marketable securities at the end of the 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

Jan 22

Daily Brief Consumer: Tokyo Stock Exchange Tokyo Price Index Topix, Campbell Soup Co, Columbia Sportswear Co, S.M.Entertainment Co and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs
Campbell Soup: Key Drivers
Columbia Sportswear: Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Risks (01/23)
Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

By Aki Matsumoto

METI’s survey confirms that “the number of outside directors has increased, but they aren’t completely independent, as they’re sometimes appointed by people with ties to the company” isn’t incorrect statement.
The reality is that the parent companies of Japan’s large asset management companies are financial institutions, and it’s high hurdle to vote against proposals by clients of the parent company.
The BOJ is a major shareholder in many companies through its ETF holdings. If the exercise of those voting rights changes, the management of listed companies in Japan should change.

Campbell Soup: Key Drivers

Campbell Soup is off to a good start to the fiscal year and delivered an all-around beat.
Meals & beverages delivered a strong performance, and there is growth in key brands, particularly RTS (Ready-To-Serve) soups, Mexican sauces, and Italian soup, well-outpaced the growth.
We provide the stock of Campbell Soup with a ‘Hold’ rating and a revision in the target price.

Columbia Sportswear: Key Drivers, Financial Forecasts, DCF & Comparables Valuation, Risks (01/23)

Columbia Sportswear delivered a mixed set of third-quarter results as it failed to meet the revenue expectations of Wall Street given the economic, geopolitical, and supply chain challenges.
Consumer challenges are being solved by innovations like Omni-Heat Infinity and the recently unveiled Omni-Heat Helix.
The patent-pending Omni-Heat Helix from Columbia uses highly effective insulation cells to optimize warmth while ensuring breathability.

Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

By Douglas Kim

On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member.
This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.
We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.

💡 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

Jan 22

Daily Brief Industrials: Golden Energy & Resources, Cummins Inc, Plug Power Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Relia, Kingston, Fengxiang, Jafco, Esso, Golden Energy
Cummins Inc: Acquisition Of Siemens’ Commercial Vehicles Business & Other Drivers
Plug Power Inc: Partnership With Nikola Corporation & Other Drivers

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Relia, Kingston, Fengxiang, Jafco, Esso, Golden Energy

There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma in the past week: Mitsui & Co’s tilt for Relia Inc (4708 JP).
Key updates took place for: Kingston Financial (1031 HK), Shandong Fengxiang (9977 HK), Jafco Co Ltd (8595 JP), Golden Energy & Resources (GER SP), and Esso Thailand (ESSO TB).

Cummins Inc: Acquisition Of Siemens’ Commercial Vehicles Business & Other Drivers

Cummins delivered a mixed set of results for the quarter, surpassing the revenue expectations of Wall Street but missing out on earnings.
Also, through its subsidiary Meritor, Cummins announced the completion of its acquisition of the commercial vehicles business of Siemens.
Demand for the products of the company remained quite strong across its key regions and markets, which resulted in strong revenue in this quarter.

Plug Power Inc: Partnership With Nikola Corporation & Other Drivers