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Smartkarma Daily Briefs

Jun 27
0

Equity Capital Markets: Thai Beverage, Thai Life Insurance and more

By | Daily Briefs, ECM

In today’s briefing:

  • Weekly Deals Digest (26 Jun) – ThaiBev’s BeerCo, Thai Life, Tianqi Lithium, Giordano, DTAC/True
  • Thai Life Insurance IPO: Valuation Insights

Weekly Deals Digest (26 Jun) – ThaiBev’s BeerCo, Thai Life, Tianqi Lithium, Giordano, DTAC/True

By Arun George

Thai Life Insurance IPO: Valuation Insights

By Arun George

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Jun 27
0

Singapore: Thai Beverage and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Weekly Deals Digest (26 Jun) – ThaiBev’s BeerCo, Thai Life, Tianqi Lithium, Giordano, DTAC/True

Weekly Deals Digest (26 Jun) – ThaiBev’s BeerCo, Thai Life, Tianqi Lithium, Giordano, DTAC/True

By Arun George

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Jun 27
0

Macro: Taiwan Moves to Top Underweight and more

By | Daily Briefs, Macro

In today’s briefing:

  • Taiwan Moves to Top Underweight, Tech Overweight Risk
  • Q2 Earnings Season = Market Abyss?

Taiwan Moves to Top Underweight, Tech Overweight Risk

By Steven Holden

  • A recent shift in momentum has pushed Taiwan to the largest country level underweight in the Asia Ex-Japan region
  • Taiwan Technology stocks have driven allocations lower, in addition to Consumer Discretionary and Staples, Health Care and Financials.
  • Taiwan Tech remains the key risk.  Sentiment is starting to waver when funds are close to maximum exposure.  Underperformance here will be costly on both an absolute a relative basis

Q2 Earnings Season = Market Abyss?

By Cam Hui

  • Investors may face the risk of earnings downgrades as we approach Q2 earnings season, but much of the fundamental weakness may already have been discounted.
  • From a chartist’s perspective, the intermediate-term bull case is still intact.
  • Both sentiment and technical conditions are still supportive of high stock prices.

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Jun 27
0

Most Read: NTT (Nippon Telegraph & Telephone), Gcl Poly Energy Holdings Limited, SenseTime Group, West African Resources, Hanmi Science and more

By | Daily Briefs, Most Read

In today’s briefing:

  • TOPIX Rebalance: Flows at the Close on 29 June
  • GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
  • Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp
  • Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT
  • KOSPI Size Index Series: September Rebalancing Preview

TOPIX Rebalance: Flows at the Close on 29 June

By Brian Freitas

  • The third tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading on 29 June.
  • One-Way flow is ~JPY 742bn and will be spread across 2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203 JP).
  • Stocks with the largest impact of inflows have outperformed stocks with the largest impact of outflows, but there has been underperformance over the last couple of weeks.

GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows

By Brian Freitas

  • After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
  • We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
  • Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.

Last Week in Event SPACE: Toshiba, Hutch Tel, SenseTime, Giordano, DTAC/True, Toyo Const., ResApp

By David Blennerhassett

  • There is a risk that the ¥7,000/share bid for Toshiba Corp (6502 JP) gets pulled/lowered in Round 2 because of due diligence, conditionality, market environment, etc.
  • Hutchison Telecommunications Hong Kong Holdings (215 HK)‘s share price was up 33% month to date, on triple the average daily volume. Then promptly sheds 23% on an even larger volume. 
  • Even if one assumes that Softbank, Baba, and Cornerstones won’t sell, there is still 45% of SenseTime Group (20 HK) of shares out, worth US$11bn, unlocking next week.

Index Rebalance & ETF Flow Recap: HSCI, SET50, S&P/ASX, MSCI, EMP PM, AMRT IJ, AMFI, SKT/KT

By Brian Freitas

  • No changes for Asia Pacific at the MSCI Annual Market Classification Review. Lots of improvements needed for Korea to move from EM to DM in June 2025 at the earliest.
  • Lots of changes expected for the HSCI and S&P/ASX family in September. Emperador Inc (EMP PM) and Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) are potential FTSE inclusions in September.
  • Shimao Services Holdings Limited (873 HK) started trading on Thursday and MSCI has announced the deletion of the stock from the MSCI China Index at the close on 27 June.

