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Smartkarma Daily Briefs

Jun 16
0

Financials: Tether, PICC Property & Casualty H, Tisco Financial Group and more

By | Daily Briefs, Financials

In today’s briefing:

  • Tether (USDT) – Not the Next Domino
  • China Insurance: PICC P&C Vs. CPIC
  • TISCO : A High Dividend Stock

Tether (USDT) – Not the Next Domino

By Rose Choy

  • USDT or Tether, the largest stablecoin, has been experiencing small discounts to peg at times (larger discount during market stress) but those looking for a blow up will be disappointed.
  • Tether’s redemption dynamics are the main cause of the discount. Recent withdrawals in Tether and drop in market capitalization are the result of liquidations in the crypto space.
  • While Tether’s reserves are not transparent, the Company is not regulated and is under no obligation to disclose their balance sheet/ reserves in full. 

China Insurance: PICC P&C Vs. CPIC

By Alec Tseung

  • China’s motor insurance has been showing signs of growth after years of decline due to deregulations and reforms in the sector.
  • Motor insurance tailwind will benefit large players the most. Bullish on PICC P&C since it’s the largest player in motor insurance and to likely benefit the most from the tailwind.
  • Bearish on CPIC since its P&C business is much smaller than PICC P&C and Ping An P&C, while its L&H growth continues to be under pressure.  

TISCO : A High Dividend Stock

By Pi Research

  • Maintain BUY for TISCO with a target price of Bt106.00. We like its high dividend yield, expected at 8.4-9.3%for 2022-24.We maintain a moderate net profit growth of 6%CAGR for 2022-24. 
  • A mixed picture in 2Q22 We expect Tisco Financial Group (TISCO) to post a net profit of Bt1.74b in 2Q22, up 4.5% yoy (-3.1% qoq). The yoy rise will largely 
  • Lending growth in 2Q22 is likely to continue rising by 0.4% QoQ (1Q22: +0.4% QoQ), given elevated demand from corporate and SME lending despite muted new auto HP lending. 

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Jun 16
0

Indonesia: Erajaya Swasembada, PT Surya Citra Media Tbk and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Erajaya Swasembada (ERAA IJ) – Smartphones and Retail in One
  • PT Surya Citra Media Tbk (SCMA IJ) – A Vote of Confidence in Vidio

Erajaya Swasembada (ERAA IJ) – Smartphones and Retail in One

By Angus Mackintosh

  • Erajaya‘s 1Q2022 results do not reflect the company’s prospects for FY2022, given the impact of Omicron, the chip shortage, and significant IT upgrades taking place, all of which depressed performance.
  • The company is stepping up its outlet expansion this year, with plans to add 400-500 new outlets in an effort to gain market share post-pandemic by expanding its network.
  • Erajaya is adding new retail JVs outside its handset and IoT businesses including JD Sports, Wellings Pharmacy, Grand Lucky, and Paris Baguette, jointly managing these JVs.

PT Surya Citra Media Tbk (SCMA IJ) – A Vote of Confidence in Vidio

By Angus Mackintosh

  • The news that PT Surya Citra Media’s digital platform Vidio has raised an additional US$45m from Sinarmas, Grab (GRAB US), and Bali United should be seen as a positive.
  • Vidio is Indonesia’s leading OTT platform with 61m subs and 2.5m paying subs forecast to grow to 4m by year-end with Champions League, World Cup, and Original Drama driving demand.
  • PT Surya Citra Media looks cheap relative to its holding in Vidio, which is worth 71% of its market cap, and trading at a discount to 5-year average forward PER.

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Jun 16
0

Consumer: Kakao Pay, PT Surya Citra Media Tbk, Raccoon Holdings, Inc., RPSG Ventures Limited, Universal Entertainment, The Walt Disney Co, Wynn Macau Ltd, Maruti Suzuki India, Srinanaporn Marketing Public Company Limited and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?
  • PT Surya Citra Media Tbk (SCMA IJ) – A Vote of Confidence in Vidio
  • Raccoon: Valuation Has Come Down but The Growth Momentum Remains Strong
  • RPSG Ventures: IPL Media Rights Auction Update
  • Okada Manila Mess: How to Play This Chaotic Legal Drama Between Universal and Its Ousted Founder
  • TMT Quick Hits: DIS/Cricket Rights, GOOGL/TTD/EU
  • Morning Views Asia: Country Garden Holdings Co, JSW Steel Ltd, China Datang Corp Renewable Power
  • Maruti Suzuki – Return of Product Lifecycle to Drive Market Share
  • Srinanaporn Marketing (SNNP.BK) – Still Growing Well Even With Headwinds

Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?

