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Smartkarma Daily Briefs

Daily Brief China: SenseTime Group, Yashili International Holdings, Meituan, China Vast Industrial Urban Development, Tencent, China Three Gorges Renewables, Evergrande, Lepu Medical Technology A and more

By | China, Daily Briefs

In today’s briefing:

  • SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next
  • Yashili’s Pre-Condition EGM Set for 16 August
  • Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
  • The Cayman Islands to Remove the Headcount Test on 31 August
  • China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
  • China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)
  • Morning Views Asia: Evergrande, China Vanke, Indika Energy, Japfa Comfeed Indonesia
  • Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next

By Brian Freitas

  • SenseTime Group (20 HK) stock has been crushed following the lock-up expiry at the end of June with the stock now trading 40% below the IPO price.
  • The company has recently bought back stock providing some support. More importantly, SenseTime Group (20 HK) was included in Southbound Stock Connect on 29 July.
  • We expect a big increase in the free float adjustment factor (FAF) in the Hang Seng Indexes at the September rebalance that will provide some much needed passive inflows.

Yashili’s Pre-Condition EGM Set for 16 August

By Arun George

  • The approval by Yashili International Holdings (1230 HK) independent shareholders of the proposed transactions at the 16 August EGM is a pre-condition to the HK$1.20 per share privatisation proposal.
  • Shareholders will pass the ordinary resolutions at the EGM so that they can vote on the attractive privatisation proposal. The key risk is timing around the satisfaction of the pre-conditions.
  • China Mengniu Dairy Co (2319 HK)’s offer remains attractive in the context of multiples and historical share prices. At the last close, the gross spread to the offer is 10.1%.

Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet

By Shifara Samsudeen, ACMA, CGMA

  • Several news media outlets reported that Meituan (3690 HK)  Ele.me and other food delivery platforms were summoned over food safety problems as well as price war among them.
  • Food delivery platforms are ordered to strictly follow food safety management responsibilities and also prevent price wars that disrupt the market order.
  • Though the anti-trust fine of RMB3.44bn was thought to be the end of an almost year long regulatory crackdown on Meituan, it seems that this is far from over.

The Cayman Islands to Remove the Headcount Test on 31 August

By Arun George

  • After a prolonged delay, the Cayman Islands legislative gazette was published on 29 July, which stated that the amended Cayman Islands Act would come into force on 31 August. 
  • The Act will remove the headcount test for schemes, eliminating a layer of uncertainty for controlling shareholders wishing to privatise listed Cayman-incorporated companies.
  • In light of this development, we look at current active privatisations, past failed privatisations and rumoured transactions which stand to gain a new lease of life from this Act.

China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh

By Ming Lu

  • Tencent and Huawei launched beta tests for car-hailing platform almost simultaneously.
  • Alibaba begins to disconnect Ant Group to avoid implicating each other.
  • Missfresh dismissed almost all employees in its headquarters in Beijing.

China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)

By Osbert Tang, CFA

  • A “Long China Three Gorges Renewables (600905 CH), short Huaneng Power Intl Inc-A (600011 CH)” pair trade should generate good return in China’s utilities sector given the current industry dynamics.
  • The key supporting factors are: CTGR has pure exposure to renewable, faster capacity growth and a stronger balance sheet. They should underpin better earnings quality and outlook relative to HPI.
  • CTGR trades on higher PER and P/B multiples, but these should not be hurdles as they are just reflection of more promising prospects. We expect CTGR’s YTD outperformance to continue.

Morning Views Asia: Evergrande, China Vanke, Indika Energy, Japfa Comfeed Indonesia

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.


Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

By Xinyao (Criss) Wang

  • Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
  • Lepu’s expansion mainly relies on continuous M&A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
  • Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&D,which is good for sustainable long-term growth. Such business transformation takes time.

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Daily Brief Japan: Honda Tsushin Kogyo, iShares MSCI ACWI ETF, Tokyo Stock Exchange Tokyo Price Index Topix, Lasertec Corp and more

By | Daily Briefs, Japan

In today’s briefing:

  • Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)
  • Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys
  • It Is Very Important to Review ESG Investing Before the Risks Become Evident
  • Lasertec (6920) | Mind the Guidance Gap

Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)

By Travis Lundy

  • Electronics Parts and Devices manufacturer Minebea Mitsumi (6479 JP) has announced a 25% premium Tender Offer to take over connector-maker Honda Tsushin Kogyo (6826 JP)
  • It is not an overwhelming bid, but is supported by Panasonic Corp (6752 JP) which owns an equity affiliate stake, and crossholders and friendly shareholders hold a lot.
  • This looks like it will complete, despite being a little light on price. 

Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys

By Joe Jasper

  • In last week’s Int’l Compass (July 21) we discussed positive signals that suggested the lows for this bear market may have already been established, or that downside is limited.
  • But we also noted that various downtrends remained firmly intact, and that we needed to see indexes reverse their downtrends in order to get more constructive at the index level.
  • It appears the bullish reversals have begun, as the SPX, MSCI ACWI (ACWI-US), and STOXX 600 are the first three major indexes to reverse topside their 4-month and YTD downtrends.

It Is Very Important to Review ESG Investing Before the Risks Become Evident

By Aki Matsumoto

  • The reason for the limited increase in GPIF’s ESG investments must be thought of separately in terms of GPIF-specific factors and the overall trend in ESG investing.
  • Because investors consider which combination of managers in their asset allocation will work best for the overall portfolio, there are factors that cannot be determined by individual ESG investing alone.
  • ESG investing has been expanding, but with so many ESG indices and vendors in disarray, some problems are pointed out. It’s important to review the effectiveness of the ESG indices.

Lasertec (6920) | Mind the Guidance Gap

By Mark Chadwick

  • We turn tactically bearish on Lasertec as we expect the stock to dip on weak order guidance
  • After an exceptionally strong past year, we expect the order outlook to normalise
  • Risks include weaker macro, Intel capex delays and restrictions on equipment sales in China

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

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

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  • ✓ Custom Watchlists
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  • ✓ Events & Webinars

Daily Brief Energy/Materials: Crude Oil, SPDR S&P Metals & Mining ETF and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Bulls & Bears: Near-Term and Short-Term View on Oil Prices
  • XME and XLE Longs Meeting Targets

Bulls & Bears: Near-Term and Short-Term View on Oil Prices

By Vandana Hari

  • Crude price movements have been almost entirely dictated by sentiment in the broader financial markets since around mid-June.
  • Prices rose in the week to July 29 as part of a broader relief rally in risk assets. The rally is exhausted but may help resist sharp downswings for now.
  • For the mid-Aug to mid-Sep period, we are mildly bullish. 

XME and XLE Longs Meeting Targets

By Thomas Schroeder

  • XME and XLE long bets outlined on July 18 are meeting targets to unwind/reverse with XME displaying intermediate potential out of a bull wedge formation.
  • Weak buy volumes on this rise fit with it being corrective in nature (vulnerable bounce), calling for a fresh bear test into September.
  • XME bull wedge brewing and 40 macro support stand out as a macro bull set up from September into year-end.

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

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

  • ✓ Unlimited Research Summaries
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  • ✓ Custom Watchlists
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  • ✓ Events & Webinars

Daily Brief Utilities: Genex Power Ltd, China Three Gorges Renewables, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Merger Arb Mondays (01 Aug) – Genex, Yashili, Link Admin, VNET, Ramsay, Alliance Aviation
  • China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)
  • It Is Very Important to Review ESG Investing Before the Risks Become Evident

Merger Arb Mondays (01 Aug) – Genex, Yashili, Link Admin, VNET, Ramsay, Alliance Aviation

By Arun George


China Utilities: Long China Three Gorges Renewables (600905 CH), Short Huaneng Power Int (600011 CH)

By Osbert Tang, CFA

  • A “Long China Three Gorges Renewables (600905 CH), short Huaneng Power Intl Inc-A (600011 CH)” pair trade should generate good return in China’s utilities sector given the current industry dynamics.
  • The key supporting factors are: CTGR has pure exposure to renewable, faster capacity growth and a stronger balance sheet. They should underpin better earnings quality and outlook relative to HPI.
  • CTGR trades on higher PER and P/B multiples, but these should not be hurdles as they are just reflection of more promising prospects. We expect CTGR’s YTD outperformance to continue.

It Is Very Important to Review ESG Investing Before the Risks Become Evident

By Aki Matsumoto

  • The reason for the limited increase in GPIF’s ESG investments must be thought of separately in terms of GPIF-specific factors and the overall trend in ESG investing.
  • Because investors consider which combination of managers in their asset allocation will work best for the overall portfolio, there are factors that cannot be determined by individual ESG investing alone.
  • ESG investing has been expanding, but with so many ESG indices and vendors in disarray, some problems are pointed out. It’s important to review the effectiveness of the ESG indices.

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

Sign Up for Free

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

Daily Brief Industrials: ACS, Actividades de Construcción y Servicios and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Untangling ACS Holding Chain

Untangling ACS Holding Chain

By Jesus Rodriguez Aguilar

  • ACS is simplifying  its corporate structure: it has acquired the minorities in CIMIC, increased its stake in Hochtief and is buyer for any shares in Hochtief owned by Atlantia.
  • Thiess is now acquiring MACA and could also be a candidate for acquisition by the parent.
  • I see value in ACS. Further rationalisation in the holding structure would be a catalyst for the reduction of the discount.

