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Smartkarma Daily Briefs

Daily Brief United States: NFT and more

By | Daily Briefs, United States

In today’s briefing:

  • Sporting Crypto – 16th Jan 2023: Manchester United Football Club’s NFT Drop

Sporting Crypto – 16th Jan 2023: Manchester United Football Club’s NFT Drop

By Sporting Crypto

  • Manchester United are arguably the biggest European football brand on the planet.
  • So when they signed a deal in excess of £20m per year with layer 1 blockchain solution Tezos, eyebrows were raised.
  • Mainly due to the bad reputation Web3 has within football generally.

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Daily Brief India: ABM Investama and more

By | Daily Briefs, India

In today’s briefing:

  • Asia HY Trade Book – January 2023 – Lucror Analytics

Asia HY Trade Book – January 2023 – Lucror Analytics

By Charles Macgregor

The Asia HY Trade Book for January 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia (ex-Japan) HY and crossover credits.


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Daily Brief China: Hong Kong Aerospace Technology, iQIYI Inc, Kingston Financial, Fu Shou Yuan, Wuxi Biologics, ABM Investama, Country Garden Holdings Co and more

By | China, Daily Briefs

In today’s briefing:

  • Hong Kong Aerospace Tech’s (1725 HK) US$1bn Rocket-Launch Site
  • IQIYI Follow-On Offering – Might Be Expected but Its Track Record Is…
  • Kingston Financial’s (1031 HK) Vote on 9 February
  • Fu Shou Yuan (1448 HK): Latest Mortality Rate Supports Long-Term Outlook
  • Wuxi Biologics Placement (2269 HK) – Things Are No Longer Easy When the Magic of CXO Wears Off
  • Asia HY Trade Book – January 2023 – Lucror Analytics
  • Morning Views Asia: Country Garden Holdings Co, Powerlong Commercial Management Holdings
  • Kingston Financial (1031 HK): 9th Feb Scheme Vote. IFA Says Fair
  • Morning Views Asia: Country Garden Holdings Co, Powerlong Commercial Management Holdings

Hong Kong Aerospace Tech’s (1725 HK) US$1bn Rocket-Launch Site

By David Blennerhassett

  • On the 9th of January, 2023, the Republic of Djibouti signed an MOU with Hong Kong Aerospace Technology (1725 HK) (HKAT) to develop a (reported) US$1bn international commercial “spaceport”.
  • In the middle of last year, Djibouti announced plans to launch two nanosatellites to facilitate farming and other related activities.
  • HKAT, a recent back-door listing, has a market cap of US$258mn. Wholly-owned subsidiary Gang Hang Ke (Shenzhen) Space Technology, has been successfully involved in the launch of ten satellites. 

IQIYI Follow-On Offering – Might Be Expected but Its Track Record Is…

By Sumeet Singh

  • IQIYI aims to raise around US$500m via a follow-on ADS offering.
  • While the company hasn’t stated its use of proceeds, it will probably use most of it to redeem convertible notes
  • In this note, we will talk about the deal dynamics and  run the deal through our ECM framework.

Kingston Financial’s (1031 HK) Vote on 9 February

By Arun George

  • The Kingston Financial (1031 HK) scheme document is out with the scheme meeting scheduled for 9 February. The IFA considers the offer to be fair and reasonable. 
  • Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and the headcount test. No shareholder holds a blocking stake.
  • Peer re-rating increases the headcount test risk. At the last close and for the 10 March payment, the gross and annualised spread is 5.3% and 42.2%, respectively.

Fu Shou Yuan (1448 HK): Latest Mortality Rate Supports Long-Term Outlook

By Osbert Tang, CFA

  • China recorded 270,000 increases in deaths in 2022 to 10.41m (+2.7% YoY, vs. flat in 2020). This is a sad demographic trend but favourable to Fu Shou Yuan (1448 HK).  
  • Death rate of 0.74% has returned to the 1974 level. With termination of “zero COVID” policy, this is poised to increase. This will also stimulate demand for its pre-need services.
  • Despite a 73% rebound in share price from trough, valuation is still undemanding at 14.4x FY23F PER. This implies a 35% discount to the average of 22x since 2013. 

Wuxi Biologics Placement (2269 HK) – Things Are No Longer Easy When the Magic of CXO Wears Off

By Xinyao (Criss) Wang

  • WuXi Bio announced the placing of existing shares by substantial shareholder. Obviously, the share price was in  “comfortable position” for the management, so they think it’s time to take action.
  • WuXi Bio faces the uncertainty of future high growth.GSK deal/AD drug orders cannot offset the loss of COVID-19 orders.We advised to invest when it’s in “sector resonance” with “difference in expectations”.
  • What we’re most worried about this year isn’t recession/depression but Taiwan, which is the last card the US hasn’t yet played. If situation’s really bad,something may happen in Taiwan Strait.