KOSPI Size Index Series: September Rebalancing Preview

By Sanghyun Park

  • We generally detect an increase in the buying volume of local institutions for stocks moving from Large Cap to Mid Cap ahead of the KOSPI size index rebalancing.
  • At the last close, Mid→Large: Pan Ocean, Hyundai Mipo, BGF Retail, & OCI / Large→Mid: Hanmi Science, KCC, DB Hitek, & KEPCO E&C
  • The level of price impact/correlation in the last rebalancing was exceptionally high. This is reason enough for us to consider setting up a preemptive position for this rebalancing event.

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Jun 27
0

India: China South City, Sadbhav Engineering and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: China South City, HPCL-Mittal Energy Ltd
  • Sadbhav Engineering Ltd – Liquidity Issues at Peak, Asset Monetization Key to Survival

Morning Views Asia: China South City, HPCL-Mittal Energy Ltd

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.

Sadbhav Engineering Ltd – Liquidity Issues at Peak, Asset Monetization Key to Survival

By Nirmal Bang

  • Execution remains weak in FY22: SADE reported weak numbers for FY22 as revenue at Rs12.26bn declined by 25% YoY.
  • Orderbook value uncertain, extended delays in execution: As on 3QFY22, SADE had an order book of Rs85bn, reflecting 7x TTM book to bill ratio.
  • Leverage still remains high, liquidity issues persist: Net debt to EBITDA as on FY22 stood at 7x.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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Jun 27
0

Equity Bottom-Up: Nidec Corp, Epam Systems, JD Health, J Front Retailing, Z Holdings, Lepu Biopharma, China Gas Holdings, Bosideng International Holdings and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Nidec (6594 JP): Reconsider Strategy & Management
  • Long Idea: EPAM Systems
  • JD Health (6618.HK) – Logic Change Due to the New Policy?
  • Subscriptions Provide Growth Model for J Front’s Daimaru-Matsuzakaya
  • Z Holdings (4689) | An Online Goldmine
  • Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing
  • China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt
  • Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

Nidec (6594 JP): Reconsider Strategy & Management

By Scott Foster

  • Nidec’s share price jumped 6.5% on Friday, June 24, suggesting support near ¥8,000.
  • Reconsider the company’s future as CEO Nagamori leads the turnaround of OKK and makes machine tools and industrial robots into a new product division.
  • Nagamori, who will turn 78 in August, is still the Key Man at Nidec.

Long Idea: EPAM Systems

By Aaron Gabin

  • EPAM is an IT Services firm that does high end software development for Fortune 2000 customers.
  • One of the great under the radar compounders of all time. Feb 2012 IPO-Feb 2022: ~27% revenue, earnings, FCF CAGR, 45% equity CAGR.
  • Core engineering talent historically in Ukraine, Belarus, and Russia, this is the overhang. We think great management team can navigate relocation and return to growth.

JD Health (6618.HK) – Logic Change Due to the New Policy?

By Xinyao (Criss) Wang

  • The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.
  • Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.
  • As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.

Subscriptions Provide Growth Model for J Front’s Daimaru-Matsuzakaya

By Michael Causton

  • Subscription usage continues to rise in Japan and a new survey suggests just under 50% of teens and 20s plan to use a subscription service this year.
  • Daimaru-Matsuzakaya’s luxury and designer brand rental business has been so successful that the company had to turn away new members for a while.
  • The department store’s owner, J Front Retailing (3086 JP), sees subscriptions as a third pillar to its business in the future.

Z Holdings (4689) | An Online Goldmine

By Mark Chadwick

  • Z HD’s media business accounts for 80% of consolidated earnings.
  • We believe that the combination of Yahoo Japan and LINE is driving new synergies and growth opportunities.
  • We believe that the media business alone could justify an EV of ¥4.5t, way above ZHD’s current EV of ¥3.5t

Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing

By Tina Banerjee

  • Lepu Biopharma (2157 HK) has filed NDA for its lead drug candidate pucotenlimab (HX008) for two indications in China, having a combined estimated market opportunity of RMB8 billion by 2030.
  • Overcrowded PD-1 mAb drugs market in China, with 10 marketed drugs, may limit the growth potential of pucotenlimab. However, pucotenlimab has better efficacy than existing drugs.
  • Lepu’s other core assets are also progressing and the company has sufficient cash to fund its R&D and commercialization initiatives.