By Sanghyun Park

  • When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
  • Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
  • The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.

PT Surya Citra Media Tbk (SCMA IJ) – A Vote of Confidence in Vidio

By Angus Mackintosh

  • The news that PT Surya Citra Media’s digital platform Vidio has raised an additional US$45m from Sinarmas, Grab (GRAB US), and Bali United should be seen as a positive.
  • Vidio is Indonesia’s leading OTT platform with 61m subs and 2.5m paying subs forecast to grow to 4m by year-end with Champions League, World Cup, and Original Drama driving demand.
  • PT Surya Citra Media looks cheap relative to its holding in Vidio, which is worth 71% of its market cap, and trading at a discount to 5-year average forward PER.

Raccoon: Valuation Has Come Down but The Growth Momentum Remains Strong

By Oshadhi Kumarasiri

  • Raccoon Holdings, Inc. (3031 JP) is currently maintaining the COVID growth momentum while all others in Japanese e-commerce are face a significant drop-off in demand conditions.
  • If this outperformance continues, valuation multiples that look somewhat decent today could look cheap beyond any reasonable doubts in a few years.
  • In addition, if Raccoon succeeds in bringing down advertising spending to the pre-COVID level, the share price could rise above the previous peak of ¥3,300.

RPSG Ventures: IPL Media Rights Auction Update

By Ankit Agrawal, CFA

  • We had highlighted in our prior note that IPL Media Rights for next 5Y (2023-27) could fetch a value of over INR 40,000cr.
  • The bidding concluded recently. Total value of IPL Media Rights came in at INR 48,390cr, well above the INR 40,000cr expectation and closer to our optimistic scenario of INR 50,000cr.
  • RPSGV’s IPL team will receive INR 480cr+ per year from its share in media rights vs INR 300-350cr projected earlier. This improves IRR for RPSGV’s investment in IPL team substantially. 

Okada Manila Mess: How to Play This Chaotic Legal Drama Between Universal and Its Ousted Founder

By Howard J Klein

  • The Philippine gaming market is recovering fast from covid with the future of hs biggest casino property plagued by legal battles.
  • Founder Kazuo Okada dismissed in 2017 by the Universal board over his alleged financial self dealing, is seen behind a May 31st strong arm takeover of the property.
  • The Manila government thus far remains neutral but plans for a Spac IPO by Universal and a US based hedge fund is delayed, but is scheduled to debut by September.

TMT Quick Hits: DIS/Cricket Rights, GOOGL/TTD/EU

By Aaron Gabin

  • Indian Premiere League cricket auction has brought in $6.6B thus far, up 3x from the 2018-2022 package, though the per game increase is closer to 2.3x.
  • Disney was smart to relinquish the digital rights, saving itself $3.6B in cash (~$2/share) rather than spending to drive worthless Hotstar+ subs (~$0.26/share).
  • Google may open up YouTube advertising to 3rd party platforms to settle EU antitrust…a potential boon for The Trade Desk.

Morning Views Asia: Country Garden Holdings Co, JSW Steel Ltd, China Datang Corp Renewable Power

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.

Maruti Suzuki – Return of Product Lifecycle to Drive Market Share

By Motilal Oswal

  • After a gap of almost three years, MSIL’s product pipeline has just kick- started with an exciting line-up of launches over the next 2-2.5 years.
  • It has launched upgraded Celerio, and mid-cycle refresh of Baleno as well as XL6.
  • Going forward, MSIL would be launching: new models (four SUVs), platform upgrade (Alto) and mid-cycle refresh (Brezza).

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.

Srinanaporn Marketing (SNNP.BK) – Still Growing Well Even With Headwinds

By Maybank Research

  • U/G to BUY from Hold
  • Sales projected to hit record high in 2Q22
  • Earnings to remain solid despite GPM pressure
  • Promising 2H22E outlook

We upgrade SNNP to BUY from Hold after the share price corrected by 18% since 3 May when we deemed it to be fully valued. Sales momentum remains positive underpinned by greater mobility post-Covid and the successful launch of new products. Cost inflation and labour constraints may put pressure on GPM but solid top-line growth should buoy earnings growth. We believe the recent share price dip offers a buying opportunity, with 23% upside to our DCF-TP of THB18.80 (WACC 7.3% and G.3%).