Asia HY Trade Book – January 2023 – Lucror Analytics

By Charles Macgregor

The Asia HY Trade Book for January 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia (ex-Japan) HY and crossover credits.


Morning Views Asia: Country Garden Holdings Co, Powerlong Commercial Management Holdings

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.


Kingston Financial (1031 HK): 9th Feb Scheme Vote. IFA Says Fair

By David Blennerhassett

  • The Scheme Booklet is now out and Kingston Financial (1031 HK)‘s shareholders can vote on Chu Yuet Wah’s Offer on the 9 February.
  • The Cancellation price of HK$0.30/share was a 47.78% premium to the undisturbed prices. It will not be increased. 
  • Currently trading at a gross/annualised spread of 5.3%/44.4%, assuming payment on the 10 March. 

Morning Views Asia: Country Garden Holdings Co, Powerlong Commercial Management Holdings

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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Daily Brief Indonesia: Semen Indonesia (Gresik), ABM Investama and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Semen Indonesia (SMGR IJ) –  A Set Up with New Capacity and Lower Costs
  • Asia HY Trade Book – January 2023 – Lucror Analytics

Semen Indonesia (SMGR IJ) –  A Set Up with New Capacity and Lower Costs

By Angus Mackintosh

  • Semen Indonesia came through the worst of 2022 with flat sales, despite lower volumes, with profits rising by +18.9%, driven by cost savings, reduced debt, and use of DMO coal.
  • 4Q2022 may see a slowdown given. the onset of the rainy season but the company is well-positioned to ride a recovery in 2023 with additional capacity from Semen Baturaja.
  • Semen Indonesia (SMGR IJ) is well set up for a recovery in earnings for the next two years, with great synergies to come from Semen Baturaja. Valuations are well-below historic.

Asia HY Trade Book – January 2023 – Lucror Analytics

By Charles Macgregor

The Asia HY Trade Book for January 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia (ex-Japan) HY and crossover credits.


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Daily Brief Japan: Tsi Holdings, Fast Retailing, Money Forward, Nippon Steel Corporation, Amvis Holdings Inc and more

By | Daily Briefs, Japan

In today’s briefing:

  • TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
  • Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages
  • Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability
  • Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?
  • Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan

TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap

By Travis Lundy

  • Last April I wrote about Tsi Holdings (3608 JP) which was trading at 0.5x EV/EBITDA and where I suggested it could double in 2-3yrs. 
  • The day after I wrote, the stock closed at ¥312/share, briefly touched ¥480 before ending the year at ¥444. On Friday they announced Q3 earnings, now TTM EV/EBITDA is 2.5x.
  • They also announced a buyback, and the stock is up further. It is worth looking into the details both near-term and what they mean longer-term.

Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages

By Oshadhi Kumarasiri

  • Fast Retailing (9983 JP)’s 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.
  • The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.
  • Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.

Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability

By Shifara Samsudeen, ACMA, CGMA

  • Money Forward (3994 JP) reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.
  • Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).
  • Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.

Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?

By Aki Matsumoto

  • With the shrinking domestic market, the steel brokerage business is no longer a profitable business for trading companies, so Nippon Steel needs to strengthen its own sales capabilities.
  • While this TOB will have negative impact on Nippon Steel’s balance sheet and profit margins in the short term, the steel market may be moving more significantly than we think.
  • While it would be better for Nippon Steel to make NISSOL 100% subsidiary, I suspect that NISSOL is still being kept as a card to be sold for cash generation.

Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan

By Tina Banerjee

  • Amvis Holdings Inc (7071 JP) recorded 51% YoY revenue growth to ¥22B in FY22, 3% ahead of guidance. The company has added 16 facilities (825 beds), exceeding its initial plan.
  • Buoyed by strong FY22 results, business expansion, and favorable demand scenario, Amvis has raised FY23 guidance. In FY23, the company aims to open 19 new facilities.   
  • Amvis has formulated the new three-year plan, “Amvis 2025”. The company is accelerating the pace of opening Ishinkan to bring up the number to 127 by September 30, 2025.  

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Daily Brief ESG: A Few Students Were Motivated by Assignments from Their Teachers and more

By | Daily Briefs, ESG

In today’s briefing:

  • A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

By Aki Matsumoto

  • Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
  • If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
  • If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.

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Daily Brief Credit: Morning Views Asia: Azure Power Global Ltd and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Azure Power Global Ltd, China Hongqiao, Fantasia Holdings Group Co
  • Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Morning Views Asia: Azure Power Global Ltd, China Hongqiao, Fantasia Holdings Group Co

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.


Stanley Black & Decker Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Stanley Black & Decker one of the largest providers of tools and engineering systems across the world and caters to a wide variety of industries.
  • The company has seen significant progress toward narrowing its focus and overhauling its supply chain in recent times.
  • We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

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Daily Brief ECM: Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good and more

By | Daily Briefs, ECM

In today’s briefing:

  • Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good
  • AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money

Wuxi Biologics Placement – Lesser Discount than Recent Deals but Still Looks Good

By Ethan Aw

  • Wuxi Biologics Holdings is looking to raise up to US$513m by selling about 1.3% of Wuxi Biologics (2269 HK). 
  • This is the company’s 16th placement since it listed in June 2017. 
  • In this note, we will discuss deal dynamics, past deal performance, and share the scores on our ECM framework.

AInnovation Technology Lock-Up – US$670m Worth of Pre-IPO Investment Is Still Well in the Money

By Clarence Chu

  • Qingdao Ainnovation Technology Group (2121 HK) was listed on 27th Jan 2022, with its one-year lockup expiring on 27th January 2023.
  • Qingdao AInnovation Technology Group is an AI solutions provider offering full-stack AI-based products and solutions.
  • Coming up for one-year lockup expiry are the pre-IPO shareholders. Bulk of them are in the money as some have invested as early as 2018.

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Daily Brief Thematic (Sector/Industry): Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos
  • US Banks – Slow Going
  • Smartkarma Webinar | Shopping in Tokyo: Japan Retail and Consumer Market Picks

Good Morning Japan |US Off = Directionless; BOJ in Focus +2trn JGB Buying; Kuroda off to Davos

By Mark Chadwick

  • OVERSEAS:  US MLK Holidays – World markets directionless;  US Equity Futs flat; European Markets bid on Inflation peak;  BOJ decision to lead markets this week.
  • JAPAN:  NKY Futures +0.2% vs Cash ; USDJPY flat at 128.52 ; BOJ speculation dominates local headlines;  Kuroda heads to Davos = no fireworks? ;  Dec Machine Tools orders +1%YoY
  • DAILY NUGGET:  Fast Retailing and Sustainability: Set to introduce a new repair service in its domestic stores.

US Banks – Slow Going

By Daniel Tabbush

  • Two US banks saw more than 80% of their net interest income delta erased by credit costs
  • Many US banks are seeing sharply higher credit costs in 4Q22 from reversals a year ago
  • Loan growth is decelerating in 4Q22 compared with 3Q22, not a positive outlook

Smartkarma Webinar | Shopping in Tokyo: Japan Retail and Consumer Market Picks

By Smartkarma Research

In this next webinar we will speak to Smartkarma Insight Provider, Michael Causton about his top picks in the Japanese Retail and Consumer Market space. With the Japanese retail and consumer markets facing major catalysts for change like high levels of inflation, higher wages, and a labour shortage, what can we expect from the space, and what exactly it will take for Japanese retailers to thrive under these changes? 

The webinar will be hosted on Wednesday, 25 January 2023, 17:00 SGT/HKT.

Michael is co-founder and partner at JapanConsuming. JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports and seminars on retail sectors and consumer trends, as well as telephone consulting/meetings with investors. All of JapanConsuming’s team are bilingual and bi-cultural, and the company’s research sources are: Direct meetings with retailers, wholesalers, distributors, trade body staff, govt., marketing firms, academics etc. Govt. data Trade association data Trade Press across all consumer sectors Unique Network of buyers/managers/marketing staff at retail, as well as wholesalers and trading firms. Editors/Journalists at publishing houses and PR/Ad firms. JapanConsuming was founded by Michael Causton and Roy Larke. Michael Causton set up and ran a consumer distribution business in Tokyo for 10 years and developed this into a business responsible for annual imports to Japan of several billion Yen, at the same time building up an inside knowledge of how Japanese distribution works and developing a network of contacts across the industry. Seeing the lack of quality market intelligence on Japanese markets, he co-founded JapanConsuming in 2000. He divides his time between Japan and Europe/US consulting for companies, governments and investors, including providing talks, seminars, and webinars as well as writing reports and books.


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Daily Brief Technical Analysis: SPX Trendline to Define and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • SPX Trendline to Define
  • Tencent Reach for Sell Zone

SPX Trendline to Define

By Thomas Schroeder

  • Adjusted our SPX resistance level given overshoots with a focus on SPX futures trendline at 4,080 and price pivot at 4,100.
  • We will take this week to measure overbought conditions and sentiment. Near term upside risk to SPX trendline that defines the LT trend.
  • We have not given up on our macro bear cycle as long as trendline caps. Fine tuning top signals is the chore at hand.

Tencent Reach for Sell Zone

By Thomas Schroeder

  • Tencent faces formidable resistance at 385 that may not be seen for a while. 385 is where old lows and old highs coincide.
  • RSI is extended (ST sell and bounce). Buy volumes are descent but have been drifting since late 2022.
  • 385 a good zone to sell cash positions or short to challenge pivot supports outlined. 320 is an intermediate level to hold to keep things glued together.

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