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

Sign Up for Free

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

Daily Brief TMT/Internet: SenseTime Group, Meituan, Tencent, Honda Tsushin Kogyo, iShares MSCI ACWI ETF, Route Mobile, Lasertec Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next
  • Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet
  • China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh
  • Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)
  • Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys
  • Route Mobile Ltd: Forensic Analysis
  • Lasertec (6920) | Mind the Guidance Gap

SenseTime (20 HK): Lock-Up Expiry Done; Stock Connect Done; Passive Inflows Next

By Brian Freitas

  • SenseTime Group (20 HK) stock has been crushed following the lock-up expiry at the end of June with the stock now trading 40% below the IPO price.
  • The company has recently bought back stock providing some support. More importantly, SenseTime Group (20 HK) was included in Southbound Stock Connect on 29 July.
  • We expect a big increase in the free float adjustment factor (FAF) in the Hang Seng Indexes at the September rebalance that will provide some much needed passive inflows.

Meituan – Regulators Now Probing on Food Safety; Anti-Monopoly Crackdown Is Not Over Yet

By Shifara Samsudeen, ACMA, CGMA

  • Several news media outlets reported that Meituan (3690 HK)  Ele.me and other food delivery platforms were summoned over food safety problems as well as price war among them.
  • Food delivery platforms are ordered to strictly follow food safety management responsibilities and also prevent price wars that disrupt the market order.
  • Though the anti-trust fine of RMB3.44bn was thought to be the end of an almost year long regulatory crackdown on Meituan, it seems that this is far from over.

China Internet Weekly (1Aug2022): Tencent, Alibaba, Meituan, JD Logistics, MissFresh

By Ming Lu

  • Tencent and Huawei launched beta tests for car-hailing platform almost simultaneously.
  • Alibaba begins to disconnect Ant Group to avoid implicating each other.
  • Missfresh dismissed almost all employees in its headquarters in Beijing.

Minebea Mitsumi Tender for Honda Tsushin Kogyo (6826)

By Travis Lundy

  • Electronics Parts and Devices manufacturer Minebea Mitsumi (6479 JP) has announced a 25% premium Tender Offer to take over connector-maker Honda Tsushin Kogyo (6826 JP)
  • It is not an overwhelming bid, but is supported by Panasonic Corp (6752 JP) which owns an equity affiliate stake, and crossholders and friendly shareholders hold a lot.
  • This looks like it will complete, despite being a little light on price. 

Europe, MSCI ACWI Bullish Downtrend Reversals as Japan Tests Resistance; Tech, Health Care Buys

By Joe Jasper

  • In last week’s Int’l Compass (July 21) we discussed positive signals that suggested the lows for this bear market may have already been established, or that downside is limited.
  • But we also noted that various downtrends remained firmly intact, and that we needed to see indexes reverse their downtrends in order to get more constructive at the index level.
  • It appears the bullish reversals have begun, as the SPX, MSCI ACWI (ACWI-US), and STOXX 600 are the first three major indexes to reverse topside their 4-month and YTD downtrends.

Route Mobile Ltd: Forensic Analysis

By Nitin Mangal

  • Route Mobile operates as a cloud communication provider to enterprises, OTT players and mobile network operators. The company got listed on the bourse in September 2021.
  • Route is a growing company, and derives a significant chunk of its business internationally.
  • Route Mobile is a story centralized by grey areas, be it accounting or management’s stance on contingent liability, or impairment in investments.

Lasertec (6920) | Mind the Guidance Gap

By Mark Chadwick

  • We turn tactically bearish on Lasertec as we expect the stock to dip on weak order guidance
  • After an exceptionally strong past year, we expect the order outlook to normalise
  • Risks include weaker macro, Intel capex delays and restrictions on equipment sales in China

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

Sign Up for Free

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

Daily Brief Industrials: ACS, Actividades de Construcción y Servicios and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Untangling ACS Holding Chain

Untangling ACS Holding Chain

By Jesus Rodriguez Aguilar

  • ACS is simplifying  its corporate structure: it has acquired the minorities in CIMIC, increased its stake in Hochtief and is buyer for any shares in Hochtief owned by Atlantia.
  • Thiess is now acquiring MACA and could also be a candidate for acquisition by the parent.
  • I see value in ACS. Further rationalisation in the holding structure would be a catalyst for the reduction of the discount.