China Gas Holdings (384 HK): Not Giving It the Benefit of Doubt

By Osbert Tang, CFA

  • We continued to be cautious on China Gas Holdings (384 HK) given the challenges faced. It guided for a flat dollar margin in FY23 but we think this is optimistic.
  • Connection fees are likely to stay under pressure after a 42.1% decline in FY22. It only projects 2.6-2.9m new residential connections for FY23, compared with 2.9m in FY22.
  • Although China Gas is now the cheapest Hong Kong-listed China gas utilities company, it takes time to regain market confidence. At similar valuation, Kunlun Energy (135 HK) looks more interesting. 

Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

By Osbert Tang, CFA

  • The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion. 
  • Management expects double-digit profit growth for FY23 as it pursues targeted “2+13” expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
  • Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. 

Related tickers: Nidec Corp (6594.T), Epam Systems (EPAM.N), JD Health (6618.HK), J Front Retailing (3086.T), Z Holdings (4689.T), China Gas Holdings (0384.HK), Bosideng International Holdings (3998.HK)

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Jun 27
0

South Korea: Hanmi Science and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI Size Index Series: September Rebalancing Preview

KOSPI Size Index Series: September Rebalancing Preview

By Sanghyun Park

  • We generally detect an increase in the buying volume of local institutions for stocks moving from Large Cap to Mid Cap ahead of the KOSPI size index rebalancing.
  • At the last close, Mid→Large: Pan Ocean, Hyundai Mipo, BGF Retail, & OCI / Large→Mid: Hanmi Science, KCC, DB Hitek, & KEPCO E&C
  • The level of price impact/correlation in the last rebalancing was exceptionally high. This is reason enough for us to consider setting up a preemptive position for this rebalancing event.

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Jun 26
0

Japan: Alfresa Holdings, Toshiba Corp and more

By | Daily Briefs, Japan

In today’s briefing:

  • Alfresa Holdings (2784 JP): Looking Ahead Through 2022–25 Mid-Term Management Plan
  • Asia-Pac Weekly Risk Arb Wrap: Toshiba, Uniden, Giordano, ResApp, Infomedia, SPH REIT, Toyo

Alfresa Holdings (2784 JP): Looking Ahead Through 2022–25 Mid-Term Management Plan

By Tina Banerjee

  • Alfresa Holdings (2784 JP) reported revenue decline in FY21. Apart from market wide negative impact of COVID-19 and drug price revision, suspended qualification for public bidding tenders affected the company.
  • In FY22, the company is expected to be back to its growth path with less impact of bidding suspension and increasing focus on high growth areas.
  • According to its 2022–2024 mid-term management plan, Alfresa targets to achieve a revenue of ¥2.7 trillion and operating income margin of 1.5% or higher by FY25.

Asia-Pac Weekly Risk Arb Wrap: Toshiba, Uniden, Giordano, ResApp, Infomedia, SPH REIT, Toyo

By David Blennerhassett

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Jun 26
0

Financials: Kakao Pay and more

By | Daily Briefs, Financials

In today’s briefing:

  • Kakao Pay: MSCI Will Likely to Continue to Treat Alipay as a Strategic Investor

Kakao Pay: MSCI Will Likely to Continue to Treat Alipay as a Strategic Investor

By Douglas Kim

  • In our view, MSCI will likely to continue to treat Alipay as a strategic investor in Kakao Pay (377300 KS). 
  • This will likely result in a failed inclusion of Kakao Pay in the next round of MSCI Korea Index rebalance.
  • We also make a comparison to Kakao Pay-Alipay with another block sale involving Kakao Games Corp (293490 KS) and Netmarble Corporation (251270 KS).

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Jun 26
0

Health Care: Alfresa Holdings and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Alfresa Holdings (2784 JP): Looking Ahead Through 2022–25 Mid-Term Management Plan

Alfresa Holdings (2784 JP): Looking Ahead Through 2022–25 Mid-Term Management Plan

By Tina Banerjee

  • Alfresa Holdings (2784 JP) reported revenue decline in FY21. Apart from market wide negative impact of COVID-19 and drug price revision, suspended qualification for public bidding tenders affected the company.
  • In FY22, the company is expected to be back to its growth path with less impact of bidding suspension and increasing focus on high growth areas.
  • According to its 2022–2024 mid-term management plan, Alfresa targets to achieve a revenue of ¥2.7 trillion and operating income margin of 1.5% or higher by FY25.

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