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Jun 16
0

Singapore: Hwa Hong Corp and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …

Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …

By David Blennerhassett

  • The Circular, containing the IFA opinion and the directors’ recommendation, was despatched after close yesterday. The IFA says fair and the directors recommend shareholders accept the Offer.
  • However … directors holding 29.26% of shares out do not intend to accept the Offer. The intention of an additional 10.9% held by Ong family members is not known.
  • No word on Hong Leong Investment as to their 5.1% stake. The IFA notes the revised Offer terms are a 20.8% discount to the revalued NAV of S$0.5052/share

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Jun 16
0

Event-Driven: Kito Corporation, Resapp Health, Coronado Global Resources Inc, Hwa Hong Corp, Baidu, Kakao Pay, HYBE and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Kito (6409) – Now Sitting Pretty
  • ResApp (RAP AU): Pfizer Coughs Up
  • Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday
  • Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …
  • Baidu to Sell Its Stake in IQiyi
  • Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?
  • HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022

Kito (6409) – Now Sitting Pretty

By Travis Lundy

  • Kito Corporation (6409 JP) is under offer by KKR unit Crosby, which announced a takeover in mid-May.
  • Anti-Trust and foreign review will take a few months, and so we wait. In the meantime, the shareholder register has changed significantly. This remains an interesting option.
  • And now, global market ructions offer arbitrageurs a meaningful opportunity.

ResApp (RAP AU): Pfizer Coughs Up

By David Blennerhassett

  • Pfizer Inc (PFE US) is Offering ResApp Health (RAP AU) shareholders up to A$0.207/share by way of a Scheme. ResApp’s Board unanimously recommends the Offer.
  • ResApp is currently trialing a cough-based Covid detection tool. If the study proves satisfactory, Pfizer will outlay A$0.207/share. If not, shareholders get A$0.146/share. Pfizer initially pitched A$0.115/share. 
  • The results of the study are due out on the 20 June. 

Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday

By Brian Freitas

  • Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close tomorrow.
  • The stocks with passive inflows have outperformed the stocks with passive outflows over the last couple of months and post-announcement. There will be pre-positions on a lot of names.
  • Short interest has increased on nearly all the deletes from the S&P/ASX indices, while short interest movement on the stocks with passive inflows has been mixed.

Hwa Hong (HWAH SP): Directors Recommend Offer. But Not Really …

By David Blennerhassett

  • The Circular, containing the IFA opinion and the directors’ recommendation, was despatched after close yesterday. The IFA says fair and the directors recommend shareholders accept the Offer.
  • However … directors holding 29.26% of shares out do not intend to accept the Offer. The intention of an additional 10.9% held by Ong family members is not known.
  • No word on Hong Leong Investment as to their 5.1% stake. The IFA notes the revised Offer terms are a 20.8% discount to the revalued NAV of S$0.5052/share

Baidu to Sell Its Stake in IQiyi

By Shifara Samsudeen, ACMA, CGMA

  • Reuters and several other news media outlets reported that Baidu (BIDU US) is planning to sell its stake in iQIYI Inc (IQ US) .
  • Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.
  • IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.

Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?

By Sanghyun Park

  • When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
  • Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
  • The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.

HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022

By Douglas Kim

  • As a result of a drastic decline in the share price of HYBE, it is increasingly likely that HYBE’s weight in MSCI Korea Index will be reduced significantly in 2022. 
  • According to our valuation sensitivity analysis, our base case valuation is 4.8 trillion won.
  • As of 1 March 2022, HYBE’s weight in the MSCI Korea Index was 0.430064%, which was the 38th largest stock in this index (out of 111 stocks in total). 

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Jun 16
0

South Korea: Kakao Pay, HYBE, Cellid and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?
  • HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022
  • Cellid (299660 KS): Promising Immunotherapeutic Platform; Well-Funded to Commercialize Pipeline

Kakao Pay MSCI Inclusion: 2022 August QIR or 2023 May SAIR?

By Sanghyun Park

  • When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
  • Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
  • The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.

HYBE: Significant Reduction in MSCI Korea Index Weight Likely in 2022

By Douglas Kim

  • As a result of a drastic decline in the share price of HYBE, it is increasingly likely that HYBE’s weight in MSCI Korea Index will be reduced significantly in 2022. 
  • According to our valuation sensitivity analysis, our base case valuation is 4.8 trillion won.
  • As of 1 March 2022, HYBE’s weight in the MSCI Korea Index was 0.430064%, which was the 38th largest stock in this index (out of 111 stocks in total). 

Cellid (299660 KS): Promising Immunotherapeutic Platform; Well-Funded to Commercialize Pipeline

By Tina Banerjee

  • Cellid (299660 KS) is developing a rich pipeline of five cell-based anticancer therapeutic vaccines, for which there are no commercialized competing products at present. BVAC-C is the lead candidate.
  • BVAC-C is being developed for cervical, head and neck, anal, and certain other cancers. It is the world’s first-in-class in terms of its complex and powerful anticancer action mechanism.
  • Cellid has secured government funding of KRW8.9 billion for its COVID-19 vaccine candidate. The company is accelerating clinical trial of COVID-19 booster dose candidate.

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Jun 16
0

India: RPSG Ventures Limited, Wynn Macau Ltd, Gateway Distriparks, Ashoka Buildcon, Tata Communications, Maruti Suzuki India, Bharat Petroleum Corp and more

By | Daily Briefs, India

In today’s briefing:

  • RPSG Ventures: IPL Media Rights Auction Update
  • Morning Views Asia: Country Garden Holdings Co, JSW Steel Ltd, China Datang Corp Renewable Power
  • Gateway Distripark Ltd – Strong Rail Performance Amid Partial Commissioning of DFC Route
  • Ashoka Buildcon Ltd – EPC Business Outlook Robust; Transitioning to Asset-Light Model
  • Tata Communications – Wait Continues for Double Digit Revenue Growth
  • Maruti Suzuki – Return of Product Lifecycle to Drive Market Share
  • Bharat Petroleum Corporation – BPCL Management Meeting

RPSG Ventures: IPL Media Rights Auction Update

By Ankit Agrawal, CFA

  • We had highlighted in our prior note that IPL Media Rights for next 5Y (2023-27) could fetch a value of over INR 40,000cr.
  • The bidding concluded recently. Total value of IPL Media Rights came in at INR 48,390cr, well above the INR 40,000cr expectation and closer to our optimistic scenario of INR 50,000cr.
  • RPSGV’s IPL team will receive INR 480cr+ per year from its share in media rights vs INR 300-350cr projected earlier. This improves IRR for RPSGV’s investment in IPL team substantially. 

Morning Views Asia: Country Garden Holdings Co, JSW Steel Ltd, China Datang Corp Renewable Power

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.

Gateway Distripark Ltd – Strong Rail Performance Amid Partial Commissioning of DFC Route

By Nirmal Bang

  • Increase in freight volume post commissioning of partial western DFC route
  • Company is able to deliver timely cargo by leveraging its strong infrastructure
  • Strong and sustained market share in North India: Gateway Distriparks indicated that their market share grew at a faster rate compared to industry.in NCR region.

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.

Ashoka Buildcon Ltd – EPC Business Outlook Robust; Transitioning to Asset-Light Model

By Nirmal Bang

  • Healthy Portfolio: ASBL currently has a sizeable order book of Rs155bn.
  • CGD business: CGD business is Performing well vis-à-vis its competitors; company has already invested Rs1.4bn and has plans to invest total of Rs8.5bn within a span of 3-4 years.
  • Resilient EPC performance; robust outlook: Company recorded 20% growth in EPC business in FY22 and margins in the range of 11-12%. In terms of pecking order, management has indicated that it would continue to focus on roads and highways, followed by power and railway projects.

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.

Tata Communications – Wait Continues for Double Digit Revenue Growth

By Emkay

  • Key highlights: Management reiterated its strategy with a focus on: 1) enabling borderless growth; 2) enhancing products and efficiency; 3) building agility; 4) boosting product innovation and customer experience; 5) managing risk.
  • Outlook: In the last two years, although the company has delivered on its financial fitness goals, revenue recovery has seen a delay.
  • Key Risks: 1) increased losses in incubation services; 2) inability to close large deals; 3) continued delays in revenue recovery; and 4) higher competitive intensity.

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.

Maruti Suzuki – Return of Product Lifecycle to Drive Market Share

By Motilal Oswal

  • After a gap of almost three years, MSIL’s product pipeline has just kick- started with an exciting line-up of launches over the next 2-2.5 years.
  • It has launched upgraded Celerio, and mid-cycle refresh of Baleno as well as XL6.
  • Going forward, MSIL would be launching: new models (four SUVs), platform upgrade (Alto) and mid-cycle refresh (Brezza).

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.

Bharat Petroleum Corporation – BPCL Management Meeting

By Nirmal Bang

  • Refining crack spread over crude: HSD crack stood at US$22/bbl in 4QFY22 vs US$12.61/bbl in 3QFY22.
  • Retail prices/margins: The management expects retail price revision to take place if the current geopolitical situation turns out to be a prolonged one.
  • BPCL envisages to become net zero by 2040 – Bina refinery plans to produce 1GW of green hydrogen in 5 years – will require capex of Rs5,000mn; long-term target of 10GW by 2040.

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 16
0

Japan: Kito Corporation, Raccoon Holdings, Inc., M3 Inc, Universal Entertainment and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kito (6409) – Now Sitting Pretty
  • Raccoon: Valuation Has Come Down but The Growth Momentum Remains Strong
  • M3: Valuation to Further Drop as Earnings Momentum Slows Down
  • Okada Manila Mess: How to Play This Chaotic Legal Drama Between Universal and Its Ousted Founder

Kito (6409) – Now Sitting Pretty

By Travis Lundy

  • Kito Corporation (6409 JP) is under offer by KKR unit Crosby, which announced a takeover in mid-May.
  • Anti-Trust and foreign review will take a few months, and so we wait. In the meantime, the shareholder register has changed significantly. This remains an interesting option.
  • And now, global market ructions offer arbitrageurs a meaningful opportunity.

Raccoon: Valuation Has Come Down but The Growth Momentum Remains Strong

By Oshadhi Kumarasiri

  • Raccoon Holdings, Inc. (3031 JP) is currently maintaining the COVID growth momentum while all others in Japanese e-commerce are face a significant drop-off in demand conditions.
  • If this outperformance continues, valuation multiples that look somewhat decent today could look cheap beyond any reasonable doubts in a few years.
  • In addition, if Raccoon succeeds in bringing down advertising spending to the pre-COVID level, the share price could rise above the previous peak of ¥3,300.

M3: Valuation to Further Drop as Earnings Momentum Slows Down

By Shifara Samsudeen, ACMA, CGMA

  • M3’s shares have declined 53.2% over the last 12-months to JPY3,566 from JPY7,613 per share. Share price has lost 15% since 4QFY03/2022 earnings in April.
  • The company’s Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing.
  • However, with pandemic conditions easing off, m3’s earnings growth has begun to decelerate and we think there is further downside with weakening of core earnings.

Okada Manila Mess: How to Play This Chaotic Legal Drama Between Universal and Its Ousted Founder

By Howard J Klein

  • The Philippine gaming market is recovering fast from covid with the future of hs biggest casino property plagued by legal battles.
  • Founder Kazuo Okada dismissed in 2017 by the Universal board over his alleged financial self dealing, is seen behind a May 31st strong arm takeover of the property.
  • The Manila government thus far remains neutral but plans for a Spac IPO by Universal and a US based hedge fund is delayed, but is scheduled to debut by September.

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Jun 16
0

Macro: Central Banks and Financial Markets: Time to Embrace Some Humility and more

By | Daily Briefs, Macro

In today’s briefing:

  • Central Banks and Financial Markets: Time to Embrace Some Humility
  • China: Three Takeaways from Recent Data Releases
  • Tight Labour Market Obliges the Fed to Quickly Reverse Its Policy Error
  • Further Picked Up In Yo Y Growth
  • Metal To The Pedal

Central Banks and Financial Markets: Time to Embrace Some Humility

By Said Desaque

  • Fed credibility is on the line at this week’s policy meeting. Globally, central banks eased too aggressively during the pandemic and were too slow undertaking remedial measures to fight inflation. 
  • Central banks no longer encourage investors to embrace duration risk, but there are costs imparted to the banking system and the corporate sector via higher capital costs.     
  • Restoring US price stability requires time due to sticky service inflation, while future Fed credibility hinges critically on firm forward guidance being issued this week.  

China: Three Takeaways from Recent Data Releases

By Nigel Chiang

  • Monetary data shows that it is local government bond issuance that is powering monetary growth while private sector credit demand remains weak.
  • Export volume growth suggests that external demand is less able to support the economy. And weak inflation reflects languid domestic demand.
  • The rash of recent macro data essentially shows that while the worst is likely over for the economy, policy easing has not imparted a meaningful boost to domestic demand.

Tight Labour Market Obliges the Fed to Quickly Reverse Its Policy Error

By Prasenjit K. Basu

  • The FOMC hiked its policy Fed Funds rate by 75bp on 15 Jun’22, the sharpest single hike in 28 years, taking the central rate to 1.625% (official range of 1.5-1.75%).
  • With headline CPI inflation at 8.6%YoY in May’22, and wage inflation at 5.2%, inflationary expectations needed to be nipped in the bud, and the Fed has finally taken decisive action.
  • We expect the FF rate to reach 3% by Sep’22, then rise more sedately. This will induce a shallow recession by Mar’24. We are bullish on a 6-month view.

Further Picked Up In Yo Y Growth

By Maybank Research

  • Second consecutive month of higher YoY growth
  • OFWR outlook – host economies’ re-opening tailwinds vs global headwinds
  • Click here to enter text.

Overseas Filipino Workers Remittances (OFWR) growth picked up further in Apr 2022 to +3.9% YoY (Mar 2022: +3.2% YoY). Our 2022 OFWR growth forecast is +4.2% (4M 2022: +2.7%; 2021: +5.1%). OFWR outlook faces the upsides from host economies’ re-openings and the downsides from Russia-Ukraine war drags on Europe plus risk of US hard landing. Historical data suggest positive correlation between OFWR and crude oil price, USDPHP in the event of stronger USD/weaker PHP, and domestic inflation rate.

Metal To The Pedal

By Maybank Research

  • Fed rate hikes cycle into even higher gear
  • FOMC dot plot signals above-3% fed funds rate in 2022-2024
  • “Hawkish” tilts among ASEAN central banks

14-15 June 2022 FOMC meet saw the target fed funds rate (FFR) raised by +75bps to 1.50%-1.75% range. Fed’s latest “dot plot” signals another +175bps FFR hikes in the remaining four FOMC meetings this year to 3.375% in 2022 vs 1.625% mid-point of current target FFR range, with current hikes cycle ending in early-2023 at 3.75%.

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Jun 16
0

Industrials: Kito Corporation, China United Lines, Ashoka Buildcon, Gateway Distriparks and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Kito (6409) – Now Sitting Pretty
  • China United Lines Pre-IPO – Profitable and Growing Rapidly, However Market Is Concentrated
  • Ashoka Buildcon Ltd – EPC Business Outlook Robust; Transitioning to Asset-Light Model
  • Gateway Distripark Ltd – Strong Rail Performance Amid Partial Commissioning of DFC Route

Kito (6409) – Now Sitting Pretty

By Travis Lundy

  • Kito Corporation (6409 JP) is under offer by KKR unit Crosby, which announced a takeover in mid-May.
  • Anti-Trust and foreign review will take a few months, and so we wait. In the meantime, the shareholder register has changed significantly. This remains an interesting option.
  • And now, global market ructions offer arbitrageurs a meaningful opportunity.

China United Lines Pre-IPO – Profitable and Growing Rapidly, However Market Is Concentrated

By Clarence Chu

  • China United Lines (CUL HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
  • China United Lines (CUL) is a container shipping company in China. CUL has grown rapidly and its large proportion of vessels being chartered-in, has allowed it to scale its capacity.
  • Shipping volume growth was accompanied by topline growth, and margins have been on the uptrend. However, the firm is only a small player in a concentrated market.

Ashoka Buildcon Ltd – EPC Business Outlook Robust; Transitioning to Asset-Light Model

By Nirmal Bang

  • Healthy Portfolio: ASBL currently has a sizeable order book of Rs155bn.
  • CGD business: CGD business is Performing well vis-à-vis its competitors; company has already invested Rs1.4bn and has plans to invest total of Rs8.5bn within a span of 3-4 years.
  • Resilient EPC performance; robust outlook: Company recorded 20% growth in EPC business in FY22 and margins in the range of 11-12%. In terms of pecking order, management has indicated that it would continue to focus on roads and highways, followed by power and railway projects.

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.

Gateway Distripark Ltd – Strong Rail Performance Amid Partial Commissioning of DFC Route

By Nirmal Bang

  • Increase in freight volume post commissioning of partial western DFC route
  • Company is able to deliver timely cargo by leveraging its strong infrastructure
  • Strong and sustained market share in North India: Gateway Distriparks indicated that their market share grew at a faster rate compared to industry.in NCR region.

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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