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

Sign Up for Free

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

Daily Brief Health Care: Mediclinic International, Lepu Medical Technology A and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Remgro/Mediclinic: Healthier Offer
  • Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

Remgro/Mediclinic: Healthier Offer

By Jesus Rodriguez Aguilar

  • After four prospective offers from a Remgro-led consortium, Mediclinic’s Board is to recommend the latest one: 504p/share in cash, cum dividend. The PUSU deadline has been extended until 5 August.
  • The offer values Mediclinic at c. 10x EV/Fwd EBITDA, both above the median of comparables and the failed offer for Spire. At 35% premium, it seems reasonable, but not overly generous.
  • After four proposals, I doubt the consortium will increase its offer, and investors will be happy to part with the cash. Gross spread is 3.92%. Long MDC LN.

Pre-IPO Lepu Medical Technology – Lepu Is in a Difficult Position and Turning It Around Takes Time

By Xinyao (Criss) Wang

  • Lepu suffered from the negative impact of VBP on drug/medical consumables, and its share price has yet to recover. We are not optimistic about the outlook of the traditional businesses.
  • Lepu’s expansion mainly relies on continuous M&A. Whether these diversified businesses will produce synergies and how much performance they will contribute need to be tested by time and the market.
  • Excessive epitaxial expansion may not be a long-term solution. Lepu needs to focus more on endogenous growth and R&D,which is good for sustainable long-term growth. Such business transformation takes time.

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

Sign Up for Free

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

Daily Brief Consumer: Yashili International Holdings, Silver Crest Acquisition and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Yashili’s Pre-Condition EGM Set for 16 August
  • Sweet Deal

Yashili’s Pre-Condition EGM Set for 16 August

By Arun George

  • The approval by Yashili International Holdings (1230 HK) independent shareholders of the proposed transactions at the 16 August EGM is a pre-condition to the HK$1.20 per share privatisation proposal.
  • Shareholders will pass the ordinary resolutions at the EGM so that they can vote on the attractive privatisation proposal. The key risk is timing around the satisfaction of the pre-conditions.
  • China Mengniu Dairy Co (2319 HK)’s offer remains attractive in the context of multiples and historical share prices. At the last close, the gross spread to the offer is 10.1%.

Sweet Deal

By subSPAC

  • Tim Horton China has bucked the recent trend of Chinese Companies, opting to list in the US through a SPAC rather than aiming for an IPO on shore.
  • The company is looking to capitalize on the rapidly growing Chinese Coffee market by tapping into capital from US investors.
  • However, growing geopolitical tensions and a regulatory crackdown from the SEC could dampen deal prospects.

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

Sign Up for Free

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

Daily Brief Financials: China Vast Industrial Urban Development, SGX, Evergrande, ICICI Bank Ltd and more

By | Daily Briefs, Financials

In today’s briefing:

  • The Cayman Islands to Remove the Headcount Test on 31 August
  • SGX/NYSE Collaboration Agreement: Right Partners, Right Place, Right Products
  • Morning Views Asia: Evergrande, China Vanke, Indika Energy, Japfa Comfeed Indonesia
  • ICICI Bank, KMB Q1 Conferences: Media and Analysts’ Silence Is Not Golden for Stakeholders

The Cayman Islands to Remove the Headcount Test on 31 August

By Arun George

  • After a prolonged delay, the Cayman Islands legislative gazette was published on 29 July, which stated that the amended Cayman Islands Act would come into force on 31 August. 
  • The Act will remove the headcount test for schemes, eliminating a layer of uncertainty for controlling shareholders wishing to privatise listed Cayman-incorporated companies.
  • In light of this development, we look at current active privatisations, past failed privatisations and rumoured transactions which stand to gain a new lease of life from this Act.

SGX/NYSE Collaboration Agreement: Right Partners, Right Place, Right Products

By Kyle Rudden

  • Last week, SGX and the New York Stock Exchange announced a collaboration focusing on dual listings and new products (primarily ETFs)… and all with an overarching ESG imperative.
  • Typically, these kinds of announcements are met with a healthy dash of skepticism by investors but the SGX/NYSE agreement is a clear exception, deserving atypical early-stage optimism.
  • Complementary skill sets (Right Partners), once-in-lifetime market opportunities (Right Place), and leveraging existing cabilities to meet current ESG investing demand (Right Products).

Morning Views Asia: Evergrande, China Vanke, Indika Energy, Japfa Comfeed Indonesia

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.


ICICI Bank, KMB Q1 Conferences: Media and Analysts’ Silence Is Not Golden for Stakeholders

By Hemindra Hazari

  • ICICI Bank Ltd (ICICIBC IN) & Kotak Mahindra Bank (KMB IN) actively covered by a large number of analysts
  • Significant issues of regulatory penalties on Kotak Bank subsidiary & major theft in a currency chest of ICICI Bank. No clarification from both banks
  • Instead of demanding explanations from the banks during the 1Q concalls, media and analysts chose to remain silent

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

Sign Up for Free

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

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  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars